CIB Marine Bancshares, Inc. Announces First Quarter 2022 Results

Rhea-AI Summary

CIB Marine Bancshares reported its Q1 2022 financial results, revealing a net income of $0.9 million, down from $2.1 million in Q1 2021. Net interest income decreased to $5.5 million from $5.7 million year-over-year, with a net mortgage banking revenue drop from $5 million to $1.4 million, influenced by rising mortgage rates impacting loan originations. Asset quality remains strong, with non-performing assets at 0.19%. The company issued $10 million in subordinated debentures to support its preferred stock redemption plan.

Positive

• Strong asset quality ratios with non-performing assets at 0.19%.
• Successful issuance of $10 million subordinated debentures for preferred stock redemption.

Negative

• Net income decreased significantly from $2.1 million to $0.9 million year-over-year.
• Net mortgage banking revenues fell sharply from $5 million to $1.4 million.
• Total loan originations dropped from $143 million to $58 million due to rising mortgage rates.

BROOKFIELD, Wis., April 22, 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 first quarter of 2022. Changes to markets over the past quarter and year have impacted the Company’s level and composition of income and mortgage lending activity has declined in the rising mortgage rate environment. Net income for the quarter ended March 31, 2022, was $0.9 million, or $0.69 basic and $0.50 diluted earnings per share, compared to $2.1 million, or $1.67 basic and $0.97 diluted earnings per share, for the same period of 2021.

Financial highlights for the quarter include:

• Net interest income and margin in the first quarter of 2022 were $5.5 million and 3.05%, respectively, compared to $5.7 million and 3.23% in the same period of 2021. The change was primarily the result of a reduction in residential loans held for sale balances due to lower mortgage volume, an increase in lower yielding interest bearing cash and due from, a decline in PPP loan fees, and the issuance of 4.50% coupon bearing subordinated debt.
• Net mortgage banking revenues were $1.4 million for the first quarter of 2022 compared to $5.0 million for the same period of 2021. The change was due to a significant decline in loan originations (from $143 million to $58 million) due to an increase of almost 100 basis points in average mortgage rates over the same period, as well as tightening margins in the industry due to competitive pressures in the lower volume environment. Related mortgage compensation expenses were also down $1.8 million in the first quarter of 2022 compared to the same period in 2021.
• Asset quality ratios were strong at March 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 0.19% and 0.13%, respectively, compared to 0.21% and 0.14% at December 31, 2021, and 0.52% and 0.23% at March 31, 2021. With asset quality measures continuing to report near cycle best levels, easing COVID infection levels, and loan balances down for the quarter, CIBM reversed $0.3 million in provisions for future loan losses compared to a nominal provision in the same period of 2021.
• Tangible book value attributable to the common stock was $55.13 per share outstanding at March 31, 2022, compared to $57.06 at December 31, 2021, and $53.25 at March 31, 2021. The change at CIBM is similar to the experience across the industry. With a 100 basis point or more increase in US Treasury rates in the 2- to 5-year terms over the first quarter, the unrealized losses in the available for sale securities portfolio increased, representing $2.19 in tangible book value per share at March 31, 2022.
• Deposits for checking, savings, and money market accounts in aggregate grew by $12 million from December 31, 2021, to March 31, 2022, due to marketing activity and continued relatively low short-term interest rates. As short-term federal funds and US T-Bill interest rates rise over the course of the year, pressure on balances is expected to increase.
  

Mr. J. Brian Chaffin, CIBM’s President and CEO, commented, “Tightening margins and the impact of seasonal and cyclical factors on mortgage volumes have led to a decline in the operating results for our mortgage banking division. With mortgage volumes expected to be down significantly compared to the last two years, we are taking this opportunity to make an important upgrade in our mortgage loan operating system, which will provide a better loan origination experience for employees and customers alike.

“Interest rates across the curve have shifted significantly upwards, with federal funds rates expected to increase from near 0% at the beginning of the year to over 2.0% by year-end as part of the Fed’s inflation fighting monetary policy action plan. We expect this to dampen loan demand, economic activity, and certain asset prices significantly, and it has already changed recession risks materially over the coming year or two. We plan to continue adjusting underwriting standards to reflect future credit risks and actively managing the loan portfolio.

“The increase in interest rates is widely expected to reduce lower-cost deposit growth in the industry. However, lower loan demand and significant balance sheet liquidity are expected to slow the increase in deposit costs at CIBM and in the industry.

