CIB Marine Bancshares, Inc. Announces Second Quarter 2020 Results

7/16, 5:00 PM (Source: GlobeNewswire)

BROOKFIELD, Wis., July 16, 2020 (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 second quarter of 2020.  Net income for the quarter was $1.7 million compared to $0.8 million for the same period in 2019 and, for the six months ending June 30, 2020, it was $2.5 million compared to $1.4 million for the same period in 2019.

A summary of financial results for the quarter and six months ended June 30, 2020, is attached.  Select highlights include:

  • Net income and income before taxes for the quarter and six months ended June 30th were the strongest in more than five years, excluding the deferred tax valuation adjustment made in the fourth quarter of 2017.
  • CIBM Bank’s mortgage banking division was a significant contributor to improved earnings results.  For the six months ended June 30th, net mortgage banking revenues were $6.2 million, nearly double the same period of the prior year.  Lower interest rates have fueled a surge in rate-refinance loan originations, as well as strong new home purchase activity, resulting in over $200 million in loan originations the first half of the year.   
  • Net interest income was up $0.6 million for the first six months of 2020, compared to the same period in 2019.  The primary reasons for improvement were higher average balances in loans held for sale and Paycheck Protection Program (PPP) loans, and a 54 basis point reduction in the cost of interest bearing liabilities primarily due to repricing maturing time deposits and money market rate promotions and short-term borrowings in a lower rate environment. 
  • COVID-19 has impacted the Company in many direct and indirect ways.  During the second quarter of 2020, CIBM Bank originated around 350 loans or $43 million in government guaranteed PPP loans.  In addition, COVID-19 loan payment deferrals reached 87 loans, or around $75 million in total outstanding balances.
  • Provisions for loan losses were up $0.7 million during the six months ended June 30, 2020, versus the same period in 2019.  The primary reason for the increase is environmental and qualitative factors related to the impact COVID-19 has had on the current economic conditions, including the sharp decline in GDP and rapid rise in unemployed persons.  A significant number of government programs are acting to support businesses and household income so that the amount of problem loans has remained relatively low to date. 
  • Non-performing assets, restructured loans, and loans 90 days or more past due and still accruing to total assets and nonaccrual loans to total loans were 1.02% and 0.92%, respectively, at March June 30, 2020, down from 1.35% and 1.09%, respectively, at December 31, 2019, and 1.40% and 1.12%, respectively, at June 30, 2020.  The improvements during the first six months of 2020 were related to certain loan level improvements, although credit quality is expected to deteriorate in the foreseeable future due to the economic impact of COVID-19.

Mr. J. Brian Chaffin, President and CEO of CIBM, commented, “The Company has spent a significant amount of time addressing COVID-19 related issues – from managing the branches for the safety of our staff and customers, to adjusting to having more than 70% of employees work from home, to working with our clients to meet their banking needs in these challenging times.  The situation has forced us to adapt and make or advance plans for improvements in both our products and delivery systems, and in our operations areas.  Investors can be proud of the dedication and commitment CIBM Bank employees have exhibited through this period.

“Although income for the first half of the year was much improved over the same period of 2019, we remain committed to improving our longer term operating results using the process we call ‘Project Falcon’, which includes plans to improve our deposit mix, enhance efficiencies, and excel at our core services.”  

Mr. Chaffin continued, “A Fifth Amendment to the Company’s Articles of Incorporation, which would make permanent the changes that permit the Company to engage in negotiated voluntary repurchases of its Preferred Stock, was approved by our Common Shareholders in April and has now been presented to the Preferred Shareholders for their approval at a Special Meeting of Preferred Shareholders to be held on August 5, 2020.  We will provide the results of that vote on our website following the meeting.”

He concluded, “As discussed in our June 17, 2020, press release, we have completed the third and final modified Dutch auction pursuant to the Second Amendment of our Articles of Incorporation that resulted in the repurchase of 214 shares of preferred stock for a total price of approximately $148,000 representing a $33,000 discount to the carry value of the preferred shares repurchased.  We will be providing a more detailed analysis in our upcoming quarterly shareholder letter.” 

