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Sturgis Bancorp Reports Earnings for First Quarter 2021

STURGIS, MI / ACCESSWIRE / April 28, 2021 / Sturgis Bancorp, Inc. (OTCQX:STBI) today announced net income of $1.4 million for the first quarter of 2021.

Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (Bank), and its subsidiaries Oakleaf Financial Services, Oak Mortgage, Ayres/Oak Insurance, and Oak Title Services. The Bank provides a full array of trust, commercial and consumer banking services from banking centers in Sturgis, Bangor, Bronson, Centreville, Climax, Colon, Portage, South Haven, St. Joseph, Three Rivers and White Pigeon, MI. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank. Ayres/Oak Insurance offers various competitive commercial and consumer insurance products. Oak Title Services offers commercial and consumer title insurance.

Key Highlights for the first quarter of 2021:

  • Net income decreased 9.6% for the first quarter of 2021 to $1,363,000, compared to $1,507,000 for the first quarter of 2020, primarily due to higher provision for loan losses. The provision was based on qualitative factors that recognized uncertainty related to the impact of COVID on the overall economy.
  • Asset quality is very strong, with 99.84% of loans current.
  • The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 leverage capital at 8.59%.
  • Sales of $51.6 million residential mortgages generated $1.1 million of noninterest income in 2021, compared to $776,000 on $32.3 million of sales in 2020.
  • Total assets increased 10.2% to $709.0 million.
  • Net loans increased 6.7% to $475.1 million, including $18.3 million increase in residential mortgages.
  • An interest rate swap was terminated in the quarter, generating $407,000 gain.
  • Total deposits increased 10.6% to $561.9 million.
  • Allowance for loan losses was 1.39% of loans.

Eric L. Eishen, President and CEO, stated, "The Bank had a strong first quarter. Continuing uncertainty regarding the impact of COVID on the overall economy warranted higher provision for loan losses in this quarter. Few loans were delinquent and most residential and consumer loans with COVID-related accommodations in the past year have paid off or returned to normal payments. Hotel loans with COVID-related accommodations also are gradually returning to full payment status. We expect our hotel loans to continue their rebound, especially as summer travel improves vacancy rates. Earnings were positively impacted by strong Mortgage Banking activity and the gain on swap termination. Paycheck Protection Program loan originations also continued strong through the first quarter of 2021."

Three months ended March 31, 2021 vs. three months ended March 31, 2020 - Net income for the three months ended March 31, 2021 was $1,363,000, or $0.64 per share, compared to net income of $1,507,000, or $0.71 per share, for the three months ended March 31, 2020. The tax equivalent net interest margin decreased to 2.78% in the first three months of 2021 from 3.72% in the first three months of 2020.

Net interest income increased to $4.3 million in 2021 from $4.1 million in 2020. The growth was primarily due to loan interest income, which increased by $261,000 to $4.8 million. Total interest income increased $305,000 to $5.4 million in 2021, and interest expense only increased $138,000 to $1.0 million in 2021.

The Company provided $636,000 to the allowance for loan losses in the first three months of 2021, compared to $151,000 in the same quarter of 2020. Net charge-offs were $251,000 in 2021 and $64,000 in 2020.

Noninterest income was $2.7 million in the first quarter of 2021, compared to $1.9 million in the first quarter of 2020. Most of the increase was due to $407,000 gain on termination of an interest rate swap. Mortgage banking activities also increased $341,000, to $1.1 million. Investment brokerage commission income also increased to $448,000 in 2021 from $362,000 in 2020.

Noninterest expense was $4.8 million in 2021, compared to $4.1 million in 2020. Salaries and employee benefits, the largest component of noninterest expense, increased $372,000, or 14.7%. The higher compensation expense includes staff for the Bank's expansion into southwest Michigan.

Total assets increased to $709.0 million on March 31, 2021 from $643.6 million on December 31, 2020, primarily in loans. Loans increased $30.0 million from December 31, 2020, primarily in residential mortgages.