“Two years ago, we began Project Falcon with the primary goal of changing our deposit mix and cost of funds. Since then, our percentile rank for annual interest bearing liability costs within our national peer size category has declined from the 83^rd to the 35^th on a year-on-year basis.

“Project Falcon also focuses on identifying and implementing internal process improvements and efficiency-enhancing technologies that allow us to maximize our internal capacity. In addition, we continue to focus on hiring and retaining highly talented employees, providing them the tools they need to be successful in our industry, and rewarding their success at competitive levels.

“Finally, to support our preferred stock redemption plan, we issued $10 million in subordinated debentures during the first quarter of 2022. The 10-year notes bear interest at 4.50% per annum through February 18, 2027, and thereafter pay a quarterly floating rate equal to the Three-Month Term SOFR plus 275 basis. With two years of improved operating results, strong asset quality, and a substantial reduction in preferred stock already completed, the market presented an opportunity for this lower cost of capital to be obtained.”

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates ten 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																3 Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,				March 31,			March 31,
		2022			2021			2021			2021			2021				2022			2021
	(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data:
Interest and dividend income	$	5,879		$	6,244		$	6,311		$	6,239		$	6,265			$	5,879		$	6,265
Interest expense		413			387			417			456			536				413			536
Net interest income		5,466			5,857			5,894			5,783			5,729				5,466			5,729
Provision for (reversal of) loan losses		(325	)		(502	)		(413	)		(300	)		20				(325	)		20
Net interest income after provision for (reversal of) loan losses		5,791			6,359			6,307			6,083			5,709				5,791			5,709
Noninterest income (1)		1,705			2,718			4,072			3,135			5,146				1,705			5,146
Noninterest expense		6,262			7,641			7,517			7,279			7,940				6,262			7,940
Income before income taxes		1,234			1,436			2,862			1,939			2,915				1,234			2,915
Income tax expense		334			336			788			558			798				334			798
Net income	$	900		$	1,100		$	2,074		$	1,381		$	2,117			$	900		$	2,117
Common Share Data:
Basic net income per share (2)	$	0.69		$	1.28		$	1.61		$	1.08		$	1.67			$	0.69		$	1.67
Diluted net income per share (2)		0.50			0.92			0.94			0.63			0.97				0.50			0.97
Dividend		0.00			0.00			0.00			0.00			0.00				0.00			0.00
Tangible book value per share (3)		55.13			57.06			55.60			54.19			53.25				55.13			53.25
Book value per share (3)		52.64			54.55			50.58			49.16			48.21				52.64			48.21
Weighted average shares outstanding - basic		1,295,573			1,287,438			1,286,536			1,282,917			1,268,947				1,295,573			1,268,947
Weighted average shares outstanding - diluted		1,792,181			1,784,005			2,208,493			2,208,600			2,185,433				1,792,181			2,185,433
Financial Condition Data:
Total assets	$	764,641		$	745,393		$	775,912		$	753,660		$	752,715			$	764,641		$	752,715
Loans		529,212			543,819			559,079			553,642			540,206				529,212			540,206
Allowance for loan losses		(8,011	)		(8,352	)		(8,699	)		(9,165	)		(9,253	)			(8,011	)		(9,253	)
Investment securities		109,533			106,647			102,243			108,825			112,400				109,533			112,400
Deposits		631,953			618,991			624,579			609,964			608,433				631,953			608,433
Borrowings		36,789			27,049			34,577			29,592			30,736				36,789			30,736
Stockholders' equity		89,931			91,780			108,984			107,051			105,593				89,931			105,593
Financial Ratios and Other Data:
Performance Ratios:
Net interest margin (4)		3.05	%		3.18	%		3.21	%		3.26	%		3.23	%			3.05	%		3.23	%
Net interest spread (5)		2.98	%		3.10	%		3.12	%		3.16	%		3.13	%			2.98	%		3.13	%
Noninterest income to average assets (6)		0.97	%		1.43	%		2.13	%		1.68	%		2.79	%			0.97	%		2.79	%
Noninterest expense to average assets		3.35	%		3.98	%		3.92	%		3.91	%		4.27	%			3.35	%		4.27	%
Efficiency ratio (7)		85.98	%		88.87	%		75.34	%		81.69	%		72.72	%			85.98	%		72.72	%
