Sturgis Bancorp Reports Earnings for First Quarter 2020
STURGIS, Mich., April 29, 2020 (GLOBE NEWSWIRE) — Sturgis Bancorp, Inc. (OTCQX: STBI) today announced net income of $1.5 million for the first quarter of 2020.
Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (Bank), and its subsidiaries Oakleaf Financial Services, Inc., Oak Mortgage, LLC, Oak Insurance Services, LLC, and Oak Title Services, LLC. The Bank provides a full array of trust, commercial and consumer banking services from banking centers in Sturgis, Bangor, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, MI. The Bank also has loan production offices in Portage and St. Joseph, Michigan. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank. Oak Insurance Services offers various competitive commercial and consumer insurance products. Oak Title Services offers commercial and consumer title insurance.Key Highlights for the first quarter of 2020:Net income increased 45% for the first quarter of 2020 to $1,507,000, compared to $1,042,000 for the first quarter of 2019, primarily due to mortgage banking activities.The Bank maintained strong capital ratios, exceeding “well-capitalized” requirements, with Tier 1 leverage capital at 8.13%. Total capital at March 31, 2020 was 12.52% of risk-weighted assets. Total assets increased 12% to $530.5 million. The Bank’s risk-weighted assets were $350.4 million at March 31, 2020.Net loans increased 1.9% to $359.2 million.Total deposits increased 7.1% to $378.0 million.Allowance for loan losses was 0.99% of loans.Eric L. Eishen, President and CEO, stated, “The Bank had a strong first quarter. Earnings were positively impacted by strong Mortgage Banking activity. The Bank calculates the Allowance for Loan and Lease Losses (ALLL) under GAAP with an incurred loss model. Accordingly, the Bank did not materially change qualitative factors in the ALLL in the first quarter. This decision was based on discussions with customers and review of the Bank’s loan portfolio. The Bank’s primary exposure to COVID-impacted industries is Hotel loans. The Bank has proactively deferred loan payments for many of these loan clients. However, these borrowers have indicated they believe they will be able to handle a short-term interruption to service. Many have also utilized the SBA’s PPP program to assist their business. Credit quality has remained strong. The Bank constantly analyzes the loan portfolio and economic conditions in our market area to determine the extent of required allocations for unidentified loan losses. Appropriate adjustments are realized every quarter, as market conditions change.”Three months ended March 31, 2020 vs. three months ended March 31, 2019 – Net income for the three months ended March 31, 2020 was $1,507,000, or $0.71 per share, compared to net income of $1,042,000, or $0.50 per share, for the three months ended March 31, 2019. The tax equivalent net interest margin decreased to 3.72% in the first three months of 2020 from 3.99% in the first three months of 2019. Net interest income increased to $4.1 million in 2020 from $3.8 million in 2019. The growth was primarily due to loan interest income, which increased by $468,000 to $4.5 million. Total interest income increased $458,000 to $5.0 million in 2020, and interest expense only increased $123,000 to $902,000 in 2020.The Company provided $151,000 to the allowance for loan losses in the first three months of 2020, compared to $38,000 in the same quarter of 2019. Net charge-offs were $64,000 in 2020 and ($2,000) in 2019. Noninterest income was $1.9 million in the first quarter of 2020, compared to $1.2 million in the first quarter of 2019. Most of the increase was due to mortgage banking activities, up $564,000, to $776,000. Mortgage banking activities included residential loan sales of $33.0 million in 2020, compared to $5.0 million in 2019. Investment brokerage commission income also increased to $362,000 in 2020 from $291,000 in 2019. Noninterest expense was $4.1 million in 2020, compared to $3.7 million 2019. Salaries and employee benefits, the largest component of noninterest expense, increased $116,000, or 4.8%. Total assets increased to $530.5 million at March 31, 2020 from $473.4 million at December 31, 2019, primarily in cash and cash equivalents. Loans increased $6.7 million from December 31, 2019, primarily in commercial real estate loans and residential mortgages.Interest-bearing deposits increased to $288.1 million at March 31, 2020 from $263.2 million at December 31, 2019. The increase in deposit accounts is typical for the first quarter of each year, 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 2020. Brokered deposits, a component of interest-bearing deposits, decreased $4.1 million in the first quarter of 2020, to $11.8 million at March 31, 2020. Total equity was $42.7 million at March 31, 2020, compared to $43.6 million at December 31, 2019. The regular quarterly dividend was increased in the first quarter of 2020 to a record-high $0.16 per share. Book value per share was $20.16 ($16.75 tangible) at March 31, 2020. 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.Contacts:
