STURGIS, Mich., July 15 /PRNewswire-FirstCall/ -- Sturgis Bancorp,
Inc. (OTC:STBI) (BULLETIN BOARD: STBI) posted a 20.1% earnings
decrease for the first half of 2009, compared to 2008, Eric L.
Eishen, President and CEO, announced today. Key Highlights for the
first six months of 2009: -- Net income decreased 20.1% to
$905,000, or $0.45 per share. -- Total deposits increased 5.9% to
$251.6 million. -- Noninterest-bearing deposits increased $1.5
million, or 5.9%. -- Realized gain on sale of securities was $1.1
million. -- Secured liabilities of the Bank, comprised of Federal
Home Loan Bank advances and repurchase agreements, were reduced
$6.2 million, or 5.5%. -- Sturgis Bank & Trust Company's
regulatory capital ratios were enhanced with additional capital
infusion from Sturgis Bancorp. -- Allowance for loan losses
increased to 1.42% of total loans from 1.01% at the end of 2008. --
TARP CPP funds of $7.2 million were preliminarily approved by the
U.S. Treasury - In April 2009, the Company rejected Treasury's
offer. -- Nonaccrual loans increased $2.2 million and delinquent
loans also increased to 2.04% of total loans from 1.59% at December
31, 2008. First Half of 2009 vs. 2008 - Net income for the six
months ended June 30, 2009 decreased 20.1% to $905,000, or $0.45
per share from $1,132,000, or $0.54 per share for 2008. Net
interest income decreased $282,000, primarily due to the lower
tax-equivalent net interest margin of 2.75% in 2009 from 3.20% in
2008. Average interest-earning assets increased to $358.5 million
for the six months ended June 30, 2009 from $323.4 million for the
same period in 2008. Net charge-offs for the first half of 2009
were $260,000, compared to $101,000 a year ago. The Company
provided $1.5 million for loan losses in the first half of 2009,
compared to $231,000 in 2008. The increase in provision for loan
losses recognizes the deterioration of economic market conditions,
increasing the Bank's allowance for loan losses to 1.42% of total
loans at June 30, 2009 from 1.01% at December 31, 2008. Noninterest
income was $3.4 million for the first six months of 2009, compared
to $2.4 million for same period in 2008. The primary component of
this increase was $1.1 million of realized gain on sale of
available-for-sale mortgage-backed securities. Mortgage banking
activities also increased 54% to $658,000, primarily due to a
decrease in mortgage rates during the six months ended June 30,
2009. Commission income decreased 34% to $487,000, as the market
value of brokerage accounts decreased. Noninterest expense
decreased $125,000, despite the FDIC special assessment of
$182,000, which was accrued as of June 30, 2009. Total FDIC
premiums, including the special assessment, increased $296,000 from
the first half of 2008. Salaries and employee benefits decreased
$502,000, primarily due to the elimination of profit-sharing
accrual for 2009, lower brokerage commission expense, and increase
in deferral of loan origination expenses. Mr. Eishen said, "During
the first six months of 2009, the Bank increased its allowance for
loan losses and realized a significant gain on sale of securities.
The Company continues to perform better than many of its Michigan
peers. The Company also diligently investigates the loan portfolio
for early indications of weakness in any segment." Second Quarter
of 2009 vs. 2008 - Net income for the quarter ended June 30, 2009
decreased 56.1% to $211,000, or $0.10 per share from $481,000, or
$0.24 per share for the year-earlier quarter. Net interest income
decreased $278,000, primarily due to the lower tax-equivalent net
interest margin for the quarters to 2.53% in 2009 from 3.14% in
2008. Average interest-earning assets increased to $361.3 million
for the quarter ended June 30, 2009 from $325.7 million for the
same quarter in 2008. Net charge-offs for the second quarter of
2009 were $111,000, compared to $80,000 a year ago. The Company
provided $256,000 for loan losses in the second quarter of 2009,
compared to $149,000 in 2008. The increase in provision for loan
losses recognizes the deterioration of economic market conditions.
Noninterest income was $1.1 million for the second quarters of 2009
and 2008. An additional $20,000 gain on sale of securities was
realized in the second quarter of 2009. Mortgage banking activities
increased $63,000. Commission income decreased 25.5% to $245,000.
Noninterest expense increased $64,000, primarily due to the special
assessment by FDIC as of June 30, 2009. In the second quarter of
2009, the FDIC premiums, including the $182,000 special assessment,
were $206,000 higher than the second quarter of 2008. Offsetting
the FDIC expense was a decrease in salaries and employee benefits
of $214,000. Total assets increased to $390.8 million at June 30,
2009 from $383.4 million at December 31, 2008, primarily in
short-term interest-earning deposits. Loans also increased $1.9
million during the first half of 2009. Nonperforming assets
increased from December 31, 2008, as follows: Percentage of Gross
Loans Past due and still accruing: 06/30/2009 12/31/2008 Past due
one month 1.55% 1.07% Past due two months 0.25% 0.38% Past due
three or more months 0.24% 0.14% Nonaccrual loans 1.88% 1.12% Real
Estate Owned 0.84% 0.67% Noninterest-bearing deposits increased to
$27.2 million at June 30, 2009 from $25.7 million at December 31,
2008. Interest-bearing deposits also increased to $224.3 million at
June 30, 2009 from $211.8 million at December 31, 2008. A good
portion of the increase, $6.4 million, was in transaction accounts.
