CIB Marine Bancshares, Inc. Announces 2022 Results

Rhea-AI Summary

CIB Marine Bancshares, Inc. (OTCQX: CIBH) reported its financial performance for the year ending December 31, 2022. Net income was $3.7 million, down from $6.7 million in 2021, with earnings per share at $2.97 basic and $2.16 diluted. Despite lower mortgage banking revenues, net interest income rose to $23.9 million, with a 3.27% margin. The company experienced a 58% drop in mortgage loan originations due to rising average mortgage rates. Non-performing assets remained stable at 0.20% of total assets. CIBH redeemed preferred shares, further impacting earnings allocation.

Positive

• Net interest income increased to $23.9 million, with a margin of 3.27%.
• Non-performing asset ratio stable at 0.20%, indicating strong asset quality.
• Reversal of loan losses of $0.6 million in Q4 2022.

Negative

• Net income declined to $3.7 million from $6.7 million YoY.
• 58% decrease in mortgage loan originations compared to 2021.
• Mortgage banking revenues fell by $9.3 million over the year.

BROOKFIELD, Wis., Jan. 20, 2023 (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 year ending December 31, 2022. Operating results for the year were dominated by rising net interest income and related net interest margins; continued asset quality strength; recoveries of prior loan losses; and the difficult operating environment for mortgage banking. Net income for the twelve months ended December 31, 2022, was $3.7 million, or $2.97 basic and $2.16 diluted earnings per share, compared to $6.7 million, or $5.64 basic and $4.06 diluted earnings per share, for the same period of 2021; and net income for the quarter ended December 31, 2022, was $0.9 million, or $0.81 basic and $0.59 diluted earnings per share, compared to $1.1 million, or $1.28 basic and $0.92 diluted earnings per share, for the same period in 2021.

   Financial highlights for the year and quarter ended December 31, 2022, include:

• Net interest income and margin were $23.9 million and 3.27%, respectively, for the twelve-month period, compared to $23.3 million and 3.22%, respectively, in the same period of 2021; and $6.1 million and 3.32%, respectively, for the quarter, compared to $5.9 million and 3.18%, respectively, for the same period of 2021. These improvements were despite $0.8 million lower Paycheck Protection Program (“PPP”) loan fee accretion income and $0.4 million more subordinated debt interest expense in 2022, compared to the prior year. Stronger results reflect primarily higher earning asset balances and yields, and the relatively high level of non-interest bearing checking account balances. All remaining PPP loans were fully repaid in the third quarter of 2022.
• Net mortgage banking revenues were down $9.3 million and $1.7 million for the twelve months and quarter, respectively, compared to the same periods of 2021. The change was due to a $260 million or 58% decline in loan originations for the twelve-month period compared to the prior year, as a result of average 30-year mortgage rates rising by more than 250 basis points from 2021 to 2022 and the dramatic competitive tightening of pricing margins across the mortgage banking industry.
• As of December 31, 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 0.20% and 0.16%, respectively, compared to 0.21% and 0.14%, respectively, on December 31, 2021. In addition, net recoveries resulting from collections of loans previously charged off were 0.33% of average loans for the fourth quarter ending December 31, 2022; combined with ongoing collections and pay-offs of classified assets there was a reversal of loan losses of $0.6 million for the quarter. Reversals of loan losses were $0.9 million for the year, compared to $1.2 million for the same period in 2021, with the primary difference being the improved environmental factors during 2021 compared to its prior period.
• Since December 31, 2021, the Fed has increased their target fed funds rate by 450 basis points putting pressure on deposit mix over the shorter term. Over the year 2022, time deposit balances have increased $32 million versus a decrease of $30 million in money market accounts, and interest bearing checking were up $13 million versus a decline of $5 million in non-interest bearing checking accounts. The current high level of short-term interest rates is a strong force for these ongoing trends of deposit balances shifting from lower cost to higher cost in the banking industry.
• On December 19, 2022, CIBM redeemed 5,830 shares of Series A Preferred Stock for a total price of $4.8 million or $825 per share. The redemption was at a total discount of $146,000 to the carrying value for the preferred shares which is added to net income in the per share earnings allocated to common shareholder calculation.
  

