CIB Marine Bancshares, Inc. Announces Third Quarter 2022 Results

CIB Marine Bancshares, Inc.

BROOKFIELD, Wis., Oct. 14, 2022 (GLOBE NEWSWIRE) -- CIB Marine Bancshares, Inc. (the “Company” or “CIBM”) (OTCQX: CIBH), the holding company of CIBM Bank, announced its unaudited results of operations and financial condition for the quarter and nine months ended September 30, 2022. Continued strong net interest income supported increased earnings over the prior quarter, however, third quarter earnings are down compared to the same period in 2021 due to substantially reduced mortgage banking income in the rapidly changing interest rate environment. Net income for the quarter was $1.0 million, or $0.78 basic and $0.57 diluted earnings per share, compared to $2.1 million, or $1.61 basic and $0.94 diluted earnings per share, for the same period of 2021; and net income for the nine-month period was $2.8 million, or $2.16 basic and $1.57 diluted earnings per share, compared to $5.6 million, or $4.36 basic and $2.53 diluted earnings per share, for the same period in 2021.

Financial highlights for the quarter include:

• Net interest income and margin were $6.4 million and 3.45%, respectively, compared to $5.9 million and 3.21%, respectively, in the same period of 2021; and $17.8 million and 3.25%, respectively, for the nine-month period compared to $17.4 million and 3.23%, respectively, for the same period of 2021. The nine-month period in 2022 has $0.6 million less PPP loan fee accretion income and $0.3 million more subordinated debt interest expense compared to the same period in 2021. Improvements reflect higher earning assets, asset yield increases outpacing liability cost increases, and growth in non-interest bearing checking accounts. All remaining PPP loans were fully repaid in the third quarter of 2022.

• Net mortgage banking revenues were down $2.5 million and $7.5 million for the quarter and nine-month period, respectively, compared to the same periods of 2021. The change was due to a 54% decline in loan originations for the nine months ended September 30, 2022, compared to the same period of 2021, as a result of a substantial increase in residential mortgage rates and the dramatic competitive tightening of pricing margins across the industry.

• As of September 30, 2022, 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 0.18% and 0.13%, respectively, compared to 0.21% and 0.14%, respectively, on December 31, 2021, and 0.25% and 0.18%, respectively, on September 30, 2021.

• Over the longer-term, improving deposit mix is crucial to our success in managing consistently higher net interest margins. Since December 31, 2021, the Fed has increased their target fed funds rate by 300 basis points putting pressure on deposit mix over the shorter term. Over the year, time deposit balances have increased $20 million, money market accounts have decreased by $37 million, and combined interest and non-interest bearing checking accounts have increased by $30 million.

Mr. J. Brian Chaffin, CIBM’s President and CEO, commented, “Despite declining real gross domestic product, rapidly rising interest rates, and declining asset prices, we have been able to improve our core banking operating revenues with solid lending and deposit activity while maintaining strong asset quality measures. Although residential lending and related earnings have receded dramatically this year, we are positioned for longer-term success as the marketplace continues to consolidate.”

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates ten banking offices and two 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.

