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CIB Marine Bancshares, Inc. Announces 2017 First Quarter Results
Apr 13, 2017
OTC Disclosure & News Service
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CIB Marine Bancshares, Inc. Announces 2017 First Quarter Results
WAUKESHA, WI--(Marketwired - April 13, 2017) - CIB Marine Bancshares, Inc. (the "Company" or "CIBM") (OTCQB: CIBH), the holding company of CIBM Bank (the "Bank"), today announces its results of operations and financial condition for the first quarter of 2017. Net income for the first quarter was $0.9 million or $0.05 per share basic. This compares to net income of $1.1 million or $0.06 per share basic for the fourth quarter of 2016 and net income of $1.0 million or $0.05 per share basic for the first quarter of 2016.
Select highlights for the quarter include:
Return on average assets for the first quarter of 2017 is 0.56%, compared to 0.66% for the fourth quarter of 2016 and 0.66% for the first quarter of 2016. Both of the prior periods reported significant recovery of prior loan related losses whereas there was none in the current quarter.
Our book and tangible book value per share of common stock are reported at $0.60 and $1.08, respectively, compared to $0.41 and $0.90 from one year prior.
Net income for subsidiary CIBM Bank was $1.1 million, compared to net income of $1.2 million for the fourth quarter of 2016 boosted by a large loan loss recovery and $0.7 million for the first quarter of 2016. Improvements are due to higher net interest income and gains on sale of SBA loans, as well as lower noninterest expense.
Net interest income of $4.7 million for the quarter is an increase of $0.2 million from the fourth quarter of 2016 and $0.3 million from the first quarter of 2016.
Non-interest income of $1.9 million for the quarter was on par with $1.9 million from the fourth quarter of 2016. Non-interest income for the first quarter of 2016 was $2.1 million and included $0.4 million in net gains from sale of OREO assets net of other write-downs.
"CIB Marine's performance reflected continued gains consistent with our business plan. Our net interest income grew due to higher earning asset volumes and the new Fed rate hikes. Gains on sale of SBA loans of $0.4 million reported in net gains on sale of assets is an early sign of the kind of performance our new SBA Lending division is capable of providing. Retail banking generated more than $20 million gross in new deposits to assist funding prior asset growth and a reduction in our FHLB borrowings. At Avenue Mortgage, although off to a seasonally slower start, the month of March showed signs of strength as the home purchase markets started to heat up and our new and growing lending team in central Illinois is just getting started," said Mr. J. Brian Chaffin, President and CEO of CIB Marine Bancshares, Inc.
Mr. Chaffin added, "We are excited to introduce our Affordable Loan Program to assist low and moderate income households in our communities and the creation of a new Community Development Officer position. Early indicators are very positive and show what a positive force the company and its employees can have within the communities we live and work."
Mr. Chaffin then noted, "As referenced in our shareholder letter dated April 3, 2017, we have included with this release a summary analysis of the potential impact preferred stock repurchases under various discount scenarios would have on book value. More information and a proposal for common shareholders to vote on will be included in the Proxy Statement for the 2017 Annual Shareholder Meeting."
CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates 11 banking offices in Illinois, Wisconsin and Indiana and 4 separate 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.
Notice that Preferred Dividend has not been declared: Pursuant to Sections 5.4(e)(v) and 5.5(e)(v) of the Company's Articles of Incorporation, notice is hereby given that the Board of Directors of the Company has not declared a dividend on its Series A Preferred Stock or its Series B Convertible Preferred Stock for the period ended March 31, 2017 and, accordingly, no dividend will be paid to preferred shareholders for such Dividend Period.
