Key Indices Rise: EPS, ROE STURGIS, Mich., Jan. 24
/PRNewswire-FirstCall/ -- Sturgis Bancorp, Inc. (OTC:STBI)
(BULLETIN BOARD: STBI) posted an earnings increase of 6.1% for the
year ended December 31, 2007, compared to 2006, Eric L. Eishen,
President and CEO, announced today, primarily due to commission
income and growth in average earning assets. Net income decreased
17.8% for the fourth quarter of 2007, compared to 2006, primarily
due to lower net interest margin. Sturgis Bancorp is the holding
company for Sturgis Bank & Trust Company, 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, Coldwater, 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.
Year Ended December 31, 2007 vs. 2006 - Net income for the year
ended December 31, 2007 rose 6.1% to $3.3 million, or $1.43 per
share, basic and diluted, from $3.2 million, or $1.29 per share,
basic and diluted, for 2006. Net interest income rose 2.2% to $11.4
million, from $11.2 million for 2006. The improvement chiefly
reflects the increase in average interest-bearing assets to $294.9
million during 2007 from $272.7 million during 2006. The net
interest margin decreased to 3.91% for 2007 from 4.14% for 2006.
Noninterest income was $4.9 million for 2007, compared to $4.4
million in 2006. The primary components of the increase in
noninterest income were commission and trust fee income, which were
up $297,000 and $93,000, respectively. Noninterest expense
increased $384,000, or 3.6%, primarily due to salaries and employee
benefits. Salaries and employee benefits increased $425,000,
primarily due to cost of living adjustments and commission-based
pay. Net charge-offs for 2007 were $337,000, compared to $258,000 a
year ago. The Company provided $513,000 for loan losses in 2007,
compared to $493,000 in 2006, primarily due to changes in the
composition of the loan portfolio. Fourth Quarter of 2007 vs. 2006
- Net income for the quarter ended December 31, 2007 decreased
17.8% to $692,000, or $0.30 per share, basic and diluted, from
$842,000, or $0.35 per share, basic and diluted, for the year-
earlier quarter. Recent interest rate reductions by the Federal
Reserve have contributed to the decrease in net income. Net
interest income decreased 4.8% to $2.8 million, from $2.9 million
for the fourth quarter of 2006, with the net interest margin
decreasing to 3.69% for the fourth quarter of 2007 from 4.18% for
the fourth quarter of 2006. Noninterest income was $1.2 million for
the fourth quarter of 2007, compared to $1.1 million for the fourth
quarter of 2006. The primary component of the increase was
commission income, which increased $76,000. Noninterest expense
increased $173,000, primarily in salaries and employee benefits.
Net charge-offs for the fourth quarter of 2007 were $154,000,
compared to $70,000 a year ago. Contrary to the State-wide trend in
Michigan, the Bank has not experienced significant increases in its
troubled assets ratio. Management is diligently working to
maintain, or even decrease, delinquencies, despite softness in the
State and local economy. Mr. Eishen said, "National attention has
been focused on large write downs by financial institutions,
related to 'sub-prime' mortgages. As a community bank, we have
maintained our traditional underwriting standards. We did not
participate in securitizing 'sub-prime' mortgages and we have not
invested in securities backed by them. The Bank remains
'well-capitalized', as defined by its Federal Regulators." Total
assets increased to $347.2 million at December 31, 2007 from $320.9
million at December 31, 2006, primarily in loans. Loans increased
$28.6 million, or 11.9%, to $270.0 million at December 31, 2007
from $241.6 million at December 31, 2006. This increase is
partially due to $10.9 million of commercial loans purchased in
2007 with credit guarantees backed by the full faith and credit of
the U.S. Government. In 2007, Sturgis Bancorp redeemed 152,838
shares of common stock for $2.2 million and paid cash dividends of
$0.53 per common share, totaling $1.2 million. Total equity was
$27.7 million at December 31, 2007, compared to $27.5 million at
December 31, 2006. Book value per share increased to $12.20 at
December 31, 2007 from $11.40 at December 31, 2006. Sturgis Bank
& Trust Company, the Bancorp's primary subsidiary, is committed
to maintaining "well- capitalized" status, as defined by regulatory
capital requirements. 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 http://www.sturgisbank.com/ . Consolidated
Balance Sheets December 31, 2007 2006 (In Thousands) Assets Cash
