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CIB Marine Bancshares, Inc. Announces Second Quarter 2020 Results
BROOKFIELD, Wis., July 16, 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 second quarter of 2020. Net income for the quarter was $1.7 million compared to $0.8 million for the same period in 2019 and, for the six months ending June 30, 2020, it was $2.5 million compared to $1.4 million for the same period in 2019.
A summary of financial results for the quarter and six months ended June 30, 2020, is attached. Select highlights include:
Net income and income before taxes for the quarter and six months ended June 30th were the strongest in more than five years, excluding the deferred tax valuation adjustment made in the fourth quarter of 2017.
CIBM Bank’s mortgage banking division was a significant contributor to improved earnings results. For the six months ended June 30th, net mortgage banking revenues were $6.2 million, nearly double the same period of the prior year. Lower interest rates have fueled a surge in rate-refinance loan originations, as well as strong new home purchase activity, resulting in over $200 million in loan originations the first half of the year.
Net interest income was up $0.6 million for the first six months of 2020, compared to the same period in 2019. The primary reasons for improvement were higher average balances in loans held for sale and Paycheck Protection Program (PPP) loans, and a 54 basis point reduction in the cost of interest bearing liabilities primarily due to repricing maturing time deposits and money market rate promotions and short-term borrowings in a lower rate environment.
COVID-19 has impacted the Company in many direct and indirect ways. During the second quarter of 2020, CIBM Bank originated around 350 loans or $43 million in government guaranteed PPP loans. In addition, COVID-19 loan payment deferrals reached 87 loans, or around $75 million in total outstanding balances.
Provisions for loan losses were up $0.7 million during the six months ended June 30, 2020, versus the same period in 2019. The primary reason for the increase is environmental and qualitative factors related to the impact COVID-19 has had on the current economic conditions, including the sharp decline in GDP and rapid rise in unemployed persons. A significant number of government programs are acting to support businesses and household income so that the amount of problem loans has remained relatively low to date.
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 1.02% and 0.92%, respectively, at March June 30, 2020, down from 1.35% and 1.09%, respectively, at December 31, 2019, and 1.40% and 1.12%, respectively, at June 30, 2020. The improvements during the first six months of 2020 were related to certain loan level improvements, although credit quality is expected to deteriorate in the foreseeable future due to the economic impact of COVID-19.
Mr. J. Brian Chaffin, President and CEO of CIBM, commented, “The Company has spent a significant amount of time addressing COVID-19 related issues – from managing the branches for the safety of our staff and customers, to adjusting to having more than 70% of employees work from home, to working with our clients to meet their banking needs in these challenging times. The situation has forced us to adapt and make or advance plans for improvements in both our products and delivery systems, and in our operations areas. Investors can be proud of the dedication and commitment CIBM Bank employees have exhibited through this period.
“Although income for the first half of the year was much improved over the same period of 2019, we remain committed to improving our longer term operating results using the process we call ‘Project Falcon’, which includes plans to improve our deposit mix, enhance efficiencies, and excel at our core services.”
Mr. Chaffin continued, “A Fifth Amendment to the Company’s Articles of Incorporation, which would make permanent the changes that permit the Company to engage in negotiated voluntary repurchases of its Preferred Stock, was approved by our Common Shareholders in April and has now been presented to the Preferred Shareholders for their approval at a Special Meeting of Preferred Shareholders to be held on August 5, 2020. We will provide the results of that vote on our website following the meeting.”
He concluded, “As discussed in our June 17, 2020, press release, we have completed the third and final modified Dutch auction pursuant to the Second Amendment of our Articles of Incorporation that resulted in the repurchase of 214 shares of preferred stock for a total price of approximately $148,000 representing a $33,000 discount to the carry value of the preferred shares repurchased. We will be providing a more detailed analysis in our upcoming quarterly shareholder letter.”
