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CIB Marine Bancshares, Inc. Announces Third Quarter 2020 Results
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
loans 90 days or more past due and still
accruing to total loans (11) 0.49 % 1.07 % 1.25 % 1.38 % 1.44 % 0.49 % 1.44 %
Nonperforming assets, restructured loans
and loans 90 days or more past due and still
accruing to total assets (11) 0.60 % 1.02 % 1.24 % 1.35 % 1.40 % 0.60 % 1.40 %
Allowance for loan losses to total loans (11) 1.65 % 1.58 % 1.58 % 1.56 % 1.49 % 1.65 % 1.49 %
Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or
more past due and still accruing (11) 338.59 % 147.79 % 126.26 % 112.66 % 103.07 % 338.59 % 103.07 %
Net charge-offs (recoveries) annualized
to average loans (11) -0.04 % -0.09 % 0.08 % 0.21 % 0.01 % -0.02 % 0.13 %
Capital Ratios:
Total equity to total assets 12.76 % 12.27 % 13.59 % 13.27 % 13.43 % 12.76 % 13.43 %
Total risk-based capital ratio 15.91 % 15.49 % 15.36 % 15.19 % 15.18 % 15.91 % 15.18 %
Tier 1 risk-based capital ratio 14.65 % 14.23 % 14.11 % 13.94 % 13.93 % 14.65 % 13.93 %
Leverage capital ratio 11.20 % 10.82 % 11.08 % 10.71 % 10.86 % 11.20 % 10.86 %
Other Data:
Number of employees (full-time equivalent) 176 177 177 176 182 176 182
Number of banking facilities 11 11 11 11 11 11 11
(1) Noninterest income includes gains and losses on securities.
(2) Common share data prior to September 14, 2020 is adjusted to reflect the 1 share per 15 share reverse split to allow for comparability between the pre and post reverse split periods.
(3) 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 and 9 months ended 2019 and $0.03 million for the 2nd quarter and 9 months ended September 30, 2020.
(4) 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.
(5) Net interest margin is the ratio of net interest income to average interest-earning assets.
(6) Net interest spread is the yield on average interest-earning assets less the rate on average interest-bearing liabilities.
(7) Noninterest income to average assets excludes gains and losses on securities.
(8) The efficiency ratio is noninterest expense divided by the sum of net interest income plus noninterest income, excluding gains and losses on securities.
(9) Earnings on average assets are net income divided by average total assets.
(10) Earnings on average equity are net income divided by average stockholders' equity.
(11) Excludes loans held for sale.
CIB MARINE BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
September 30, June 30, March 31, December 31, September 30,
2020 2020 2020 2019 2019
(Dollars in Thousands, Except Shares)
Assets
Cash and due from banks $ 30,544 $ 9,120 $ 9,006 $ 8,970 $ 9,582
Reverse repurchase agreements 8,208 18,117 3,622 11,196 4,083
Securities available for sale 104,866 110,818 117,640 117,972 118,211
Equity securities at fair value 2,485 2,485 2,465 2,426 2,437
Loans held for sale 67,496 83,997 24,988 16,928 25,347
Loans 546,351 535,692 513,992 513,705 508,758
Allowance for loan losses (9,037 ) (8,483 ) (8,107 ) (8,007 ) (7,560 )
Net loans 537,314 527,209 505,885 505,698 501,198
Federal Home Loan Bank Stock 3,140 2,948 2,947 2,587 926
Premises and equipment, net 4,667 4,679 4,769 4,274 4,504
Accrued interest receivable 2,075 1,973 1,610 1,486 1,646
Deferred tax assets, net 18,547 19,325 19,509 20,069 20,455
Other real estate owned, net 2,103 2,334 2,335 2,396 2,466
Bank owned life insurance 4,774 4,745 4,718 4,691 4,666
Goodwill and other intangible assets 137 142 148 154 159
Other assets 7,248 5,259 5,831 4,944 5,031
Total Assets $ 793,604 $ 793,151 $ 705,473 $ 703,791 $ 700,711
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand $ 91,134 $ 90,450 $ 67,459 $ 70,175 $ 63,694
Interest-bearing demand 61,262 54,288 47,760 45,512 50,683
Savings 225,724 205,470 196,797 204,976 202,866
Time 215,250 216,603 219,983 209,527 240,502
