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CIB Marine Bancshares, Inc. Announces 2017 First Quarter Results

WAUKESHA, WI--(Marketwired - April 13, 2017) - CIB Marine Bancshares, Inc. (the "Company" or "CIBM") (CIBH), the holding company of CIBM Bank (the "Bank"), today announces its results of operations and financial condition for the first quarter of 2017. Net income for the first quarter was $0.9 million or $0.05 per share basic. This compares to net income of $1.1 million or $0.06 per share basic for the fourth quarter of 2016 and net income of $1.0 million or $0.05 per share basic for the first quarter of 2016.

Select highlights for the quarter include:

  • Return on average assets for the first quarter of 2017 is 0.56%, compared to 0.66% for the fourth quarter of 2016 and 0.66% for the first quarter of 2016. Both of the prior periods reported significant recovery of prior loan related losses whereas there was none in the current quarter.
  • Our book and tangible book value per share of common stock are reported at $0.60 and $1.08, respectively, compared to $0.41 and $0.90 from one year prior.
  • Net income for subsidiary CIBM Bank was $1.1 million, compared to net income of $1.2 million for the fourth quarter of 2016 boosted by a large loan loss recovery and $0.7 million for the first quarter of 2016. Improvements are due to higher net interest income and gains on sale of SBA loans, as well as lower noninterest expense.
  • Net interest income of $4.7 million for the quarter is an increase of $0.2 million from the fourth quarter of 2016 and $0.3 million from the first quarter of 2016.
  • Non-interest income of $1.9 million for the quarter was on par with $1.9 million from the fourth quarter of 2016. Non-interest income for the first quarter of 2016 was $2.1 million and included $0.4 million in net gains from sale of OREO assets net of other write-downs.

"CIB Marine's performance reflected continued gains consistent with our business plan. Our net interest income grew due to higher earning asset volumes and the new Fed rate hikes. Gains on sale of SBA loans of $0.4 million reported in net gains on sale of assets is an early sign of the kind of performance our new SBA Lending division is capable of providing. Retail banking generated more than $20 million gross in new deposits to assist funding prior asset growth and a reduction in our FHLB borrowings. At Avenue Mortgage, although off to a seasonally slower start, the month of March showed signs of strength as the home purchase markets started to heat up and our new and growing lending team in central Illinois is just getting started," said Mr. J. Brian Chaffin, President and CEO of CIB Marine Bancshares, Inc.

Mr. Chaffin added, "We are excited to introduce our Affordable Loan Program to assist low and moderate income households in our communities and the creation of a new Community Development Officer position. Early indicators are very positive and show what a positive force the company and its employees can have within the communities we live and work."

Mr. Chaffin then noted, "As referenced in our shareholder letter dated April 3, 2017, we have included with this release a summary analysis of the potential impact preferred stock repurchases under various discount scenarios would have on book value. More information and a proposal for common shareholders to vote on will be included in the Proxy Statement for the 2017 Annual Shareholder Meeting."

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates 11 banking offices in Illinois, Wisconsin and Indiana and 4 separate 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.

Notice that Preferred Dividend has not been declared: Pursuant to Sections 5.4(e)(v) and 5.5(e)(v) of the Company's Articles of Incorporation, notice is hereby given that the Board of Directors of the Company has not declared a dividend on its Series A Preferred Stock or its Series B Convertible Preferred Stock for the period ended March 31, 2017 and, accordingly, no dividend will be paid to preferred shareholders for such Dividend Period.