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 6 Months Ended 
 June 30,March 31,December 31,September 30,June 30, June 30,June 30, 
  2020  2020  2019  2019  2019   2020  2019  
 (Dollars in thousands, except share and per share data) 
Selected Statement of Operations Data         
Interest and dividend income$6,669 $6,636 $6,820 $7,035 $7,078  $13,305 $14,093  
Interest expense 1,343  1,689  2,030  2,183  2,256   3,032  4,434  
Net interest income 5,326  4,947  4,790  4,852  4,822   10,273  9,659  
Provision for (reversal of) loan losses 249  202  715  327  (67)  451  (225) 
Net interest income after provision for (reversal of) loan losses 5,077  4,745  4,075  4,525  4,889   9,822  9,884  
Noninterest income (1) 4,489  2,642  2,249  3,835  2,710   7,131  4,072  
Noninterest expense 7,308  6,322  6,879  7,233  6,557   13,630  12,062  
Income (loss) before income taxes 2,258  1,065  (555) 1,127  1,042   3,323  1,894  
Income tax expense (benefit) 575  281  (180) 93  281   856  510  
Net income (loss)$1,683 $784 $(375)$1,034 $761   $2,467 $1,384  
          
Common Share Data         
Basic net income (loss) per share (2)$0.09 $0.04 $(0.02)$0.07 $0.04  $0.13 $0.08  
Diluted net income (loss) per share (2) 0.05  0.02  (0.02) 0.04  0.02   0.08  0.04  
Dividend 0.00  0.00  0.00  0.00  0.00   0.00  0.00  
Tangible book value per share (3) 3.15  3.07  2.99  3.03  2.97   3.15  2.97  
Book value per share (3) 2.80  2.73  2.64  2.68  2.60   2.80  2.60  
Weighted average shares outstanding - basic 18,992,550  18,724,047  18,646,427  18,455,408  18,290,674   18,858,299  18,261,584  
Weighted average shares outstanding - diluted 32,402,984  32,329,698  32,329,533  32,536,354  33,083,324   32,330,877  32,950,273  
Financial Condition Data         
Total assets$793,151 $705,473 $703,791 $700,711 $708,270  $793,151 $708,270  
Loans 535,692  513,992  513,705  508,758  513,755   535,692  513,755  
Allowance for loan losses (8,483) (8,107) (8,007) (7,560) (7,251)  (8,483) (7,251) 
Investment securities 113,303  120,105  120,398  120,648  124,784   113,303  124,784  
Deposits 566,811  531,999  530,190  557,745  535,367   566,811  535,367  
Borrowings 120,233  68,950  73,847  38,468  69,174   120,233  69,174  
Stockholders' equity 97,347  95,841  93,404  94,082  94,035   97,347  94,035  
Financial Ratios and Other Data         
Performance Ratios:         
Net interest margin (4) 2.96% 3.04% 2.86% 2.95% 2.89%  3.00% 2.91% 
Net interest spread (5) 2.76% 2.78% 2.55% 2.62% 2.58%  2.77% 2.61% 
Noninterest income to average assets (6) 2.36% 1.51% 1.28% 2.19% 1.52%  1.95% 1.14% 
Noninterest expense to average assets 3.86% 3.67% 3.88% 4.14% 3.72%  3.77% 3.43% 
Efficiency ratio (7) 74.61% 83.74% 97.57% 83.44% 87.45%  78.58% 88.26% 
Earnings on average assets (8) 0.89% 0.45% -0.21% 0.59% 0.43%  0.68% 0.39% 
Earnings on average equity (9) 6.97% 3.32% -1.56% 4.35% 3.28%  5.17% 3.02% 
Asset Quality Ratios:         
Nonaccrual loans to loans (10) 0.92% 0.97% 1.09% 1.14% 1.12%  0.92% 1.12% 
Nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing to total loans (10) 1.07% 1.25% 1.38% 1.44% 1.45%  1.07% 1.45% 
Nonperforming assets, restructured loans and loans 90 days or more past due and still accruing to total assets (10) 1.02% 1.24% 1.35% 1.40% 1.40%  1.02% 1.40% 
Allowance for loan losses to total loans (10) 1.58% 1.58% 1.56% 1.49% 1.41%  1.58% 1.41% 
Allowance for loan losses to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (10) 147.79% 126.26% 112.66% 103.07% 97.34%  147.79% 97.34% 
Net charge-offs (recoveries) annualized to average loans (10) -0.09% 0.08% 0.21% 0.01% 0.44%  -0.01% 0.19% 
Capital Ratios:         
Total equity to total assets 12.27% 13.59% 13.27% 13.43% 13.28%  12.27% 13.28% 
Total risk-based capital ratio 15.49% 15.36% 15.19% 15.18% 15.32%  15.49% 15.32% 
Tier 1 risk-based capital ratio 14.23% 14.11% 13.94% 13.93% 14.07%  14.23% 14.07% 
Leverage capital ratio 10.82% 11.08% 10.71% 10.86% 10.64%  10.82% 10.64% 
Other Data:         
Number of employees (full-time equivalent) 177  177  176  182  180   177  180  
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 of 2019 and $0.03 million for the 2nd quarter and 6 months ended June 30, 2020. 
(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. Book value measures are reported inclusive of the net deferred tax assets. As presented here, shares of common outstanding excludes unvested Restricted Stock Awards. 
(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) 
       