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, 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 Three Months Ended
March 31, December 31, September 30, June 30, March 31, March 31, March 31,
2017 2016 2016 2016 2016 2017 2016
(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data
Interest and dividend income $ 5,562 $ 5,273 $ 5,286 $ 5,214 $ 5,176 $ 5,562 $ 5,176
Interest expense 892 793 740 729 735 892 735
Net interest income 4,670 4,480 4,546 4,485 4,441 4,670 4,441
Provision for (reversal of) loan losses 228 (796 ) 69 118 61 228 61
Net interest income after provision for (reversal of) loan losses 4,442 5,276 4,477 4,367 4,380 4,442 4,380
Noninterest income (1) 1,847 1,908 2,651 2,788 2,053 1,847 2,053
Noninterest expense 5,401 6,127 6,220 5,951 5,481 5,401 5,481
Income (loss) before income taxes 888 1,057 908 1,204 952 888 952
Income tax expense 0 (5 ) 40 15 0 0 0
Net income (loss) $ 888 $ 1,062 $ 868 $ 1,189 $ 952 $ 888 $ 952
Common Share Data
Basic net income (loss) per share $ 0.05 $ 0.06 $ 0.05 $ 0.07 $ 0.05 $ 0.05 $ 0.05
Diluted net income (loss) per share 0.02 0.03 0.02 0.03 0.03 0.02 0.03
Dividend 0 0 0 0 0 0 0
Tangible book value per share (2) 1.08 1.01 1.04 0.99 0.90 1.08 0.90
Book value per share (2) 0.60 0.53 0.56 0.51 0.41 0.60 0.41
Weighted average shares outstanding - basic 18,127,892 18,127,892 18,127,892 18,127,892 18,127,892 18,127,892 18,127,892
Weighted average shares outstanding - diluted 36,193,353 36,082,522 35,818,022 35,631,892 35,631,892 36,193,353 35,631,892
Financial Condition Data
Total assets $ 631,160 $ 653,559 $ 632,628 $ 615,708 $ 597,089 $ 631,160 $ 597,089
Loans 483,501 483,518 466,057 461,859 470,424 483,501 470,424
Allowance for loan losses (7,567 ) (7,592 ) (8,549 ) (8,219 ) (8,235 ) (7,567 ) (8,235 )
Investment securities 111,745 112,072 103,853 103,542 97,474 111,745 97,474
Deposits 497,144 483,097 476,428 468,377 467,334 497,144 467,334
Borrowings 60,837 96,944 81,636 72,833 57,929 60,837 57,929
Stockholders' equity 70,819 69,523 70,094 69,266 67,475 70,819 67,475
Financial Ratios and Other Data
Performance Ratios:
Net interest margin (3) 3.02 % 2.84 % 2.95 % 3.11 % 3.15 % 3.02 % 3.15 %
Net interest spread (4) 2.87 % 2.70 % 2.80 % 2.96 % 3.00 % 2.87 % 3.00 %
Noninterest income to average assets (5) 1.16 % 1.18 % 1.68 % 1.88 % 1.42 % 1.16 % 1.42 %
Noninterest expense to average assets 3.40 % 3.79 % 3.93 % 4.02 % 3.78 % 3.40 % 3.78 %
Efficiency ratio (6) 82.88 % 95.91 % 86.42 % 81.82 % 84.40 % 82.88 % 84.40 %
Earnings (loss) on average assets (7) 0.56 % 0.66 % 0.55 % 0.80 % 0.66 % 0.56 % 0.66 %
Earnings (loss) on average equity (8) 5.10 % 5.93 % 4.89 % 6.98 % 5.75 % 5.10 % 5.75 %
Asset Quality Ratios:
Nonaccrual loans to loans (9) 1.32 % 1.26 % 1.16 % 0.81 % 0.81 % 1.32 % 0.81 %
Nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing to total loans (9) 1.65 % 1.60 % 1.58 % 1.63 % 1.64 % 1.65 % 1.64 %
Nonperforming assets, restructured loans and loans 90 days or more past due and still accruing to total assets (9) 1.77 % 1.67 % 1.32 % 1.59 % 1.94 % 1.77 % 1.94 %
Allowance for loan losses to total loans 1.57 % 1.57 % 1.83 % 1.78 % 1.75 % 1.57 % 1.75 %
Allowance for loan losses to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (9) 94.67 % 97.99 % 116.08 % 109.14 % 106.74 % 94.67 % 106.74 %
Net charge-offs (recoveries) annualized to average loans 0.21 % 0.14 % -0.22 % 0.12 % -0.10 % 0.21 % -0.10 %
Capital Ratios:
Total equity to total assets 11.02 % 10.64 % 11.08 % 11.25 % 11.30 % 11.02 % 11.30 %
Total risk-based capital ratio 15.90 % 15.40 % 15.66 % 15.60 % 15.19 % 15.90 % 15.19 %
Tier 1 risk-based capital ratio 14.65 % 14.15 % 14.41 % 14.34 % 13.93 % 14.65 % 13.93 %
Leverage capital ratio 11.21 % 11.14 % 11.20 % 11.69 % 11.72 % 11.21 % 11.72 %
Other Data:
Number of employees (full-time equivalent) 181 171 169 167 180 181 180
Number of banking facilities 11 11 11 11 11 11 11
(1) Noninterest income includes gains and losses on securities.
