CIB Marine Bancshares, Inc. Announces Second Quarter 2021 Results

Rhea-AI Summary

CIB Marine Bancshares, Inc. (CIBH) reported strong financial results for the first half of 2021, with net income of $3.5 million, up from $2.5 million last year. The company saw a return on average assets improvement to 0.94% and increased tangible book value to $54.19 per share. Net interest income rose by $1.2 million for the six months due to a decline in interest-bearing liabilities. Meanwhile, checking and savings deposits grew by $31.1 million and $22.2 million, respectively. However, mortgage banking revenues declined in Q2 compared to last year, reflecting a shift in refinance activity as interest rates rise.

Positive

• Net income increased to $3.5 million for the six months compared to $2.5 million in 2020.
• Return on average assets improved to 0.94%, up from 0.68% year-over-year.
• Tangible book value rose to $54.19 per share, a 14.7% increase over 12 months.
• Net interest income up by $1.2 million for six months, reflecting improved cost of funds.
• Deposit balances increased significantly: $31.1 million in checking and $22.2 million in savings.

Negative

• Net income for Q2 decreased to $1.4 million from $1.7 million year-over-year.
• Non-performing loan metrics slightly elevated due to pandemic impact.
• Mortgage banking revenue declined by $1.2 million in Q2 compared to the same period in 2020.

BROOKFIELD, Wis., July 13, 2021 (GLOBE NEWSWIRE) -- CIB Marine Bancshares, Inc. (the “Company” or “CIBM”) (OTCQB: CIBH), the holding company of CIBM Bank, announced its unaudited results of operations and financial condition for the six months and quarter ended June 30, 2021. Net income for the six months was $3.5 million compared to $2.5 million for the same period in 2020, and $1.4 million for the quarter compared to $1.7 million for the same quarter in 2020.

Financial highlights include:

• Return on average assets improved to 0.94% for the six months, compared to 0.68% for the same period in 2020; and 0.74% for the quarter compared to 0.89% for the same period of 2020.
• Tangible book value attributable to the common stock increased to $54.19 per share outstanding at June 30, 2021, compared to $52.28 at December 31, 2020, and $47.25 at June 30, 2020, reflecting a 12-month increase of 14.7%.
• Net interest income was up for the six months and the quarter by $1.2 million and $0.5 million, respectively, compared to the same periods in 2020. The primary reason for the change is a 74 basis point and 60 basis point decline in the cost of interest bearing liabilities over the respective time periods, compared to a 36 and 19 basis point change in yields on interest earning assets, respectively. The change in the cost of interest bearing liabilities is due to repricing in a lower rate environment and a shift in balances from higher rate time deposits to lower rate money market and non-interest bearing checking accounts. In addition, yields on loans have declined slowly due to the predominantly fixed rate nature of the portfolio and a change in portfolio mix away from lower earning residential loans in favor of higher earning commercial real estate loans. As a result, the net interest margin as of June 30, 2021, is 3.24%, which is 24 basis points higher than at June 30, 2020.      
• Net mortgage banking revenues were up $1.6 million for the six months and down $1.2 million for the quarter, compared to the same periods of 2020. The decline in the quarter-end results was primarily due to the exceptional levels of mortgage refinance activity and pricing margins in 2020, and the increase in the six-month results is due to the relative strength of first quarter production in 2021 compared to the same period in 2020. Although mortgage rates are up 25 to 50 basis points from last year, the total origination of mortgage loans for the six months ended June 30, 2021, was $239 million compared to $218 million in the same period of 2020, with the current year production comprised of more purchase money and cash out refinance mortgage loans.
• Compensation expenses increased $1.2 million for the six-month period compared to the same period last year, primarily due to increased performance-related compensation in the mortgage division.
• 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 0.29% and 0.19%, respectively, at June 30, 2021, down from 0.54% and 0.23%, respectively, at December 31, 2020, and 1.02% and 0.92%, respectively, at June 30, 2020. The results continue to be near this credit cycle’s best, due in part to fiscal support measures for businesses in certain sectors, the credit resolution of a few large loans, and the sale of OREO property.
• During the six months ended June 30, 2021, CIBM Bank originated $19 million in round two Paycheck Protection Program (PPP) loans. As of June 30, 2021, CIBM Bank had received $37 million in SBA forgiveness funding for the approximately $43 million in PPP loans originated in 2020; and $1 million of forgiveness for PPP loans originated in 2021. The forgiveness funding rate per loan as a percent of the original loan balance has been 100% to date.
• Checking account deposits grew by $31.1 million, and savings and money market account deposits grew by $22.2 million, from December 31, 2020 to June 30, 2021, reflecting federal fiscal and monetary policies (e.g., low interest rates and liquidity support programs) as well as ongoing marketing activity results.