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,
	2022			2022			2022			2021			2021				2022			2021
	(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data:
Interest and dividend income	$	7,234		$	6,411		$	5,879		$	6,244		$	6,311			$	19,524		$	18,815
Interest expense		823			517			413			387			417				1,753			1,409
Net interest income		6,411			5,894			5,466			5,857			5,894				17,771			17,406
Provision for (reversal of) loan losses		34			40			(325	)		(502	)		(413	)			(251	)		(693	)
Net interest income after provision for
(reversal of) loan losses		6,377			5,854			5,791			6,359			6,307				18,022			18,099
Noninterest income (1)		1,313			1,660			1,705			2,718			4,072				4,678			12,353
Noninterest expense		6,311			6,374			6,262			7,641			7,517				18,947			22,736
Income before income taxes		1,379			1,140			1,234			1,436			2,862				3,753			7,716
Income tax expense		352			251			334			336			788				937			2,144
Net income	$	1,027		$	889		$	900		$	1,100		$	2,074			$	2,816		$	5,572
Common Share Data:
Basic net income per share (2)	$	0.78		$	0.68		$	0.69		$	1.28		$	1.61			$	2.16		$	4.36
Diluted net income per share (2)		0.57			0.49			0.50			0.92			0.94				1.57			2.53
Dividend		0.00			0.00			0.00			0.00			0.00				0.00			0.00
Tangible book value per share (3)		52.24			53.68			54.53			57.06			55.60				52.24			55.60
Book value per share (3)		49.78			51.22			52.07			54.55			50.58				49.78			50.58
Weighted average shares outstanding - basic		1,308,752			1,307,289			1,295,573			1,287,438			1,286,536				1,302,872			1,278,818
Weighted average shares outstanding - diluted		1,797,721			1,798,002			1,792,181			1,784,005			2,208,493				1,794,941			2,200,867
Financial Condition Data:
Total assets	$	762,965		$	774,356		$	764,641		$	745,393		$	775,912			$	762,965		$	775,912
Loans		564,841			549,175			529,212			543,819			559,079				564,841			559,079
Allowance for loan losses		(8,061	)		(8,010	)		(8,011	)		(8,352	)		(8,699	)			(8,061	)		(8,699	)
Investment securities		127,954			122,483			109,533			106,647			102,243				127,954			102,243
Deposits		633,234			642,500			631,953			618,991			624,579				633,234			624,579
Borrowings		37,168			37,693			36,789			27,049			34,577				37,168			34,577
Stockholders' equity		87,228			89,111			89,931			91,780			108,984				87,228			108,984
Financial Ratios and Other Data:
Performance Ratios:
Net interest margin (4)		3.45	%		3.23	%		3.05	%		3.18	%		3.21	%			3.25	%		3.23	%
Net interest spread (5)		3.29	%		3.14	%		2.98	%		3.10	%		3.12	%			3.13	%		3.14	%
Noninterest income to average assets (6)		0.72	%		0.91	%		0.97	%		1.43	%		2.13	%			0.87	%		2.20	%
Noninterest expense to average assets		3.24	%		3.34	%		3.35	%		3.98	%		3.92	%			3.31	%		4.03	%
Efficiency ratio (7)		80.73	%		83.52	%		85.98	%		88.87	%		75.34	%			83.35	%		76.28	%
Earnings on average assets (8)		0.53	%		0.47	%		0.48	%		0.57	%		1.08	%			0.49	%		0.99	%
Earnings on average equity (9)		4.52	%		3.96	%		3.98	%		4.47	%		7.59	%			4.15	%		6.95	%
Asset Quality Ratios:
Nonaccrual loans to loans (10)		0.13	%		0.22	%		0.13	%		0.14	%		0.18	%			0.13	%		0.18	%
Nonaccrual loans, restructured loans and
loans 90 days or more past due and still
accruing to total loans (10)		0.17	%		0.28	%		0.20	%		0.21	%		0.27	%			0.17	%		0.27	%
Nonperforming assets, restructured loans
and loans 90 days or more past due and still
accruing to total assets (10)		0.18	%		0.25	%		0.19	%		0.21	%		0.25	%			0.18	%		0.25	%
Allowance for loan losses to total loans (10)		1.43	%		1.46	%		1.51	%		1.54	%		1.56	%			1.43	%		1.56	%
Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or
more past due and still accruing (10)		852.11	%		512.48	%		742.45	%		726.26	%		575.33	%			852.11	%		575.33	%
Net charge-offs (recoveries) annualized
to average loans (10)		-0.01	%		0.03	%		0.01	%		-0.11	%		0.04	%			0.01	%		-0.07	%
Capital Ratios:
Total equity to total assets		11.43	%		11.51	%		11.76	%		12.31	%		14.05	%			11.43	%		14.05	%
Total risk-based capital ratio		16.42	%		16.85	%		17.52	%		15.53	%		18.14	%			16.42	%		18.14	%
Tier 1 risk-based capital ratio		13.48	%		13.85	%		14.43	%		14.28	%		16.89	%			13.48	%		16.89	%
Leverage capital ratio		10.16	%		10.20	%		10.27	%		10.22	%		12.44	%			10.16	%		12.44	%
Other Data:
Number of employees (full-time equivalent)		166			159			172			177			179				166			179
Number of banking facilities		10			10			10			10			10				10			10
(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 $0.5 million for the quarter ended December 31, 2021.
(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)
	September 30,			June 30,			March 31,			December 31,			September 30,
	2022			2022			2022			2021			2021
	(Dollars in Thousands, Except Shares)
Assets
Cash and due from banks	$	36,454		$	68,097		$	88,605		$	59,184		$	69,217
Reverse repurchase agreements		-			-			-			-			-
Securities available for sale		125,830			120,265			107,237			104,240			99,813
Equity securities at fair value		2,124			2,218			2,296			2,407			2,430
Loans held for sale		6,471			7,519			9,567			9,859			18,258
Loans		564,841			549,175			529,212			543,819			559,079
Allowance for loan losses		(8,061	)		(8,010	)		(8,011	)		(8,352	)		(8,699	)
Net loans		556,780			541,165			521,201			535,467			550,380
Federal Home Loan Bank Stock		1,897			2,897			3,140			3,140			3,140
Premises and equipment, net		4,159			4,138			4,226			4,200			3,979
Accrued interest receivable		1,807			1,644			1,611			1,605			1,813
Deferred tax assets, net		16,977			16,142			15,758			14,731			15,193
Other real estate owned, net		403			403			403			403			403
Bank owned life insurance		6,040			6,002			5,966			5,930			5,894
Goodwill and other intangible assets		92			98			103			109			115
Other assets		3,931			3,768			4,528			4,118			5,277
Total Assets	$	762,965		$	774,356		$	764,641		$	745,393		$	775,912
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand	$	134,765		$	129,457		$	124,724		$	120,479		$	122,441
Interest-bearing demand		79,306			66,495			67,362			63,693			62,414
Savings		254,146			287,159			294,255			289,943			287,609
Time		165,017			159,389			145,612			144,876			152,115
Total deposits		633,234			642,500			631,953			618,991			624,579
Short-term borrowings		27,480			28,013			27,117			27,049			34,577
Long-term borrowings		9,688			9,680			9,672			-			-
Accrued interest payable		227			287			144			100			111
Other liabilities		5,108			4,765			5,824			7,473			7,661
Total liabilities		675,737			685,245			674,710			653,613			666,928
Stockholders' Equity
Preferred stock, $1 par value; 5,000,000 authorized shares at September 30, 2022 and December 31, 2021; 7% fixed rate noncumulative perpetual issued; 20,463 shares and 40,690 shares of series A and 1,610 shares and 3,201 shares of series B; convertible; $22.1 million and $43.9 million aggregate liquidation preference, respectively		18,762			18,762			18,762			18,762			37,308
Common stock, $1 par value; 75,000,000 authorized shares; 1,323,547 and 1,306,660 issued shares; 1,309,478 and 1,292,591 outstanding shares at September 30, 2022 and December 31, 2021, respectively. (1)		1,324			1,324			1,318			1,307			1,302
Capital surplus		180,664			180,544			180,431			180,360			179,557
Accumulated deficit		(106,081	)		(107,108	)		(107,997	)		(108,897	)		(109,997	)
Accumulated other comprehensive income, net		(6,907	)		(3,877	)		(2,049	)		782			1,348
Treasury stock, 14,791 shares on September 30, 2022 and December 31, 2021 (2)		(534	)		(534	)		(534	)		(534	)		(534	)
Total stockholders' equity		87,228			89,111			89,931			91,780			108,984
Total liabilities and stockholders' equity	$	762,965		$	774,356		$	764,641		$	745,393		$	775,912
(1) Both issued and outstanding shares as stated here exclude 59,676 shares of unvested restricted stock awards at June 30, 2022 and 66,299 shares at December 31, 2021.
(2) Treasury stock includes 722 shares held by subsidiary bank CIBM Bank.