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, 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   Three Months Ended
    March 31,   December 31,   September 30,   June 30,   March 31,   March 31,   March 31,
    2017   2016   2016   2016   2016   2017   2016
    (Dollars in thousands, except share and per share data)
Selected Statement of Operations Data                                                        
Interest and dividend income   $ 5,562     $ 5,273     $ 5,286     $ 5,214     $ 5,176     $ 5,562     $ 5,176  
Interest expense     892       793       740       729       735       892       735  
  Net interest income     4,670       4,480       4,546       4,485       4,441       4,670       4,441  
Provision for (reversal of) loan losses     228       (796 )     69       118       61       228       61  
  Net interest income after provision for (reversal of) loan losses     4,442       5,276       4,477       4,367       4,380       4,442       4,380  
Noninterest income (1)     1,847       1,908       2,651       2,788       2,053       1,847       2,053  
Noninterest expense     5,401       6,127       6,220       5,951       5,481       5,401       5,481  
  Income (loss) before income taxes     888       1,057       908       1,204       952       888       952  
Income tax expense     0       (5 )     40       15       0       0       0  
  Net income (loss)   $ 888     $ 1,062     $ 868     $ 1,189     $ 952     $ 888     $ 952  
                                                         
Common Share Data                                                        
  Basic net income (loss) per share   $ 0.05     $ 0.06     $ 0.05     $ 0.07     $ 0.05     $ 0.05     $ 0.05  
  Diluted net income (loss) per share     0.02       0.03       0.02       0.03       0.03       0.02       0.03  
  Dividend     0       0       0       0       0       0       0  
  Tangible book value per share (2)     1.08       1.01       1.04       0.99       0.90       1.08       0.90  
  Book value per share (2)     0.60       0.53       0.56       0.51       0.41       0.60       0.41  
  Weighted average shares outstanding - basic     18,127,892       18,127,892       18,127,892       18,127,892       18,127,892       18,127,892       18,127,892  
  Weighted average shares outstanding - diluted     36,193,353       36,082,522       35,818,022       35,631,892       35,631,892       36,193,353       35,631,892  
Financial Condition Data                                                        
  Total assets   $ 631,160     $ 653,559     $ 632,628     $ 615,708     $ 597,089     $ 631,160     $ 597,089  
  Loans     483,501       483,518       466,057       461,859       470,424       483,501       470,424  
  Allowance for loan losses     (7,567 )     (7,592 )     (8,549 )     (8,219 )     (8,235 )     (7,567 )     (8,235 )
  Investment securities     111,745       112,072       103,853       103,542       97,474       111,745       97,474  
  Deposits     497,144       483,097       476,428       468,377       467,334       497,144       467,334  
  Borrowings     60,837       96,944       81,636       72,833       57,929       60,837       57,929  
  Stockholders' equity     70,819       69,523       70,094       69,266       67,475       70,819       67,475  
Financial Ratios and Other Data                                                        
  Performance Ratios:                                                        
    Net interest margin (3)     3.02 %     2.84 %     2.95 %     3.11 %     3.15 %     3.02 %     3.15 %
    Net interest spread (4)     2.87 %     2.70 %     2.80 %     2.96 %     3.00 %     2.87 %     3.00 %
    Noninterest income to average assets (5)     1.16 %     1.18 %     1.68 %     1.88 %     1.42 %     1.16 %     1.42 %
    Noninterest expense to average assets     3.40 %     3.79 %     3.93 %     4.02 %     3.78 %     3.40 %     3.78 %
    Efficiency ratio (6)     82.88 %     95.91 %     86.42 %     81.82 %     84.40 %     82.88 %     84.40 %
    Earnings (loss) on average assets (7)     0.56 %     0.66 %     0.55 %     0.80 %     0.66 %     0.56 %     0.66 %
    Earnings (loss) on average equity (8)     5.10 %     5.93 %     4.89 %     6.98 %     5.75 %     5.10 %     5.75 %
Asset Quality Ratios:                                                        
  Nonaccrual loans to loans (9)     1.32 %     1.26 %     1.16 %     0.81 %     0.81 %     1.32 %     0.81 %
  Nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing to total loans (9)     1.65 %     1.60 %     1.58 %     1.63 %     1.64 %     1.65 %     1.64 %
  Nonperforming assets, restructured loans and loans 90 days or more past due and still accruing to total assets (9)     1.77 %     1.67 %     1.32 %     1.59 %     1.94 %     1.77 %     1.94 %
  Allowance for loan losses to total loans     1.57 %     1.57 %     1.83 %     1.78 %     1.75 %     1.57 %     1.75 %
  Allowance for loan losses to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (9)     94.67 %     97.99 %     116.08 %     109.14 %     106.74 %     94.67 %     106.74 %
  Net charge-offs (recoveries) annualized to average loans     0.21 %     0.14 %     -0.22 %     0.12 %     -0.10 %     0.21 %     -0.10 %
Capital Ratios:                                                        
  Total equity to total assets     11.02 %     10.64 %     11.08 %     11.25 %     11.30 %     11.02 %     11.30 %
  Total risk-based capital ratio     15.90 %     15.40 %     15.66 %     15.60 %     15.19 %     15.90 %     15.19 %
  Tier 1 risk-based capital ratio     14.65 %     14.15 %     14.41 %     14.34 %     13.93 %     14.65 %     13.93 %
  Leverage capital ratio     11.21 %     11.14 %     11.20 %     11.69 %     11.72 %     11.21 %     11.72 %
Other Data:                                                        
  Number of employees (full-time equivalent)     181       171       169       167       180       181       180  
  Number of banking facilities     11       11       11       11       11       11       11  
   