Mr. J. Brian Chaffin, CIB Marine’s President and CEO, commented, “Improvements to our cost of funds and higher commercial loan balances have supported strong growth of $1.2 million in our net interest income year-to-date. Solid mortgage origination production is above where it was last year at this time, but the pipeline of loans not yet closed is lower compared to this time in 2020 due in part to the higher interest rates and lower levels of rate refinance activity. SBA lending activity in the first six months of 2021 has again been dominated by PPP loan activity, including originations and forgiveness funding. We have begun to originate SBA 7(a) loans again; up to $3 million may be ready for sale in the second half of 2021 and more production is expected in the future.”     

Noting an increase in deposit balances across the financial industry as a whole, Mr. Chaffin commented, “Total balances in combined checking, savings, and money market products at CIBM Bank increased $99 million over the last 12 months and $53 million the last six months due, in part, to federal economic stimulus policies and programs. We expect these balances to recede in the future as stimulus monies are spent and further when short-term interest rates begin to rise.”  

He also remarked on non-performing loan credit metrics at or near cyclical bests, noting, “We are very pleased with the results, due in part to the diversification of the portfolio by segment and commercial real estate property type. However, we remain cautious about future credit quality in higher risk segments of the portfolio due to the lingering impact of the pandemic. As a result, although down from the prior quarter- and year-end, we continue to have a higher than normal loan loss reserve reflecting, in part, higher environmental factor adjustments.

“Finally, we know our shareholders are anxiously awaiting news on the status of negotiations regarding our plan to repurchase preferred stock. Progress has been slower than expected, but continues. We ask for your patience as we work through the process. If we are able to reach an agreement on a proposal that will benefit all shareholders, we will present it for approval in a new proxy statement. If such an agreement is not possible, we will notify shareholders and the Annual Meeting will proceed as currently scheduled on July 29^th,” he concluded.

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.

