STBI Sturgis Bancorp Inc (QX)

STURGIS, Mich., April 27 /PRNewswire-FirstCall/ -- Sturgis Bancorp, Inc. (OTC Bulletin Board: STBI) posted a 78.1% earnings decrease for the first quarter of 2010, compared to 2009, Eric L. Eishen, President and CEO, announced today.  The decrease was primarily due to the $975,000 lower gains on sale of securities.

Key Highlights for the first three months of 2010:

• Bank reports profits and continues to exceed "well-capitalized' requirements.
• Net income decreased 78.1% to $253,000, or $0.13 per share.
• Mortgage banking activities decreased 47.6% to $196,000.
• Total deposits increased 5.1% to $271.3 million.
• Noninterest bearing deposits increased 16.0% to $28.8 million.
• Realized gain on sale of securities was $126,000, compared to $1.1 million in the first three months of 2009.
• Fixed assets held for sale at December 31, 2009 were sold at $108,000 gain.
• Allowance for loan losses increased to 1.48% of total loans from 1.41% at the end of 2009.
• Nonaccrual loans increased $24,000 and delinquent loans decreased to 1.05% of total loans from 1.56% at December 31, 2009.

First Quarter of 2010 vs. 2009 - Net income for the quarter ended March 31, 2010 decreased 78.1% to $253,000, or $0.13 per share, from $694,000, or $0.34 per share, for the year-earlier quarter. Net interest income decreased $134,000. The tax-equivalent net interest margin for the quarters decreased to 2.96% in 2010 from 2.98% in 2009.  Average interest-earning assets decreased to $339.9 million for the quarter ended March 31, 2010 from $355.7 million for the same quarter in 2009.

Net charge-offs for the first quarter of 2010 were $424,000, compared to $150,000 a year ago.  The Company provided $590,000 for loan losses in the first quarter of 2010, compared to $1.2 million in 2009.  The provision for loan losses recognized changes in the market economic conditions, increasing the Bank's allowance for loan losses to 1.48% of total loans at March 31, 2010 from 1.41% at December 31, 2009.

Noninterest income was $1.3 million for the first quarter of 2010, compared to $2.3 million for 2009.   The primary component of this decrease was realized gains on sales of available-for-sale mortgage-backed securities, which were $126,000 in 2010 and $1.1 million in 2009.  Mortgage banking activities decreased 47.6% to $196,000, primarily due to a short term decrease in mortgage rates during the three months ended March 31, 2009.  Commission income increased 18.2% to $286,000, as the market value of brokerage accounts increased.  The $317,000 of premises and equipment held for sale at December 31, 2009 were sold in the quarter ended March 31, 2010 at a gain of $108,000.  Noninterest expense increased $104,000, primarily in salaries and employee benefits.  The increase in salaries and employee benefits resulted from lower deferrals of loan origination expenses, a contra-compensation item, to $88,000 in 2010 from $179,000 in 2009.  

Mr. Eishen said, "The Bank increased its allowance for loan losses, decreased delinquencies, and realized gains of over $100,000 each on sales of securities and fixed assets.  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, "The Company resisted weakening 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 $382.4 million at March 31, 2010 from $369.9 million at December 31, 2009, primarily in short-term investments.  Loans decreased $1.6 million for the quarter.

Noninterest-bearing deposits increased to $28.8 million at March 31, 2010 from $24.9 million at December 31, 2009.  Interest-bearing deposits also increased to $242.5 million at March 31, 2010 from $234.3 million at December 31, 2009.  A good portion of the increase, $7.9 million, was in checking accounts.  Brokered certificates of deposit increased $1.8 million to $33.4 million at March 31, 2010.  Brokered certificates of deposit are used as an alternative to Federal Home Loan Bank ("FHLB") advances, when the total interest cost is lower.  

In the quarter ended March 31, 2010, the Company paid cash dividends of $0.03 per common share, totaling $61,000. Total equity was $25.6 million at March 31, 2010, compared to $25.4 million at December 31, 2009.  Book value per share increased to $12.71 at March 31, 2010 from $12.60 at December 31, 2009.  

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, 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 www.sturgisbank.com.

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SOURCE Sturgis Bancorp, Inc.