(1) Noninterest income includes gains and losses on securities.
(2) Tangible book value per share is the shareholder 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 shareholder equity less the liquidation preference of the preferred stock, divided by the total shares of common outstanding.
(3) Net interest margin is the ratio of net interest income to average interest-earning assets.
(4) Net interest spread is the yield on average interest-earning assets less the rate on average interest-bearing liabilities.
(5) Noninterest income to average assets excludes gains and losses on securities.
(6) The efficiency ratio is noninterest expense divided by the sum of net interest income plus noninterest income, excluding gains and losses on securities.
(7) Earnings on average assets are net income divided by average total assets.
(8) Earnings on average equity are net income divided by average common equity.
(9) Excludes loans held for sale.
 
 
 
CIB MARINE BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
             
    March 31, December 31, September 30, June 30, March 31,
    2017 2016 2016 2016 2016
    (Dollars in thousands, except share data)
Assets                                
Cash and due from banks   $ 12,773   $ 10,291   $ 11,427   $ 9,808   $ 9,136  
Reverse repurchase agreements     11,019     24,275     27,560     20,313     -  
Securities available for sale     111,745     112,072     103,853     103,542     97,474  
Loans held for sale     2,448     11,469     15,875     11,602     10,176  
                                 
Loans     483,501     483,518     466,057     461,859     470,424  
Allowance for loan losses     (7,567 )   (7,592 )   (8,549 )   (8,219 )   (8,235 )
  Net loans     475,934     475,926     457,508     453,640     462,189  
                                 
Federal Home Loan Bank Stock     2,070     3,803     3,803     2,170     2,170  
Premises and equipment, net     4,369     4,427     4,256     4,358     4,716  
Accrued interest receivable     1,377     1,382     1,289     1,290     1,468  
Other real estate owned, net     3,153     3,159     982     2,283     3,859  
Bank owned life insurance     4,414     4,389     4,363     4,336     4,310  
Goodwill and other intangible assets     215     221     226     232     237  
Other assets     1,643     2,145     1,486     2,134     1,354  
    Total Assets   $ 631,160   $ 653,559   $ 632,628   $ 615,708   $ 597,089  
                                 
Liabilities and Stockholders' Equity                                
Deposits:                                
  Noninterest-bearing demand   $ 76,088   $ 77,154   $ 87,216   $ 82,460   $ 74,564  
  Interest-bearing demand     33,027     33,832     29,821     31,508     32,096  
  Savings     192,175     176,435     169,390     175,955     175,576  
  Time     195,854     195,676     190,001     178,454     185,098  
    Total deposits     497,144     483,097     476,428     468,377     467,334  
Short-term borrowings     60,837     96,944     81,636     72,833     57,929  
Accrued interest payable     327     349     319     335     339  
Other liabilities     2,033     3,646     4,151     4,897     4,012  
    Total liabilities     560,341     584,036     562,534     546,442     529,614  
                                 