Sturgis Bancorp — Eric Eishen, President & CEO, or Brian P. Hoggatt, CFO — P: 269 651-9345
Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (Bank), and its subsidiaries Oakleaf Financial Services, Inc., Oak Mortgage, LLC, Oak Insurance Services, LLC, and Oak Title Services, LLC. The Bank provides a full array of trust, commercial and consumer banking services from banking centers in Sturgis, Bangor, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, MI. The Bank also has loan production offices in Portage and St. Joseph, Michigan. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank. Oak Insurance Services offers various competitive commercial and consumer insurance products. Oak Title Services offers commercial and consumer title insurance.Key Highlights for the first quarter of 2020:Net income increased 45% for the first quarter of 2020 to $1,507,000, compared to $1,042,000 for the first quarter of 2019, primarily due to mortgage banking activities.The Bank maintained strong capital ratios, exceeding “well-capitalized” requirements, with Tier 1 leverage capital at 8.13%. Total capital at March 31, 2020 was 12.52% of risk-weighted assets. Total assets increased 12% to $530.5 million. The Bank’s risk-weighted assets were $350.4 million at March 31, 2020.Net loans increased 1.9% to $359.2 million.Total deposits increased 7.1% to $378.0 million.Allowance for loan losses was 0.99% of loans.Eric L. Eishen, President and CEO, stated, “The Bank had a strong first quarter. Earnings were positively impacted by strong Mortgage Banking activity. The Bank calculates the Allowance for Loan and Lease Losses (ALLL) under GAAP with an incurred loss model. Accordingly, the Bank did not materially change qualitative factors in the ALLL in the first quarter. This decision was based on discussions with customers and review of the Bank’s loan portfolio. The Bank’s primary exposure to COVID-impacted industries is Hotel loans. The Bank has proactively deferred loan payments for many of these loan clients. However, these borrowers have indicated they believe they will be able to handle a short-term interruption to service. Many have also utilized the SBA’s PPP program to assist their business. Credit quality has remained strong. The Bank constantly analyzes the loan portfolio and economic conditions in our market area to determine the extent of required allocations for unidentified loan losses. Appropriate adjustments are realized every quarter, as market conditions change.”Three months ended March 31, 2020 vs. three months ended March 31, 2019 – Net income for the three months ended March 31, 2020 was $1,507,000, or $0.71 per share, compared to net income of $1,042,000, or $0.50 per share, for the three months ended March 31, 2019. The tax equivalent net interest margin decreased to 3.72% in the first three months of 2020 from 3.99% in the first three months of 2019. Net interest income increased to $4.1 million in 2020 from $3.8 million in 2019. The growth was primarily due to loan interest income, which increased by $468,000 to $4.5 million. Total interest income increased $458,000 to $5.0 million in 2020, and interest expense only increased $123,000 to $902,000 in 2020.The Company provided $151,000 to the allowance for loan losses in the first three months of 2020, compared to $38,000 in the same quarter of 2019. Net charge-offs were $64,000 in 2020 and ($2,000) in 2019. Noninterest income was $1.9 million in the first quarter of 2020, compared to $1.2 million in the first quarter of 2019. Most of the increase was due to mortgage banking activities, up $564,000, to $776,000. Mortgage banking activities included residential loan sales of $33.0 million in 2020, compared to $5.0 million in 2019. Investment brokerage commission income also increased to $362,000 in 2020 from $291,000 in 2019. Noninterest expense was $4.1 million in 2020, compared to $3.7 million 2019. Salaries and employee benefits, the largest component of noninterest expense, increased $116,000, or 4.8%. Total assets increased to $530.5 million at March 31, 2020 from $473.4 million at December 31, 2019, primarily in cash and cash equivalents. Loans increased $6.7 million from December 31, 2019, primarily in commercial real estate loans and residential mortgages.Interest-bearing deposits increased to $288.1 million at March 31, 2020 from $263.2 million at December 31, 2019. The increase in deposit accounts is typical for the first quarter of each year, 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 2020. Brokered deposits, a component of interest-bearing deposits, decreased $4.1 million in the first quarter of 2020, to $11.8 million at March 31, 2020. Total equity was $42.7 million at March 31, 2020, compared to $43.6 million at December 31, 2019. The regular quarterly dividend was increased in the first quarter of 2020 to a record-high $0.16 per share. Book value per share was $20.16 ($16.75 tangible) at March 31, 2020. 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.Contacts:
Sturgis Bancorp — Eric Eishen, President & CEO, or Brian P. Hoggatt, CFO — P: 269 651-9345
