CIB Marine Bancshares, Inc. Announces Third Quarter 2021 Results

Rhea-AI Summary

CIB Marine Bancshares, Inc. (CIBH) reported unaudited results for the nine months and quarter ending September 30, 2021. Net income was $5.6 million for the nine-month period, down from $5.9 million in 2020, with quarterly net income at $2.1 million, compared to $3.4 million the prior year. Return on average assets decreased to 0.99%. Common stock tangible book value increased to $56.14 per share. Non-interest income fell by $2.9 million, while loan quality improved, leading to a $0.7 million reversal of loan loss provisions. Additionally, CIBH's Preferred Stock Redemption Plan is set for October, redeeming $18 million in shares.

Positive

• Common stock tangible book value increased to $56.14 per share, a rise of 11.5% over the past year.
• Loan portfolio quality improved, leading to a $0.7 million reversal of loan loss provisions.
• Robust deposit growth, with checking account deposits rising by $32.6 million.

Negative

• Net income decreased from $5.9 million in 2020 to $5.6 million for the nine-month period.
• Quarterly net income dropped from $3.4 million to $2.1 million year-over-year.
• Non-interest income decreased by $2.9 million compared to the same period in 2020.

BROOKFIELD, Wis., Oct. 12, 2021 (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 nine months and quarter ended September 30, 2021. Net income for the nine months was $5.6 million compared to $5.9 million for the same period in 2020; and $2.1 million for the quarter compared to $3.4 million for the same quarter the prior year, which included record quarterly operating results for the Bank’s Mortgage Banking Division due to the significant mortgage refinance activity related to lower interest rates in 2020.

Financial highlights include:

• Return on average assets was 0.99% for the nine-month period, compared to 1.05% for the same period in 2020; and 1.08% for the quarter compared to 1.73% for the same quarter in 2020.
• Common stock tangible book value increased to $56.14 per share outstanding at September 30, 2021, compared to $52.28 at December 31, 2020, and $50.35 at September 30, 2020, reflecting a 12-month increase of 11.5%.
• Net interest income for the nine months and the quarter increased by $0.9 million and decreased by $0.3 million, respectively, compared to the same periods in 2020. The primary reason for the improvement is a 61 basis point decline in the cost of interest bearing liabilities over the respective time period, while the yield on interest earning assets declined by only 37 basis points. The change in the cost of interest bearing liabilities is primarily due to repricing products and accounts 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. The increase in net interest income combined with slower asset yield declines due to the relatively high percentage of fixed rate earning assets, resulted in a 3.23% net interest margin for the nine month period, which is up 13 basis points from September 30, 2020.      
• Loan portfolio asset quality and environmental factors contributed to a $0.7 million reversal of loan loss provisions during the nine-month period in 2021 compared to provisions of $1.0 million for the same period in 2020, for a difference of $1.6 million between the two periods.
• At the same time, there was a $2.9 million decrease in non-interest income during the nine-month period compared to the same period in 2020.   Mortgage banking operating results remain strong with elevated earnings, although not as high as the same period in 2020 due, in part, to a significantly lower level of rate refinance activity as rates are higher and the market is experiencing refinance burnout.
• 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 0.25% and 0.18%, respectively, at September 30, 2021, down from 0.54% and 0.23%, respectively, at December 31, 2020, and 0.60% and 0.22%, respectively, at September 30, 2020. The results continue to be near this credit cycle’s best, partially due to collection related activity and federal monetary policy and fiscal support measures for businesses and households.
• During 2020 and 2021, CIBM Bank originated $63 million in Paycheck Protection Program (PPP) loans. As of September 30, 2021, PPP loan balances paid down to approximately $17 million, with substantially all paid off PPP loans to date receiving 100% forgiveness funding from the SBA.
• Balance sheet liquidity is currently supported by robust deposit levels, with checking account deposits up $32.6 million and savings and money market account deposits up $43.7 million, since year-end. The increases reflect ongoing marketing activity and the general market liquidity conditions bolstered by federal fiscal and monetary policies (e.g., low interest rates and liquidity support programs).

Mr. J. Brian Chaffin, CIB Marine’s President and CEO, commented, “Continued strong results in commercial and residential mortgage lending were complimented by a sizeable increase in activity by our Government Guaranteed Lending Division, which has generated $7.8 million in SBA 7(a) and 504 loan originations year to date. In addition, after a significant build up by CIB Marine and peers in the allowance for loan losses last year, we have been cautiously unwinding that in 2021 due to improved asset quality in the portfolio and economic conditions supported by prior monetary and fiscal support measures for businesses and households.”     

