CIB Marine Bancshares, Inc. Announces Third Quarter 2019 Results


BROOKFIELD, Wis., Oct. 11, 2019 (GLOBE NEWSWIRE) -- CIB Marine Bancshares, Inc. (the “Company” or “CIBM”) (OTCQB: CIBH), the holding company of CIBM Bank, announced its unaudited results of operations and financial condition for the third quarter of 2019.  Income before taxes for the quarter was $1.1 million compared to $1.2 million for the same period in 2018, and for the nine months ending September 30, 2019, it was $3.0 million compared to $3.3 million for the same period in 2018.

A summary of financial results for the quarter and nine months ended September 30, 2019, is attached.  Select highlights include:

  • Tangible book value per share and stated book value per share at September 30, 2019, were $3.03 and $2.68 per share of common stock, respectively, compared to $2.82 and $2.45, respectively, at December 31, 2018.  The increase reflects reported income for the nine months ended September 30, 2019, improved net accumulated other comprehensive income (loss) due to improved available for sale security fair values as a result of lower market interest rates, and discounts to the repurchase of preferred stock in the third quarter. 
  • Income before taxes for subsidiary CIBM Bank was $1.2 million for the quarter compared to $1.7 million for the same period in 2018, and $3.3 million for the nine months ended September 30, 2019, compared to $4.2 million for the same period in 2018.  Comparing the two nine-month periods, there was a decline in net interest income of $0.4 million due primarily to rising cost of funds and a reduction in SBA reverse repo balances, a decline in non-interest income of $0.2 million due to lower SBA gains on sale as a result of lower origination volumes in part offset by stronger mortgage banking revenues, an increase in provision to allowance for loan losses of $0.1 million and an increase in non-interest expenses by $0.3 million lead by higher compensation, collection and occupancy and premise expenses.
  • Non-performing assets, restructured loans, and loans 90 days or more past due and still accruing to total assets was 1.40% at September 30, 2019, versus 1.45% at December 31, 2018, and 1.11% at September 30, 2018. The increase from one year ago is primarily the result of one loan placed on non-accrual during the fourth quarter of 2018.  CIB Marine’s allowance for loan losses was 1.49% at September 30, 2019, versus 1.62% at December 31, 2018, and 1.62% at September 30, 2018.  The decline was primarily due to a $0.5 million charge-off of a loan that was previously reserved for.

Mr. J. Brian Chaffin, President and CEO of CIBM, commented, “Our SBA and Mortgage Divisions’ net revenues were up $0.4 million and $0.8 million, respectively, from second quarter of 2019 due to stronger loan production from both.  Notably, the Mortgage Division has had stronger production and higher earnings on that production during 2019 versus the year prior.  This can be attributed to solid purchase money and elevated refinance activity on lower mortgage rates so far this year and a number of new lender hires.”

He added, “Our net interest margin improved by 6 basis points from the prior quarter and printed the best result since the third quarter of 2018.  We are encouraged that the cost of funds has begun to turn lower and we expect the decline to pick up in the two quarters ahead as we expect a significant amount of maturing time deposits originated near the peak of the rate cycle last year and early this year to reprice at lower rates.

“Finally, during the third quarter, we approved and accepted the repurchase of 2,229 shares of preferred stock as part of the second of three planned preferred stock modified Dutch auctions held pursuant to our 2018 amendments to the Articles of Incorporation.  The total price for the shares was $1.6 million, resulting in a discount of $0.3 million to the $1.9 million carrying value of the preferred stock shares.  The discount was transferred to paid-in capital for common stock during the third quarter.  As a reminder, a $3.5 million liability currently exists for the purchase of 4,923 preferred shares, which CIBM anticipates settling on or before December 1, 2019, as agreed to in 2018.”

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates eleven banking offices and five mortgage loan offices in Illinois, Wisconsin and Indiana.  More information on the Company is available at www.cibmarine.com, including recent shareholder letters, links to regulatory financial reports, and audited financial statements.

FORWARD-LOOKING STATEMENTS
CIB Marine has made statements in this release that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. CIB Marine intends these forward-looking statements to be subject to the safe harbor created thereby and is including this statement to avail itself of the safe harbor. Forward-looking statements are identified generally by statements containing words and phrases such as “may,” “project,” “are confident,” “should be,” “intend,” “predict,” “believe,” “plan,” “expect,” “estimate,” “anticipate” and similar expressions. These forward-looking statements reflect CIB Marine’s current views with respect to future events and financial performance that are subject to many uncertainties and factors relating to CIB Marine’s operations and the business environment, which could change at any time.

There are inherent difficulties in predicting factors that may affect the accuracy of forward-looking statements.