Mr. J. Brian Chaffin, CIBM’s President and CEO, commented, “Rising interest rates and housing affordability have severely impacted mortgage origination volumes. In a recent press release, we highlighted steps we have taken to enhance revenue generation and efficiencies in our Mortgage Division while the mortgage origination industry consolidates. At the same time, rising interest rates supported rising net interest margins, and ongoing collection activity related to classified loans and previously charged-off loans enhanced our operating results and financial condition.”

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates ten banking offices in Illinois, Wisconsin and Indiana, and has mortgage loan officers and/or offices in eight states. 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																12 Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,				December 31,			December 31,
		2022			2022			2022			2022			2021				2022			2021
	(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data:
Interest and dividend income	$	7,808		$	7,234		$	6,411		$	5,879		$	6,244			$	27,332		$	25,059
Interest expense		1,664			823			517			413			387				3,417			1,796
Net interest income		6,144			6,411			5,894			5,466			5,857				23,915			23,263
Provision for (reversal of) loan losses		(642	)		34			40			(325	)		(502	)			(893	)		(1,195	)
Net interest income after provision for
(reversal of) loan losses		6,786			6,377			5,854			5,791			6,359				24,808			24,458
Noninterest income (1)		791			1,313			1,660			1,705			2,718				5,469			15,071
Noninterest expense		6,316			6,311			6,374			6,262			7,641				25,263			30,377
Income before income taxes		1,261			1,379			1,140			1,234			1,436				5,014			9,152
Income tax expense		351			352			251			334			336				1,288			2,480
Net income	$	910		$	1,027		$	889		$	900		$	1,100			$	3,726		$	6,672
Common Share Data:
Basic net income per share (2)	$	0.81		$	0.78		$	0.68		$	0.69		$	1.28			$	2.97		$	5.64
Diluted net income per share (2)		0.59			0.57			0.49			0.50			0.92				2.16			4.06
Dividend		0.00			0.00			0.00			0.00			0.00				0.00			0.00
Tangible book value per share (3)		53.19			52.24			53.68			54.53			57.06				53.19			57.06
Book value per share (3)		51.39			49.78			51.22			52.07			54.55				51.39			54.55
Weighted average shares outstanding - basic		1,308,279			1,308,752			1,307,289			1,295,573			1,287,438				1,303,859			1,280,259
Weighted average shares outstanding - diluted		1,796,947			1,797,721			1,798,002			1,792,181			1,784,005				1,795,037			1,778,294
Financial Condition Data:
Total assets	$	752,997		$	762,965		$	774,356		$	764,641		$	745,393			$	752,997		$	745,393
Loans		577,303			564,841			549,175			529,212			543,819				577,303			543,819
Allowance for loan losses		(7,894	)		(8,061	)		(8,010	)		(8,011	)		(8,352	)			(7,894	)		(8,352	)
Investment securities		124,421			127,954			122,483			109,533			106,647				124,421			106,647
Deposits		628,869			633,234			642,500			631,953			618,991				628,869			618,991
Borrowings		34,485			37,168			37,693			36,789			27,049				34,485			27,049
Stockholders' equity		83,503			87,228			89,111			89,931			91,780				83,503			91,780
Financial Ratios and Other Data:
Performance Ratios:
Net interest margin (4)		3.32	%		3.45	%		3.23	%		3.05	%		3.18	%			3.27	%		3.22	%
Net interest spread (5)		3.02	%		3.29	%		3.14	%		2.98	%		3.10	%			3.10	%		3.13	%
Noninterest income to average assets (6)		0.41	%		0.72	%		0.91	%		0.97	%		1.43	%			0.75	%		2.00	%
Noninterest expense to average assets		3.27	%		3.24	%		3.34	%		3.35	%		3.98	%			3.30	%		4.02	%
Efficiency ratio (7)		91.13	%		80.73	%		83.52	%		85.98	%		88.87	%			85.17	%		79.10	%
Earnings on average assets (8)		0.47	%		0.53	%		0.47	%		0.48	%		0.57	%			0.49	%		0.88	%
Earnings on average equity (9)		4.15	%		4.52	%		3.96	%		3.98	%		4.47	%			4.15	%		6.37	%
Asset Quality Ratios:
Nonaccrual loans to loans (10)		0.16	%		0.13	%		0.22	%		0.13	%		0.14	%			0.16	%		0.14	%
Nonaccrual loans, restructured loans and
loans 90 days or more past due and still
accruing to total loans (10)		0.20	%		0.17	%		0.28	%		0.20	%		0.21	%			0.20	%		0.21	%