Earnings on average assets (8)		0.48	%		0.57	%		1.08	%		0.74	%		1.14	%			0.48	%		1.14	%
Earnings on average equity (9)		3.98	%		4.47	%		7.59	%		5.18	%		8.10	%			3.98	%		8.10	%
Asset Quality Ratios:
Nonaccrual loans to loans (10)		0.13	%		0.14	%		0.18	%		0.19	%		0.23	%			0.13	%		0.23	%
Nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing to total loans (10)		0.20	%		0.21	%		0.27	%		0.32	%		0.37	%			0.20	%		0.37	%
Nonperforming assets, restructured loans and loans 90 days or more past due and still accruing to total assets (10)		0.19	%		0.21	%		0.25	%		0.29	%		0.52	%			0.19	%		0.52	%
Allowance for loan losses to total loans (10)		1.51	%		1.54	%		1.56	%		1.66	%		1.71	%			1.51	%		1.71	%
Allowance for loan losses to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (10)		742.45	%		726.26	%		575.33	%		519.26	%		459.21	%			742.45	%		459.21	%
Net charge-offs (recoveries) annualized to average loans (10)		0.01	%		-0.11	%		0.04	%		-0.16	%		-0.08	%			0.01	%		-0.08	%
Capital Ratios:
Total equity to total assets		11.76	%		12.31	%		14.05	%		14.20	%		14.03	%			11.76	%		14.03	%
Total risk-based capital ratio		17.52	%		15.53	%		18.14	%		18.02	%		18.12	%			17.52	%		18.12	%
Tier 1 risk-based capital ratio		14.43	%		14.28	%		16.89	%		16.76	%		16.86	%			14.43	%		16.86	%
Leverage capital ratio		10.27	%		10.22	%		12.44	%		12.32	%		11.88	%			10.27	%		11.88	%
Other Data:
Number of employees (full-time equivalent)		172			177			179			176			179				172			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)
	March 31,			December 31,			September 30,			June 30,			March 31,
		2022			2021			2021			2021			2021
	(Dollars in Thousands, Except Shares)
Assets
Cash and due from banks	$	88,605		$	59,184		$	69,217		$	52,467		$	51,691
Reverse repurchase agreements		-			-			-			-			-
Securities available for sale		107,237			104,240			99,813			106,383			109,965
Equity securities at fair value		2,296			2,407			2,430			2,442			2,435
Loans held for sale		9,567			9,859			18,258			13,168			18,136
Loans		529,212			543,819			559,079			553,642			540,206
Allowance for loan losses		(8,011	)		(8,352	)		(8,699	)		(9,165	)		(9,253	)
Net loans		521,201			535,467			550,380			544,477			530,953
Federal Home Loan Bank Stock		3,140			3,140			3,140			3,140			3,140
Premises and equipment, net		4,226			4,200			3,979			3,873			4,476
Accrued interest receivable		1,611			1,605			1,813			1,916			1,983
Deferred tax assets, net		15,758			14,731			15,193			15,632			16,417
Other real estate owned, net		403			403			403			403			1,875
Bank owned life insurance		5,966			5,930			5,894			4,861			4,831
Goodwill and other intangible assets		103			109			115			120			126
Other assets		4,528			4,118			5,277			4,778			6,687
Total Assets	$	764,641		$	745,393		$	775,912		$	753,660		$	752,715
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand	$	124,724		$	120,479		$	122,441		$	121,862		$	109,466
Interest-bearing demand		67,362			63,693			62,414			61,439			63,033
Savings		294,255			289,943			287,609			266,085			268,026
Time		145,612			144,876			152,115			160,578			167,908
Total deposits		631,953			618,991			624,579			609,964			608,433
Short-term borrowings		27,117			27,049			34,577			29,592			30,736
Long-term borrowings		9,672			-			-			-			-
Accrued interest payable		144			100			111			127			140
Other liabilities		5,824			7,473			7,661			6,926			7,813
Total liabilities		674,710			653,613			666,928			646,609			647,122
Stockholders' Equity
Preferred stock, $1 par value; 5,000,000 authorized shares at March 31, 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			37,308			37,308			37,308
Common stock, $1 par value; 75,000,000 authorized shares; 1,317,958 and 1,306,660 issued shares; 1,303,889 and 1,292,591 outstanding shares at March 31, 2022 and December 31, 2021, respectively. (1)		1,318			1,307			1,302			1,301			1,295
Capital surplus		180,431			180,360			179,557			179,421			179,291
Accumulated deficit		(107,997	)		(108,897	)		(109,997	)		(112,071	)		(113,452	)
Accumulated other comprehensive income, net		(2,049	)		782			1,348			1,626			1,685
