STURGIS, MI / ACCESSWIRE / April 22, 2024 / Sturgis Bancorp, Inc. (OTCQX:STBI) today announced results for the first quarter of 2024:
Key Highlights
- Net loss for the quarter was $(1.97 million).
- Loss per share of $(0.92).
- Paid dividend of $0.17 per share.
- Total assets increased to $925 million.
- Deposits increased to $807 million.
- Credit quality remains strong with 99.44% of unguaranteed loans performing according to loan agreements.
- The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 leverage capital at 7.64%.
From Jason J. Hyska, Sturgis Bancorp, Inc. Chief Executive Officer
"Overall, the Bank is performing well despite the large credit loss. The Bank recognized a large write-off related to one commercial loan relationship. This is the same credit that required a $1.00 million reserve in 4Q23. Overall credit quality remains strong with 99.44% of all unguaranteed loans performing according to loan agreements and the Bank remains well capitalized with a Tier 1 leverage ratio of 7.64%.
The Bank continues to grow our deposit base and relationships throughout our footprint. The Bank's entrance into new markets has helped fuel this growth and attract quality talent that bring well-seasoned relationships that are new to the Bank, but not new to the lender. The Bank is focusing on overall relationships that include loans, deposits, insurance services, and investment services opportunities. We remain committed to providing strong customer service, while managing the net interest margin and overall expenses in this very challenging interest rate environment."
Income Statement Highlights
- Net loss for the quarter (1Q24) was $(1.97 million), down from last quarter's (4Q23) loss of $(350,000) and from the net income of $1.52 million reported for the same quarter of the prior year (1Q23).
- Earnings (loss) per share were $(0.92) for 1Q24, $(0.16) for 4Q23, and $0.72 for 1Q23.
- Net interest income was $6.79 million during 1Q24, a 1.02% decrease from 4Q23's $6.86 million and a 4.97% decrease from 1Q23's $7.15 million in net interest income. These decreases were primarily due to increasing interest expense of $4.39 million in 1Q24, versus $3.91 million in 4Q23 and $2.30 million in 1Q23.
- The tax equivalent net interest margin decreased to 3.21% during 1Q24 from 3.28% in 4Q23 and from 3.60% in 1Q23.
- During 1Q24, $4.66 million was provided to the allowance for credit losses, compared to $993,000 in 4Q23, and $267,000 in 1Q23.
- Noninterest income totaled $3.11 million during 1Q24, a 58.99% increase from 4Q23's $1.96 million. This also represents an 82.05% increase from 1Q23's $1.71 million in noninterest income. These increases were primarily due to:
- Investment brokerage commission income in 1Q24 was $594,000, compared to $606,000 for 4Q23, and $420,000 for 1Q23.
- Mortgage banking activities in 1Q24 were $486,000, compared to $420,000 for 4Q23, and $251,000 for 1Q23.
- Termination of an interest rate swap resulting in gain recognition of $1.07 million during 1Q24.
- Noninterest expenses totaled $7.82 million during 1Q24, a 6.56% decrease from 4Q23's $8.37 million. This also represents a 15.88% increase from 1Q23's $6.74 million in noninterest expenses. These fluctuations were primarily due to:
- Compensation and benefits in 1Q24 were $4.57 million, compared to $5.41 million for 4Q23, and $4.03 million for 1Q23. Most of the increase in 4Q23 was due to one-time expenses associated with the retirement of the former President and CEO.
Balance Sheet Highlights
- Total assets increased to $925 million as of the end of 1Q24, a 0.63% increase from the end of 4Q23's $919 million balance, and a 5.84% increase from the end of 1Q23's $874 million balance. These fluctuations were primarily due to:
- Cash and cash equivalents ended 1Q24 at $16.5 million, compared to $40.0 million as of the end of 4Q23, and $19.3 million as of the end of 1Q23.
- Securities - available-for-sale increased to $75.4 million as of the end of 1Q24, from $52.7 million as of the end of 4Q23, and $63.4 million as of the end of 1Q23.
- Net loans increased to $742 million as of the end of 1Q24, from $739 million as of the end of 4Q23, and $705 million as of the end of 1Q23.
- Net charge-offs increased to $5.48 million in 1Q24, from $63,000 in 4Q23, and $14,000 in 1Q23. Net charge-offs in 1Q24 included $5.50 million from one relationship, $22,000 from other charge-offs, and $38,000 of recoveries.
