Sturgis Bancorp Reports 27% Jump in Q1 Earnings26 April 2006
Sturgis Bancorp, Inc. (OTC Bulletin Board: STBI) posted a 27% jump in earnings for the first quarter of 2006, primarily due to improved net interest margin, Eric L. Eishen, President and CEO, announced today.
Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company, and its subsidiary 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, 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.
First Quarter of 2006 vs. 2005 - Net income for the quarter ended March 31, 2006 rose 26.7% to $714,626, or $0.29 per share, basic and diluted, from $563,879, or $0.21 per share, basic and diluted, for the year-earlier quarter. Net interest income rose 17.8% to $2.7 million, from $2.3 million for the first quarter of 2005. The improvement chiefly reflects higher net interest margin, which increased to 4.13% from 3.43% a year ago.
Noninterest income was $1.0 million for both periods. The quarter's results were aided by a nominal 1% increase in noninterest expense. The Company provided $126,089 for loan losses in the first quarter of 2006, primarily due to changes in the composition of the loan portfolio.
Mr. Eishen said, "We had a positive quarter, despite some softness in business activity and strong competition for somewhat weak loan demand. As expected, we benefited substantially from the series of rate increases by the Federal Reserve, which pushed-up market rates and improved our net interest margin.
"Looking forward, we're optimistic about the second quarter and second half. On the deposit side, we are focusing on increasing commercial-demand deposit accounts and consumer free checking accounts. Our commercial lending team is working hard to add quality customers and market share. We are continuing our strategic focus on building fee income from our brokerage and trust operations, as well as the bank itself."
Net charge-offs for the first quarter of 2006 were $44,013, compared to $289,220 a year ago.
Total assets decreased to $305.7 million at March 31, 2006 from $307.5 million at December 31, 2005, primarily in loans. The increase in cash and cash equivalents is due to temporary seasonal increases in interest-bearing deposit liabilities.
Noninterest-bearing deposits were unchanged at $18.6 million at March 31, 2006 and December 31, 2005. Interest-bearing deposits increased to $204.1 million at March 31, 2006 from $195.0 million at December 31, 2005. This increase includes temporary seasonal deposits of municipal depositors, which was invested in short-term investments. The increase also includes brokered certificates of deposit used to repay advances from Federal Home Loan Bank.
Brokered certificates of deposit are used as the preferred alternative to Federal Home Loan Bank advances, when the total interest cost is lower.
Sturgis Bancorp redeemed $410,043 in stock and paid cash dividends of $0.10 per common share, totaling $246,636. The combination of these two events fully used the net income of the first quarter, so that equity was unchanged at $26.6 million on March 31, 2006 and December 31, 2005. Book value per share increased to $10.78 at March 31, 2006 from $10.65 at December 31, 2005.
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 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 .
Consolidated Balance Sheets
March 31, 2006 Dec. 31, 2005
Assets
Cash and due from banks $12,172,191 $13,467,336
Other short-term investments 6,788,401 2,206,923
Total cash and cash equivalents 18,960,592 15,674,259
Interest-bearing deposits in banks 3,374,082 3,374,181
Securities - Held-to-maturity 6,400,744 6,563,481
Securities - Available for sale 13,986,266 14,810,022
Federal Home Loan Bank stock, at cost 4,567,300 4,567,300
Loans held for sale 327,732 1,174,270
Loans, net 233,103,586 235,575,168
Real estate owned 689,161 1,021,073
Bank owned life insurance 7,217,640 7,153,080
Accrued interest receivable 1,873,729 1,833,586
Investment in limited partnerships 985,849 994,970
Premises and equipment, net 6,179,346 6,139,759
Goodwill, net of accumulated amortization 5,109,419 5,109,419
Originated mortgage servicing rights 1,569,310 1,611,047
Other assets 1,376,364 1,913,052
Total assets $305,721,120 $307,514,667
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing $18,596,227 $18,585,854
Interest bearing 204,074,030 195,007,153
Total Deposits 222,670,257 213,593,007
Federal Home Loan Bank advances 41,000,000 51,000,000
Repurchase agreements 13,000,000 13,400,000
Accrued interest payable 810,182 833,606
Other liabilities 1,643,810 2,079,933
Total liabilities 279,124,249 280,906,546
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 - 2,466,361
shares and 2,498,064 shares at
March 31, 2006 and December 31, 2005,
respectively 2,466,361 2,498,064
Additional paid-in capital 12,917,219 13,295,559
Accumulated other comprehensive income (261,915) (192,717)
Retained earnings 11,475,206 11,007,215
Total stockholders' equity 26,596,871 26,608,121
Total liabilities and
stockholders' equity $305,721,120 $307,514,667
Consolidated Statements of Income
Three Months Ended March 31,
2006 2005
Interest income
Loans $4,313,096 $3,577,546
Investment securities:
Taxable 256,141 323,306
Tax-exempt 27,299 28,366
Dividends 59,272 47,278
Total interest income 4,655,808 3,976,496
Interest expense
Deposits 1,197,250 962,803
Borrowed funds 727,823 694,765
Total interest expense 1,925,073 1,657,568
Net interest income 2,730,735 2,318,928
Provision for loan losses 126,089 -
Net interest income - After provision
for loan losses 2,604,646 2,318,928
Noninterest income:
Service charges and other fees 385,418 382,411
Investment brokerage commission income 293,331 267,219
Mortgage banking activities 145,716 140,519
Trust fee income 87,654 125,749
Increase in value of bank owned life
insurance 64,560 63,376
Other income (3,934) 12,229
Total noninterest income 972,745 991,503
Noninterest expenses:
Salaries and employee benefits 1,613,623 1,403,176
Occupancy and equipment 308,142 315,574
Data processing 151,581 152,069
Professional services 99,106 144,410
Real estate owned expense 13,039 28,796
Advertising 45,129 59,751
Other 323,911 416,557
Total noninterest expenses 2,554,531 2,520,333
Income - Before income tax expense 1,022,860 790,098
Provision for federal income tax 308,234 226,219
Net income $714,626 $563,879
Basic earnings per share $0.29 $0.21
Diluted earnings per share $0.29 $0.21
Dividends declared per share $0.10 $0.09
Key Ratios:
Return on average equity 10.94% 8.27%
Return on average assets 0.94% 0.73%
Net interest margin on average interest-bearing
assets 4.13% 3.43%
Efficiency ratio 68.98% 73.16%
Source: prnewswire
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