Treasury stock, 14,791 shares on March 31, 2022 and December 31, 2021 (2)		(534	)		(534	)		(534	)		(534	)		(534	)
Total stockholders' equity		89,931			91,780			108,984			107,051			105,593
Total liabilities and stockholders' equity	$	764,641		$	745,393		$	775,912		$	753,660		$	752,715
(1) Both issued and outstanding shares as stated here exclude 69,232 shares of unvested restricted stock awards at March 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																3 Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,				March 31,			March 31,
		2022			2021			2021			2021			2021				2022			2021
	(Dollars in thousands)
Interest Income
Loans	$	5,254		$	5,572		$	5,646		$	5,583		$	5,524			$	5,254		$	5,524
Loans held for sale		58			131			135			95			175				58			175
Securities		537			516			509			551			555				537			555
Other investments		30			25			21			10			11				30			11
Total interest income		5,879			6,244			6,311			6,239			6,265				5,879			6,265
Interest Expense
Deposits		350			379			409			447			512				350			512
Short-term borrowings		7			8			8			9			24				7			24
Long-term borrowings		56			0			0			0			0				56			0
Total interest expense		413			387			417			456			536				413			536
Net interest income		5,466			5,857			5,894			5,783			5,729				5,466			5,729
Provision for (reversal of) loan losses		(325	)		(502	)		(413	)		(300	)		20				(325	)		20
Net interest income after provision for (reversal of) loan losses		5,791			6,359			6,307			6,083			5,709				5,791			5,709
Noninterest Income
Deposit service charges		88			95			97			90			84				88			84
Other service fees		25			23			35			43			40				25			40
Mortgage banking revenue, net		1,430			2,300			3,626			2,763			4,983				1,430			4,983
Other income		212			185			186			280			192				212			192
Net gains on sale of securities available for sale		0			0			0			0			0				0			0
Unrealized gains (losses) recognized on equity securities		(112	)		(23	)		(12	)		7			(43	)			(112	)		(43	)
Net gains (loss) on sale of SBA loans		31			120			151			0			0				31			0
Net gains (losses) on sale of assets and (writedowns)		31			18			(11	)		(48	)		(110	)			31			(110	)
Total noninterest income		1,705			2,718			4,072			3,135			5,146				1,705			5,146
Noninterest Expense
Compensation and employee benefits		4,229			5,334			5,436			5,099			5,956				4,229			5,956
Equipment		442			446			390			384			379				442			379
Occupancy and premises		422			400			395			443			434				422			434
Data Processing		166			167			105			181			185				166			185
Federal deposit insurance		52			51			46			47			48				52			48
Professional services		224			353			227			328			253				224			253
Telephone and data communication		61			67			70			56			60				61			60
Insurance		85			72			66			64			68				85			68
Other expense		581			751			782			677			557				581			557
Total noninterest expense		6,262			7,641			7,517			7,279			7,940				6,262			7,940
Income from operations before income taxes		1,234			1,436			2,862			1,939			2,915				1,234			2,915
Income tax expense		334			336			788			558			798				334			798
Net income		900			1,100			2,074			1,381			2,117				900			2,117
Preferred stock dividend		0			0			0			0			0				0			0
Discount from repurchase of preferred stock		0			546			0			0			0				0			0
Net income allocated to common stockholders	$	900		$	1,646		$	2,074		$	1,381		$	2,117			$	900		$	2,117

FAQ

What were the earnings per share for CIB Marine Bancshares in Q1 2022?

In Q1 2022, CIB Marine Bancshares reported earnings of $0.69 basic and $0.50 diluted per share.

How much did CIB Marine Bancshares' net income decline in Q1 2022?

The net income for Q1 2022 was $0.9 million, down from $2.1 million in the same quarter of 2021.

What was the impact of rising mortgage rates on CIB Marine's loan originations?

CIB Marine experienced a decline in loan originations from $143 million to $58 million due to rising mortgage rates.

What asset quality measures did CIB Marine Bancshares report for Q1 2022?

Non-performing assets were reported at 0.19%, indicating strong asset quality.

How much subordinated debt did CIB Marine Bancshares issue in Q1 2022?

CIB Marine issued $10 million in subordinated debentures during Q1 2022.