Sturgis Bancorp Reports Earnings for Second Quarter 2020
STURGIS, Mich., July 24, 2020 (GLOBE NEWSWIRE) — Sturgis Bancorp, Inc. (OTCQX: STBI) today announced net income of $2.9 million for the first half of 2020 and $1.4 million for the second 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:Net income increased 22% for the first half of 2020 to $2,863,000, compared to $2,339,000 for the first half of 2019, primarily due to mortgage banking activities.
Sales of $69.9 million residential mortgages generated $1.9 million of noninterest income in the first half of 2020, compared to $406,000 on $12.6 million of sales in the first half of 2019.
Net loans increased 13.2% to $398.9 million.
The Bank supported 515 borrowers with SBA’s Paycheck Protection Program (PPP) loans, for a total of $34.7 million on June 20, 2020.
Total assets increased 30% to $617.5 million. The Bank’s risk-weighted assets were $364.7 million at June 30, 2020.
Total deposits increased 22.2% to $431.3 million.
Allowance for loan losses was 1.13% of loans.Eric L. Eishen, President and CEO, stated, “I am very pleased to report the Bank remained open during the entire stay-at-home orders in the State of Michigan. Although Bank branch lobbies were operating under an appointment-only system, we successfully served all our customer needs during the height of the COVID pandemic. The Bank’s technology investments over the past few years well prepared the Bank for full service, using drive-thru, night deposit, Telebank, Internet, mobile banking, and remote deposit. The Bank had a strong first half, led by mortgage banking activities. The Bank provided $1.1 million to the Allowance for Loan and Lease Losses (ALLL) under GAAP with an incurred loss model. This increase in ALLL addresses the growth in total loans and COVID-impacted industries, such as hotel loans. The Bank has proactively deferred loan payments for several affected borrowers. However, most of 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 Paycheck Protection Program to assist their business. The Bank was able to assist 515 borrowers in obtaining PPP loans, introducing some new commercial clients to the Bank. The Bank has already realized strong deposit growth from these new customers, as well as from existing depositors. Overall 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.”Six months ended June 30, 2020 vs. six months ended June 30, 2019 – Net income for the six months ended June 30, 2020 was $2,863,000, or $1.35 per share, compared to net income of $2,339,000, or $1.11 per share, for the six months ended June 30, 2019. The tax-equivalent net interest margin decreased to 3.44% in the first six months of 2020 from 4.01% in the first six months of 2019.Net interest income increased to $8.3 million in 2020 from $7.8 million in 2019. The growth was primarily in loan interest income, which increased $732,000 to $9.1 million. Total interest income increased $713,000 to $10.1 million, and interest expense only increased $214,000 to $1.8 million.The Company provided $1.1 million to the allowance for loan losses in the first six months of 2020, compared to $113,000 in the same period of 2019. Net charge-offs were $62,000 in 2020 and $0 in 2019.Noninterest income was $4.1 million in the first half of 2020, compared to $2.6 million in the first half of 2019. Most of the increase was due to mortgage banking activities, up $1.5 million, to $1.9 million. Mortgage banking activities included residential loan sales of $69.9 million in 2020, compared to $12.6 million in 2019. Investment brokerage commission income also increased 12% in 2020 to $685,000 in 2020 from $612,000 in 2019. The Bank also realized $157,000 gain on sale of securities in 2020, compared to $1,000 in 2019.Noninterest expense was $7.9 million in 2020, compared to $7.5 million 2019. Salaries and employee benefits, the largest component of noninterest expense, increased $182,000, or 3.9%. Three months ended June 30, 2020 vs. three months ended June 30, 2019 – Net income for the three months ended June 30, 2020 was $1,355,000, or $0.64 per share, compared to net income of $1,297,000, or $0.62 per share, for the three months ended June 30, 2019. The tax equivalent net interest margin decreased to 2.92% in the second quarter of 2020 from 4.02% in the second quarter of 2019. Net interest income increased to $4.2 million in 2020 from $4.0 million in 2019. The growth was primarily due to loan interest income, which increased by $264,000 to $9.2 million. Total interest income increased $255,000 to $5.1 million in 2020, and interest expense only increased $90,000 to $926,000 in 2020.The Company provided $974,000 to the allowance for loan losses in the second quarter of 2020, compared to $75,000 in the same quarter of 2019. Net charge-offs were ($2,000) in 2020 and $3,000 in 2019. Noninterest income was $2.3 million in the second quarter of 2020, compared to $1.4 million in the second quarter of 2019. Most of the increase was due to mortgage banking activities, up $928,000, to $1.1 million. Mortgage banking activities included residential loan sales of $36.9 million in 2020, compared to $7.5 million in 2019. The Bank also realized $157,000 gain on sale of securities in 2020, compared to $44,000 in 2019.Noninterest expense was $3.9 million in 2020, compared to $3.8 million 2019. Salaries and employee benefits, the largest component of noninterest expense, increased $65,000, or 3.0%. Total assets increased to $617.5 million at June 30, 2020 from $473.4 million at December 31, 2019, primarily in cash and cash equivalents and loans. Loans increased $46.4 million from December 31, 2019, primarily in commercial nonmortgage loans, commercial real estate loans and residential mortgages. At June 30, 2020, the Bank had $34.7 million of PPP loans.Interest-bearing deposits increased to $312.2 million at June 30, 2020 from $263.2 million at December 31, 2019. Brokered deposits, a component of interest-bearing deposits, decreased $11.9 million in the first half of 2020, to $27.8 million at June 30, 2020. Total equity was $43.7 million at June 30, 2020, compared to $43.6 million at December 31, 2019. The regular quarterly dividend was increased in the first half of 2020 to a record-high $0.16 per share. Book value per share was $20.62 ($17.05 tangible) at June 30, 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:Net income increased 22% for the first half of 2020 to $2,863,000, compared to $2,339,000 for the first half of 2019, primarily due to mortgage banking activities.