(2) Tangible book value per share is the shareholder 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 shareholder equity less the liquidation preference of the preferred stock, divided by the total shares of common outstanding.
(3) Net interest margin is the ratio of net interest income to average interest-earning assets.
(4) Net interest spread is the yield on average interest-earning assets less the rate on average interest-bearing liabilities.
(5) Noninterest income to average assets excludes gains and losses on securities.
(6) The efficiency ratio is noninterest expense divided by the sum of net interest income plus noninterest income, excluding gains and losses on securities.
(7) Earnings on average assets are net income divided by average total assets.
(8) Earnings on average equity are net income divided by average common equity.
(9) Excludes loans held for sale.
CIB MARINE BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
(Dollars in thousands, except share data)
Assets
Cash and due from banks $ 12,773 $ 10,291 $ 11,427 $ 9,808 $ 9,136
Reverse repurchase agreements 11,019 24,275 27,560 20,313 -
Securities available for sale 111,745 112,072 103,853 103,542 97,474
Loans held for sale 2,448 11,469 15,875 11,602 10,176
Loans 483,501 483,518 466,057 461,859 470,424
Allowance for loan losses (7,567 ) (7,592 ) (8,549 ) (8,219 ) (8,235 )
Net loans 475,934 475,926 457,508 453,640 462,189
Federal Home Loan Bank Stock 2,070 3,803 3,803 2,170 2,170
Premises and equipment, net 4,369 4,427 4,256 4,358 4,716
Accrued interest receivable 1,377 1,382 1,289 1,290 1,468
Other real estate owned, net 3,153 3,159 982 2,283 3,859
Bank owned life insurance 4,414 4,389 4,363 4,336 4,310
Goodwill and other intangible assets 215 221 226 232 237
Other assets 1,643 2,145 1,486 2,134 1,354
Total Assets $ 631,160 $ 653,559 $ 632,628 $ 615,708 $ 597,089
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand $ 76,088 $ 77,154 $ 87,216 $ 82,460 $ 74,564
Interest-bearing demand 33,027 33,832 29,821 31,508 32,096
Savings 192,175 176,435 169,390 175,955 175,576
Time 195,854 195,676 190,001 178,454 185,098
Total deposits 497,144 483,097 476,428 468,377 467,334
Short-term borrowings 60,837 96,944 81,636 72,833 57,929
Accrued interest payable 327 349 319 335 339
Other liabilities 2,033 3,646 4,151 4,897 4,012
Total liabilities 560,341 584,036 562,534 546,442 529,614
Stockholders' Equity
Preferred stock, $1 par value; 5,000,000
authorized shares; 7% fixed rate noncumulative perpetual issued-55,624 shares of series A and 4,376 shares of series B; convertible; aggregate liquidation preference- $60,000 51,000 51,000 51,000 51,000 51,000
Common stock, $1 par value; 50,000,000 authorized shares; 18,346,391 issued shares; 18,135,344 outstanding shares 18,346 18,346 18,346 18,346 18,346
Capital surplus 158,602 158,552 158,510 158,493 158,493
Accumulated deficit (154,629 ) (155,517 ) (156,579 ) (157,446 ) (158,636 )
Accumulated other comprehensive loss, net (1,971 ) (2,329 ) (654 ) (598 ) (1,199 )
Treasury stock 218,499 shares at cost (529 ) (529 ) (529 ) (529 ) (529 )
Total stockholders' equity 70,819 69,523 70,094 69,266 67,475