 June 30, March 31, December 31, September 30, June 30,  
  2020  2020  2019  2019  2019  
 (Dollars in Thousands, Except Shares) 
Assets      
Cash and due from banks$9,120 $9,006 $8,970 $9,582 $8,791  
Reverse repurchase agreements 18,117  3,622  11,196  4,083  18,347  
Securities available for sale 110,818  117,640  117,972  118,211  122,365  
Equity securities at fair value 2,485  2,465  2,426  2,437  2,419  
Loans held for sale 83,997  24,988  16,928  25,347  8,450  
       
Loans 535,692  513,992  513,705  508,758  513,755  
Allowance for loan losses (8,483) (8,107) (8,007) (7,560) (7,251) 
Net loans 527,209  505,885  505,698  501,198  506,504  
       
Federal Home Loan Bank Stock 2,948  2,947  2,587  926  2,363  
Premises and equipment, net 4,679  4,769  4,274  4,504  4,643  
Accrued interest receivable 1,973  1,610  1,486  1,646  1,820  
Deferred tax assets, net 19,325  19,509  20,069  20,455  20,703  
Other real estate owned, net 2,334  2,335  2,396  2,466  2,466  
Bank owned life insurance 4,745  4,718  4,691  4,666  4,640  
Goodwill and other intangible assets 142  148  154  159  165  
Other assets 5,259  5,831  4,944  5,031  4,594  
Total Assets$793,151 $705,473 $703,791 $700,711 $708,270  
       
Liabilities and Stockholders' Equity       
Deposits:      
Noninterest-bearing demand$90,450 $67,459 $70,175 $63,694 $62,424  
Interest-bearing demand 54,288  47,760  45,512  50,683  32,649  
Savings 205,470  196,797  204,976  202,866  192,133  
Time 216,603  219,983  209,527  240,502  248,161  
Total deposits 566,811  531,999  530,190  557,745  535,367  
Short-term borrowings 77,273  68,950  73,847  38,468  69,174  
Long-term borrowings 42,960  0  0  0  0  
Accrued interest payable 447  543  603  711  725  
Other liabilities 8,313  8,140  5,747  9,705  8,969  
Total liabilities 695,804  609,632  610,387  606,629  614,235  
       