CIB MARINE BANCSHARES, INC.
Selected Unaudited Consolidated Financial Data
	At or for the
	Quarters Ended																	6 Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,					June 30,			June 30,
	2021			2021			2020			2020			2020					2021			2020
	(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data:
Interest and dividend income	$	6,239		$	6,265		$	6,489		$	7,202		$	6,669				$	12,504		$	13,305
Interest expense		456			536			765			1,017			1,343					992			3,032
Net interest income		5,783			5,729			5,724			6,185			5,326					11,512			10,273
Provision for (reversal of) loan losses		(300	)		20			101			501			249					(280	)		451
Net interest income after provision for
(reversal of) loan losses		6,083			5,709			5,623			5,684			5,077					11,792			9,822
Noninterest income (1)		3,135			5,146			6,566			8,104			4,489					8,281			7,131
Noninterest expense		7,279			7,940			9,317			9,056			7,308					15,219			13,630
Income before income taxes		1,939			2,915			2,872			4,732			2,258					4,854			3,323
Income tax expense		558			798			565			1,322			575					1,356			856
Net income	$	1,381		$	2,117		$	2,307		$	3,410		$	1,683				$	3,498		$	2,467
Common Share Data (2):
Basic net income per share (3)	$	1.08		$	1.67		$	1.82		$	2.69		$	1.36				$	2.74		$	1.99
Diluted net income per share (3)		0.63			0.97			1.06			1.56			0.79					1.59			1.16
Dividend		0.00			0.00			0.00			0.00			0.00					0.00			0.00
Tangible book value per share (4)		54.19			53.25			52.28			50.35			47.25					54.19			47.25
Book value per share (4)		49.16			48.21			47.19			45.27			42.00					49.16			42.00
Weighted average shares outstanding - basic		1,282,917			1,268,947			1,267,584			1,267,582			1,266,174					1,275,971			1,257,224
Weighted average shares outstanding - diluted		2,208,600			2,185,433			2,181,142			2,181,868			2,160,201					2,197,071			2,155,394
Financial Condition Data:
Total assets	$	753,660		$	752,715		$	750,982		$	793,604		$	793,151				$	753,660		$	793,151
Loans		553,642			540,206			539,227			546,351			535,692					553,642			535,692
Allowance for loan losses		(9,165	)		(9,253	)		(9,122	)		(9,037	)		(8,483	)				(9,165	)		(8,483	)
Investment securities		108,825			112,400			108,492			107,351			113,303					108,825			113,303
Deposits		609,964			608,433			586,373			593,370			566,811					609,964			566,811
Borrowings		29,592			30,736			51,310			87,994			120,233					29,592			120,233
Stockholders' equity		107,051			105,593			103,704			101,271			97,347					107,051			97,347
Financial Ratios and Other Data:
Performance Ratios:
Net interest margin (5)		3.26	%		3.23	%		3.14	%		3.30	%		2.96	%				3.24	%		3.00	%
Net interest spread (6)		3.16	%		3.13	%		3.01	%		3.16	%		2.76	%				3.15	%		2.77	%
Noninterest income to average assets (7)		1.68	%		2.79	%		3.43	%		4.12	%		2.36	%				2.24	%		1.95	%
Noninterest expense to average assets		3.91	%		4.27	%		4.86	%		4.60	%		3.86	%				4.09	%		3.77	%
Efficiency ratio (8)		81.69	%		72.72	%		75.77	%		63.38	%		74.61	%				76.75	%		78.58	%
Earnings on average assets (9)		0.74	%		1.14	%		1.20	%		1.73	%		0.89	%				0.94	%		0.68	%
Earnings on average equity (10)		5.18	%		8.10	%		8.83	%		13.51	%		6.97	%				6.62	%		5.17	%
Asset Quality Ratios:
Nonaccrual loans to loans (11)		0.19	%		0.23	%		0.23	%		0.32	%		0.92	%				0.19	%		0.92	%
Nonaccrual loans, restructured loans and
loans 90 days or more past due and still
accruing to total loans (11)		0.32	%		0.37	%		0.40	%		0.49	%		1.07	%				0.32	%		1.07	%
Nonperforming assets, restructured loans
and loans 90 days or more past due and still
accruing to total assets (11)		0.29	%		0.52	%		0.54	%		0.60	%		1.02	%				0.29	%		1.02	%
Allowance for loan losses to total loans (11)		1.66	%		1.71	%		1.69	%		1.65	%		1.58	%				1.66	%		1.58	%
Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or
more past due and still accruing (11)		519.26	%		459.21	%		421.14	%		338.59	%		147.79	%				519.26	%		147.79	%
Net charge-offs (recoveries) annualized
to average loans (11)		-0.16	%		-0.08	%		0.01	%		-0.04	%		-0.09	%				-0.12	%		-0.01	%
Capital Ratios:
Total equity to total assets		14.20	%		14.03	%		13.81	%		12.76	%		12.27	%				14.20	%		12.27	%
Total risk-based capital ratio		18.02	%		18.15	%		17.44	%		16.13	%		15.49	%				18.02	%		15.49	%
Tier 1 risk-based capital ratio		16.76	%		16.89	%		16.19	%		14.87	%		14.23	%				16.76	%		14.23	%
Leverage capital ratio		12.19	%		11.88	%		11.46	%		11.20	%		10.82	%				12.19	%		10.82	%
Other Data:
Number of employees (full-time equivalent)		176			179			176			176			177					176			177
Number of banking facilities		10			10			11			11			11					10			11
(1) Noninterest income includes gains and losses on securities.
(2) Common share data prior to September 14, 2020, is adjusted to reflect the 1:15 reverse split to allow for comparability between the pre- and post- reverse split periods.
(3) 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 $0.03 million for the 2nd quarter and 12 months ended 2020.
(4) 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.
(5) Net interest margin is the ratio of net interest income to average interest-earning assets.
(6) Net interest spread is the yield on average interest-earning assets less the rate on average interest-bearing liabilities.
(7) Noninterest income to average assets excludes gains and losses on securities.
(8) The efficiency ratio is noninterest expense divided by the sum of net interest income plus noninterest income, excluding gains and losses on securities.
(9) Earnings on average assets are net income divided by average total assets.
(10) Earnings on average equity are net income divided by average stockholders' equity.
(11) Excludes loans held for sale.