Total liabilities and stockholders' equity $ 631,160 $ 653,559 $ 632,628 $ 615,708 $ 597,089
CIB MARINE BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
At or for the
Quarters Ended Three Months Ended
March 31, December 31, September 30, June 30, March 31, March 31, March 31,
2017 2016 2016 2016 2016 2017 2016
(Dollars in thousands)
Interest Income
Loans $ 4,826 $ 4,493 $ 4,540 $ 4,635 $ 4,572 $ 4,826 $ 4,572
Loans held for sale 46 141 153 95 83 46 83
Securities 611 563 513 478 517 611 517
Other investments 79 76 80 6 4 79 4
Total interest income 5,562 5,273 5,286 5,214 5,176 5,562 5,176
Interest Expense
Deposits 749 697 659 692 705 749 705
Short-term borrowings 143 96 81 37 30 143 30
Total interest expense 892 793 740 729 735 892 735
Net interest income 4,670 4,480 4,546 4,485 4,441 4,670 4,441
Provision for (reversal of) loan losses 228 (796 ) 69 118 61 228 61
Net interest income after provision for (reversal of) loan losses 4,442 5,276 4,477 4,367 4,380 4,442 4,380
Noninterest Income
Deposit service charges 113 121 125 121 103 113 103
Other service fees 46 45 47 52 67 46 67
Mortgage Banking revenue, net 1,142 1,414 2,285 2,102 1,336 1,142 1,336
Other income 97 136 206 96 117 97 117
Net gains on sale of securities 0 0 0 0 0 0 0
Net gains (losses) on sale of assets and (writedowns) 449 192 (12 ) 417 430 449 430
Total noninterest income 1,847 1,908 2,651 2,788 2,053 1,847 2,053
Noninterest Expense
Compensation and employee benefits 3,705 4,228 4,426 4,143 3,624 3,705 3,624
Equipment 290 305 277 293 273 290 273
Occupancy and premises 390 390 377 389 435 390 435
Data Processing 140 123 185 151 154 140 154
Federal deposit insurance 87 92 105 106 106 87 106
Professional services 200 156 157 213 249 200 249
Telephone and data communication 81 90 92 99 109 81 109
Insurance 59 60 60 56 54 59 54
Other expense 449 683 541 501 477 449 477
Total noninterest expense 5,401 6,127 6,220 5,951 5,481 5,401 5,481
Income (loss) from operations before income taxes 888 1,057 908 1,204 952 888 952
Income tax expense 0 (5 ) 40 15 0 0 0
Net income (loss) 888 1,062 868 1,189 952 888 952
Preferred stock dividend 0 0 0 0 0 0 0
Net income (loss) allocated to common stockholders $ 888 $ 1,062 $ 868 $ 1,189 $ 952 $ 888 $ 952
CIB Marine Bancshares, Inc.
Summary of Preferred Stock Repurchase Program Scenario Analysis
In a letter to shareholders dated April 3, 2017, we discussed a plan to be presented to shareholders at the 2017 Annual Shareholder Meeting on May 25, 2017, in Champaign, Illinois. The Company intends to create a non-mandatory preferred stock repurchase program if the common and preferred shareholders vote in favor of an amendment to the Company's Articles of Incorporation permitting individually negotiated repurchases of the preferred stock. The repurchase of preferred stock at a discount to par is accretive for the Company and its shareholders, and creates the opportunity for liquidity for preferred shareholders who choose for themselves to sell their stock at a mutually agreeable price. The analysis below demonstrates the accretion to book value of preferred stock repurchases under various discount scenarios.
