STURGIS, Mich., April 27 /PRNewswire-FirstCall/ -- Sturgis Bancorp,
Inc. (OTC:STBI) (BULLETIN BOARD: STBI) posted a 6.6% earnings
increase for the first quarter of 2009, compared to 2008, Eric L.
Eishen, President and CEO, announced today. Key Highlights for the
Quarter: -- Net income increased 6.6% to $694,000, or $0.34 per
share. -- Total deposits increased 7.3% to $254.7 million. --
Noninterest-bearing deposits increased $4.6 million, or 17.9%. --
Realized gain on sale of securities was $1.1 million. -- Secured
liabilities, comprised of Federal Home Loan Bank advances and
repurchase agreements, were reduced $10.6 million, or 9.1%. --
Sturgis Bank & Trust Company's regulatory capital ratios
continue to exceed the "well capitalized" definition. -- 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. -- Loan delinquencies remain relatively unchanged
since December 31, 2008. First Quarter of 2009 vs. 2008 - Net
income for the quarter ended March 31, 2009 increased 6.6% to
$694,000, or $0.34 per share, basic and diluted, from $651,000, or
$0.30 per share, basic and diluted, for the year-earlier quarter.
Net interest income remained relatively flat, decreasing only
$4,000. The decrease in tax-equivalent net interest margin for the
quarters to 2.98% in 2009 from 3.25% in 2008 was offset by growth
in average interest-earning assets. Average interest-earning assets
increased to $355.7 million for the quarter ended March 31, 2009
from $321.3 million for the same quarter in 2008. Net charge-offs
for the first quarter of 2009 were $150,000, compared to $21,000 a
year ago. The Company provided $1.2 million for loan losses in the
first quarter of 2009, compared to $82,000 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 March 31, 2009 from 1.01% at December
31, 2008. Noninterest income was $2.3 million for the first quarter
of 2009, compared to $1.3 million for 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 increased 81% to $394,000, primarily due to a short term
decrease in mortgage rates during the three months ended March 31,
2009. Commission income decreased 41% to $242,000, as the market
value of brokerage accounts decreased for the two quarters. Other
noninterest income included a $7,000 gain on sale of real estate
owned in 2009, compared to $31,000 gain in 2008. Noninterest
expense decreased $167,000, primarily in salaries and employee
benefits. The decrease in salaries and employee benefits resulted
from the elimination of profit-sharing accrual for 2009, lower
brokerage commission expense, and increase in deferral of loan
origination expenses. Mr. Eishen said, "We had a positive first
quarter, relative to the first quarter of 2008. The Bank increased
its allowance for loan losses and realized a significant gain on
sale of securities. The Company continue 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." Mr. Eishen added, "Loan activity has been strong,
especially to refinance residential mortgages at lower market
rates. The Company has resisted weakening our underwriting
standards or stretching for yield as rates have fallen. Our lending
team is working hard to add quality customers and market share. We
are continuing our strategic focus on restructuring our balance
sheet to reflect a more commercial bank structure and building fee
income." Total assets increased to $397.4 million at March 31, 2009
from $383.4 million at December 31, 2008, primarily in short-term
interest-earning deposits. Loans also increased $1.5 million for
the quarter. Delinquent loans remained relatively unchanged from
December 31, 2008, as follows: Percentage of Gross Loans at
December 31, Past due and still accruing: 03/31/2009 12/31/2008
---------- ---------- Past due one month 0.67% 1.07% Past due two
months 0.27% 0.38% Past due three or more months 0.32% 0.14%
Nonaccrual loans 1.20% 1.12% Real Estate Owned 0.74% 0.67%
Noninterest-bearing deposits increased to $30.3 million at March
31, 2009 from $25.7 million at December 31, 2008. Interest-bearing
deposits also increased to $224.4 million at March 31, 2009 from
$211.8 million at December 31, 2008. A good portion of the
increase, $8.2 million, was in transaction accounts. Brokered
certificates of deposit increased $2.6 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 $5.1 million
and $5.5 million, respectively. In the quarter ended March 31,
2009, paid cash dividends of $0.12 per common share, totaling $0.3
million. Total equity was $25.6 million at March 31, 2009, compared
to $25.8 million at December 31, 2008. Book value per share
decreased to $12.69 at March 31, 2009 from $12.76 at December 31,
2008. 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 Mar. 31, 2009 Dec. 31, 2008
------------- ------------- (In Thousands) Assets Cash and due from
banks $9,412 $6,930 Other short-term investments 9,355 9 ----- -
Total cash and cash equivalents 18,767 6,939 Interest-earning
deposits in banks 14,225 9,334 Securities - Available for sale
37,106 41,896 Securities - Held-to-maturity 9,205 8,777 Federal
Home Loan Bank stock, at cost 4,784 4,784 Loans held for sale 2,107
1,578 Loans, net 282,410 280,867 Premises and equipment, net 8,587
8,710 Goodwill, net of accumulated amortization 5,109 5,109
Originated mortgage servicing rights 1,326 1,409 Real estate owned
2,125 1,913 Bank owned life insurance 8,154 8,072 Accrued interest
receivable 2,009 2,286 Investment in limited partnerships 592 618
Other assets 878 1,102 --- ----- Total assets $397,384 $383,394
======== ======== Liabilities and Stockholders' Equity Liabilities
Deposits Noninterest-bearing $30,303 $25,710 Interest bearing
224,437 211,807 ------- ------- Total Deposits 254,740 237,517
Federal Home Loan Bank advances 81,600 86,287 Repurchase agreements
25,000 30,500 Accrued interest payable 756 868 Other liabilities
10,128 2,472 ------ ----- Total liabilities 371,784 357,644
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 March 31, 2009 and December 31, 2008 2,017
2,017 Additional paid-in capital 6,872 6,872 Accumulated other
comprehensive income (loss) (211) 391 Retained earnings 16,922
16,470 ------ ------ Total stockholders' equity 25,600 25,750
------ ------ Total liabilities and stockholders' equity $397,384
$383,394 ============= ============= Consolidated Statements of
Income Three Months Ended March 31, 2009 2008 Interest income (In
Thousands) Loans $3,931 $4,776 Investment securities: Taxable 681
477 Tax-exempt 7 18 Dividends 47 64 Total interest income 4,666
5,335 Interest expense Deposits 1,110 1,594 Borrowed funds 967
1,148 Total interest expense 2,077 2,742 Net interest income 2,589
2,593 Provision for loan losses 1,125 82 Net interest income -
After provision for loan losses 1,364 2,511 Noninterest income:
Service charges and other fees 416 389 Investment brokerage
commission income 242 408 Mortgage banking activities 374 207 Trust
fee income 71 136 Increase in value of bank owned life insurance 82
80 Gain on sale of securities 1,101 - Other income 8 31 Total
noninterest income 2,294 1,251 Noninterest expenses: Salaries and
employee benefits 1,599 1,887 Occupancy and equipment 393 350 Data
processing 203 186 Professional services 81 74 Real estate owned
expense 49 55 Advertising 30 31 FDIC insurance premium 96 7 Other
302 330 Total noninterest expenses 2,753 2,920 Income - Before
income tax expense 905 842 Provision for federal income tax 211 191
Net income $694 $651 Earnings per share $0.34 $0.30 Dividends
declared per share $0.12 $0.12 Return on average equity 10.90%
10.04% Return on average assets 0.72% 0.73% Net interest margin
(tax equivalent) 2.98% 3.25% 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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