Stockholders' Equity       
Preferred stock, $1 par value; 5,000,000 authorized shares at both June 30, 2020 and December 31, 2019; 7% fixed rate noncumulative perpetual issued; 40,690 shares of series A and 3,201 shares of series B; convertible; $44.1 million aggregate liquidation preference 37,308  37,490  37,490  37,489  39,384  
Common stock, $1 par value; 75,000,000 authorized shares; 19,239,935 and 18,868,329 issued shares; 19,028,888 and 18,657,282 outstanding shares at June 30, 2020 and December 31, 2019, respectively. (1)                                                                                                                        19,240  19,162  18,868  18,868  18,543  
Capital surplus 161,032  160,990  161,175  161,110  160,991  
Accumulated deficit (121,285) (122,969) (123,753) (123,377) (124,412) 
Accumulated other comprehensive income, net 1,586  1,702  158  526  63  
Treasury stock 221,902 shares at cost (534) (534) (534) (534) (534) 
Total stockholders' equity 97,347  95,841  93,404  94,082  94,035  
Total liabilities and stockholders' equity$793,151 $705,473 $703,791 $700,711 $708,270  
       
(1) Both issued and outstanding shares as stated here exclude 435,157 shares and 815,395 shares of unvested restricted stock awards at June 30, 2020, and December 31, 2019, respectively. 
       


CIB MARINE BANCSHARES, INC. 
Consolidated Statements of Operations (Unaudited) 
          
 At or for the  
 Quarters Ended 6 Months Ended 
 June 30,March 31,December 31,September 30,June 30, June 30,June 30, 
  2020 2020  2019  2019  2019   2020  2019  
 (Dollars in thousands) 
          
Interest Income         
Loans$5,540$5,703 $5,793 $5,992 $5,811  $11,243 $11,504  
Loans held for sale 451 119  195  152  97   570  182  
Securities 661 763  764  810  868   1,424  1,672  
Other investments 17 51  68  81  302   68  735  
Total interest income 6,669 6,636  6,820  7,035  7,078   13,305  14,093  
          
Interest Expense         
Deposits 1,263 1,512  1,856  2,027  1,949   2,775  3,754  
Short-term borrowings 54 177  174  156  307   231  680  
Long-term borrowings 26 0  0  0  0   26  0  
Total interest expense 1,343 1,689  2,030  2,183  2,256   3,032  4,434  
Net interest income 5,326 4,947  4,790  4,852  4,822   10,273  9,659  
Provision for (reversal of) loan losses 249 202  715  327  (67)  451  (225) 
Net interest income after provision for (reversal of) loan losses 5,077 4,745  4,075  4,525  4,889   9,822  9,884  
          
Noninterest Income         
Deposit service charges 88 96  98  101  95   184  178  
Other service fees 36 20  23  30  29   56  49  
Mortgage banking revenue, net 3,990 2,177  2,112  2,936  2,148   6,167  3,126  
Other income 266 265  129  150  179   531  344  
Net gains on sale of securities available for sale 0 0  0  0  0   0  0  
Unrealized gains (losses) recognized on equity securities 20 39  (11) 18  34   59  64  
Net gains on sale of SBA loans 87 437  166  605  253   524  253  
Net gains (losses) on sale of assets and (writedowns) 2 (392) (268) (5) (28)  (390) 58  
Total noninterest income 4,489 2,642  2,249  3,835  2,710   7,131  4,072  
          
Noninterest Expense         
Compensation and employee benefits 5,451 4,421  4,701  5,309  4,445   9,872  8,132  
Equipment 379 363  394  335  353   742  688  
Occupancy and premises 407 460  460  420  437   867  893  
Data Processing 155 164  157  165  160   319  326  
Federal deposit insurance 47 0  (10) (5) 66   47  148  
Professional services 242 298  320  198  207   540  347  
Telephone and data communication 67 68  81  86  83   135  161  
Insurance 55 54  59  70  52   109  105  
Other expense 505 494  717  655  754   999  1,262  
Total noninterest expense 7,308 6,322  6,879  7,233  6,557   13,630  12,062  
Income (losses) from operations before income taxes 2,258 1,065  (555) 1,127  1,042   3,323  1,894  
Income tax expense (benefit) 575 281  (180) 93  281   856  510  
Net income (loss) 1,683 784  (375) 1,034  761   2,467  1,384  
Preferred stock dividend 0 0  0  0  0   0  0  
Discount from repurchase of preferred stock 33 0  0  308  0   33  0  
          
Net income (loss) allocated to common stockholders$1,716$784 $(375)$1,342 $761  $2,500 $1,384  
          

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