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CIB Marine Bancshares, Inc. Announces 2019 Results

BROOKFIELD, Wis., Jan. 24, 2020 (GLOBE NEWSWIRE) -- CIB Marine Bancshares, Inc. (the “Company” or “CIBM”) (CIBH), the holding company of CIBM Bank, announced its unaudited results of operations and financial condition for the fourth quarter and year-end 2019.  Net income for the year ended December 31, 2019, was $2.0 million or $0.13 basic and $0.07 diluted earnings per share, compared to $3.3 million or $0.28 basic and $0.15 diluted earnings per share for the same period of 2018. 

Lower income for the year was the result of a few key factors:

  • The provision for loan losses was $0.8 million in 2019 compared to a $1.2 million reversal of provision in 2018.  Although credit quality measures overall were improved, as highlighted below, impairments on a few loans resulted in a provision to loan losses of $0.7 million during the fourth quarter of 2019 compared to a reversal of $1.2 million for the same period of 2018. 
  • Total gains on the sale of SBA 7(a) loans for the year 2019 declined by $1.1 million compared to 2018 due to a $6 million decline in loans originated for sale and lower premiums on loans sold.  The decline reflects the broader industry experience for the year.
  • Cost of interest bearing liabilities increased 38 basis points from 2018 to 2019 as deposit pricing pressure for time deposits and money market accounts began building in the latter half of 2018 and continued into 2019.  As a result, the net interest margin declined by 14 basis points and net interest income declined by $0.5 million in 2019 compared to 2018.

Some highlights of 2019 included:

  • Mortgage division income before tax increased by $1.0 million for the full year compared to 2018, the result of an increase of approximately $55 million in residential loans originated for sale.
  • Tangible book value per share and stated book value per share at December 31, 2019, were $2.99 and $2.64 per share of common stock, respectively, reflecting increases of $0.17 and $0.19 versus the prior year-end.  The increases were due primarily to $2.0 million in net income; a $1.4 million improvement in accumulated other comprehensive income; and a $0.3 million discount to the carry value of the preferred stock repurchased in 2019, which was accretive to the common shareholders.
  • Although the cost of interest bearing liabilities was higher overall for the year, it declined by 13 basis points during the fourth quarter as renewing 12-month time deposits and money market accounts with one-year introductory rates were repriced in a lower rate environment.  
  • 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 was 1.35% and 1.09%, respectively, at December 31, 2019, compared to 1.45% and 1.34%, respectively, at December 31, 2018.

Mr. J. Brian Chaffin, President and CEO of CIBM, commented, “Although we showed solid results in a number of areas where goals and budgets were met or exceeded – including our corporate banking and mortgage divisions – the higher loan loss provisions resulting from a few loans, higher cost of funds, and lower SBA originations were setbacks in 2019 that resulted in lower than expected overall operating results.  In the fourth quarter of 2019, management, working with the Board of Directors, commenced a targeted improvement process with objectives to drive better results in the future.  This process is directed at cost of funds, product mix and margins, cost controls and other matters related to the company’s culture, brand, and customer experience.”

Regarding preferred stock repurchases, he stated, “We settled our outstanding preferred stock repurchases during the fourth quarter of 2019 and early 2020.  This included the repurchase of 2,229 shares of preferred stock as part of the second of three planned modified Dutch auctions, and 4,923 preferred shares that were subject to repurchase pursuant to a negotiated repurchase agreement entered into in 2018.  The total purchase price was $5.1 million.  CIB Marine did not issue any new capital or debt to pay for the repurchases and no longer has any outstanding liabilities in its balance sheet for agreements to repurchase stock. Total repurchased shares to date amount to approximately 26% of the 60,000 shares of preferred stock originally issued in 2009 and the shares repurchased to date included 1,159 shares of Series B preferred stock, effectively terminating conversion rights equal to 4.6 million shares of common stock.

“CIB Marine plans to hold the third and final modified Dutch auction during the first half of 2020.  More information will be forthcoming,” he concluded.

