Sturgis Bancorp Reports Earnings for First Quarter

STURGIS, Mich., April 22, 2017 (GLOBE NEWSWIRE) -- Sturgis Bancorp, Inc . (OTCQX:STBI) today announced net income of $662,000 for the first 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, 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.

Key Highlights for the first quarter of 2017:

• Net income increased 12% for the first quarter of 2017 to $662,000, compared to $592,000 for the first quarter of 2016, primarily due to higher net interest income and lower provisions for ALLL.
• The Bank maintained strong capital ratios, exceeding “well-capitalized” requirements, with Tier 1 leverage capital at 8.22%.  Total capital at March 31, 2017 was 14.32% of risk-weighted assets.  The Bank's risk-weighted assets were $249.5 million at March 31, 2017.
• Total deposits increased 4.6% to $311.4 million, mostly in temporary municipal deposits.
• Allowance for loan losses was 1.20% of loans, unchanged from December 31, 2016.

Three months ended March 31, 2017 vs. three months ended March 31, 2016 - Net income for the three months ended March 31, 2017 was $662,000, or $0.32 per share, compared to net income of $592,000, or $0.28 per share, for the three months ended March 31, 2016.  The tax equivalent net interest margin increased to 3.79% in the first three months of 2017 from 3.75% in the first three months of 2016. 

Noninterest income was $1.1 million in the first quarter of 2017, compared to $1.2 million in the first quarter of 2016.  Most of the decrease was in investment brokerage commission income, which decreased to $330,000 in 2017 from $445,000 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 from LPL.

Noninterest expense was $3.6 million in 2017 and $3.4 million in 2016.  Salaries and employee benefits, the largest component of noninterest expense, increased $278,000, primarily due to higher pension funding in 2017 and cost of living increases.  Real estate owned expense decreased to $16,000 in 2017, compared to $60,000 in 2016. 

The Company provided ($135,000) to the allowance for loan losses in the first three months of 2017, compared to $94,000 in the same quarter of 2016.  Net charge-offs were ($72,000) in 2017, compared to $69,000 in 2016. 

Total assets increased to $401.8 million at March 31, 2017 from $398.6 million at December 31, 2016, primarily in cash and cash equivalents.  Loans decreased $4.5 million from December 31, 2016.  Most of the decrease in loans was in commercial real estate and other commercial loans. 

Noninterest-bearing deposits decreased to $63.5 million at March 31, 2017 from $65.5 million at December 31, 2016.  Interest-bearing deposits increased to $247.9 million at March 31, 2017 from $232.3 million at December 31, 2016.  The increase in total 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 2017.  Brokered deposits decreased $3.5 million in the first quarter of 2017, to $6.1 million at March 31, 2017.  The growth in deposits allowed borrowed funds to decrease by $10.8 million to $50.3 million at March 31, 2017.

Total equity was $35.3 million at March 31, 2017, compared to $34.7 million at December 31, 2016.  Book value per share increased to $16.90 ($13.42 tangible) at March 31, 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 .

Contacts: Sturgis Bancorp -- Eric Eishen, President & CEO, or Brian P. Hoggatt, CFO -- P: 269 651-9345