Noting the improved deposit mix and net interest margin, Mr. Chaffin commented, “Our Project Falcon initiatives, combined with market liquidity conditions, have supported improvement in our deposit mix and lower cost of funds, which extended our net interest margin’s positive trend into the third quarter. Since year-end 2020, our checking and savings deposit product balances have increased $76 million, with time deposits down $38 million. Both CIB Marine and the market have perceptively high levels of cash and cash equivalents in the balance sheet, primarily due to the uncertain nature of the stability of checking and money market product balances.”  

He concluded, “Finally, thanks to the approval granted by our common and preferred shareholders at their meetings held on September 24, 2021, we have moved forward with our Preferred Stock Redemption Plan and expect to execute the $18 million Initial Redemption in October. Nearly 50% of all outstanding preferred shares will be redeemed on a pro-rata basis at $825 per share. With a current carrying value and liquidation preference of $850 and $1,000 per preferred share, respectively, the transaction represents a discount to the carrying value of the redeemed shares of approximately $545,000, or $0.42 per outstanding share of common stock. Further, following the Initial Redemption, the dilution that would occur with the conversion of the Series B Shares to common shares (which may occur only in certain, limited circumstances) will be reduced from 40% to 24% of the total issued and outstanding common shares on a pro-forma, fully-diluted basis.”   