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates eleven banking offices and four 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   12 Months Ended
  December 31, September 30, June 30, March 31, December 31,   December 31, December 31,
  2019 2019 2019 2019 2018   2019 2018
                 
  (Dollars in thousands, except share and per share data)
Selected Statement of Operations Data                
Interest and dividend income $ 6,820   $ 7,035   $ 7,078   $ 7,015   $ 7,009     $ 27,948   $ 26,203  
Interest expense   2,030     2,183     2,256     2,178     2,064       8,647     6,422  
Net interest income   4,790     4,852     4,822     4,837     4,945       19,301     19,781  
Provision for (reversal of) loan losses   715     327     (67 )   (158 )   (1,195 )     817     (1,185 )
Net interest income after provision for                
(reversal of) loan losses   4,075     4,525     4,889     4,995     6,140       18,484     20,966  
Noninterest income (1)   2,249     3,835     2,710     1,362     1,546       10,156     9,409  
Noninterest expense   6,879     7,233     6,557     5,505     6,415       26,174     25,847  
Income (loss) before income taxes   (555 )   1,127     1,042     852     1,271       2,466     4,528  
Income tax expense (benefit)   (180 )   93     281     229     313       423     1,188  
Net income (loss) $ (375 ) $ 1,034   $ 761   $ 623   $ 958     $ 2,043   $ 3,340  
                 
Common Share Data                
Basic net income (loss) per share (2) $ (0.02 ) $ 0.07   $ 0.04   $ 0.03   $ 0.05     $ 0.13   $ 0.28  
Diluted net income (loss) per share (2)   (0.02 )   0.04     0.02     0.02     0.03       0.07     0.15  
Dividend   0.00     0.00     0.00     0.00     0.00       0.00     0.00  
Tangible book value per share (3)   2.99     3.03     2.97     2.90     2.82       2.99     2.82  
Book value per share (3)   2.64     2.68     2.60     2.53     2.45       2.64     2.45  
Weighted average shares outstanding - basic   18,646,427     18,455,408     18,290,674     18,232,169     18,232,169       18,406,663     18,209,096  
Weighted average shares outstanding - diluted   32,329,533     32,536,354     33,009,983     32,815,744     32,757,855       32,711,639     35,139,642  
Financial Condition Data                
Total assets $ 703,791   $ 700,711   $ 708,270   $ 702,152   $ 721,259     $ 703,791   $ 721,259  
Loans   513,705     508,758     513,755     489,273     491,337       513,705     491,337  
Allowance for loan losses   (8,007 )   (7,560 )   (7,251 )   (7,865 )   (7,947 )     (8,007 )   (7,947 )
Investment securities   120,398     120,648     124,784     123,500     121,281       120,398     121,281  
Deposits   530,190     557,745     535,367     542,938     536,931       530,190     536,931  
Borrowings   73,847     38,468     69,174     57,220     86,710       73,847     86,710  
Stockholders' equity   93,404     94,082     94,035     92,507     91,035       93,404     91,035  
Financial Ratios and Other Data                
Performance Ratios:                
Net interest margin (4)   2.86 %   2.95 %   2.89 %   2.94 %   2.89 %     2.91 %   3.05 %
Net interest spread (5)   2.55 %   2.62 %   2.58 %   2.64 %   2.62 %     2.60 %   2.80 %
Noninterest income to average assets (6)   1.28 %   2.19 %   1.52 %   0.76 %   0.84 %     1.43 %   1.37 %
Noninterest expense to average assets   3.88 %   4.14 %   3.72 %   3.14 %   3.54 %     3.72 %   3.75 %
Efficiency ratio (7)   97.57 %   83.44 %   87.45 %   89.24 %   99.18 %     89.07 %   88.44 %
Earnings on average assets (8)   -0.21 %   0.59 %   0.43 %   0.36 %   0.53 %     0.29 %   0.48 %
Earnings on average equity (9)   -1.56 %   4.35 %   3.28 %   2.76 %   4.23 %     2.18 %   3.52 %
Asset Quality Ratios:                
Nonaccrual loans to loans (10)   1.09 %   1.14 %   1.12 %   1.29 %   1.34 %     1.09 %   1.34 %
Nonaccrual loans, restructured loans and                
loans 90 days or more past due and still                
accruing to total loans (10)   1.38 %   1.44 %   1.45 %   1.66 %   1.62 %     1.38 %   1.62 %
Nonperforming assets, restructured loans                
and loans 90 days or more past due and still                
accruing to total assets (10)   1.35 %   1.40 %   1.40 %   1.51 %   1.45 %     1.35 %   1.45 %
Allowance for loan losses to total loans (10)   1.56 %   1.49 %   1.41 %   1.61 %   1.62 %     1.56 %   1.62 %
Allowance for loan losses to nonaccrual loans,                
restructured loans and loans 90 days or                
more past due and still accruing (10)   112.66 %   103.07 %   97.34 %   96.96 %   99.72 %     112.66 %   99.72 %
Net charge-offs (recoveries) annualized                
to average loans (10)   0.21 %   0.01 %   0.44 %   (0.06 %)   (0.74 %)     0.15 %   -0.29 %
Capital Ratios:                
Total equity to total assets   13.27 %   13.43 %   13.28 %   13.17 %   12.62 %     13.27 %   12.62 %
Total risk-based capital ratio   15.19 %   15.18 %   15.32 %   15.56 %   15.34 %     15.19 %   15.34 %
Tier 1 risk-based capital ratio   13.94 %   13.93 %   14.07 %   14.31 %   14.09 %     13.94 %   14.09 %
Leverage capital ratio   10.71 %   10.86 %   10.64 %   10.39 %   10.10 %     10.71 %   10.10 %
Other Data:                
Number of employees (full-time equivalent)   176     182     180     177     183       176     183  
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 twelve months ended December 31, 2019, and $1.8 million for the twelve months ended December 31, 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. 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)
           