- Total deposits increased to $807 million as of the end of 1Q24, a 1.05% increase from the end of 4Q23's $799 million balance, and a 2.24% increase from the end of 1Q23's $790 million balance. These fluctuations were comprised of:
- Noninterest-bearing deposits decreased to $155 million as of the end of 1Q24, from $160 million as of the end of 4Q23, and $159 million as of the end of 1Q23.
- Interest-bearing deposits increased to $652 million as of the end of 1Q24, from $639 million as of the end of 4Q23, and $631 million as of the end of 1Q23.
- Borrowed funds increased to $41.0 million as of the end of 1Q24, from $40.0 million as of the end of 4Q23, and $10.0 million as of the end of 1Q23.
- Total equity as of the end of 1Q24 was $52.7 million, compared to $55.8 million as of the end of 4Q23, and $52.5 million as of the end of 1Q23.
- Book value per share was $24.49 ($20.37 tangible) as of the end of 1Q24, compared to $25.94 ($21.84 tangible) as of the end of 4Q23, and $24.48 ($20.40 tangible) as of the end of 1Q23.
About Sturgis Bancorp, Inc.
Sturgis Bancorp, Inc. is the holding company for Sturgis Bank & Trust Company (the Bank), and its subsidiaries: Oakleaf Financial Services, Oak Mortgage, Ayres/Oak Insurance, and Oak Title Services. The Bank provides a full array of trust, commercial, and consumer banking services from banking centers in: Sturgis, Bangor, Bronson, Centreville, Climax, Colon, Marshall, Niles, Portage, South Haven, St. Joseph, Three Rivers, and White Pigeon, Michigan. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oakleaf Mortgage offers residential mortgages in all markets of the Bank. Ayres/Oak Insurance offers various competitive commercial and consumer insurance products. Oak Title Services offers commercial and consumer title insurance services.
Forward-Looking Statements
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 Sturgis Bancorp, Inc. (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 statements. 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 or future litigation and contingencies; trends in consumer behavior and ability to repay loans; and changes in 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 and updates, visit our website at www.sturgis.bank.
Sturgis Bancorp, Inc. Contacts
- Jason J. Hyska, CEO & President, or Brian P. Hoggatt, CFO - (269) 651-9345
CONSOLIDATED BALANCE SHEETS
(Unaudited - Amounts in thousands, except share and per share data)
| March 31, | Dec 31, | March 31, | ||||||||||
| 2024 | 2023 | 2023 | ||||||||||
| 1Q24 | 4Q23 | 1Q23 | ||||||||||
ASSETS | ||||||||||||
Cash and due from banks | $ | 8,711 | $ | 10,243 | $ | 11,963 | ||||||
Other short-term investments | 7,784 | 29,766 | 7,290 | |||||||||
Total cash and cash equivalents | 16,495 | 40,009 | 19,253 | |||||||||
Securities - available-for-sale | 75,354 | 52,658 | 63,435 | |||||||||
Securities - held-to-maturity | 20,615 | 20,866 | 21,640 | |||||||||
Federal Home Loan Bank stock | 7,599 | 7,295 | 8,381 | |||||||||
Loans held for sale | 4,865 | 2,259 | 1,023 | |||||||||
Loans, net of allowance for credit losses of $10,283, $10,198, | ||||||||||||
and $9,001 at 1Q24, 4Q23, and 1Q23, respectively | 742,472 | 739,461 | 705,307 | |||||||||
Premises and equipment, net | 18,846 | 19,136 | 17,294 | |||||||||
Goodwill | 5,834 | 5,834 | 5,834 | |||||||||
Mortgage servicing rights | 3,036 | 2,979 | 2,914 | |||||||||
Real estate owned | 188 | 130 | 285 | |||||||||
Bank-owned life insurance | 15,939 | 15,832 | 16,086 | |||||||||
Accrued interest receivable | 3,239 | 3,099 | 2,674 | |||||||||
Other assets | 10,815 | 9,914 | 10,140 | |||||||||
Total assets | $ | 925,297 | $ | 919,472 | $ | 874,266 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
Liabilities | ||||||||||||
Deposits | ||||||||||||
Noninterest-bearing | $ | 155,116 | $ | 159,899 | $ | 158,761 | ||||||
