STURGIS, Mich., Nov. 6 /PRNewswire-FirstCall/ -- Sturgis Bancorp,
Inc. (OTC:STBI) (BULLETIN BOARD: STBI) posted a 36.1% earnings
decrease for the first nine months of 2009, compared to 2008, Eric
L. Eishen, President and CEO, announced today. Key Highlights for
the first nine months of 2009: -- Bank reports profits and
continues to exceed "well-capitalized" requirements. -- Net income
decreased 36.1% to $1,114,000, or $0.55 per share. -- Net income
decreased 36.1% to $1,114,000, or $0.55 per share. -- Mortgage
banking activities increased 43.2% to $931,000. -- Total deposits
increased 9.9% to $260.9 million. -- Realized gain on sale of
securities was $1.2 million. -- Secured liabilities of the Bank,
comprised of Federal Home Loan Bank advances and repurchase
agreements, were reduced $31.3 million, or 26.8%. -- Sturgis Bank
& Trust Company's regulatory capital ratios were enhanced with
additional capital infusion from Sturgis Bancorp. -- Allowance for
loan losses increased to 1.39% 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 $2.9 million and
delinquent loans also increased to 1.74% of total loans from 1.59%
at December 31, 2008. First Nine Months of 2009 vs. 2008 - Net
income for the nine months ended September 30, 2009 decreased 36.1%
to $1,114,000, or $0.55 per share from $1,742,000, or $0.86 per
share for 2008. Net interest income decreased $378,000, primarily
due to the lower tax-equivalent net interest margin of 2.80% in
2009 from 3.13% in 2008. Average interest-earning assets increased
to $353.5 million for the nine months ended September 30, 2009 from
$330.0 million for the same period in 2008. Net charge-offs for the
first nine months of 2009 were $702,000, compared to $107,000 a
year ago. The Company provided $1.8 million for loan losses in the
first nine months of 2009, compared to $268,000 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 1.39% of total loans at September 30, 2009 from
1.00% at December 31, 2008. Noninterest income was $4.6 million for
the first nine months of 2009, compared to $3.6 million for same
period in 2008. The primary component of this increase was $1.2
million of realized gain on sale of available-for-sale
mortgage-backed securities. Mortgage banking activities also
increased 43% to $931,000, primarily due to a decrease in mortgage
rates during the nine months ended September 30, 2009. Commission
income decreased 37% to $786,000, as the market value of brokerage
accounts decreased. Noninterest expense decreased $273,000, despite
the FDIC special assessment of $182,000 paid in 2009. Total FDIC
premiums, including the special assessment, increased $348,000 from
the first nine months of 2008. Salaries and employee benefits
decreased $711,000. Lower brokerage commission expense and increase
in deferral of loan origination expenses contributed to the
decline. President and CEO Eishen stated, "The Michigan economy
continues to struggle. We are fortunate that our market area
continues to be slightly better than other regions within the
State. We are hearing positive reports from our commercial clients
and hopefully we will see improvements in employment. However, we
are seeing more stress on consumers. We have made significant
increases to our Allowance for Loan and Lease Losses thus far in
2009. We have also written down troubled loans when it is evident
the borrower may not be able to service their obligations. It is
troubling that the banking industry continues to receive mixed
messages on capital and liquidity levels. Washington D.C. is
telling bankers to lend and the Regulatory Agencies are indicating
it is a time to further build capital." Third Quarter of 2009 vs.
2008 - Net income for the quarter ended September 30, 2009
decreased 65.7% to $209,000, or $0.10 per share from $610,000, or
$0.30 per share for the year-earlier quarter. Net interest income
decreased $96,000, primarily due to the lower tax-equivalent net
interest margin for the quarters to 2.90% in 2009 from 3.01% in
2008. Average interest-earning assets increased to $343.7 million
for the quarter ended September 30, 2009 from $342.4 million for
the same quarter in 2008. Net charge-offs for the third quarter of
2009 were $442,000, compared to $6,000 a year ago. The Company
provided $359,000 for loan losses in the third quarter of 2009,
compared to $37,000 in 2008. The increase in provision for loan
losses recognizes the deterioration of economic market conditions.