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																9 Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,				September 30,			September 30,
		2021			2021			2021			2020			2020				2021			2020
	(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data:
Interest and dividend income	$	6,311		$	6,239		$	6,265		$	6,489		$	7,202			$	18,815		$	20,507
Interest expense		417			456			536			765			1,017				1,409			4,049
Net interest income		5,894			5,783			5,729			5,724			6,185				17,406			16,458
Provision for (reversal of) loan losses		(413	)		(300	)		20			101			501				(693	)		952
Net interest income after provision for
(reversal of) loan losses		6,307			6,083			5,709			5,623			5,684				18,099			15,506
Noninterest income (1)		4,072			3,135			5,146			6,566			8,104				12,353			15,235
Noninterest expense		7,517			7,279			7,940			9,317			9,056				22,736			22,686
Income before income taxes		2,862			1,939			2,915			2,872			4,732				7,716			8,055
Income tax expense		788			558			798			565			1,322				2,144			2,178
Net income	$	2,074		$	1,381		$	2,117		$	2,307		$	3,410			$	5,572		$	5,877
Common Share Data:
Basic net income per share (2)	$	1.63		$	1.08		$	1.67		$	1.82		$	2.69			$	4.36		$	4.69
Diluted net income per share (2)		0.94			0.63			0.97			1.06			1.56				2.55			2.73
Dividend		0.00			0.00			0.00			0.00			0.00				0.00			0.00
Tangible book value per share (3)		56.14			54.19			53.25			52.28			50.35				56.14			50.35
Book value per share (3)		51.07			49.16			48.21			47.19			45.27				51.07			45.27
Weighted average shares outstanding - basic		1,274,216			1,282,917			1,268,947			1,267,584			1,267,582				1,277,464			1,260,499
Weighted average shares outstanding - diluted		2,196,173			2,208,600			2,185,433			2,181,142			2,181,868				2,188,547			2,163,850
Financial Condition Data:
Total assets	$	775,912		$	753,660		$	752,715		$	750,982		$	793,604			$	775,912		$	793,604
Loans		559,079			553,642			540,206			539,227			546,351				559,079			546,351
Allowance for loan losses		(8,699	)		(9,165	)		(9,253	)		(9,122	)		(9,037	)			(8,699	)		(9,037	)
Investment securities		102,243			108,825			112,400			108,492			107,351				102,243			107,351
Deposits		624,579			609,964			608,433			586,373			593,370				624,579			593,370
Borrowings		34,577			29,592			30,736			51,310			87,994				34,577			87,994
Stockholders' equity		108,984			107,051			105,593			103,704			101,271				108,984			101,271
Financial Ratios and Other Data:
Performance Ratios:
Net interest margin (4)		3.21	%		3.26	%		3.23	%		3.14	%		3.30	%			3.23	%		3.10	%
Net interest spread (5)		3.12	%		3.16	%		3.13	%		3.01	%		3.16	%			3.14	%		2.90	%
Noninterest income to average assets (6)		2.13	%		1.68	%		2.79	%		3.43	%		4.12	%			2.20	%		2.72	%
Noninterest expense to average assets		3.92	%		3.91	%		4.27	%		4.86	%		4.60	%			4.03	%		4.06	%
Efficiency ratio (7)		75.34	%		81.69	%		72.72	%		75.77	%		63.38	%			76.28	%		71.71	%
Earnings on average assets (8)		1.08	%		0.74	%		1.14	%		1.20	%		1.73	%			0.99	%		1.05	%
Earnings on average equity (9)		7.59	%		5.18	%		8.10	%		8.83	%		13.51	%			6.95	%		8.05	%
Asset Quality Ratios:
Nonaccrual loans to loans (10)		0.18	%		0.19	%		0.23	%		0.23	%		0.32	%			0.18	%		0.32	%
Nonaccrual loans, restructured loans and
loans 90 days or more past due and still
accruing to total loans (10)		0.27	%		0.32	%		0.37	%		0.40	%		0.49	%			0.27	%		0.49	%
Nonperforming assets, restructured loans
and loans 90 days or more past due and still
accruing to total assets (10)		0.25	%		0.29	%		0.52	%		0.54	%		0.60	%			0.25	%		0.60	%
Allowance for loan losses to total loans (10)		1.56	%		1.66	%		1.71	%		1.69	%		1.65	%			1.56	%		1.65	%
Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or
more past due and still accruing (10)		575.33	%		519.26	%		459.21	%		421.14	%		338.59	%			575.33	%		338.59	%
Net charge-offs (recoveries) annualized
to average loans (10)		0.04	%		-0.16	%		-0.08	%		0.01	%		-0.04	%			-0.07	%		-0.02	%
Capital Ratios:
Total equity to total assets		14.05	%		14.20	%		14.03	%		13.81	%		12.76	%			14.05	%		12.76	%
Total risk-based capital ratio		18.14	%		18.02	%		18.15	%		17.44	%		16.13	%			18.14	%		16.13	%
Tier 1 risk-based capital ratio		16.88	%		16.76	%		16.89	%		16.19	%		14.87	%			16.88	%		14.87	%
Leverage capital ratio		12.44	%		12.32	%		11.88	%		11.46	%		11.20	%			12.44	%		11.20	%
Other Data:
Number of employees (full-time equivalent)		179			176			179			176			176				179			176
Number of banking facilities		10			10			10			11			11				10			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 $0.03 million for the 9 months ended September 30, 2020.
(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)
	September 30,			June 30,			March 31,			December 31,			September 30,
		2021			2021			2021			2020			2020
	(Dollars in Thousands, Except Shares)
Assets
Cash and due from banks	$	69,217		$	52,467		$	51,691		$	29,927		$	30,544
Reverse repurchase agreements		-			-			-			-			8,208
Securities available for sale		99,813			106,383			109,965			106,014			104,866
Equity securities at fair value		2,430			2,442			2,435			2,478			2,485
Loans held for sale		18,258			13,168			18,136			42,977			67,496
Loans		559,079			553,642			540,206			539,227			546,351
Allowance for loan losses		(8,699	)		(9,165	)		(9,253	)		(9,122	)		(9,037	)
Net loans		550,380			544,477			530,953			530,105			537,314
Federal Home Loan Bank Stock		3,140			3,140			3,140			3,140			3,140
Premises and equipment, net		3,979			3,873			4,476			4,682			4,667
Accrued interest receivable		1,813			1,916			1,983			2,050			2,075
Deferred tax assets, net		15,193			15,632			16,417			16,292			18,547
Other real estate owned, net		403			403			1,875			1,875			2,103
Bank owned life insurance		5,894			4,861			4,831			4,802			4,774
Goodwill and other intangible assets		115			120			126			131			137
Other assets		5,277			4,778			6,687			6,509			7,248
Total Assets	$	775,912		$	753,660		$	752,715		$	750,982		$	793,604
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand	$	122,441		$	121,862		$	109,466		$	92,544		$	91,134
Interest-bearing demand		62,414			61,439			63,033			59,679			61,262
Savings		287,609			266,085			268,026			243,888			225,724
Time		152,115			160,578			167,908			190,262			215,250
Total deposits		624,579			609,964			608,433			586,373			593,370
Short-term borrowings		34,577			29,592			30,736			51,310			54,052
Long-term borrowings		-			-			-			-			33,942
Accrued interest payable		111			127			140			246			398
Other liabilities		7,661			6,926			7,813			9,349			10,571
Total liabilities		666,928			646,609			647,122			647,278			692,333
Stockholders' Equity
Preferred stock, $1 par value; 5,000,000 authorized shares at both September 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; 1,289,494 and 1,285,385 issued shares; 1,275,425 and 1,268,316 outstanding shares at September 30, 2021 and December 31, 2020, respectively. (1)		1,302			1,301			1,295			1,282			1,282
Capital surplus		179,557			179,421			179,291			179,188			179,090
Accumulated deficit		(109,997	)		(112,071	)		(113,452	)		(115,569	)		(117,875	)
Accumulated other comprehensive income, net		1,348			1,626			1,685			2,029			2,000
Treasury stock, 14,791 shares on September 30, 2021 and December 31, 2020		(534	)		(534	)		(534	)		(534	)		(534	)
Total stockholders' equity		108,984			107,051			105,593			103,704			101,271
Total liabilities and stockholders' equity	$	775,912		$	753,660		$	752,715		$	750,982		$	793,604
(1) Both issued and outstanding shares as stated here exclude 67,837 shares of unvested restricted stock awards at September 30, 2021 and 59,842 shares at December 31, 2020.