Brokered certificates of deposit decreased $2.5 million from
December 31, 2008. Brokered certificates of deposit are used as an
alternative to Federal Home Loan Bank ("FHLB") advances, when the
total interest cost is lower. The increase in deposits allowed the
Bank to reduce FHLB advances and repurchase agreements by $3.0
million and $5.5 million, respectively. In the six months ended
June 30, 2009, the Company paid cash dividends of $0.24 per common
share, totaling $0.5 million. Total equity was $25.7 million at
June 30, 2009, compared to $25.8 million at December 31, 2008. Book
value per share decreased to $12.72 at June 30, 2009 from $12.76 at
December 31, 2008. Also in the first half of 2009, Sturgis Bancorp
borrowed $2.3 million to invest in the common stock of Sturgis Bank
& Trust Company. This capital infusion, along with retained
earnings, enhanced the regulatory capital ratios of the Bank, as
follows: June 30, 2009 December 31, 2008 Total capital to
risk-weighted assets 11.92% 11.02% Tier 1 capital to risk-weighted
assets 10.66% 9.84% Tier 1 capital to adjusted total assets 6.73%
6.11% 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 12 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. 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/. (Financial
statements follow) Consolidated Balance Sheets June 30, 2009 Dec.
31, 2008 (In Thousands) Assets Cash and due from banks $7,100
$6,930 Other short-term investments 2,089 9 Total cash and cash
equivalents 9,189 6,939 Interest-earning deposits in banks 15,752
9,334 Securities - Available for sale 39,537 41,896 Securities -
Held-to-maturity 8,585 8,777 Federal Home Loan Bank stock, at cost
4,784 4,784 Loans held for sale 860 1,578 Loans, net 282,805
280,867 Premises and equipment, net 8,536 8,710 Goodwill, net of
accumulated amortization 5,109 5,109 Originated mortgage servicing
rights 1,302 1,409 Real estate owned 2,416 1,913 Bank owned life
insurance 8,237 8,072 Accrued interest receivable 2,019 2,286
Investment in limited partnerships 565 618 Other assets 1,084 1,102
Total assets $390,780 $383,394 Liabilities and Stockholders' Equity
Liabilities Deposits Noninterest-bearing $27,218 $25,710 Interest
bearing 224,332 211,807 Total Deposits 251,550 237,517 Federal Home
Loan Bank advances 86,018 86,287 Repurchase agreements 25,000
30,500 Accrued interest payable 711 868 Other liabilities 1,850
2,472 Total liabilities 365,129 357,644 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 - 2,017,245
shares at June 30, 2009 and December 31, 2008 2,017 2,017
Additional paid-in capital 6,872 6,872 Accumulated other
comprehensive income (loss) (128) 391 Retained earnings 16,890
16,470 Total stockholders' equity 25,651 25,750 Total liabilities
and stockholders' equity $390,780 $383,394 Consolidated Statements
of Income Six Months Ended June 30, 2009 2008 (In Thousands)
Interest income Loans $7,769 $9,236 Investment securities: Taxable
1,037 900 Tax-exempt 24 32 Dividends 80 151 Total interest income
8,910 10,319 Interest expense Deposits 2,181 3,035 Borrowed funds
1,892 2,165 Total interest expense 4,073 5,200 Net interest income
4,837 5,119 Provision for loan losses 1,482 231 Net interest income
- After provision for loan losses 3,355 4,888 Noninterest income:
Service charges and other fees 801 781 Investment brokerage
commission income 487 737 Mortgage banking activities 658 427 Trust
fee income 159 215 Increase in value of bank owned life insurance
165 161 Gain on sale of securities 1,122 - Other income 11 34 Total
noninterest income 3,403 2,355 Noninterest expenses: Salaries and
employee benefits 3,119 3,621 Occupancy and equipment 764 680 Data
processing 377 399 Professional services 163 164 Real estate owned
expense 175 101 Advertising 60 79 FDIC insurance premium 377 81
Other 656 691 Total noninterest expenses 5,691 5,816 Income -
Before income tax expense 1,067 1,427 Provision for federal income
tax 162 295 Net income $905 $1,132 Earnings per share $0.45 $0.54
Dividends declared per share $0.24 $0.24 Return on average equity
7.07% 8.96% Return on average assets 0.46% 0.63% Net interest
margin (tax equivalent) 2.75% 3.20% Consolidated Statements of
Income Three Months Ended June 30, 2009 2008 (In Thousands)
Interest income Loans $3,839 $4,463 Investment securities: Taxable
356 423 Tax-exempt 17 13 Dividends 32 86 Total interest income
4,244 4,985 Interest expense Deposits 1,071 1,442 Borrowed funds
925 1,017 Total interest expense 1,996 2,459 Net interest income
2,248 2,526 Provision for loan losses 256 149 Net interest income -
After provision for loan losses 1,992 2,377 Noninterest income:
Service charges and other fees 385 392 Investment brokerage
commission income 245 329 Mortgage banking activities 284 221 Trust
fee income 88 79 Increase in value of bank owned life insurance 83
81 Gain on sale of securities 20 - Other income 24 1 Total
noninterest income 1,129 1,103 Noninterest expenses: Salaries and
employee benefits 1,520 1,734 Occupancy and equipment 371 329 Data
processing 174 214 Professional services 82 89 Real estate owned
expense 127 46 Advertising 31 48 FDIC insurance premium 280 74
Other 374 361 Total noninterest expenses 2,959 2,895 Income -
Before income tax expense 162 585 Provision for federal income tax
(49) 104 Net income $211 $481 Earnings per share $0.10 $0.24
Dividends declared per share $0.12 $0.12 Return on average equity
3.28% 7.90% Return on average assets 0.21% 0.53% Net interest
margin (tax equivalent) 2.53% 3.14% DATASOURCE: Sturgis Bancorp,
Inc. CONTACT: Eric Eishen, President & CEO, or Brian P.
Hoggatt, CFO, +1-269-651-9345, both of Sturgis Bancorp Web Site:
http://www.sturgisbank.com/
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