Southern Michigan Bank and Trust: Overview of the bank

Southern Michigan Bank and Trust was established in 1872 and is one of a select number of banks in the country that have existed for over a century. Its main office is located in the state of Michigan in the city of Coldwater. Michigan is home to 83 banks that collectively have $88,249 million of assets outstanding. The bank first got insured by the Federal Deposit Insurance Corporation in the year 1934 which is effectively the first year it was possible to get insured by the agency, which itself was founded in the prior year. In addition, the FDIC is the primary federal regulator for the bank and is focused on supervising and examining the bank for operational safety and soundness. Mainly because of its relative size, geographic reach and presence, the bank is considered to be a community bank, instead of a national bank. Based on our estimates, we believe its asset base of $1,138 million ranks it in the 80th percentile of banks in the United States. Southern Michigan Bank and Trust is primarily a domestic bank and does not at the current time have operations outside of the United States. Domestically, the bank currently has 16 offices. As of this writing, the bank employed a total of 196 people.

Details on the Bank’s Asset Composition

The bank currently has total assets of $1,138 million, total net loans to customers of $726 million and total deposits outstanding of $971 million as of this writing. Approximately 65% of the bank’s deposits outstanding were transactional deposits, while domestic depositors made up 100% of the bank’s total deposit base. 57% of the domestic deposits outstanding are insured. Looking at the asset side of the balance sheet, 65% of the bank’s total asset base consisted of loans to customers (keep in mind that this is on a gross basis). Loans for real estate purposes alone comprised 80% of the outstanding loans. Southern Michigan Bank and Trust has $111 million of outstanding 1-4 family residential loans (mortgages), which in total represents 15% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 0% and 16% of loans outstanding, respectively. Loans to farmland and farms represents 8% of loans outstanding.

Contact Information For Southern Michigan Bank and Trust

  • Main Office Address: 45-51 W. Pearl St., Coldwater, MI 49036
  • Website:
  • Total Number of Branches: 16
  • Total Number of International Branches: None
  • Number of Employees: 196
  • FDIC Certificate Number: 5019
  • FDIC Community Bank: Yes
  • FDIC Field Office: Grand Rapids
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 822042
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

southern michigan bank and trust-financial-metrics-sept-21

Southern Michigan Bank and Trust has total assets of $1,138 million and over the past year its asset base has increased substantially, reporting an increase of 22.2%. Moving to the bank’s loan portfolio, the bank has net loans outstanding of $726 million based on the latest available information. Its net loans outstanding have increased substantially over the past year, with an increase of 17.2%. Within the loan portfolio, residential mortgages make up 15% of the outstanding loans of the bank, and over the past year have registered an increase of 51.7%. In addition, the bank provides loans to commercial and industrial businesses, which represents 16.2% of its total lending and stood at $119 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 8.4% of its total loan portfolio. Finally, the bank also engages in the provision of auto loans. These are loans provided to customers to help finance vehicle purchases. Auto loans represent 0.1% of the bank’s total lending.

Bank Liquidity and Funding

While most banks are insured by the FDIC, the insurance coverage does not always provide full protection. Therefore, understanding a banks liquidity and funding is important to help assess the riskiness of a bank’s balance sheet. A large and growing deposit base is usually a good sign for a bank’s liquidity and funding. This is because customer deposits are often a cheap source of financing as many of those accounts do not pay interest or much interest. Looking at Southern Michigan Bank and Trust, they have total customer deposits of $971 million which over the past year has registered an increase of 24.1%. Furthermore, the bank has a loan to deposit ratio of 75% which is below the national average. Banks in the United States have a loan to deposit ratio of approximately 82%. A lower ratio is better since it means that a bank’s lending activities are more comfortably covered by its deposit base. The entirety of the bank’s deposit base stems from domestic depositors.

Bank Performance and Capital Metrics

southern michigan bank and trust-performance-metrics-sept-21

The above chart provides a brief summary of some of the key performance metrics for Southern Michigan Bank and Trust. Next to these metrics are the equivalent for the average U.S. bank. When it comes to the bank’s return on assets, over the past year it has improved. Importantly, on this metric we can also see that the bank is below the average bank. Return on assets tells us how productive a bank is being with its asset base. Moving on to the bank’s return on equity, which tells us how much of a return the bank has generated for its owners, over the past year it has improved. In addition, we can also see that the bank is above the average bank on this metric. The bank’s total leverage ratio has been relatively stable over the past year and is currently below the national average. Last but certainly not least is the tier 1 capital ratio. This is an important measure of the financial strength of a bank and its balance sheet. Southern Michigan Bank and Trust’s tier 1 capital ratio has been relatively stable over the past year, and is below the average U.S. bank.

Conclusion: Southern Michigan Bank and Trust

Ultimately, after considering all of the relevant factors we rate Southern Michigan Bank and Trust 3.1 out of 5.0, which is above average. Specifically, an area of strength for the bank would be its cost of funds which is above the national average. On the contrary, the bank’s net interest margin is one of the primary drawbacks on its rating as on this metric, the bank is below average. As a reminder, our rating is based on our proprietary scoring system which uses data from an in-depth nationwide bank study we performed. None of the work presented is intended to be investment advice or advice of any sort and is presented purely for informational purposes.