CIB MARINE BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
	June 30,			March 31,			December 31,			September 30,			June 30,
	2021			2021			2020			2020			2020
	(Dollars in Thousands, Except Shares)
Assets
Cash and due from banks	$	52,467		$	51,691		$	29,927		$	30,544		$	9,120
Reverse repurchase agreements		-			-			-			8,208			18,117
Securities available for sale		106,383			109,965			106,014			104,866			110,818
Equity securities at fair value		2,442			2,435			2,478			2,485			2,485
Loans held for sale		13,168			18,136			42,977			67,496			83,997
Loans		553,642			540,206			539,227			546,351			535,692
Allowance for loan losses		(9,165	)		(9,253	)		(9,122	)		(9,037	)		(8,483	)
Net loans		544,477			530,953			530,105			537,314			527,209
Federal Home Loan Bank Stock		3,140			3,140			3,140			3,140			2,948
Premises and equipment, net		3,873			4,476			4,682			4,667			4,679
Accrued interest receivable		1,916			1,983			2,050			2,075			1,973
Deferred tax assets, net		15,632			16,417			16,292			18,547			19,325
Other real estate owned, net		403			1,875			1,875			2,103			2,334
Bank owned life insurance		4,861			4,831			4,802			4,774			4,745
Goodwill and other intangible assets		120			126			131			137			142
Other assets		4,778			6,687			6,509			7,248			5,259
Total Assets	$	753,660		$	752,715		$	750,982		$	793,604		$	793,151
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand	$	121,862		$	109,466		$	92,544		$	91,134		$	90,450
Interest-bearing demand		61,439			63,033			59,679			61,262			54,288
Savings		266,085			268,026			243,888			225,724			205,470
Time		160,578			167,908			190,262			215,250			216,603
Total deposits		609,964			608,433			586,373			593,370			566,811
Short-term borrowings		29,592			30,736			51,310			54,052			77,273
Long-term borrowings		-			-			-			33,942			42,960
Accrued interest payable		127			140			246			398			447
Other liabilities		6,926			7,813			9,349			10,571			8,313
Total liabilities		646,609			647,122			647,278			692,333			695,804
Stockholders' Equity
Preferred stock, $1 par value; 5,000,000 authorized shares at both June 30, 2021 and December 31, 2020; 7% fixed rate noncumulative perpetual issued; 40,690 shares of series A and 3,201 shares of series B; convertible; $43.9 million aggregate liquidation preference		37,308			37,308			37,308			37,308			37,308
Common stock, $1 par value; 75,000,000 authorized shares; 1,299,553 and 1,285,385 issued shares; 1,285,484 and 1,268,316 outstanding shares at June 30, 2021 and December 31, 2020, respectively. (1)(2)		1,301			1,295			1,282			1,282			19,240
Capital surplus (2)		179,421			179,291			179,188			179,090			161,032
Accumulated deficit		(112,071	)		(113,452	)		(115,569	)		(117,875	)		(121,285	)
Accumulated other comprehensive income, net		1,626			1,685			2,029			2,000			1,586
Treasury stock, 14,791 shares on June 30, 2021 and December 31, 2020 and 221,902 shares prior at cost (2)		(534	)		(534	)		(534	)		(534	)		(534	)
Total stockholders' equity		107,051			105,593			103,704			101,271			97,347
Total liabilities and stockholders' equity	$	753,660		$	752,715		$	750,982		$	793,604		$	793,151
(1) Both issued and outstanding shares as stated here exclude 70,206 shares of unvested restricted stock awards at June 30, 2021 and 59,842 at December 31, 2020.
(2) Effective September 14, 2020, the Company executed a reverse stock split of 1 share for every 15 shares outstanding. Fractional shares were remitted cash at the then-current market value of $15.75 per share.