Interest-bearing | 652,251 | 639,039 | 630,904 | |||||||||
Total deposits | 807,367 | 798,938 | 789,665 | |||||||||
Federal Home Loan Bank advances and other borrowings | 41,000 | 40,000 | 10,000 | |||||||||
Subordinated debentures - $15,000 face amount (less | ||||||||||||
unamortized debt issuance costs of $143, $164, and $225 | ||||||||||||
at 1Q24, 4Q23, and 1Q23, respectively) | 14,857 | 14,836 | 14,775 | |||||||||
Accrued interest payable | 1,752 | 1,654 | 1,146 | |||||||||
Other liabilities | 7,606 | 8,276 | 6,203 | |||||||||
Total liabilities | 872,582 | 863,704 | 821,789 | |||||||||
Stockholders' equity | ||||||||||||
Common stock - $1 par value: authorized - 9,000,000 shares; | ||||||||||||
issued and outstanding - 2,152,441 shares at 1Q24, | ||||||||||||
2,150,191 shares at 4Q22, and 2,143,441 shares at 1Q23 | 2,152 | 2,150 | 2,143 | |||||||||
Additional paid-in capital | 8,590 | 8,556 | 8,433 | |||||||||
Retained earnings | 49,694 | 52,029 | 48,627 | |||||||||
Accumulated other comprehensive (loss) | (7,721 | ) | (6,967 | ) | (6,726 | ) | ||||||
Total stockholders' equity | 52,715 | 55,768 | 52,477 | |||||||||
Total liabilities and stockholders' equity | $ | 925,297 | $ | 919,472 | $ | 874,266 | ||||||
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Amounts in thousands, except share and per share data)
| Three Months Ended | ||||||||||||
| March 31, | Dec 31, | March 31, | ||||||||||
| 2024 | 2023 | 2023 | ||||||||||
| 1Q24 | 4Q23 | 1Q23 | ||||||||||
Interest and dividend income | ||||||||||||
Loans (including fees) | $ | 10,210 | $ | 10,056 | $ | 8,717 | ||||||
Investment securities: | ||||||||||||
Taxable | 761 | 506 | 499 | |||||||||
Tax-exempt | 61 | 69 | 125 | |||||||||
Dividends | 147 | 139 | 107 | |||||||||
Total interest and dividend income | 11,179 | 10,770 | 9,448 | |||||||||
Interest expense | ||||||||||||
Deposits | 3,750 | 3,496 | 1,871 | |||||||||
Borrowed funds | 635 | 410 | 428 | |||||||||
Total interest expense | 4,385 | 3,906 | 2,299 | |||||||||
Net interest income | 6,794 | 6,864 | 7,149 | |||||||||
Credit loss expense | 4,663 | 993 | 267 | |||||||||
Net interest income, after credit loss expense | 2,131 | 5,871 | 6,882 | |||||||||
Noninterest income | ||||||||||||
Service charges on deposits and other fees | 335 | 345 | 318 | |||||||||
Interchange income | 308 | 328 | 312 | |||||||||
Investment brokerage commission income | 594 | 606 | 420 | |||||||||
Mortgage banking activities | 486 | 420 | 251 | |||||||||
Trust fee income | 87 | 76 | 137 | |||||||||
Earnings on cash value of bank-owned life insurance | 107 | 100 | 98 | |||||||||
Gain on sale of real estate owned, net | 1 | 2 | 17 | |||||||||
Gain on termination of interest rate swap | 1,070 | - | - | |||||||||
Proportionate net income from unconsolidated subsidiaries | 114 | 67 | 31 | |||||||||
Other income | 11 | 14 | 126 | |||||||||
Total noninterest income | 3,113 | 1,958 | 1,710 | |||||||||
Noninterest expenses | ||||||||||||
Compensation and benefits | 4,569 | 5,412 | 4,034 | |||||||||
Occupancy and equipment | 1,064 | 992 | 851 | |||||||||
Interchange expenses | 165 | 179 | 150 | |||||||||
Data processing | 290 | 187 | 259 | |||||||||
Professional services | 169 | 177 | 132 | |||||||||
Advertising | 201 | 185 | 172 | |||||||||
FDIC premiums | 181 | 152 | 127 | |||||||||
Other expenses | 1,178 | 1,082 | 1,021 | |||||||||
Total noninterest expenses | 7,817 | 8,366 | 6,746 | |||||||||
Income (loss) before income tax expense (benefit) | (2,573 | ) | (537 | ) | 1,846 | |||||||
Income tax expense (benefit) | (603 | ) | (187 | ) | 324 | |||||||
Net income (loss) | $ | (1,970 | ) | $ | (350 | ) | $ | 1,522 | ||||
Earnings (loss) per share | $ | (0.92 | ) | $ | (0.16 | ) | $ | 0.72 | ||||
Dividends per share | $ | 0.17 | $ | 0.17 | $ | 0.17 | ||||||
SOURCE: Sturgis Bancorp, Inc.
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