  December 31, September 30, June 30, March 31, December 31,
  2019 2019 2019 2019 2018
  (Dollars in Thousands, Except Shares)
Assets          
Cash and due from banks $ 8,970   $ 9,582   $ 8,791   $ 8,168   $ 13,037  
Reverse repurchase agreements   11,196     4,083     18,347     42,729     58,662  
Securities available for sale   117,972     118,211     122,365     121,115     118,926  
Equity securities at fair value   2,426     2,437     2,419     2,385     2,355  
Loans held for sale   16,928     25,347     8,450     4,467     4,632  
           
Loans   513,705     508,758     513,755     489,273     491,337  
Allowance for loan losses   (8,007 )   (7,560 )   (7,251 )   (7,865 )   (7,947 )
Net loans   505,698     501,198     506,504     481,408     483,390  
           
Federal Home Loan Bank Stock   2,587     926     2,363     2,003     3,172  
Premises and equipment, net   4,274     4,504     4,643     4,538     4,498  
Accrued interest receivable   1,486     1,646     1,820     1,873     1,570  
Deferred tax assets, net   20,069     20,455     20,703     21,156     21,422  
Other real estate owned, net   2,396     2,466     2,466     2,466     2,486  
Bank owned life insurance   4,691     4,666     4,640     4,613     4,590  
Goodwill and other intangible assets   154     159     165     171     176  
Other assets (1)   4,944     5,031     4,594     5,060     2,343  
Total Assets $ 703,791   $ 700,711   $ 708,270   $ 702,152   $ 721,259  
           
Liabilities and Stockholders' Equity          
Deposits:          
Noninterest-bearing demand $ 70,175   $ 63,694   $ 62,424   $ 62,553   $ 63,507  
Interest-bearing demand   45,512     50,683     32,649     32,467     33,660  
Savings   204,976     202,866     192,133     188,110     181,432  
Time   209,527     240,502     248,161     259,808     258,332  
Total deposits   530,190     557,745     535,367     542,938     536,931  
Short-term borrowings   73,847     38,468     69,174     57,220     86,710  
Accrued interest payable   603     711     725     727     710  
Other liabilities (1)   5,747     9,705     8,969     8,760     5,873  
Total liabilities   610,387     606,629     614,235     609,645     630,224  
           