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,
2020 2020 2019 2019 2019 2020 2019
(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data
Interest and dividend income $ 6,669 $ 6,636 $ 6,820 $ 7,035 $ 7,078 $ 13,305 $ 14,093
Interest expense 1,343 1,689 2,030 2,183 2,256 3,032 4,434
Net interest income 5,326 4,947 4,790 4,852 4,822 10,273 9,659
Provision for (reversal of) loan losses 249 202 715 327 (67 ) 451 (225 )
Net interest income after provision for (reversal of) loan losses 5,077 4,745 4,075 4,525 4,889 9,822 9,884
Noninterest income (1) 4,489 2,642 2,249 3,835 2,710 7,131 4,072
Noninterest expense 7,308 6,322 6,879 7,233 6,557 13,630 12,062
Income (loss) before income taxes 2,258 1,065 (555 ) 1,127 1,042 3,323 1,894
Income tax expense (benefit) 575 281 (180 ) 93 281 856 510
Net income (loss) $ 1,683 $ 784 $ (375 ) $ 1,034 $ 761 $ 2,467 $ 1,384
Common Share Data
Basic net income (loss) per share (2) $ 0.09 $ 0.04 $ (0.02 ) $ 0.07 $ 0.04 $ 0.13 $ 0.08
Diluted net income (loss) per share (2) 0.05 0.02 (0.02 ) 0.04 0.02 0.08 0.04
Dividend 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Tangible book value per share (3) 3.15 3.07 2.99 3.03 2.97 3.15 2.97
Book value per share (3) 2.80 2.73 2.64 2.68 2.60 2.80 2.60
Weighted average shares outstanding - basic 18,992,550 18,724,047 18,646,427 18,455,408 18,290,674 18,858,299 18,261,584
Weighted average shares outstanding - diluted 32,402,984 32,329,698 32,329,533 32,536,354 33,083,324 32,330,877 32,950,273
Financial Condition Data
Total assets $ 793,151 $ 705,473 $ 703,791 $ 700,711 $ 708,270 $ 793,151 $ 708,270
Loans 535,692 513,992 513,705 508,758 513,755 535,692 513,755
Allowance for loan losses (8,483 ) (8,107 ) (8,007 ) (7,560 ) (7,251 ) (8,483 ) (7,251 )
Investment securities 113,303 120,105 120,398 120,648 124,784 113,303 124,784
Deposits 566,811 531,999 530,190 557,745 535,367 566,811 535,367
Borrowings 120,233 68,950 73,847 38,468 69,174 120,233 69,174
Stockholders' equity 97,347 95,841 93,404 94,082 94,035 97,347 94,035
Financial Ratios and Other Data
Performance Ratios:
Net interest margin (4) 2.96 % 3.04 % 2.86 % 2.95 % 2.89 % 3.00 % 2.91 %
Net interest spread (5) 2.76 % 2.78 % 2.55 % 2.62 % 2.58 % 2.77 % 2.61 %
Noninterest income to average assets (6) 2.36 % 1.51 % 1.28 % 2.19 % 1.52 % 1.95 % 1.14 %
Noninterest expense to average assets 3.86 % 3.67 % 3.88 % 4.14 % 3.72 % 3.77 % 3.43 %
Efficiency ratio (7) 74.61 % 83.74 % 97.57 % 83.44 % 87.45 % 78.58 % 88.26 %
Earnings on average assets (8) 0.89 % 0.45 % -0.21 % 0.59 % 0.43 % 0.68 % 0.39 %
Earnings on average equity (9) 6.97 % 3.32 % -1.56 % 4.35 % 3.28 % 5.17 % 3.02 %
Asset Quality Ratios:
Nonaccrual loans to loans (10) 0.92 % 0.97 % 1.09 % 1.14 % 1.12 % 0.92 % 1.12 %
Nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing to total loans (10) 1.07 % 1.25 % 1.38 % 1.44 % 1.45 % 1.07 % 1.45 %
Nonperforming assets, restructured loans and loans 90 days or more past due and still accruing to total assets (10) 1.02 % 1.24 % 1.35 % 1.40 % 1.40 % 1.02 % 1.40 %
Allowance for loan losses to total loans (10) 1.58 % 1.58 % 1.56 % 1.49 % 1.41 % 1.58 % 1.41 %
Allowance for loan losses to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (10) 147.79 % 126.26 % 112.66 % 103.07 % 97.34 % 147.79 % 97.34 %
Net charge-offs (recoveries) annualized to average loans (10) -0.09 % 0.08 % 0.21 % 0.01 % 0.44 % -0.01 % 0.19 %
Capital Ratios:
Total equity to total assets 12.27 % 13.59 % 13.27 % 13.43 % 13.28 % 12.27 % 13.28 %