Interest-bearing deposits increased to $423.7 million on March 31, 2021 from $383.5 million on December 31, 2020. The increase in deposit accounts is partially due to typical seasonal patterns for municipalities, as municipalities deposit property tax revenues. Municipalities historically have either used or reinvested those funds elsewhere during the second quarter of the year, and Management expects that pattern to continue for 2021. Brokered deposits of $61.2 million, a component of interest-bearing deposits, remained unchanged during the quarter ended March 31, 2021.

Total equity was $48.5 million on March 31, 2021, compared to $47.8 million on December 31, 2020. The regular quarterly dividend was maintained during 2020 and into the first quarter of 2021 at a record-high $0.16 per share. Book value per share was $22.81 ($18.84 tangible) on March 31, 2021.

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
(Amounts in thousands, except share and per share data)

 
 
     
 
 
Mar. 31,
 
 
Dec. 31,
 
 
 
2021
 
 
2020
 
ASSETS
 
 
 
 
 
 
Cash and due from banks
 
$
10,632
 
 
$
12,060
 
Other short-term investments
 
 
65,709
 
 
 
55,782
 
Total cash and cash equivalents
 
 
76,341
 
 
 
67,842
 
Interest-earning deposits in banks
 
 
1,241
 
 
 
1,241
 
Securities - available for sale
 
 
96,230
 
 
 
73,072
 
Federal Home Loan Bank stock, at cost
 
 
5,476
 
 
 
4,917
 
Loans held for sale, at fair value
 
 
13,419
 
 
 
6,832
 
Loans, net of allowance of $6,615 and $6,231
 
 
475,054
 
 
 
445,091
 
Premises and equipment, net
 
 
11,977
 
 
 
11,844
 
Goodwill
 
 
5,834
 
 
 
5,834
 
Core deposit intangibles
 
 
69
 
 
 
77
 
Originated mortgage servicing rights
 
 
2,547
 
 
 
2,245
 
Real estate owned
 
 
210
 
 
 
341
 
Bank-owned life insurance
 
 
11,162
 
 
 
11,091
 
Accrued interest receivable
 
 
2,464
 
 
 
2,458
 
Other assets
 
 
6,939
 
 
 
10,721
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
708,963
 
 
$
643,606
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
Noninterest-bearing
 
$
138,250
 
 
$
124,434
 
Interest-bearing
 
 
423,672
 
 
 
383,464
 
Total deposits
 
 
561,922
 
 
 
507,898
 
Federal Home Loan Bank advances and other borrowings
 
 
61,500
 
 
 
61,500
 
Subordinated debentures - $15,000 face amount (less unamortized
 
 
 
 
 
 
 
 
 debt issuance costs of $389 at March 31, 2021 and $400 at
 
 
 
 
 
 
 
 
December 31, 2020)
 
 
14,611
 
 
 
14,600
 
Accrued interest payable
 
 
430
 
 
 
477
 
Other liabilities
 
 
22,009
 
 
 
12,019
 
Total liabilities
 
 
660,472
 
 
 
596,494
 
 
 
 
 
 
 
 
 
 
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 2,125,541 shares at March 31, 2021
 
 
 
 
 
 
 
 
and 2,123,291 at December 31, 2020
 
 
2,126
 
 
 
2,123
 
Additional paid-in capital
 
 
8,090
 
 
 
8,050
 
Retained earnings
 
 
39,862
 
 
 
38,840
 
Accumulated other comprehensive loss
 
 
(1,587)
 
 
 
(1,901)
 
Total stockholders' equity
 
 
48,491
 
 
 
47,112
 
 
 
 
 
 
 
 
 
 
Total liabilities and stockholders' equity
 
$
708,963
 
 
$
643,606
 
 
 
 
 
 
 
 
 
 

CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)

 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
2021
 
 
2020
 
Interest income
 
 
 
 
 
 
Loans
 
$
4,770
 
 
$
4,509
 
Investment securities:
 
 
 
 
 
 
 
 
Taxable
 
 
210
 
 
 
257
 
Tax-exempt
 
 
139
 
 
 
229
 
Dividends
 
 
232
 
 
 
