CIB Marine Bancshares, Inc. Announces Third Quarter 2020 Results

Rhea-AI Summary

CIB Marine Bancshares reported significant improvements in net income, achieving $3.4 million in Q3 2020, up from $1.0 million in Q3 2019. For the nine months ending September 30, 2020, net income reached $5.9 million, compared to $2.4 million the previous year. Driven by a surge in mortgage banking, net mortgage revenues were $13.9 million, up from $6.1 million YoY. However, provisions for loan losses increased to $1.0 million, citing credit deterioration from COVID-19. A reverse stock split was executed on September 14, 2020, with plans to upgrade to OTCQX anticipated.

Positive

• Q3 2020 net income increased to $3.4 million from $1.0 million YoY.
• Nine-month net income improved to $5.9 million compared to $2.4 million YoY.
• Net mortgage banking revenues surged to $13.9 million, up from $6.1 million YoY.
• The efficiency ratio improved to 72% from 86% YoY.
• Successful implementation of a 1-for-15 reverse stock split on September 14, 2020.

Negative

• Provisions for loan losses increased to $1.0 million from $0.1 million YoY.
• Expectations of ongoing credit deterioration in the portfolio due to COVID-19.

BROOKFIELD, Wis., Oct. 13, 2020 (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 third quarter of 2020. Net income for the quarter was $3.4 million compared to $1.0 million for the same period in 2019 and, for the nine months ending September 30, 2020, it was $5.9 million compared to $2.4 million for the same period in 2019.

A summary of financial results for the quarter and nine months ended September 30, 2020, is attached. Select highlights include:

• The return on average assets and efficiency ratio year to date were 1.05% and 72%, respectively, compared to 0.46% and 86%, respectively, for the same period in 2019.
• CIBM Bank’s Mortgage Banking Division was a significant contributor to improved quarter and year to date earnings results. Driven by refinance activity due to lower interest rates, net mortgage banking revenues and loan originations for the nine months ended September 30, 2020, were $13.9 million and $418 million, respectively, compared to $6.1 million and $226 million, respectively, for the same period of the prior year.
• Compensation expense was up 28% in the Company for the nine months ended September 30, 2020, primarily due to the increase in mortgage division compensation as a result of the significant increase in production.  Compensation at the mortgage division represents 52% of the total compensation in the Company year to date; excluding the mortgage division, the Company’s compensation year to date is up less than 2% compared to the same period last year.
• Net interest income was up $1.9 million for the first nine months of 2020, compared to the same period in 2019. The primary reasons for the increase include: (i) higher average balances in loans held for sale and Paycheck Protection Program (PPP) loans, (ii) a 68 basis point reduction in the cost of interest bearing liabilities due to the lower interest rate environment, and (iii) the collection of principal plus interest on a large non-performing commercial real estate loan.
• In addition to providing the impetus for lower interest rates, COVID-19 and the related Lockdown Recession have affected the Company in many ways. Year to date, CIBM Bank has originated approximately 350 government guaranteed PPP loans, with balances in excess of $43 million. As a result, CIBM Bank has received and deferred $1.5 million in fees from the SBA to be fully recognized in earnings when the loans are repaid or granted forgiveness with repayment by the government. To date, the Company has prepared PPP forgiveness applications totaling $7 million in principal balances and $0.2 million in related deferred origination fees; we expect receipt of proceeds during the fourth quarter. In addition, there were 90 loans totaling $74 million with COVID-19 loan payment deferrals as of September 30, 2020.
• Provisions for loan losses were $1.0 million for the nine months ended September 30, 2020, compared to $0.1 million for the same period of 2019. The primary reason for the increase is environmental and qualitative factors as well as certain borrower credit deterioration primarily from those industries hardest hit by COVID-19 and the Lockdown Recession (i.e., restaurants and hospitality).   
• 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 0.60% and 0.32%, respectively; compared to 1.35% and 1.09%, respectively, at December 31, 2019; and 1.40% and 1.14%, respectively, at September 30, 2020. The improvements during the first nine months of 2020 were due to certain loan level improvements including a successful large commercial real estate loan collection.
  

Mr. J. Brian Chaffin, President and CEO of CIBM, commented, “We are happy to report very strong earnings for the first three quarters of 2020. Given the challenges that many banks have faced this year, the efforts of our staff to deliver these results is outstanding. From the logistical and technological aspects of servicing our customers and managing bank and mortgage operations remotely, to implementing the significant number of new government economic and industry level assistance programs, to the bank-wide initiatives to improve earnings and efficiency, investors can be proud of the dedication and commitment of the entire CIBM Bank team.

“Record levels of mortgage banking activity at the Company have contributed to our financial success this year, and we have seen improvements in our funding composition and cost of funds thanks to the lower rate environment and our ‘Project Falcon’ initiatives related to deposit generation and operating efficiencies. Despite the strong results thus far in 2020,” he cautioned, “we expect to see credit deterioration continue in the industry on whole and in portions of CIBM Bank’s portfolio in the quarters ahead. To address the Lockdown Recession’s impact on credit risk, CIBM Bank has established higher loan loss provisions this year, with the possibility of further increases in the quarters to come.”   