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,
	2022			2022			2022			2021			2021				2022			2021
	(Dollars in thousands)
Interest Income
Loans	$	6,029		$	5,542		$	5,254		$	5,572		$	5,646			$	16,825		$	16,753
Loans held for sale		96			90			58			131			135				244			405
Securities		826			683			537			516			509				2,046			1,615
Other investments		283			96			30			25			21				409			42
Total interest income		7,234			6,411			5,879			6,244			6,311				19,524			18,815
Interest Expense
Deposits		662			384			350			379			409				1,396			1,368
Short-term borrowings		40			12			7			8			8				59			41
Long-term borrowings		121			121			56			0			0				298			0
Total interest expense		823			517			413			387			417				1,753			1,409
Net interest income		6,411			5,894			5,466			5,857			5,894				17,771			17,406
Provision for (reversal of) loan losses		34			40			(325	)		(502	)		(413	)			(251	)		(693	)
Net interest income after provision for
(reversal of) loan losses		6,377			5,854			5,791			6,359			6,307				18,022			18,099
Noninterest Income
Deposit service charges		86			92			88			95			97				266			271
Other service fees		18			71			25			23			35				114			118
Mortgage banking revenue, net		1,126			1,268			1,430			2,300			3,626				3,824			11,372
Other income		147			141			212			185			186				500			658
Net gains on sale of securities available for sale		0			0			0			0			0				0			0
Unrealized gains (losses) recognized on equity securities		(93	)		(78	)		(112	)		(23	)		(12	)			(283	)		(48	)
Net gains (loss) on sale of SBA loans		0			126			31			120			151				157			151
Net gains (losses) on sale of assets and (writedowns)		29			40			31			18			(11	)			100			(169	)
Total noninterest income		1,313			1,660			1,705			2,718			4,072				4,678			12,353
Noninterest Expense
Compensation and employee benefits		4,240			4,175			4,229			5,334			5,436				12,644			16,491
Equipment		396			439			442			446			390				1,277			1,153
Occupancy and premises		390			408			422			400			395				1,220			1,272
Data Processing		205			171			166			167			105				542			471
Federal deposit insurance		58			51			52			51			46				161			141
Professional services		244			284			224			353			227				752			808
Telephone and data communication		61			60			61			67			70				182			186
Insurance		74			74			85			72			66				233			198
Other expense		643			712			581			751			782				1,936			2,016
Total noninterest expense		6,311			6,374			6,262			7,641			7,517				18,947			22,736
Income from operations
before income taxes		1,379			1,140			1,234			1,436			2,862				3,753			7,716
Income tax expense		352			251			334			336			788				937			2,144
Net income		1,027			889			900			1,100			2,074				2,816			5,572
Preferred stock dividend		0			0			0			0			0				0			0
Discount from repurchase of preferred stock		0			0			0			546			0				0			0
Net income allocated to
common stockholders	$	1,027		$	889		$	900		$	1,646		$	2,074			$	2,816		$	5,572

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