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CIB Marine Bancshares, Inc. Announces Second Quarter 2019 Results
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 second quarter of 2019. Income before taxes for the quarter was $1.0 million compared to $1.1 million for the same period in 2018, and for the six months ending June 30, 2019, it was $1.9 million compared to $2.0 million for the same period in 2018.
A summary of financial results for the quarter and six months ended June 30, 2019, is attached. Select highlights include:
Tangible book value per share and stated book value per share at June 30, 2019, were $2.97 and $2.60 per share of common stock, respectively, compared to $2.82 and $2.45, respectively, at December 31, 2018. The increase reflects reported income for the six months ended June 30, 2019, and improved net accumulated other comprehensive income (loss) due to improved available for sale security values as a result of lower market interest rates.
Income before taxes for subsidiary CIBM Bank was $1.2 million for the quarter compared to $1.4 million for the same period in 2018, and $2.0 million for the six months ending June 30, 2019, compared to $2.5 million for the same period in 2018. Comparing the two six month periods, there was a decline in net interest income of $0.2 million due primarily to rising cost of funds, and a decline in non-interest income of $0.9 million due to lower net mortgage banking revenues and SBA gains on sale as a result of lower origination volumes. This was offset, in part, by lower non-interest expenses of $0.4 million and a $0.2 million improvement in provisions to loan losses.
Non-performing assets, restructured loans, and loans 90 days or more past due and still accruing to total assets was 1.40% at June 30, 2019, versus 1.45% at December 31, 2018, and 0.94% at June 30, 2018. The increase from one year ago is primarily the result of one loan placed on non-accrual during the fourth quarter of 2018. CIB Marine’s allowance for loan losses was 1.41% at June 30, 2019, versus 1.62% at December 31, 2018, and 1.65% at June 30, 2018. The decline was primarily due to a $0.5 million charge-off of a loan that was previously reserved for.
Mr. J. Brian Chaffin, President and CEO of CIBM, commented, “Our mortgage division increased mortgage loan closings by $47 million in the second quarter versus the first quarter of 2019 and net mortgage banking revenue increased by $1.2 million over the same period. The improvements are attributable to a number of factors including seasonality, the division’s success in purchase money lending activity, a number of new hires, and lower interest rates. At the same time, our loan portfolio grew by $24 million during the quarter with contributions from all major portfolio segments, including commercial, residential, and home equity lines of credit. Our SBA loan originations continue to be softer than the prior year with our gains on sale year to date totaling $0.3 million compared to $0.7 million for the same period last year, but there is a significant pipeline developed that we expect to support higher originations and gains on sale in the quarters ahead.”
He added, “Our rising trend in cost of funds has slowed due to a number of factors, including slower total balance sheet growth in the industry and market pricing for lower future short- and mid-term interest rates. However, it continues to have an adverse effect on our net interest income growth and our net interest margin, which reported at 2.89% for the second quarter of 2019, down from 2.94% in the first quarter.
“Lastly, we concluded the offering period of the second of three planned preferred stock modified Dutch auctions in June of 2019. Of the approximately 29,475 shares of preferred stock offered for sale, approximately 2,229 shares met the criteria for repurchase laid out by the Board of Directors of CIBM and are anticipated to be accepted by CIBM for a total price of $1.6 million, pending necessary regulatory approvals. It is contemplated a discount of $0.3 million to the carrying value of preferred stock shares will be transferred to paid-in capital upon acceptance by CIBM of these offered shares. CIBM plans to settle the transactions from cash and no additional capital has been or is contemplated to be issued to provide funding for the purchases. As a reminder, a $3.5 million liability currently exists for the purchase of 4,923 preferred shares, which will settle on or before December 1, 2019, as agreed to in 2018.”