Stockholders should note that many factors, some of which are discussed elsewhere in this Earnings Release and in the documents that are incorporated by reference, could affect the future financial results of CIB Marine and could cause those results to differ materially from those expressed in forward-looking statements contained or incorporated by reference in this document. These factors, many of which are beyond CIB Marine’s control, include but are not limited to:

  • operating, legal, execution, credit, market, security (including cyber), and regulatory risks;
  • economic, political, and competitive forces affecting CIB Marine’s banking business;
  • the impact on net interest income and securities values from changes in monetary policy and general economic and political conditions; and
  • the risk that CIB Marine’s analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.

These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made. CIB Marine undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements are subject to significant risks and uncertainties and CIB Marine’s actual results may differ materially from the results discussed in forward-looking statements.

FOR INFORMATION CONTACT:
J. Brian Chaffin, President & CEO
(217) 355-0900
brian.chaffin@cibmbank.com 


CIB MARINE BANCSHARES, INC.
Selected Unaudited Consolidated Financial Data
         
 At or for the
 Quarters Ended 9 Months Ended
 September 30,June 30,March 31,December 31,September 30,
  September 30, September 30,
  2019  2019  2019  2018  2018   2019  2018 
 (Dollars in thousands, except share and per share data)
Selected Statement of Operations Data        
Interest and dividend income$7,035 $7,078 $7,015 $7,009 $6,798  $21,128 $19,194 
Interest expense 2,183  2,256  2,178  2,064  1,767   6,617  4,358 
Net interest income 4,852  4,822  4,837  4,945  5,031   14,511  14,836 
Provision for (reversal of) loan losses 327  (67) (158) (1,195) (13)  102  10 
Net interest income after provision for        
(reversal of) loan losses 4,525  4,889  4,995  6,140  5,044   14,409  14,826 
Noninterest income (1) 3,835  2,710  1,362  1,546  3,063   7,907  7,863 
Noninterest expense 7,233  6,557  5,505  6,415  6,871   19,295  19,432 
Income before income taxes 1,127  1,042  852  1,271  1,236   3,021  3,257 
Income tax expense 93  281  229  313  345   603  875 
Net income$1,034 $761 $623 $958 $891   $2,418 $2,382 
         
Common Share Data        
Basic net income per share (2)$0.07 $0.04 $0.03 $0.05 $0.14  $0.15 $0.23 
Diluted net income per share (2) 0.04  0.02  0.02  0.03  0.07   0.08  0.12 
Dividend 0.00  0.00  0.00  0.00  0.00   0.00  0.00 
Tangible book value per share (3) 3.03  2.97  2.90  2.82  2.71   3.03  2.71 
Book value per share (3) 2.68  2.60  2.53  2.45  2.34   2.68  2.34 
Weighted average shares outstanding - basic 18,455,408  18,290,674  18,232,169  18,232,169  18,232,169   18,281,049  18,201,320 
Weighted average shares outstanding - diluted 32,536,354  33,009,983  32,815,744  32,757,855  34,589,375   32,835,500  35,958,705 
Financial Condition Data        
Total assets$700,711 $708,270 $702,152 $721,259 $723,733  $700,711 $723,733 
Loans 508,758  513,755  489,273  491,337  507,677   508,758  507,677 
Allowance for loan losses (7,560) (7,251) (7,865) (7,947) (8,217)  (7,560) (8,217)
Investment securities 120,648  124,784  123,500  121,281  118,345   120,648  118,345 
Deposits 557,745  535,367  542,938  536,931  523,729   557,745  523,729 
Borrowings 38,468  69,174  57,220  86,710  104,357   38,468  104,357 
Stockholders' equity 94,082  94,035  92,507  91,035  88,993   94,082  88,993 
Financial Ratios and Other Data        
Performance Ratios:        
Net interest margin (4) 2.95% 2.89% 2.94% 2.89% 2.97%  2.93% 3.10%
Net interest spread (5) 2.62% 2.58% 2.64% 2.62% 2.72%  2.61% 2.87%
Noninterest income to average assets (6) 2.19% 1.52% 0.76% 0.84% 1.72%  1.49% 1.56%
Noninterest expense to average assets 4.14% 3.72% 3.14% 3.54% 3.82%  3.67% 3.82%
Efficiency ratio (7) 83.44% 87.45% 89.24% 99.18% 84.63%  86.39% 85.38%
Earnings on average assets (8) 0.59% 0.43% 0.36% 0.53% 0.50%  0.46% 0.47%
Earnings on average equity (9) 4.35% 3.28% 2.76% 4.23% 3.77%  3.48% 3.30%
Asset Quality Ratios:        
Nonaccrual loans to loans (10) 1.14% 1.12% 1.29% 1.34% 0.73%  1.14% 0.73%
Nonaccrual loans, restructured loans and        
 loans 90 days or more past due and still        
 accruing to total loans (10) 1.44% 1.45% 1.66% 1.62% 1.09%  1.44% 1.09%
Nonperforming assets, restructured loans        
and loans 90 days or more past due and still        
accruing to total assets (10) 1.40% 1.40% 1.51% 1.45% 1.11%  1.40% 1.11%
Allowance for loan losses to total loans (10) 1.49% 1.41% 1.61% 1.62% 1.62%  1.49% 1.62%
Allowance for loan losses to nonaccrual loans,        
restructured loans and loans 90 days or        
more past due and still accruing (10) 103.07% 97.34% 96.96% 99.72% 148.99%  103.07% 148.99%
Net charge-offs (recoveries) annualized        
to average loans (10) 0.01% 0.44% (0.06%) (0.74%) (0.14%)  0.13% -0.14%
Capital Ratios:        
Total equity to total assets 13.43% 13.28% 13.17% 12.62% 12.30%  13.43% 12.30%
Total risk-based capital ratio 15.20% 15.32% 15.56% 15.34% 14.43%  15.20% 14.43%
Tier 1 risk-based capital ratio 13.95% 14.07% 14.31% 14.09% 13.18%  13.95% 13.18%
Leverage capital ratio 10.86% 10.64% 10.39% 10.10% 9.90%  10.86% 9.90%
Other Data:        
Number of employees (full-time equivalent) 182  180  177  183  188   182  188 
Number of banking facilities 11  11  11  11  11   11  11 
         