Nonperforming assets, restructured loans
and loans 90 days or more past due and still
accruing to total assets (10)		0.20	%		0.18	%		0.25	%		0.19	%		0.21	%			0.20	%		0.21	%
Allowance for loan losses to total loans (10)		1.37	%		1.43	%		1.46	%		1.51	%		1.54	%			1.37	%		1.54	%
Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or
more past due and still accruing (10)		684.06	%		852.11	%		512.48	%		742.45	%		726.26	%			684.06	%		726.26	%
Net charge-offs (recoveries) annualized
to average loans (10)		-0.33	%		-0.01	%		0.03	%		0.01	%		-0.11	%			-0.08	%		-0.08	%
Capital Ratios:
Total equity to total assets		11.09	%		11.43	%		11.51	%		11.76	%		12.31	%			11.09	%		12.31	%
Total risk-based capital ratio		15.71	%		16.42	%		16.85	%		17.52	%		15.53	%			15.71	%		15.53	%
Tier 1 risk-based capital ratio		12.78	%		13.48	%		13.85	%		14.43	%		14.28	%			12.78	%		14.28	%
Leverage capital ratio		9.73	%		10.16	%		10.20	%		10.27	%		10.22	%			9.73	%		10.22	%
Other Data:
Number of employees (full-time equivalent)		189			166			159			172			177				189			177
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 $0.1 million for the quarter and year ended December 31, 2022 and $0.5 million for the quarter and year 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)
	December 31,			September 30,			June 30,			March 31,			December 31,
		2022			2022			2022			2022			2021
	(Dollars in Thousands, Except Shares)
Assets
Cash and due from banks	$	19,667		$	36,454		$	68,097		$	88,605		$	59,184
Reverse repurchase agreements		-			-			-			-			-
Securities available for sale		122,292			125,830			120,265			107,237			104,240
Equity securities at fair value		2,129			2,124			2,218			2,296			2,407
Loans held for sale		5,057			6,471			7,519			9,567			9,859
Loans		577,303			564,841			549,175			529,212			543,819
Allowance for loan losses		(7,894	)		(8,061	)		(8,010	)		(8,011	)		(8,352	)
Net loans		569,409			556,780			541,165			521,201			535,467
Federal Home Loan Bank Stock		1,897			1,897			2,897			3,140			3,140
Premises and equipment, net		4,081			4,159			4,138			4,226			4,200
Accrued interest receivable		1,915			1,807			1,644			1,611			1,605
Deferred tax assets, net		16,273			16,977			16,142			15,758			14,731
Other real estate owned, net		375			403			403			403			403
Bank owned life insurance		6,076			6,040			6,002			5,966			5,930
Goodwill and other intangible assets		87			92			98			103			109
Other assets		3,739			3,931			3,768			4,528			4,118
Total Assets	$	752,997		$	762,965		$	774,356		$	764,641		$	745,393
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand	$	115,186		$	134,765		$	129,457		$	124,724		$	120,479
Interest-bearing demand		76,918			79,306			66,495			67,362			63,693
Savings		260,159			254,146			287,159			294,255			289,943
Time		176,606			165,017			159,389			145,612			144,876
Total deposits		628,869			633,234			642,500			631,953			618,991
Short-term borrowings		24,789			27,480			28,013			27,117			27,049
Long-term borrowings		9,696			9,688			9,680			9,672			-
Accrued interest payable		554			227			287			144			100
Other liabilities		5,586			5,108			4,765			5,824			7,473
Total liabilities		669,494			675,737			685,245			674,710			653,613
Stockholders' Equity
Preferred stock, $1 par value; 5,000,000 authorized shares at December 31, 2022 and December 31, 2021; 7% fixed rate noncumulative perpetual issued; 14,633 shares and 20,463 shares of series A and 1,610 shares and 1,610 shares of series B; convertible; $16.2 million and $22.1 million aggregate liquidation preference, respectively		13,806			18,762			18,762			18,762			18,762
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 December 31, 2022 and December 31, 2021, respectively. (1)		1,324			1,324			1,324			1,318			1,307
Capital surplus		180,777			180,664			180,544			180,431			180,360
Accumulated deficit		(105,025	)		(106,081	)		(107,108	)		(107,997	)		(108,897	)
Accumulated other comprehensive income, net		(6,845	)		(6,907	)		(3,877	)		(2,049	)		782
Treasury stock, 14,791 shares on December 31, 2022 and December 31, 2021 (2)		(534	)		(534	)		(534	)		(534	)		(534	)
Total stockholders' equity		83,503			87,228			89,111			89,931			91,780