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 6 Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
2019 2019 2018 2018 2018 2019 2018
(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data
Interest and dividend income $ 7,078 $ 7,015 $ 7,009 $ 6,798 $ 6,387 $ 14,093 $ 12,396
Interest expense 2,256 2,178 2,064 1,767 1,406 4,434 2,591
Net interest income 4,822 4,837 4,945 5,031 4,981 9,659 9,805
Provision for (reversal of) loan losses (67 ) (158 ) (1,195 ) (13 ) 149 (225 ) 23
Net interest income after provision for
(reversal of) loan losses 4,889 4,995 6,140 5,044 4,832 9,884 9,782
Noninterest income (1) 2,710 1,362 1,546 3,063 2,968 4,072 4,800
Noninterest expense 6,557 5,505 6,415 6,871 6,737 12,062 12,561
Income before income taxes 1,042 852 1,271 1,236 1,063 1,894 2,021
Income tax expense 281 229 313 345 241 510 530
Net income $ 761 $ 623 $ 958 $ 891 $ 822 $ 1,384 $ 1,491
Common Share Data
Basic net income per share (2) $ 0.04 $ 0.03 $ 0.05 $ 0.14 $ 0.05 $ 0.08 $ 0.09
Diluted net income per share (2) 0.02 0.02 0.03 0.07 0.02 0.04 0.04
Dividend 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Tangible book value per share (3) 2.97 2.90 2.82 2.71 2.58 2.97 2.58
Book value per share (3) 2.60 2.53 2.45 2.34 2.10 2.60 2.10
Weighted average shares outstanding - basic 18,290,674 18,232,169 18,232,169 18,232,169 18,209,032 18,261,584 18,185,641
Weighted average shares outstanding - diluted 33,009,983 32,815,744 32,757,855 34,589,375 36,783,724 32,950,273 36,664,538
Financial Condition Data
Total assets $ 708,270 $ 702,152 $ 721,259 $ 723,733 $ 694,812 $ 708,270 $ 694,812
Loans 513,755 489,273 491,337 507,677 488,762 513,755 488,762
Allowance for loan losses (7,251 ) (7,865 ) (7,947 ) (8,217 ) (8,055 ) (7,251 ) (8,055 )
Investment securities 124,784 123,500 121,281 118,345 119,571 124,784 119,571
Deposits 535,367 542,938 536,931 523,729 517,452 535,367 517,452
Borrowings 69,174 57,220 86,710 104,357 76,427 69,174 76,427
Stockholders' equity 94,035 92,507 91,035 88,993 97,313 94,035 97,313
Financial Ratios and Other Data
Performance Ratios:
Net interest margin (4) 2.89 % 2.94 % 2.89 % 2.97 % 3.15 % 2.92 % 3.18 %
Net interest spread (5) 2.58 % 2.64 % 2.62 % 2.72 % 2.92 % 2.62 % 2.96 %
Noninterest income to average assets (6) 1.52 % 0.76 % 0.84 % 1.72 % 1.77 % 1.14 % 1.47 %
Noninterest expense to average assets 3.72 % 3.14 % 3.54 % 3.82 % 3.99 % 3.44 % 3.82 %
Efficiency ratio (7) 87.45 % 89.24 % 99.18 % 84.63 % 84.56 % 88.26 % 85.80 %
Earnings on average assets (8) 0.43 % 0.36 % 0.53 % 0.50 % 0.49 % 0.39 % 0.45 %
Earnings on average equity (9) 3.28 % 2.76 % 4.23 % 3.77 % 3.36 % 3.03 % 3.07 %
Asset Quality Ratios:
Nonaccrual loans to loans (10) 1.12 % 1.29 % 1.34 % 0.73 % 0.53 % 1.12 % 0.53 %
Nonaccrual loans, restructured loans and
loans 90 days or more past due and still
accruing to total loans (10) 1.45 % 1.66 % 1.62 % 1.09 % 0.82 % 1.45 % 0.82 %
Nonperforming assets, restructured loans
and loans 90 days or more past due and still
accruing to total assets (10) 1.40 % 1.51 % 1.45 % 1.11 % 0.94 % 1.40 % 0.94 %
Allowance for loan losses to total loans (10) 1.41 % 1.61 % 1.62 % 1.62 % 1.65 % 1.41 % 1.65 %
Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or
more past due and still accruing (10) 97.34 % 96.96 % 99.72 % 148.99 % 200.97 % 97.34 % 200.97 %
Net charge-offs (recoveries) annualized
to average loans (10) 0.44 % (0.06 %) (0.74 %) (0.14 %) (0.48 %) 0.19 % -0.14 %
Capital Ratios:
Total equity to total assets 13.28 % 13.17 % 12.62 % 12.30 % 14.01 % 13.28 % 14.01 %
Total risk-based capital ratio 15.32 % 15.56 % 15.34 % 14.43 % 16.40 % 15.32 % 16.40 %