Noninterest income was $1.2 million for the third quarter of 2009,
compared to $1.3 million in 2008. An additional $51,000 gain on
sale of securities was realized in the third quarter of 2009.
Mortgage banking activities increased $50,000. Commission income
decreased 41.1% to $299,000. Noninterest expense decreased $98,000,
despite $58,000 paid to prepay a FHLB advance and increases in FDIC
insurance premiums of $52,000 during the quarter. Salaries and
employee benefits decreased by $209,000. Lower brokerage commission
expense and increase in deferral of loan origination expenses
contributed to the decline. Total assets decreased to $375.0
million at September 30, 2009 from $383.4 million at December 31,
2008, primarily in securities available-for-sale. Loans increased
$1.1 million during the first nine months of 2009. Mr. Eishen also
stated, "As with most banks in Michigan, we continue to focus on
Asset Quality. The chart that follows gives a comparison in loan
trends since the beginning of the year. Non accruals and real
estate owned (REO) have increased, but past due accounts continue
to be at historical levels, despite the deterioration of the
economy. Unfortunately, we are not immune to the Michigan economy.
Employment continues to be relatively stable in our main market
area. Management is implementing plans to reduce REO properties and
non-accrual loans." Nonperforming assets increased from December
31, 2008, as follows: Percentage of Gross Loans Past due and still
accruing: 09/30/2009 12/31/2008 Past due one month 1.00% 1.07% Past
due two months 0.39% 0.38% Past due three or more months 0.35%
0.14% Nonaccrual loans 2.14% 1.12% Real Estate Owned 0.81% 0.67%
Noninterest-bearing deposits increased to $25.9 million at
September 30, 2009 from $25.7 million at December 31, 2008.
Interest-bearing deposits also increased to $235.1 million at
September 30, 2009 from $211.8 million at December 31, 2008. A
majority of the increase, $17.3 million, was in transaction
accounts. Brokered certificates of deposit decreased $3.1 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 also reduce FHLB advances and repurchase agreements by
$25.8 million and $5.5 million, respectively. In the nine months
ended September 30, 2009, the Company paid cash dividends of $0.36
per common share, totaling $0.7 million. Total equity was $25.8
million at September 30, 2009 and at December 31, 2008. Book value
per share increased to $12.79 at September 30, 2009 from $12.76 at
December 31, 2008. Also in the first nine months 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: Sept. 30, 2009 December 31, 2008 Total capital to
risk-weighted assets 11.99% 11.02% Tier 1 capital to risk-weighted
assets 10.74% 9.84% Tier 1 capital to adjusted total assets 7.02%
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 Sept. 30, 2009 Dec. 31, 2008
-------------- ------------- (In Thousands) Assets Cash and due
from banks $11,037 $6,930 Other short-term investments 3,752 9
----- --- Total cash and cash equivalents 14,789 6,939
Interest-earning deposits in banks 6,578 9,334 Securities -
Available for sale 29,606 41,896 Securities - Held-to-maturity
8,267 8,777 Federal Home Loan Bank stock, at cost 4,784 4,784 Loans
held for sale 161 1,578 Loans, net 281,943 280,867 Premises and
equipment, net 8,443 8,710 Goodwill, net of accumulated
amortization 5,109 5,109 Originated mortgage servicing rights 1,321
1,409 Real estate owned 2,316 1,913 Bank owned life insurance 8,321
8,072 Accrued interest receivable 1,891 2,286 Investment in limited
partnerships 538 618 Other assets 927 1,102 --- ----- Total assets
$374,994 $383,394 ======== ======== Liabilities and Stockholders'
Equity Liabilities Deposits Noninterest-bearing $25,898 $25,710