Total risk-based capital ratio 15.49 % 15.36 % 15.19 % 15.18 % 15.32 % 15.49 % 15.32 %
Tier 1 risk-based capital ratio 14.23 % 14.11 % 13.94 % 13.93 % 14.07 % 14.23 % 14.07 %
Leverage capital ratio 10.82 % 11.08 % 10.71 % 10.86 % 10.64 % 10.82 % 10.64 %
Other Data:
Number of employees (full-time equivalent) 177 177 176 182 180 177 180
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 includes the difference between the carrying amount less the consideration paid for redeemed preferred stock of $0.3 million for the third quarter of 2019 and $0.03 million for the 2nd quarter and 6 months ended June 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)
June 30, March 31, December 31, September 30, June 30,
2020 2020 2019 2019 2019
(Dollars in Thousands, Except Shares)
Assets
Cash and due from banks $ 9,120 $ 9,006 $ 8,970 $ 9,582 $ 8,791
Reverse repurchase agreements 18,117 3,622 11,196 4,083 18,347
Securities available for sale 110,818 117,640 117,972 118,211 122,365
Equity securities at fair value 2,485 2,465 2,426 2,437 2,419
Loans held for sale 83,997 24,988 16,928 25,347 8,450
Loans 535,692 513,992 513,705 508,758 513,755
Allowance for loan losses (8,483 ) (8,107 ) (8,007 ) (7,560 ) (7,251 )
Net loans 527,209 505,885 505,698 501,198 506,504
Federal Home Loan Bank Stock 2,948 2,947 2,587 926 2,363
Premises and equipment, net 4,679 4,769 4,274 4,504 4,643
Accrued interest receivable 1,973 1,610 1,486 1,646 1,820
Deferred tax assets, net 19,325 19,509 20,069 20,455 20,703
Other real estate owned, net 2,334 2,335 2,396 2,466 2,466
Bank owned life insurance 4,745 4,718 4,691 4,666 4,640
Goodwill and other intangible assets 142 148 154 159 165
Other assets 5,259 5,831 4,944 5,031 4,594
Total Assets $ 793,151 $ 705,473 $ 703,791 $ 700,711 $ 708,270
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand $ 90,450 $ 67,459 $ 70,175 $ 63,694 $ 62,424
Interest-bearing demand 54,288 47,760 45,512 50,683 32,649
Savings 205,470 196,797 204,976 202,866 192,133
Time 216,603 219,983 209,527 240,502 248,161
Total deposits 566,811 531,999 530,190 557,745 535,367
Short-term borrowings 77,273 68,950 73,847 38,468 69,174
Long-term borrowings 42,960 0 0 0 0
Accrued interest payable 447 543 603 711 725
Other liabilities 8,313 8,140 5,747 9,705 8,969
Total liabilities 695,804 609,632 610,387 606,629 614,235
Stockholders' Equity
Preferred stock, $1 par value; 5,000,000 authorized shares at both June 30, 2020 and December 31, 2019; 7% fixed rate noncumulative perpetual issued; 40,690 shares of series A and 3,201 shares of series B; convertible; $44.1 million aggregate liquidation preference 37,308 37,490 37,490 37,489 39,384
Common stock, $1 par value; 75,000,000 authorized shares; 19,239,935 and 18,868,329 issued shares; 19,028,888 and 18,657,282 outstanding shares at June 30, 2020 and December 31, 2019, respectively. (1) 19,240 19,162 18,868 18,868 18,543
Capital surplus 161,032 160,990 161,175 161,110 160,991
Accumulated deficit (121,285 ) (122,969 ) (123,753 ) (123,377 ) (124,412 )
Accumulated other comprehensive income, net 1,586 1,702 158 526 63
Treasury stock 221,902 shares at cost (534 ) (534 ) (534 ) (534 ) (534 )
Total stockholders' equity 97,347 95,841 93,404 94,082 94,035
Total liabilities and stockholders' equity $ 793,151 $ 705,473 $ 703,791 $ 700,711 $ 708,270
(1) Both issued and outstanding shares as stated here exclude 435,157 shares and 815,395 shares of unvested restricted stock awards at June 30, 2020, and December 31, 2019, respectively.