Tier 1 risk-based capital ratio 14.07 % 14.31 % 14.09 % 13.18 % 15.14 % 14.07 % 15.14 %
Leverage capital ratio 10.64 % 10.39 % 10.10 % 9.90 % 11.70 % 10.64 % 11.70 %
Other Data:
Number of employees (full-time equivalent) 180 177 183 188 184 180 184
Number of banking facilities 11 11 11 11 11 11 11
(1) Noninterest income includes gains and losses on securities.
(2) Net income available to common stockholders in the calculation of earnings per share for the second and third quarters of 2018 and the six months ended June 30, 2018 includes the difference between the carrying amount less the consideration paid for redeemed preferred stock of $0.1 million, $1.7 million and $0.1 million, respectively.
(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. As presented here, shares of common outstanding excludes unvested Restricted Stock Awards totalling 1,244,105 shares of common stock at June 30, 2019.
(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)
June 30, March 31, December 31, September 30, June 30,
2019 2019 2018 2018 2018
(Dollars in Thousands, Except Shares)
Assets
Cash and due from banks $ 8,791 $ 8,168 $ 13,037 $ 10,055 $ 9,752
Reverse repurchase agreements 18,347 42,729 58,662 45,076 28,403
Securities available for sale 122,365 121,115 118,926 116,013 117,221
Equity securities at fair value 2,419 2,385 2,355 2,332 2,350
Loans held for sale 8,450 4,467 4,632 8,145 15,407
Loans 513,755 489,273 491,337 507,677 488,762
Allowance for loan losses (7,251 ) (7,865 ) (7,947 ) (8,217 ) (8,055 )
Net loans 506,504 481,408 483,390 499,460 480,707
Federal Home Loan Bank Stock 2,363 2,003 3,172 3,870 2,610
Premises and equipment, net (1) 7,386 7,220 4,498 4,409 4,296
Accrued interest receivable 1,820 1,873 1,570 1,858 1,580
Deferred tax assets, net 20,703 21,156 21,422 22,410 22,604
Other real estate owned, net 2,466 2,466 2,486 2,494 2,494
Bank owned life insurance 4,640 4,613 4,590 4,565 4,541
Goodwill and other intangible assets 165 171 176 181 187
Other assets 1,851 2,378 2,343 2,865 2,660
Total Assets $ 708,270 $ 702,152 $ 721,259 $ 723,733 $ 694,812
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand $ 62,424 $ 62,553 $ 63,507 $ 69,165 $ 72,839
Interest-bearing demand 32,649 32,467 33,660 33,701 32,615
Savings 192,133 188,110 181,432 164,603 175,343
Time 248,161 259,808 258,332 256,260 236,655
Total deposits 535,367 542,938 536,931 523,729 517,452
Short-term borrowings 69,174 57,220 86,710 104,357 76,427
Accrued interest payable 725 727 710 694 497
Other liabilities 8,969 8,760 5,873 5,960 3,123
Total liabilities 614,235 609,645 630,224 634,740 597,499
Stockholders' Equity
Preferred stock, $1 par value; 5,000,000
authorized shares; 7% fixed rate noncumulative perpetual issued; 42,955 shares of series A and 3,380 shares of series B; convertible; aggregate liquidation preference- $46.3 million 39,384 39,384 39,384 39,384 50,107
Common stock, $1 par value; 75,000,000
authorized shares; 18,455,610 issued shares; 18,244,563 outstanding shares 18,543 18,456 18,456 18,454 18,454
Capital surplus 160,991 160,930 160,815 160,716 158,903
Accumulated deficit (124,412 ) (125,173 ) (125,796 ) (126,754 ) (127,140 )
Accumulated other comprehensive income (loss), net 63 (556 ) (1,290 ) (2,273 ) (2,477 )
Treasury stock 221,902 shares at cost (534 ) (534 ) (534 ) (534 ) (534 )
Total stockholders' equity 94,035 92,507 91,035 88,993 97,313
Total liabilities and stockholders' equity $ 708,270 $ 702,152 $ 721,259 $ 723,733 $ 694,812
(1) The adoption of the new lease accounting standards effective January 1, 2019 resulted in $2.8 million of right of use assets being recorded in premise and equipment, net and a corresponding liability in other liabilities.
