STURGIS, Mich., July 25, 2017 (GLOBE NEWSWIRE) —
Sturgis Bancorp, Inc. (OTCQX:STBI) today announced net income of $1.6 million for the first half of 2017 and $939,000 for the second quarter of 2017.
Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (Bank), 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, Bangor, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, 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.
Key Highlights for the second quarter of 2017:
– Net income increased 33% for the second quarter of 2017 to $939,000, compared to $705,000 for the second quarter of 2016, primarily due to higher net interest income, lower provisions for ALLL, and net gain on cash flow hedges.
– The Bank maintained strong capital ratios, exceeding “well-capitalized” requirements, with Tier 1 leverage capital at 8.42%. Total capital at June 30, 2017 was 14.42% of risk-weighted assets. The Bank’s risk-weighted assets were $252.9 million at June 30, 2017.
– Total deposits increased 2.6% to $305.5 million, mostly noninterest-bearing deposits.
– Allowance for loan losses was 1.15% of gross loans, down slightly from 1.20% on December 31, 2016.
– Asset quality improved, with 0.30% of loans in nonaccrual status on June 30, 2017, compared to 0.34% on December 31, 2016. Loans past due 90 days and accruing were 0.04% of loans on June 30, 2017, compared to 0.10% on December 31, 2016.
Three months ended June 30, 2017 vs. three months ended June 30, 2016 – Net income for the three months ended June 30, 2017 was $939,000, or $0.45 per share, compared to net income of $705,000, or $0.34 per share, for the three months ended June 30, 2016. The tax equivalent net interest margin decreased to 3.75% in the second quarter of 2017 from 3.78% in the second quarter of 2016.
Noninterest income was $1.7 million in the second quarter of 2017, compared to $1.4 million in the second quarter of 2016. Most of the increase was $242,000 net gain on cash flow hedges. Service charges and other fees also increased $105,000, to $354,000, primarily due to changes in checking account fee income. Investment brokerage commission income decreased to $403,000 in 2017 from $510,000 in 2016. The decrease in commission income was primarily due to the Department of Labor’s Fiduciary Rule and the 2016 conversion to Raymond James Financial Inc. from LPL Financial.
Noninterest expense was $3.8 million in 2017 and $3.4 million in 2016. Salaries and employee benefits, the largest component of noninterest expense, increased $275,000, primarily due to higher pension funding in 2017 and cost of living increases. Real estate owned expense decreased to $47,000 in 2017, compared to $107,000 in 2016.
The Company provided ($106,000) to the allowance for loan losses in the second quarter of 2017, compared to $88,000 in the same quarter of 2016. Net charge-offs were ($24,000) in 2017, compared to $35,000 in 2016.
Six months ended June 30, 2017 vs. six months ended June 30, 2016 – Net income for the first half of 2017 was $1.6 million, or $0.77 per share, compared to net income of $1.3 million, or $0.62 per share, for the first half of 2016. The tax equivalent net interest margin increased to 3.77% in the first half of 2017 from 3.76% in the first half of 2016.
Noninterest income was $2.8 million in the first half of 2017, compared to $2.6 million in the first half of 2016. Most of the increase was $258,000 net gain on cash flow hedges. Service charges and other fees also increased $113,000, to $614,000, primarily due to changes in checking account fee income. Investment brokerage commission income decreased to $732,000 in 2017 from $954,000 in 2016. The decrease in commission income was primarily due to the Department of Labor’s Fiduciary Rule and the 2016 conversion to Raymond James Financial Inc. from LPL Financial.
Noninterest expense was $7.4 million in 2017 and $6.8 million in 2016. Salaries and employee benefits, the largest component of noninterest expense, increased $553,000, primarily due to higher pension funding in 2017 and cost of living increases. Real estate owned expense decreased to $63,000 in 2017, compared to $167,000 in 2016.
The Company provided ($241,000) to the allowance for loan losses in the first half of 2017, compared to $182,000 in the first half of 2016. Net charge-offs were ($95,000) in 2017, compared to $104,000 in 2016.
Total assets increased to $406.4 million at June 30, 2017 from $398.6 million at December 31, 2016, primarily in cash and cash equivalents. Loans decreased $1.8 million from December 31, 2016. Most of the decrease in loans was in commercial loans.
Noninterest-bearing deposits increased to $75.9 million at June 30, 2017 from $65.5 million at December 31, 2016. Interest-bearing deposits decreased to $229.6 million at June 30, 2017 from $232.3 million at December 31, 2016. Brokered deposits increased to $10.0 million in the first half of 2017 from $9.6 million at December 31, 2016.
Total equity was $35.8 million at June 30, 2017, compared to $34.7 million at December 31, 2016. Book value per share increased to $17.14 ($13.63 tangible) at June 30, 2017 from $16.65 ($13.14 tangible) at December 31, 2016.
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.