In closing he added, “We are also pleased to highlight the successful 1-for-15 reverse split of our common stock, effective September 14, 2020. Combined with a pending future upgrade for the Company’s common stock from the OTCQB to OTCQX market during the fourth quarter, this should assist in improving the marketplace for the common stock.”  

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates eleven 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																9 Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,				September 30,			September 30,
		2020			2020			2020			2019			2019				2020			2019
	(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data:
Interest and dividend income	$	7,202		$	6,669		$	6,636		$	6,820		$	7,035			$	20,507		$	21,128
Interest expense		1,017			1,343			1,689			2,030			2,183				4,049			6,617
Net interest income		6,185			5,326			4,947			4,790			4,852				16,458			14,511
Provision for loan losses		501			249			202			715			327				952			102
Net interest income after provision for
loan losses		5,684			5,077			4,745			4,075			4,525				15,506			14,409
Noninterest income (1)		8,104			4,489			2,642			2,249			3,835				15,235			7,907
Noninterest expense		9,056			7,308			6,322			6,879			7,233				22,686			19,295
Income (loss) before income taxes		4,732			2,258			1,065			(555	)		1,127				8,055			3,021
Income tax expense (benefit)		1,322			575			281			(180	)		93				2,178			603
Net income (loss)	$	3,410		$	1,683		$	784		$	(375	)	$	1,034			$	5,877		$	2,418
Common Share Data (2):
Basic net income (loss) per share (3)	$	2.69		$	1.36		$	0.63		$	(0.30	)	$	1.09			$	4.69		$	2.23
Diluted net income (loss) per share (3)		1.56			0.79			0.36			(0.30	)		0.62				2.73			1.25
Dividend		0.00			0.00			0.00			0.00			0.00				0.00			0.00
Tangible book value per share (4)		50.35			47.25			46.05			44.85			45.40				50.35			45.40
Book value per share (4)		45.27			42.00			40.95			39.60			40.20				45.27			40.20
Weighted average shares outstanding - basic		1,267,582			1,266,170			1,248,270			1,243,095			1,230,361				1,260,499			1,218,737
Weighted average shares outstanding - diluted		2,181,868			2,160,199			2,155,313			2,155,302			2,169,090				2,163,850			2,189,033
Financial Condition Data:
Total assets	$	793,604		$	793,151		$	705,473		$	703,791		$	700,711			$	793,604		$	700,711
Loans		546,351			535,692			513,992			513,705			508,758				546,351			508,758
Allowance for loan losses		(9,037	)		(8,483	)		(8,107	)		(8,007	)		(7,560	)			(9,037	)		(7,560	)
Investment securities		107,351			113,303			120,105			120,398			120,648				107,351			120,648
Deposits		593,370			566,811			531,999			530,190			557,745				593,370			557,745
Borrowings		87,994			120,233			68,950			73,847			38,468				87,994			38,468
Stockholders' equity		101,271			97,347			95,841			93,404			94,082				101,271			94,082
Financial Ratios and Other Data:
Performance Ratios:
Net interest margin (5)		3.30	%		2.96	%		3.04	%		2.86	%		2.95	%			3.10	%		2.93	%
Net interest spread (6)		3.16	%		2.76	%		2.78	%		2.55	%		2.62	%			2.90	%		2.61	%
Noninterest income to average assets (7)		4.12	%		2.36	%		1.51	%		1.28	%		2.19	%			2.72	%		1.49	%
Noninterest expense to average assets		4.60	%		3.86	%		3.67	%		3.88	%		4.14	%			4.06	%		3.67	%
Efficiency ratio (8)		63.38	%		74.61	%		83.74	%		97.57	%		83.44	%			71.71	%		86.39	%
Earnings on average assets (9)		1.73	%		0.89	%		0.45	%		-0.21	%		0.59	%			1.05	%		0.46	%
Earnings on average equity (10)		13.51	%		6.97	%		3.32	%		-1.56	%		4.35	%			8.05	%		3.48	%
Asset Quality Ratios:
Nonaccrual loans to loans (11)		0.32	%		0.92	%		0.97	%		1.09	%		1.14	%			0.32	%		1.14	%
Nonaccrual loans, restructured loans and

FAQ

What were the Q3 2020 financial results for CIB Marine Bancshares?

CIB Marine Bancshares reported a net income of $3.4 million for Q3 2020, significantly up from $1.0 million in Q3 2019.

How did CIB Marine Bancshares perform for the nine months ending September 30, 2020?

The company reported net income of $5.9 million for the nine months ending September 30, 2020, compared to $2.4 million for the same period in 2019.

What contributed to CIB Marine Bancshares' improved earnings in 2020?

The increase in earnings was largely driven by a surge in mortgage banking activities, with net mortgage banking revenues rising to $13.9 million.

What is the significance of the 1-for-15 reverse stock split for CIB Marine Bancshares?

The reverse stock split, effective September 14, 2020, aims to improve liquidity and market perception of the company's common stock.

What are the loan loss provisions reported by CIB Marine Bancshares for 2020?

The company reported loan loss provisions of $1.0 million for the nine months ending September 30, 2020, compared to $0.1 million for the same period in 2019.