(1) Noninterest income includes gains and losses on securities.
(2) Net income available to common stockholders in the calculation of earnings per share includes the difference between the carrying amount less the consideration paid for redeemed preferred stock of $0.3 million for the third quarter and nine months ended September 30, 2019, $0.1 million for the second quarter of 2018, $1.7 million for the third quarter of 2018, and $1.8 million for the nine months ended September 30, 2018.
(3) Tangible book value per share is the stockholder equity less the carry value of the preferred stock and less the goodwill and intangible assets, divided by the total shares of common outstanding. Book value per share is the stockholder equity less the liquidation preference of the preferred stock, divided by the total shares of common outstanding. As presented here, shares of common outstanding excludes unvested Restricted Stock Awards totalling 918,665 shares of common stock at September 30, 2019.
(4) Net interest margin is the ratio of net interest income to average interest-earning assets.
(5) Net interest spread is the yield on average interest-earning assets less the rate on average interest-bearing liabilities.
(6) Noninterest income to average assets excludes gains and losses on securities.
(7) The efficiency ratio is noninterest expense divided by the sum of net interest income plus noninterest income, excluding gains and losses on securities.
(8) Earnings on average assets are net income divided by average total assets.
(9) Earnings on average equity are net income divided by average stockholders' equity.
(10) Excludes loans held for sale.



CIB MARINE BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
      
 September 30, June 30, March 31, December 31, September 30,
  2019  2019  2019  2018  2018 
 (Dollars in Thousands, Except Shares)
Assets     
Cash and due from banks$9,582 $8,791 $8,168 $13,037 $10,055 
Reverse repurchase agreements 4,083  18,347  42,729  58,662  45,076 
Securities available for sale 118,211  122,365  121,115  118,926  116,013 
Equity securities at fair value 2,437  2,419  2,385  2,355  2,332 
Loans held for sale 25,347  8,450  4,467  4,632  8,145 
      
Loans 508,758  513,755  489,273  491,337  507,677 
Allowance for loan losses (7,560) (7,251) (7,865) (7,947) (8,217)
Net loans 501,198  506,504  481,408  483,390  499,460 
      
Federal Home Loan Bank Stock 926  2,363  2,003  3,172  3,870 
Premises and equipment, net (1) 7,083  7,386  7,220  4,498  4,409 
Accrued interest receivable 1,646  1,820  1,873  1,570  1,858 
Deferred tax assets, net 20,455  20,703  21,156  21,422  22,410 
Other real estate owned, net 2,466  2,466  2,466  2,486  2,494 
Bank owned life insurance 4,666  4,640  4,613  4,590  4,565 
Goodwill and other intangible assets 159  165  171  176  181 
Other assets 2,452  1,851  2,378  2,343  2,865 
Total Assets$700,711 $708,270 $702,152 $721,259 $723,733 
      