Stockholders' Equity          
Preferred stock, $1 par value; 5,000,000 authorized shares at December 31, 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   37,490     37,489     39,384     39,384     39,384  
Common stock, $1 par value; 75,000,000 authorized shares; 18,868,329 and 18,455,610 issued shares; 18,657,282 and 18,244,563 outstanding shares at December 31, 2019 and 2018, respectively. (2)   18,868     18,868     18,543     18,456     18,456  
Capital surplus   161,175     161,110     160,991     160,930     160,815  
Accumulated deficit   (123,753 )   (123,377 )   (124,412 )   (125,173 )   (125,796 )
Accumulated other comprehensive income (loss), net   158     526     63     (556 )   (1,290 )
Treasury stock 221,902 shares at cost   (534 )   (534 )   (534 )   (534 )   (534 )
Total stockholders' equity   93,404     94,082     94,035     92,507     91,035  
Total liabilities and stockholders' equity $ 703,791   $ 700,711   $ 708,270   $ 702,152   $ 721,259  
           
(1) The adoption of the new lease accounting standards effective January 1, 2019, resulted in $2.8 million of operating lease right-of-use assets being recorded in other assets, net and a corresponding liability in other liabilities.
(2) Both issued and outstanding shares as stated here exclude 815,395 shares and 1,005,915 shares of unvested restricted stock awards at December 31,2019 and 2018, respectively.
           


 
CIB MARINE BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
                 
  At or for the
  Quarters Ended   12 Months Ended
  December 31, September 30, June 30, March 31, December 31,   December 31, December 31,
  2019 2019 2019 2019 2018   2019
2018
                 
  (Dollars in thousands)
                 
Interest Income                
Loans $ 5,793   $ 5,992   $ 5,811   $ 5,693   $ 5,686     $ 23,289   $ 21,821  
Loans held for sale   195     152     97     85     86       529     388  
Securities   764     810     868     804     828       3,246     3,043  
Other investments   68     81     302     433     409       884     951  
Total interest income   6,820     7,035     7,078     7,015     7,009       27,948     26,203  
                 
Interest Expense                
Deposits   1,856     2,027     1,949     1,805     1,547       7,637     4,876  
Short-term borrowings   174     156     307     373     517       1,010     1,546  
Total interest expense   2,030     2,183     2,256     2,178     2,064       8,647     6,422  
Net interest income   4,790     4,852     4,822     4,837     4,945       19,301     19,781  
Provision for (reversal of) loan losses   715     327     (67 )   (158 )   (1,195 )     817     (1,185 )
Net interest income after provision for                
(reversal of) loan losses   4,075     4,525     4,889     4,995     6,140       18,484     20,966  
                 
Noninterest Income                
Deposit service charges   98     101     95     83     79       377     405  
Other service fees   23     30     29     20     31       102     135  
Mortgage banking revenue, net   2,112     2,936     2,148     978     1,057       8,174     6,346  
Other income   129     150     179     165     143       623     601  
Net gains on sale of securities available for sale   0     0     0     0     0       0     15  
Unrealized gains (losses) recognized on equity securities   (11 )   18     34     30     23       71     (52 )
Net gains (losses) on sale of assets and (writedowns)   (102 )   600     225     86     213       809     1,959  
Total noninterest income   2,249     3,835     2,710     1,362     1,546       10,156     9,409  
                 
Noninterest Expense                
Compensation and employee benefits   4,701     5,309     4,445     3,687     4,206       18,142     17,458  
Equipment   394     335     353     335     364       1,417     1,363  
Occupancy and premises   460     420     437     456     423       1,773     1,640  
Data Processing   157     165     160     166     169       648     669  
Federal deposit insurance   (10 )   (5 )   66     82     74       133     222  
Professional services   320     198     207     140     270       865     1,349  
Telephone and data communication   81     86     83     78     86       328     321  
Insurance   59     70     52     53     47       234     231  
Other expense   717     655     754     508     776       2,634     2,594  
Total noninterest expense   6,879     7,233     6,557     5,505     6,415       26,174     25,847  
Income (losses) from operations                
before income taxes   (555 )   1,127     1,042     852     1,271       2,466     4,528  
Income tax expense (benefit)   (180 )   93     281     229     313       423     1,188  
Net income (loss)   (375 )   1,034     761     623     958       2,043     3,340  
Preferred stock dividend   0     0     0     0     0       0     0  
Discount from repurchase of preferred stock   0     308     0     0     0       308     1,808  
Net income (loss) allocated to                
 common stockholders $ (375 ) $ 1,342   $ 761   $ 623   $ 958     $ 2,351   $ 5,148