Sales of $69.9 million residential mortgages generated $1.9 million of noninterest income in the first half of 2020, compared to $406,000 on $12.6 million of sales in the first half of 2019.
Net loans increased 13.2% to $398.9 million.
The Bank supported 515 borrowers with SBA’s Paycheck Protection Program (PPP) loans, for a total of $34.7 million on June 20, 2020.
Total assets increased 30% to $617.5 million. The Bank’s risk-weighted assets were $364.7 million at June 30, 2020.
Total deposits increased 22.2% to $431.3 million.
Allowance for loan losses was 1.13% of loans.Eric L. Eishen, President and CEO, stated, “I am very pleased to report the Bank remained open during the entire stay-at-home orders in the State of Michigan. Although Bank branch lobbies were operating under an appointment-only system, we successfully served all our customer needs during the height of the COVID pandemic. The Bank’s technology investments over the past few years well prepared the Bank for full service, using drive-thru, night deposit, Telebank, Internet, mobile banking, and remote deposit. The Bank had a strong first half, led by mortgage banking activities. The Bank provided $1.1 million to the Allowance for Loan and Lease Losses (ALLL) under GAAP with an incurred loss model. This increase in ALLL addresses the growth in total loans and COVID-impacted industries, such as hotel loans. The Bank has proactively deferred loan payments for several affected borrowers. However, most of 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 Paycheck Protection Program to assist their business. The Bank was able to assist 515 borrowers in obtaining PPP loans, introducing some new commercial clients to the Bank. The Bank has already realized strong deposit growth from these new customers, as well as from existing depositors. Overall 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.”Six months ended June 30, 2020 vs. six months ended June 30, 2019 – Net income for the six months ended June 30, 2020 was $2,863,000, or $1.35 per share, compared to net income of $2,339,000, or $1.11 per share, for the six months ended June 30, 2019. The tax-equivalent net interest margin decreased to 3.44% in the first six months of 2020 from 4.01% in the first six months of 2019.Net interest income increased to $8.3 million in 2020 from $7.8 million in 2019. The growth was primarily in loan interest income, which increased $732,000 to $9.1 million. Total interest income increased $713,000 to $10.1 million, and interest expense only increased $214,000 to $1.8 million.The Company provided $1.1 million to the allowance for loan losses in the first six months of 2020, compared to $113,000 in the same period of 2019. Net charge-offs were $62,000 in 2020 and $0 in 2019.Noninterest income was $4.1 million in the first half of 2020, compared to $2.6 million in the first half of 2019. Most of the increase was due to mortgage banking activities, up $1.5 million, to $1.9 million. Mortgage banking activities included residential loan sales of $69.9 million in 2020, compared to $12.6 million in 2019. Investment brokerage commission income also increased 12% in 2020 to $685,000 in 2020 from $612,000 in 2019. The Bank also realized $157,000 gain on sale of securities in 2020, compared to $1,000 in 2019.Noninterest expense was $7.9 million in 2020, compared to $7.5 million 2019. Salaries and employee benefits, the largest component of noninterest expense, increased $182,000, or 3.9%. Three months ended June 30, 2020 vs. three months ended June 30, 2019 – Net income for the three months ended June 30, 2020 was $1,355,000, or $0.64 per share, compared to net income of $1,297,000, or $0.62 per share, for the three months ended June 30, 2019. The tax equivalent net interest margin decreased to 2.92% in the second quarter of 2020 from 4.02% in the second quarter of 2019. Net interest income increased to $4.2 million in 2020 from $4.0 million in 2019. The growth was primarily due to loan interest income, which increased by $264,000 to $9.2 million. Total interest income increased $255,000 to $5.1 million in 2020, and interest expense only increased $90,000 to $926,000 in 2020.The Company provided $974,000 to the allowance for loan losses in the second quarter of 2020, compared to $75,000 in the same quarter of 2019. Net charge-offs were ($2,000) in 2020 and $3,000 in 2019. Noninterest income was $2.3 million in the second quarter of 2020, compared to $1.4 million in the second quarter of 2019. Most of the increase was due to mortgage banking activities, up $928,000, to $1.1 million. Mortgage banking activities included residential loan sales of $36.9 million in 2020, compared to $7.5 million in 2019. The Bank also realized $157,000 gain on sale of securities in 2020, compared to $44,000 in 2019.Noninterest expense was $3.9 million in 2020, compared to $3.8 million 2019. Salaries and employee benefits, the largest component of noninterest expense, increased $65,000, or 3.0%. Total assets increased to $617.5 million at June 30, 2020 from $473.4 million at December 31, 2019, primarily in cash and cash equivalents and loans. Loans increased $46.4 million from December 31, 2019, primarily in commercial nonmortgage loans, commercial real estate loans and residential mortgages. At June 30, 2020, the Bank had $34.7 million of PPP loans.Interest-bearing deposits increased to $312.2 million at June 30, 2020 from $263.2 million at December 31, 2019. Brokered deposits, a component of interest-bearing deposits, decreased $11.9 million in the first half of 2020, to $27.8 million at June 30, 2020. Total equity was $43.7 million at June 30, 2020, compared to $43.6 million at December 31, 2019. The regular quarterly dividend was increased in the first half of 2020 to a record-high $0.16 per share. Book value per share was $20.62 ($17.05 tangible) at June 30, 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