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,
2019 2019 2018 2018 2018 2019 2018
(Dollars in thousands)
Interest Income
Loans $ 5,811 $ 5,693 $ 5,686 $ 5,638 $ 5,372 $ 11,504 $ 10,497
Loans held for sale 97 85 86 112 117 182 190
Securities 868 804 828 720 720 1,672 1,495
Other investments 302 433 409 328 178 735 214
Total interest income 7,078 7,015 7,009 6,798 6,387 14,093 12,396
Interest Expense
Deposits 1,949 1,805 1,547 1,343 1,038 3,754 1,986
Short-term borrowings 307 373 517 424 368 680 605
Total interest expense 2,256 2,178 2,064 1,767 1,406 4,434 2,591
Net interest income 4,822 4,837 4,945 5,031 4,981 9,659 9,805
Provision for (reversal of) loan losses (67 ) (158 ) (1,195 ) (13 ) 149 (225 ) 23
Net interest income after provision for
(reversal of) loan losses 4,889 4,995 6,140 5,044 4,832 9,884 9,782
Noninterest Income
Deposit service charges 95 83 79 105 110 178 221
Other service fees 29 20 31 30 40 49 74
Mortgage Banking revenue, net 2,148 978 1,057 1,760 2,155 3,126 3,529
Other income 179 165 143 173 153 344 285
Net gains (losses) on sale of securities available for sale 0 0 0 (7 ) 0 0 22
Unrealized gains (losses) recognized on equity securities 34 30 23 (18 ) (18 ) 64 (57 )
Net gains on sale of assets 225 86 213 1,020 528 311 726
Total noninterest income 2,710 1,362 1,546 3,063 2,968 4,072 4,800
Noninterest Expense
Compensation and employee benefits 4,445 3,687 4,206 4,514 4,682 8,132 8,738
Equipment 353 335 364 351 337 688 648
Occupancy and premises 437 456 423 378 422 893 839
Data Processing 160 166 169 184 162 326 316
Federal deposit insurance 66 82 74 51 48 148 97
Professional services 207 140 270 623 290 347 456
Telephone and data communication 83 78 86 78 79 161 157
Insurance 52 53 47 60 63 105 124
Other expense 754 508 776 632 654 1,262 1,186
Total noninterest expense 6,557 5,505 6,415 6,871 6,737 12,062 12,561
Income from operations
before income taxes 1,042 852 1,271 1,236 1,063 1,894 2,021
Income tax expense 281 229 313 345 241 510 530
Net income 761 623 958 891 822 1,384 1,491
Preferred stock dividend 0 0 0 0 0 0 0
Discount from repurchase of preferred shares 0 0 0 1,703 105 0 105
Net income allocated to
common stockholders $ 761 $ 623 $ 958 $ 2,594 $ 927 $ 1,384 $ 1,596
Source: CIBM Bank
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