REPURCHASE SCENARIO AT 30% of Liquidation Preference
End of Year 2016 2017 2018 2019 2020 2021 2022 2023
Repurchase Price of Series A as % of Liquidation Preference 30% 30% 30% 30%
Preferred Series A Outstanding, end of period 55,624 35,624 25,624 15,624 0
Cash Used for Repurchase $6,000,000 $3,000,000 $3,000,000 $4,687,200 no remaining Preferred Series A
Total Shares of Series A Repurchased 20,000.00 10,000.00 10,000.00 15,624.00
Tangible Book Value per Common Share, basic $1.03 $1.83 $2.40 $2.97 $3.71
Book Value per Common Share, basic $0.53 $1.49 $2.15 $2.79 $3.67
REPURCHASE SCENARIO AT 70% of Liquidation Preference
End of Year 2016 2017 2018 2019 2020 2021 2022 2023
Repurchase Price of Series A as % of Liquidation Preference 70% 70% 70% 70% 70% 70% 70%
Preferred Series A Outstanding, end of period 55,624 47,053 42,767 38,481 34,195 29,910 25,624 21,338
Cash Used for Repurchase $6,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000
Total Shares of Series A Repurchased 8,571.43 4,285.71 4,285.71 4,285.71 4,285.71 4,285.71 4,285.71
Tangible Book Value per Common Share, basic $1.03 $1.30 $1.60 $1.90 $2.20 $2.53 $2.86 $3.18
Book Value per Common Share, basic $0.53 $0.86 $1.21 $1.53 $1.87 $2.23 $2.60 $2.96
REPURCHASE SCENARIO AT 30%, 50% then 70% of Liquidation Preference
End of Year 2016 2017 2018 2019 2020 2021 2022 2023
Repurchase Price of Series A as % of Liquidation Preference 30% 50% 70% 70% 70% 70% 70%
Preferred Series A Outstanding, end of period 55,624 35,624 29,624 25,338 21,053 16,767 12,481 8,195
Cash Used for Repurchase $6,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000
Total Shares of Series A Repurchased 20,000.00 6,000.00 4,285.71 4,285.71 4,285.71 4,285.71 4,285.71
Tangible Book Value per Common Share, basic $1.03 $1.83 $2.21 $2.51 $2.82 $3.15 $3.47 $3.80
Book Value per Common Share, basic $0.53 $1.49 $1.93 $2.25 $2.60 $2.96 $3.32 $3.68
Assumptions
1) Sufficient cash is available from earnings and liquidity to support the repurchase plan, and at the same time support a strong capital position at the subsidiary bank and the company on a consolidated basis.
2) The amendments proposed in the 2017 Proxy Statement are approved by all necessary parties and any and all regulatory approvals are obtained to engage in the repurchase activity.
3) Repurchased shares are cancelled and not retained as treasury stock.
4) Common Stock Issued and Outstanding as reflected in the basic shares used to determine the book values per share reflect 0% forfeiture of Restricted Stock Awards.
5) The Tangible Book Values and Book Values per share reflect both the accretive affects of the repurchase program and a baseline earnings forecast for purposes of demonstrating the potential outcomes.
The scenarios are an expression of possible outcomes with willing parties, free to chose for themselves when and at what prices they are willing to sell their shares of preferred stock for cash. The scenarios do not fully reflect all possible outcomes or the potential upside to the Preferred Shareholders should they retain their holdings.
FOR INFORMATION CONTACT:
J. Brian Chaffin
President & CEO
(217) 355-0900
brian.chaffin@cibmbank.com
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The above news release has been provided by the above company via the OTC Disclosure and News Service. Issuers of news releases and not OTC Markets Group Inc. are solely responsible for the accuracy of such news releases.