Stockholders' Equity                                
Preferred stock, $1 par value; 5,000,000                                
authorized shares; 7% fixed rate noncumulative perpetual issued-55,624 shares of series A and 4,376 shares of series B; convertible; aggregate liquidation preference- $60,000     51,000     51,000     51,000     51,000     51,000  
Common stock, $1 par value; 50,000,000 authorized shares; 18,346,391 issued shares; 18,135,344 outstanding shares     18,346     18,346     18,346     18,346     18,346  
Capital surplus     158,602     158,552     158,510     158,493     158,493  
Accumulated deficit     (154,629 )   (155,517 )   (156,579 )   (157,446 )   (158,636 )
Accumulated other comprehensive loss, net     (1,971 )   (2,329 )   (654 )   (598 )   (1,199 )
Treasury stock 218,499 shares at cost     (529 )   (529 )   (529 )   (529 )   (529 )
    Total stockholders' equity     70,819     69,523     70,094     69,266     67,475  
    Total liabilities and stockholders' equity   $ 631,160   $ 653,559   $ 632,628   $ 615,708   $ 597,089  
                                     
                                     
                                     
CIB MARINE BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
                             
    At or for the
    Quarters Ended   Three Months Ended
    March 31,   December 31,   September 30,   June 30,   March 31,   March 31,   March 31,
    2017   2016   2016   2016   2016   2017   2016
    (Dollars in thousands)
                                               
Interest Income                                              
Loans   $ 4,826   $ 4,493     $ 4,540     $ 4,635   $ 4,572   $ 4,826   $ 4,572
Loans held for sale     46     141       153       95     83     46     83
Securities     611     563       513       478     517     611     517
Other investments     79     76       80       6     4     79     4
  Total interest income     5,562     5,273       5,286       5,214     5,176     5,562     5,176
                                               
Interest Expense                                              
Deposits     749     697       659       692     705     749     705
Short-term borrowings     143     96       81       37     30     143     30
  Total interest expense     892     793       740       729     735     892     735
  Net interest income     4,670     4,480       4,546       4,485     4,441     4,670     4,441
Provision for (reversal of) loan losses     228     (796 )     69       118     61     228     61
  Net interest income after provision for (reversal of) loan losses     4,442     5,276       4,477       4,367     4,380     4,442     4,380
                                               
Noninterest Income                                              
Deposit service charges     113     121       125       121     103     113     103
Other service fees     46     45       47       52     67     46     67
Mortgage Banking revenue, net     1,142     1,414       2,285       2,102     1,336     1,142     1,336
Other income     97     136       206       96     117     97     117
Net gains on sale of securities     0     0       0       0     0     0     0
Net gains (losses) on sale of assets and (writedowns)     449     192       (12 )     417     430     449     430
  Total noninterest income     1,847     1,908       2,651       2,788     2,053     1,847     2,053
                                               
Noninterest Expense                                              
Compensation and employee benefits     3,705     4,228       4,426       4,143     3,624     3,705     3,624
Equipment     290     305       277       293     273     290     273
Occupancy and premises     390     390       377       389     435     390     435
Data Processing     140     123       185       151     154     140     154
Federal deposit insurance     87     92       105       106     106     87     106
Professional services     200     156       157       213     249     200     249
Telephone and data communication     81     90       92       99     109     81     109
Insurance     59     60       60       56     54     59     54
Other expense     449     683       541       501     477     449     477
  Total noninterest expense     5,401     6,127       6,220       5,951     5,481     5,401     5,481
Income (loss) from operations before income taxes     888     1,057       908       1,204     952     888     952
Income tax expense     0     (5 )     40       15     0     0     0
  Net income (loss)     888     1,062       868       1,189     952     888     952
Preferred stock dividend     0     0       0       0     0     0     0
  Net income (loss) allocated to common stockholders   $ 888   $ 1,062     $ 868     $ 1,189   $ 952   $ 888   $ 952
CIB Marine Bancshares, Inc.
Summary of Preferred Stock Repurchase Program Scenario Analysis
 
In a letter to shareholders dated April 3, 2017, we discussed a plan to be presented to shareholders at the 2017 Annual Shareholder Meeting on May 25, 2017, in Champaign, Illinois. The Company intends to create a non-mandatory preferred stock repurchase program if the common and preferred shareholders vote in favor of an amendment to the Company's Articles of Incorporation permitting individually negotiated repurchases of the preferred stock. The repurchase of preferred stock at a discount to par is accretive for the Company and its shareholders, and creates the opportunity for liquidity for preferred shareholders who choose for themselves to sell their stock at a mutually agreeable price. The analysis below demonstrates the accretion to book value of preferred stock repurchases under various discount scenarios.
 