Total deposits 593,370 566,811 531,999 530,190 557,745
Short-term borrowings 54,052 77,273 68,950 73,847 38,468
Long-term borrowings 33,942 42,960 0 0 0
Accrued interest payable 398 447 543 603 711
Other liabilities 10,571 8,313 8,140 5,747 9,705
Total liabilities 692,333 695,804 609,632 610,387 606,629
Stockholders' Equity
Preferred stock, $1 par value; 5,000,000 authorized shares at both September 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 37,308 37,490 37,490 37,489
Common stock, $1 par value; 75,000,000 authorized shares; 1,282,362 and 18,868,329 issued shares; 1,268,293 and 18,657,282 outstanding shares at September 30, 2020 and December 31, 2019, respectively. (1)(2) 1,282 19,240 19,162 18,868 18,868
Capital surplus 179,090 161,032 160,990 161,175 161,110
Accumulated deficit (117,875 ) (121,285 ) (122,969 ) (123,753 ) (123,377 )
Accumulated other comprehensive income, net 2,000 1,586 1,702 158 526
Treasury stock, 14,791 shares on September 30, 2020 and 221,902 shares prior at cost (2) (534 ) (534 ) (534 ) (534 ) (534 )
Total stockholders' equity 101,271 97,347 95,841 93,404 94,082
Total liabilities and stockholders' equity $ 793,604 $ 793,151 $ 705,473 $ 703,791 $ 700,711
(1) Both issued and outstanding shares as stated here exclude 60,570 shares of unvested restricted stock awards at September 30, 2020, and 815,395 shares of unvested restricted stock awards at December 31, 2019.
(2) Effective September 14, 2020 the company executed a reverse stock split of 1 share for every 15 shares outstanding, fractional shares were remitted cash at the current per share market value of $15.75.
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,
2020 2020 2020 2019 2019 2020 2019
(Dollars in thousands)
Interest Income
Loans $ 6,054 $ 5,540 $ 5,703 $ 5,793 $ 5,992 $ 17,297 $ 17,496
Loans held for sale 537 451 119 195 152 1,107 334
Securities 573 661 763 764 810 1,997 2,482
Other investments 38 17 51 68 81 106 816
Total interest income 7,202 6,669 6,636 6,820 7,035 20,507 21,128
Interest Expense
Deposits 942 1,263 1,512 1,856 2,027 3,717 5,781
Short-term borrowings 38 54 177 174 156 269 836
Long-term borrowings 37 26 0 0 0 63 0
Total 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 (reversal of) loan losses 501 249 202 715 327 952 102
Net interest income after provision for
(reversal of) loan losses 5,684 5,077 4,745 4,075 4,525 15,506 14,409
Noninterest Income
Deposit service charges 89 88 96 98 101 273 279
Other service fees 36 36 20 23 30 92 79
Mortgage banking revenue, net 7,741 3,990 2,177 2,112 2,936 13,908 6,062
Other income 226 266 265 129 150 757 494
Net gains on sale of securities available for sale 0 0 0 0 0 0 0
Unrealized gains (losses) recognized on equity securities 0 20 39 (11 ) 18 59 82
Net gains on sale of SBA loans (55 ) 87 437 166 605 469 858
Net gains (losses) on sale of assets and (writedowns) 67 2 (392 ) (268 ) (5 ) (323 ) 53
Total noninterest income 8,104 4,489 2,642 2,249 3,835 15,235 7,907
Noninterest Expense
Compensation and employee benefits 7,329 5,451 4,421 4,701 5,309 17,201 13,441
Equipment 352 379 363 394 335 1,094 1,023
Occupancy and premises 390 407 460 460 420 1,257 1,313
Data Processing 177 155 164 157 165 496 491
Federal deposit insurance 48 47 0 (10 ) (5 ) 95 143
Professional services 162 242 298 320 198 702 545
Telephone and data communication 71 67 68 81 86 206 247
Insurance 58 55 54 59 70 167 175
Other expense 469 505 494 717 655 1,468 1,917
Total noninterest expense 9,056 7,308 6,322 6,879 7,233 22,686 19,295
Income (losses) from operations
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
Preferred stock dividend 0 0 0 0 0 0 0
Discount from repurchase of preferred stock 0 33 0 0 308 33 308
Net income (loss) allocated to
common stockholders $ 3,410 $ 1,716 $ 784 $ (375 ) $ 1,342 $ 5,910 $ 2,726
Source: CIBM Bank
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