CIB MARINE BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
	At or for the
	Quarters Ended															6 Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2021			2021			2020			2020			2020			2021			2020
	(Dollars in thousands)
Interest Income
Loans	$	5,583		$	5,524		$	5,577		$	6,054		$	5,540		$	11,107		$	11,243
Loans held for sale		95			175			331			537			451			270			570
Securities		551			555			564			573			661			1,106			1,424
Other investments		10			11			17			38			17			21			68
Total interest income		6,239			6,265			6,489			7,202			6,669			12,504			13,305
Interest Expense
Deposits		447			512			735			942			1,263			959			2,775
Short-term borrowings		9			24			30			38			54			33			231
Long-term borrowings		0			0			0			37			26			0			26
Total interest expense		456			536			765			1,017			1,343			992			3,032
Net interest income		5,783			5,729			5,724			6,185			5,326			11,512			10,273
Provision for (reversal of) loan losses		(300	)		20			101			501			249			(280	)		451
Net interest income after provision for
(reversal of) loan losses		6,083			5,709			5,623			5,684			5,077			11,792			9,822
Noninterest Income
Deposit service charges		90			84			91			89			88			174			184
Other service fees		43			40			37			36			36			83			56
Mortgage banking revenue, net		2,763			4,983			6,387			7,741			3,990			7,746			6,167
Other income		280			192			165			226			266			472			531
Net gains on sale of securities available for sale		0			0			0			0			0			0			0
Unrealized gains (losses) recognized on equity securities		7			(43	)		(6	)		0			20			(36	)		59
Net gains (loss) on sale of SBA loans		0			0			55			(55	)		87			0			524
Net gains (losses) on sale of assets and (writedowns)		(48	)		(110	)		(163	)		67			2			(158	)		(390	)
Total noninterest income		3,135			5,146			6,566			8,104			4,489			8,281			7,131
Noninterest Expense
Compensation and employee benefits		5,099			5,956			7,015			7,329			5,451			11,055			9,872
Equipment		384			379			402			352			379			763			742
Occupancy and premises		443			434			452			390			407			877			867
Data Processing		181			185			178			177			155			366			319
Federal deposit insurance		47			48			49			48			47			95			47
Professional services		328			253			322			162			242			581			540
Telephone and data communication		56			60			82			71			67			116			135
Insurance		64			68			62			58			55			132			109
Other expense		677			557			755			469			505			1,234			999
Total noninterest expense		7,279			7,940			9,317			9,056			7,308			15,219			13,630
Income from operations
before income taxes		1,939			2,915			2,872			4,732			2,258			4,854			3,323
Income tax expense		558			798			565			1,322			575			1,356			856
Net income		1,381			2,117			2,307			3,410			1,683			3,498			2,467
Preferred stock dividend		0			0			0			0			0			0			0
Discount from repurchase of preferred stock		0			0			0			33			0			0			0
Net income allocated to
common stockholders	$	1,381		$	2,117		$	2,307		$	3,443		$	1,683		$	3,498		$	2,467

 

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

FAQ

What were the financial results for CIB Marine Bancshares for the first half of 2021?

CIB Marine Bancshares reported a net income of $3.5 million for the six months ended June 30, 2021, compared to $2.5 million for the same period in 2020.

How did CIB Marine's return on average assets change in 2021?

The return on average assets improved to 0.94% for the six months ended June 30, 2021, compared to 0.68% for the same period in 2020.

What was the change in tangible book value for CIBH as of June 30, 2021?

The tangible book value increased to $54.19 per share as of June 30, 2021, up from $52.28 at the end of 2020.

How much did net interest income increase for CIB Marine in the first half of 2021?

Net interest income rose by $1.2 million for the first half of 2021 compared to the same period in 2020.

What factors influenced CIB Marine's mortgage banking revenues in Q2 2021?

In Q2 2021, mortgage banking revenues decreased due to lower refinancing activity and competitive pricing margins compared to the exceptional levels in 2020.