REPURCHASE SCENARIO AT 30% of Liquidation Preference
End of Year 2016 2017 2018 2019 2020 2021 2022 2023
Repurchase Price of Series A as % of Liquidation Preference   30% 30% 30% 30%      
Preferred Series A Outstanding, end of period 55,624 35,624 25,624 15,624 0      
Cash Used for Repurchase   $6,000,000 $3,000,000 $3,000,000 $4,687,200 no remaining Preferred Series A
  Total Shares of Series A Repurchased   20,000.00 10,000.00 10,000.00 15,624.00      
  Tangible Book Value per Common Share, basic $1.03 $1.83 $2.40 $2.97 $3.71      
  Book Value per Common Share, basic $0.53 $1.49 $2.15 $2.79 $3.67      
REPURCHASE SCENARIO AT 70% of Liquidation Preference
End of Year 2016 2017 2018 2019 2020 2021 2022 2023
Repurchase Price of Series A as % of Liquidation Preference   70% 70% 70% 70% 70% 70% 70%
Preferred Series A Outstanding, end of period 55,624 47,053 42,767 38,481 34,195 29,910 25,624 21,338
Cash Used for Repurchase   $6,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000
  Total Shares of Series A Repurchased   8,571.43 4,285.71 4,285.71 4,285.71 4,285.71 4,285.71 4,285.71
  Tangible Book Value per Common Share, basic $1.03 $1.30 $1.60 $1.90 $2.20 $2.53 $2.86 $3.18
  Book Value per Common Share, basic $0.53 $0.86 $1.21 $1.53 $1.87 $2.23 $2.60 $2.96
REPURCHASE SCENARIO AT 30%, 50% then 70% of Liquidation Preference
End of Year 2016 2017 2018 2019 2020 2021 2022 2023
Repurchase Price of Series A as % of Liquidation Preference   30% 50% 70% 70% 70% 70% 70%
Preferred Series A Outstanding, end of period 55,624 35,624 29,624 25,338 21,053 16,767 12,481 8,195
Cash Used for Repurchase   $6,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000
  Total Shares of Series A Repurchased   20,000.00 6,000.00 4,285.71 4,285.71 4,285.71 4,285.71 4,285.71
  Tangible Book Value per Common Share, basic $1.03 $1.83 $2.21 $2.51 $2.82 $3.15 $3.47 $3.80
  Book Value per Common Share, basic $0.53 $1.49 $1.93 $2.25 $2.60 $2.96 $3.32 $3.68
Assumptions
1) Sufficient cash is available from earnings and liquidity to support the repurchase plan, and at the same time support a strong capital position at the subsidiary bank and the company on a consolidated basis.
2) The amendments proposed in the 2017 Proxy Statement are approved by all necessary parties and any and all regulatory approvals are obtained to engage in the repurchase activity.
3) Repurchased shares are cancelled and not retained as treasury stock.
4) Common Stock Issued and Outstanding as reflected in the basic shares used to determine the book values per share reflect 0% forfeiture of Restricted Stock Awards.
5) The Tangible Book Values and Book Values per share reflect both the accretive affects of the repurchase program and a baseline earnings forecast for purposes of demonstrating the potential outcomes.
The scenarios are an expression of possible outcomes with willing parties, free to chose for themselves when and at what prices they are willing to sell their shares of preferred stock for cash. The scenarios do not fully reflect all possible outcomes or the potential upside to the Preferred Shareholders should they retain their holdings.