and due from banks $ 11,781 $ 17,404 Other short-term investments
2,349 253 Total cash and cash equivalents 14,130 17,657
Interest-bearing deposits in banks 11,160 8,888 Securities -
Available for sale 14,380 16,703 Securities - Held-to-maturity
4,401 5,805 Federal Home Loan Bank stock, at cost 4,611 4,135 Loans
held for sale 645 182 Loans, net 270,200 241,569 Real estate owned
1,702 958 Bank owned life insurance 7,748 7,430 Accrued interest
receivable 2,313 2,057 Investment in limited partnerships 759 889
Premises and equipment, net 7,404 6,660 Goodwill, net of
accumulated amortization 5,109 5,109 Originated mortgage servicing
rights 1,367 1,476 Other assets 1,273 1,340 Total assets $ 347,202
$ 320,858 Liabilities and Stockholders' Equity Liabilities Deposits
Noninterest-bearing $ 18,598 $ 21,074 Interest bearing 201,524
195,060 Total Deposits 220,122 216,134 Federal Home Loan Bank
advances 83,000 61,000 Repurchase agreements 13,000 13,000 Accrued
interest payable 1,150 871 Other liabilities 2,249 2,304 Total
liabilities 319,521 293,309 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 - 2,268,607 shares and 2,416,511
shares at December 31, 2007 and 2006, respectively 2,269 2,417
Additional paid-in capital 10,377 12,341 Accumulated other
comprehensive income (100) (267) Retained earnings 15,135 13,058
Total stockholders' equity 27,681 27,549 Total liabilities and
stockholders' equity $ 347,202 $ 320,858 Consolidated Statements of
Income Three Months Ended December 31, 2007 2006 Interest income
(In Thousands) Loans $ 5,010 $ 4,764 Investment securities: Taxable
415 454 Tax-exempt 29 30 Dividends 48 52 Total interest income
5,502 5,300 Interest expense Deposits 1,586 1,450 Borrowed funds
1,113 906 Total interest expense 2,699 2,356 Net interest income
2,803 2,944 Provision for loan losses 124 154 Net interest income -
After provision for loan losses 2,679 2,790 Noninterest income:
Service charges and other fees 440 449 Investment brokerage
commission income 396 320 Mortgage banking activities 135 148 Trust
fee income 90 82 Increase in value of bank owned life insurance 82
76 Other income 12 24 Total noninterest income 1,155 1,099
Noninterest expenses: Salaries and employee benefits 1,700 1,613
Occupancy and equipment 335 333 Data processing 178 163
Professional services 89 56 Real estate owned expense 58 42
Advertising 55 73 Other 429 391 Total noninterest expenses 2,844
2,671 Income - Before income tax expense 990 1,218 Provision for
federal income tax 298 376 Net income $ 692 $ 842 Basic earnings
per share $ 0.30 $ 0.35 Diluted earnings per share $ 0.30 $ 0.35
Dividends declared per share $ 0.17 $ 0.15 Return on average equity
9.90% 12.10% Return on average assets 0.81% 1.05% Net interest
margin on average interest-bearing assets 3.69% 4.18% Efficiency
ratio 73.55% 66.05% Consolidated Statements of Income Year Ended
December 31, 2007 2006 Interest income (In Thousands) Loans $
19,493 $ 17,982 Investment securities: Taxable 1,909 1,298
Tax-exempt 111 115 Dividends 190 215 Total interest income 21,703
19,610 Interest expense Deposits 6,374 5,372 Borrowed funds 3,893
3,053 Total interest expense 10,267 8,425 Net interest income
11,436 11,185 Provision for loan losses 513 493 Net interest income
- After provision for loan losses 10,923 10,692 Noninterest income:
Service charges and other fees 1,728 1,703 Investment brokerage
commission income 1,606 1,309 Mortgage banking activities 635 641
Trust fee income 430 337 Increase in value of bank owned life
insurance 319 277 Other income 167 171 Total noninterest income
4,885 4,438 Noninterest expenses: Salaries and employee benefits
6,836 6,411 Occupancy and equipment 1,329 1,234 Data processing 684
636 Professional services 289 270 Real estate owned expense 250 139
Advertising 191 212 Loss on sale of available-for-sale securities -
327 Other 1,404 1,370 Total noninterest expenses 10,983 10,599
Income - Before income tax expense 4,825 4,531 Provision for
federal income tax 1,481 1,380 Net income $ 3,344 $ 3,151 Basic
earnings per share $ 1.43 $ 1.29 Diluted earnings per share $ 1.43
$ 1.29 Dividends declared per share $ 0.53 $ 0.45 Return on average
equity 12.04% 11.66% Return on average assets 1.00% 1.02% Net
interest margin on average interest-bearing assets 3.91% 4.15%
Efficiency ratio 67.30% 67.84% DATASOURCE: Sturgis Bancorp, Inc.
CONTACT: Eric Eishen, President & CEO, or Brian P. Hoggatt,
CFO, +1-269-651-9345, both of Sturgis Bancorp, Inc. Web site:
http://www.sturgisbank.com/
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