Interest bearing 235,085 211,807 ------- ------- Total Deposits
260,983 237,517 Federal Home Loan Bank advances 60,500 86,287
Repurchase agreements 25,000 30,500 Accrued interest payable 685
868 Other liabilities 2,022 2,472 ----- ----- Total liabilities
349,190 357,644 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 September 30, 2009 and
December 31, 2008 2,017 2,017 Additional paid-in capital 6,872
6,872 Accumulated other comprehensive income (loss) 58 391 Retained
earnings 16,857 16,470 ------ ------ Total stockholders' equity
25,804 25,750 ------ ------ Total liabilities and stockholders'
equity $374,994 $383,394 ======== ======== Consolidated Statements
of Income Nine Months Ended September 30, 2009 2008 Interest income
(In Thousands) Loans $11,623 $13,591 Investment securities: Taxable
1,465 1,584 Tax-exempt 41 40 Dividends 126 219 --- --- Total
interest income 13,255 15,434 Interest expense Deposits 3,202 4,472
Borrowed funds 2,735 3,266 ----- ----- Total interest expense 5,937
7,738 ----- ----- Net interest income 7,318 7,696 Provision for
loan losses 1,840 268 ----- --- Net interest income - After
provision for loan losses 5,478 7,428 Noninterest income: Service
charges and other fees 1,178 1,176 Investment brokerage commission
income 786 1,245 Mortgage banking activities 931 650 Trust fee
income 235 308 Increase in value of bank owned life insurance 249
241 Gain on sale of securities 1,172 - Other income 14 14 -- --
Total noninterest income 4,565 3,634 Noninterest expenses: Salaries
and employee benefits 4,722 5,433 Occupancy and equipment 1,146
1,048 Data processing 574 615 Professional services 243 263 Real
estate owned expense 296 157 Advertising 91 141 FDIC insurance
premium 473 125 Other 1,050 1,086 ----- ----- Total noninterest
expenses 8,595 8,868 ----- ----- Income - Before income tax expense
1,448 2,194 Provision for federal income tax 334 452 --- --- Net
income $1,114 $1,742 ====== ====== Earnings per share $0.55 $0.86
Dividends declared per share $0.36 $0.36 Return on average equity
5.77% 9.21% Return on average assets 0.38% 0.63% Net interest
margin (tax equivalent) 2.80% 3.13% Consolidated Statements of
Income Three Months Ended September 30, 2009 2008 Interest income
(In Thousands) Loans $3,853 $4,354 Investment securities: Taxable
428 684 Tax-exempt 17 8 Dividends 46 69 --- --- Total interest
income 4,344 5,115 Interest expense Deposits 1,021 1,437 Borrowed
funds 842 1,101 --- ----- Total interest expense 1,863 2,538 -----
----- Net interest income 2,481 2,577 Provision for loan losses 359
37 --- -- Net interest income - After provision for loan losses
2,122 2,540 Noninterest income: Service charges and other fees 376
395 Investment brokerage commission income 299 508 Mortgage banking
activities 273 223 Trust fee income 76 92 Increase in value of bank
owned life insurance 84 80 Gain on sale of securities 51 - Other
income 55 (18) --- --- Total noninterest income 1,214 1,280
Noninterest expenses: Salaries and employee benefits 1,603 1,812
Occupancy and equipment 381 368 Data processing 197 215
Professional services 80 100 Real estate owned expense 121 56
Advertising 30 62 FDIC insurance premium 96 44 Other 447 396 ---
--- Total noninterest expenses 2,955 3,053 ----- ----- Income -
Before income tax expense 381 767 Provision for federal income tax
172 157 --- --- Net income $209 $610 ==== ==== Earnings per share
$0.10 $0.30 Dividends declared per share $0.12 $0.12 Return on
average equity 3.22% 9.87% Return on average assets 0.22% 0.64% Net
interest margin (tax equivalent) 2.90% 3.01% DATASOURCE: Sturgis
Bancorp, Inc. CONTACT: Eric Eishen, President & CEO, or Brian
P. Hoggatt, CFO, both of Sturgis Bancorp, +1-269 651-9345 Web Site:
http://www.sturgisbank.com/
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