Liabilities and Stockholders' Equity      
Deposits:     
Noninterest-bearing demand$63,694 $62,424 $62,553 $63,507 $69,165 
Interest-bearing demand 50,683  32,649  32,467  33,660  33,701 
Savings 202,866  192,133  188,110  181,432  164,603 
Time 240,502  248,161  259,808  258,332  256,260 
Total deposits 557,745  535,367  542,938  536,931  523,729 
Short-term borrowings 38,468  69,174  57,220  86,710  104,357 
Accrued interest payable 711  725  727  710  694 
Other liabilities 9,705  8,969  8,760  5,873  5,960 
Total liabilities 606,629  614,235  609,645  630,224  634,740 
      
Stockholders' Equity      
Preferred stock, $1 par value; 5,000,000     
authorized shares at September 30, 2019; 7% fixed rate noncumulative perpetual issued;
40,888 shares of series A and 3,217 shares of series B; convertible; $44.1 million aggregate liquidation preference
 37,489  39,384  39,384  39,384  39,384 
Common stock, $1 par value; 75,000,000     
authorized shares; 18,868,329 issued shares; 18,646,427 outstanding shares (2) 18,868  18,543  18,456  18,456  18,454 
Capital surplus 161,110  160,991  160,930  160,815  160,716 
Accumulated deficit (123,377) (124,412) (125,173) (125,796) (126,754)
Accumulated other comprehensive income (loss), net 526  63  (556) (1,290) (2,273)
Treasury stock 221,902 shares at cost (534) (534) (534) (534) (534)
Total stockholders' equity 94,082  94,035  92,507  91,035  88,993 
Total liabilities and stockholders' equity$700,711 $708,270 $702,152 $721,259 $723,733 
      
(1) The adoption of the new lease accounting standards effective January 1, 2019 resulted in $2.8 million of right of use assets being recorded in premise and equipment, net and a corresponding liability in other liabilities.
(2) Both issued and outstanding shares as stated here exclude 918,665 shares of unvested restricted stock awards.
      



CIB MARINE BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
         
 At or for the
 Quarters Ended 9 Months Ended
 September 30,June 30,March 31,December 31,September 30,
 September 30,September 30,
  2019  2019  2019  2018  2018   2019 2018 
 (Dollars in thousands)
         
Interest Income        
Loans$5,992 $5,811 $5,693 $5,686 $5,638  $17,496$16,135 
Loans held for sale 152  97  85  86  112   334 302 
Securities 810  868  804  828  720   2,482 2,215 
Other investments 81  302  433  409  328   816 542 
Total interest income 7,035  7,078  7,015  7,009  6,798   21,128 19,194 
         
Interest Expense        
Deposits 2,027  1,949  1,805  1,547  1,343   5,781 3,329 
Short-term borrowings 156  307  373  517  424   836 1,029 
Total interest expense 2,183  2,256  2,178  2,064  1,767   6,617 4,358 
Net interest income 4,852  4,822  4,837  4,945  5,031   14,511 14,836 
Provision for (reversal of) loan losses 327  (67) (158) (1,195) (13)  102 10 
Net interest income after provision for        
(reversal of) loan losses 4,525  4,889  4,995  6,140  5,044   14,409 14,826 
         
Noninterest Income        
Deposit service charges 101  95  83  79  105   279 326 
Other service fees 30  29  20  31  30   79 104 
Mortgage Banking revenue, net 2,936  2,148  978  1,057  1,760   6,062 5,289 
Other income 150  179  165  143  173   494 458 
Net gains (losses) on sale of securities available for sale 0  0  0  0  (7)  0 15 
Unrealized gains (losses) recognized on equity securities 18  34  30  23  (18)  82 (75)
Net gains on sale of assets 600  225  86  213  1,020   911 1,746 
Total noninterest income 3,835  2,710  1,362  1,546  3,063   7,907 7,863 
         
Noninterest Expense        
Compensation and employee benefits 5,309  4,445  3,687  4,206  4,514   13,441 13,252 
Equipment 335  353  335  364  351   1,023 999 
Occupancy and premises 420  437  456  423  378   1,313 1,217 
Data Processing 165  160  166  169  184   491 500 
Federal deposit insurance (5) 66  82  74  51   143 148 
Professional services 198  207  140  270  623   545 1,079 
Telephone and data communication 86  83  78  86  78   247 235 
Insurance 70  52  53  47  60   175 184 
Other expense 655  754  508  776  632   1,917 1,818 
Total noninterest expense 7,233  6,557  5,505  6,415  6,871   19,295 19,432 
Income from operations        
before income taxes 1,127  1,042  852  1,271  1,236   3,021 3,257 
Income tax expense 93  281  229  313  345   603 875 
Net income  1,034  761  623  958  891   2,418 2,382 
Preferred stock dividend 0  0  0  0  0   0 0 
Discount from repurchase of preferred shares 308  0  0  0  1,703   308 1,808 
Net income allocated to        
 common stockholders$1,342 $761 $623 $958 $2,594  $2,726$4,190