51
 
Total interest income
 
 
5,351
 
 
 
5,046
 
 
 
 
 
 
 
 
 
 
Interest expense
 
 
 
 
 
 
 
 
Deposits
 
 
655
 
 
 
514
 
Borrowed funds
 
 
385
 
 
 
388
 
Total interest expense
 
 
1,040
 
 
 
902
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
4,311
 
 
 
4,144
 
 
 
 
 
 
 
 
 
 
Provision (benefit) for loan losses
 
 
636
 
 
 
151
 
 
 
 
 
 
 
 
 
 
Net interest income after provision (benefit) for loan losses
 
 
3,675
 
 
 
3,993
 
 
 
 
 
 
 
 
 
 
Noninterest income:
 
 
 
 
 
 
 
 
Service charges and other fees
 
 
298
 
 
 
324
 
Interchange income
 
 
250
 
 
 
211
 
Investment brokerage commission income
 
 
448
 
 
 
362
 
Mortgage banking activities
 
 
1,117
 
 
 
776
 
Trust fee income
 
 
84
 
 
 
98
 
Earnings on cash value of bank-owned life insurance
 
 
72
 
 
 
73
 
Gain (loss) on sale of real estate owned
 
 
39
 
 
 
(2)
 
Gain on termination of interest rate swap
 
 
407
 
 
 
-
 
Other income
 
 
26
 
 
 
22
 
Total noninterest income
 
 
2,741
 
 
 
1,864
 
 
 
 
 
 
 
 
 
 
Noninterest expenses:
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
 
2,896
 
 
 
2,524
 
Occupancy and equipment
 
 
609
 
 
 
510
 
Interchange expenses
 
 
113
 
 
 
102
 
Data processing
 
 
215
 
 
 
202
 
Professional services
 
 
114
 
 
 
133
 
Real estate owned expense
 
 
3
 
 
 
2
 
Advertising
 
 
106
 
 
 
69
 
FDIC premiums
 
 
63
 
 
 
44
 
Other expenses
 
 
656
 
 
 
469
 
Total noninterest expenses
 
 
4,775
 
 
 
4,055
 
 
 
 
 
 
 
 
 
 
Income before income tax expense
 
 
1,641
 
 
 
1,802
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
278
 
 
 
295
 
 
 
 
 
 
 
 
 
 
Net income
 
$
1,363
 
 
$
1,507
 
 
 
 
 
 
 
 
 
 
Earnings per share
 
$
0.64
 
 
$
0.71
 
Dividends per share
 
 
0.16
 
 
 
0.16
 
 
 
 
 
 
 
 
 
 

OTHER FINANCIAL INFORMATION

(Amounts in thousands)

 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
2021
 
 
2020
 
Sturgis Bank & Trust Company:
 
 
 
 
 
 
Average noninterest-bearing deposits
 
$
135,974
 
 
$
86,772
 
Average interest-bearing deposits
 
 
419,886
 
 
 
273,152
 
Average total assets
 
 
687,254
 
 
 
500,719
 
Sturgis Bancorp:
 
 
 
 
 
 
 
 
Average equity
 
 
47,774
 
 
 
43,343
 
Average total assets
 
 
687,368
 
 
 
500,719
 
 
 
 
 
 
 
 
 
 
Financial ratios for Sturgis Bancorp:
 
 
 
 
 
 
 
 
Return on average assets
 
 
0.79
%
 
 
1.21
%
Return on average equity
 
 
11.32
%
 
 
13.99
%
Net interest margin
 
 
2.74
%
 
 
3.65
%
Tax equivalent net interest margin
 
 
2.78
%
 
 
3.72
%
 
 
 
 
 
 
 
 
 

Contacts:

Sturgis Bancorp

Eric Eishen
President & CEO

Brian P. Hoggatt
CFO
P: 269 651-9345

SOURCE: Sturgis Bancorp, Inc.



View source version on accesswire.com:
https://www.accesswire.com/642834/Sturgis-Bancorp-Reports-Earnings-for-First-Quarter-2021

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