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