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,
2020 2020 2019 2019 2019 2020 2019
(Dollars in thousands)
Interest Income
Loans $ 5,540 $ 5,703 $ 5,793 $ 5,992 $ 5,811 $ 11,243 $ 11,504
Loans held for sale 451 119 195 152 97 570 182
Securities 661 763 764 810 868 1,424 1,672
Other investments 17 51 68 81 302 68 735
Total interest income 6,669 6,636 6,820 7,035 7,078 13,305 14,093
Interest Expense
Deposits 1,263 1,512 1,856 2,027 1,949 2,775 3,754
Short-term borrowings 54 177 174 156 307 231 680
Long-term borrowings 26 0 0 0 0 26 0
Total interest expense 1,343 1,689 2,030 2,183 2,256 3,032 4,434
Net interest income 5,326 4,947 4,790 4,852 4,822 10,273 9,659
Provision for (reversal of) loan losses 249 202 715 327 (67 ) 451 (225 )
Net interest income after provision for (reversal of) loan losses 5,077 4,745 4,075 4,525 4,889 9,822 9,884
Noninterest Income
Deposit service charges 88 96 98 101 95 184 178
Other service fees 36 20 23 30 29 56 49
Mortgage banking revenue, net 3,990 2,177 2,112 2,936 2,148 6,167 3,126
Other income 266 265 129 150 179 531 344
Net gains on sale of securities available for sale 0 0 0 0 0 0 0
Unrealized gains (losses) recognized on equity securities 20 39 (11 ) 18 34 59 64
Net gains on sale of SBA loans 87 437 166 605 253 524 253
Net gains (losses) on sale of assets and (writedowns) 2 (392 ) (268 ) (5 ) (28 ) (390 ) 58
Total noninterest income 4,489 2,642 2,249 3,835 2,710 7,131 4,072
Noninterest Expense
Compensation and employee benefits 5,451 4,421 4,701 5,309 4,445 9,872 8,132
Equipment 379 363 394 335 353 742 688
Occupancy and premises 407 460 460 420 437 867 893
Data Processing 155 164 157 165 160 319 326
Federal deposit insurance 47 0 (10 ) (5 ) 66 47 148
Professional services 242 298 320 198 207 540 347
Telephone and data communication 67 68 81 86 83 135 161
Insurance 55 54 59 70 52 109 105
Other expense 505 494 717 655 754 999 1,262
Total noninterest expense 7,308 6,322 6,879 7,233 6,557 13,630 12,062
Income (losses) from operations before income taxes 2,258 1,065 (555 ) 1,127 1,042 3,323 1,894
Income tax expense (benefit) 575 281 (180 ) 93 281 856 510
Net income (loss) 1,683 784 (375 ) 1,034 761 2,467 1,384
Preferred stock dividend 0 0 0 0 0 0 0
Discount from repurchase of preferred stock 33 0 0 308 0 33 0
Net income (loss) allocated to common stockholders $ 1,716 $ 784 $ (375 ) $ 1,342 $ 761 $ 2,500 $ 1,384
Source: CIBM Bank
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