CIB MARINE BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
	At or for the
	Quarters Ended																9 Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,				September 30,			September 30,
		2021			2021			2021			2020			2020				2021			2020
	(Dollars in thousands)
Interest Income
Loans	$	5,646		$	5,583		$	5,524		$	5,577		$	6,054			$	16,753		$	17,297
Loans held for sale		135			95			175			331			537				405			1,107
Securities		509			551			555			564			573				1,615			1,997
Other investments		21			10			11			17			38				42			106
Total interest income		6,311			6,239			6,265			6,489			7,202				18,815			20,507
Interest Expense
Deposits		409			447			512			735			942				1,368			3,717
Short-term borrowings		8			9			24			30			38				41			269
Long-term borrowings		0			0			0			0			37				0			63
Total interest expense		417			456			536			765			1,017				1,409			4,049
Net interest income		5,894			5,783			5,729			5,724			6,185				17,406			16,458
Provision for (reversal of) loan losses		(413	)		(300	)		20			101			501				(693	)		952
Net interest income after provision for
(reversal of) loan losses		6,307			6,083			5,709			5,623			5,684				18,099			15,506
Noninterest Income
Deposit service charges		97			90			84			91			89				271			273
Other service fees		35			43			40			37			36				118			92
Mortgage banking revenue, net		3,626			2,763			4,983			6,387			7,741				11,372			13,908
Other income		186			280			192			165			226				658			757
Net gains on sale of securities available for sale		0			0			0			0			0				0			0
Unrealized gains (losses) recognized on equity securities		(12	)		7			(43	)		(6	)		0				(48	)		59
Net gains (loss) on sale of SBA loans		151			0			0			55			(55	)			151			469
Net gains (losses) on sale of assets and (writedowns)		(11	)		(48	)		(110	)		(163	)		67				(169	)		(323	)
Total noninterest income		4,072			3,135			5,146			6,566			8,104				12,353			15,235
Noninterest Expense
Compensation and employee benefits		5,436			5,099			5,956			7,015			7,329				16,491			17,201
Equipment		390			384			379			402			352				1,153			1,094
Occupancy and premises		395			443			434			452			390				1,272			1,257
Data Processing		105			181			185			178			177				471			496
Federal deposit insurance		46			47			48			49			48				141			95
Professional services		227			328			253			322			162				808			702
Telephone and data communication		70			56			60			82			71				186			206
Insurance		66			64			68			62			58				198			167
Other expense		782			677			557			755			469				2,016			1,468
Total noninterest expense		7,517			7,279			7,940			9,317			9,056				22,736			22,686
Income from operations
before income taxes		2,862			1,939			2,915			2,872			4,732				7,716			8,055
Income tax expense		788			558			798			565			1,322				2,144			2,178
Net income		2,074			1,381			2,117			2,307			3,410				5,572			5,877
Preferred stock dividend		0			0			0			0			0				0			0
Discount from repurchase of preferred stock		0			0			0			0			0				0			33
Net income allocated to
common stockholders	$	2,074		$	1,381		$	2,117		$	2,307		$	3,410			$	5,572		$	5,910

FAQ

What were CIB Marine Bancshares' financial results for Q3 2021?

CIB Marine reported a net income of $2.1 million for Q3 2021, a decrease from $3.4 million in Q3 2020.

How did CIB Marine's net interest margin change in 2021?

CIB Marine's net interest margin increased to 3.23% for the nine-month period, up 13 basis points from 2020.

What is the status of CIB Marine's Preferred Stock Redemption Plan?

CIB Marine plans to execute an $18 million Initial Redemption of preferred stock in October 2021.

What is the current state of loan loss provisions for CIB Marine?

CIB Marine experienced a $0.7 million reversal of loan loss provisions due to improved loan portfolio quality.

How much did CIB Marine's common stock tangible book value increase?

The tangible book value increased to $56.14 per share, an 11.5% increase over the past year.