Total liabilities and stockholders' equity	$	752,997		$	762,965		$	774,356		$	764,641		$	745,393
(1) Both issued and outstanding shares as stated here exclude 58,897 shares of unvested restricted stock awards at December 31, 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																12 Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,				December 31,			December 31,
		2022			2022			2022			2022			2021				2022			2021
	(Dollars in thousands)
Interest Income
Loans	$	6,426		$	6,029		$	5,542		$	5,254		$	5,572			$	23,251		$	22,325
Loans held for sale		63			96			90			58			131				307			536
Securities		948			826			683			537			516				2,994			2,131
Other investments		371			283			96			30			25				780			67
Total interest income		7,808			7,234			6,411			5,879			6,244				27,332			25,059
Interest Expense
Deposits		1,452			662			384			350			379				2,848			1,747
Short-term borrowings		91			40			12			7			8				150			49
Long-term borrowings		121			121			121			56			0				419			0
Total interest expense		1,664			823			517			413			387				3,417			1,796
Net interest income		6,144			6,411			5,894			5,466			5,857				23,915			23,263
Provision for (reversal of) loan losses		(642	)		34			40			(325	)		(502	)			(893	)		(1,195	)
Net interest income after provision for
(reversal of) loan losses		6,786			6,377			5,854			5,791			6,359				24,808			24,458
Noninterest Income
Deposit service charges		82			86			92			88			95				348			366
Other service fees		15			18			71			25			23				129			141
Mortgage banking revenue, net		597			1,126			1,268			1,430			2,300				4,421			13,672
Other income		117			147			141			212			185				617			843
Net gains on sale of securities available for sale		0			0			0			0			0				0			0
Unrealized gains (losses) recognized on equity securities		4			(93	)		(78	)		(112	)		(23	)			(279	)		(71	)
Net gains (loss) on sale of SBA loans		0			0			126			31			120				157			271
Net gains (losses) on sale of assets and (writedowns)		(24	)		29			40			31			18				76			(151	)
Total noninterest income		791			1,313			1,660			1,705			2,718				5,469			15,071
Noninterest Expense
Compensation and employee benefits		4,061			4,240			4,175			4,229			5,334				16,705			21,825
Equipment		466			396			439			442			446				1,743			1,599
Occupancy and premises		399			390			408			422			400				1,619			1,672
Data Processing		202			205			171			166			167				744			638
Federal deposit insurance		70			58			51			52			51				231			192
Professional services		415			244			284			224			353				1,167			1,161
Telephone and data communication		66			61			60			61			67				248			253
Insurance		85			74			74			85			72				318			270
Other expense		552			643			712			581			751				2,488			2,767
Total noninterest expense		6,316			6,311			6,374			6,262			7,641				25,263			30,377
Income from operations
before income taxes		1,261			1,379			1,140			1,234			1,436				5,014			9,152
Income tax expense		351			352			251			334			336				1,288			2,480
Net income		910			1,027			889			900			1,100				3,726			6,672
Preferred stock dividend		0			0			0			0			0				0			0
Discount from repurchase of preferred stock		146			0			0			0			546				146			546
Net income allocated to
common stockholders	$	1,056		$	1,027		$	889		$	900		$	1,646			$	3,872		$	7,218

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

FAQ

What were CIB Marine Bancshares' financial results for 2022?

CIB Marine Bancshares reported a net income of $3.7 million for 2022, down from $6.7 million in 2021.

How did net interest income perform for CIBH in 2022?

Net interest income for CIBH increased to $23.9 million, with a margin of 3.27%.

What impact did mortgage rates have on CIBH's loan originations?

CIBH experienced a 58% decline in mortgage loan originations due to rising mortgage rates.

What was the status of non-performing assets for CIB Marine Bancshares?

As of December 31, 2022, non-performing assets were 0.20% of total assets, stable compared to the previous year.

How did CIBH's preferred stock redemption affect financials?

CIBH redeemed 5,830 shares of Series A Preferred Stock for $4.8 million, affecting earnings allocation to common shareholders.