CIB Marine Bancshares, Inc. Announces 2020 Results

Friday, 22. January 2021 11:00

BROOKFIELD, Wis., Jan. 22, 2021 (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 fourth quarter and full year of 2020. Strong mortgage operations and higher net interest income resulted in net income of $2.3 million for the quarter ending December 31, 2020, compared to a loss of $0.4 million for the same period in 2019 and, for the twelve months ending December 31, 2020, net income of $8.2 million compared to $2.0 million for the same period in 2019. Income before taxes for 2020 was $10.9 million compared to $2.5 million for 2019.

A summary of financial results for the quarter and twelve months ended December 31, 2020, is attached. Select highlights include:

  • The tangible book value for the common stock increased 16.6% over the course of 2020 from $44.85 per share at December 31, 2019, to $52.28 per share at December 31, 2020, primarily the result of higher earnings, with improved unrealized net gains on securities and discounts on repurchased preferred stock contributing as well.
  • The return on average assets and efficiency ratio for the year 2020 were 1.09% and 73% respectively, compared to 0.29% and 89%, respectively, for the same period in 2019.
  • Net mortgage banking revenue was up 148% from $8.2 million during 2019 to $20.3 million in 2020. Lower interest rates supported a surge in mortgage originations in 2020 resulting in $600 million in residential loans – almost double the $330 million in residential loans originated in 2019. Further, 65% of 2020 residential loan originations were refinance loans, compared to 47% of 2019 originations.
  • Net interest income was up 15% in 2020 from $19.3 million during 2019 to $22.2 million in 2020. The primary reasons for the increase include: (i) higher average balances in loans held for sale and Paycheck Protection Program (PPP) loans, (ii) a 75 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.
  • Expenses were up $5.8 million, from $26.2 million in 2019 to $32.0 million in 2020, primarily as a result of a $5.6 million increase in compensation in the Mortgage Banking Division due to higher mortgage loan production that created a $12.9 million increase in division revenues. Mortgage Division compensation counted for 54% of total compensation in 2020, compared to 41% in 2019. On a combined basis, all other expenses excluding compensation were down $0.2 million for 2020 compared to 2019, primarily the result of lower travel and entertainment and collection expenses.
  • COVID-19 and the related “Lockdown Recession” resulted in significant volumes of new types of banking activity. CIBM Bank originated approximately 350 government guaranteed PPP loans, totaling $43 million, in 2020. At December 31, 2020, PPP loan balances were paid down to $32 million, primarily by the Small Business Administration (SBA) as a result of loan forgiveness applications filed for borrowers. On average, such forgiveness applications represent 99% of the original loan balance per loan. In 2020, PPP loan fees received from the SBA and deferred were $1.6 million, with $0.8 million accreted into interest income due to level yield accretion over the original weighted average term (approximately two years) and accelerations as a result of $11 million in early payoffs related to loan forgiveness payments, and the remaining $0.8 million in outstanding deferred fees to be recorded into future income. Net of related deferred costs, original and accreted net deferred fees were $1.1 million and $0.6 million, respectively, with a remaining $0.5 million of net deferred fees to be recorded in future income. As of December 31, 2020, there were an additional $9 million in PPP loan forgiveness applications being processed, with the majority of the remaining PPP loan forgiveness applications expected to be received in the first half of 2021.
  • As of December 31, 2020, there were $24.5 million in outstanding loan balances from 31 loans granted a COVID-19 loan payment still in an active deferral period, representing 5% of total outstanding loan portfolio balances. Of the loans with active COVID-19 loan payment deferrals, 37% are from the hospitality industry, 15% are from the recreation and entertainment industry, 8% of the balances are from 1-4 family mortgage loans, and the remainder from a mix of other industries harmed by COVID-19 lockdowns.
  • Provisions for loan losses were $1.1 million for the twelve months ended December 31, 2020, compared to $0.8 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 related 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 0.54% and 0.23%, respectively; compared to 1.35% and 1.09%, respectively, at December 31, 2019. The improvements during 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, commended his team’s work stating, “Our 2020 results are largely attributable to our staff’s ability to quickly respond to the rapidly changing set of circumstances in 2020 - from nearly doubling mortgage loan production in response to a dramatic increase in demand; to implementing an effective PPP loan program to ensure access to funding for small businesses in our communities; to quickly executing a variety of strategies in response to the lower rate environment in order to reduce the Company’s cost of funds by more than many of our peers; to commercial loan production in excess of pre-COVID19 goals. The Board of Directors and I are extremely proud of the way our team members, both front line and back office, came together to organize, plan, and effectively execute on many different operating fronts as our world seemed to change on a daily basis.”

Looking forward to 2021, he added, “We are focused on meeting the needs of our communities through participation in emerging government economic support plans such as the new PPP program, as well as continuing our “Project Falcon” initiatives geared toward new deposit generation and operating efficiencies. In addition, we will continue to monitor developments at the state and federal level, mindful of the economic uncertainties related to the pandemic and their potential effect on credit quality, as well as new regulations and higher taxes that may be in the offing for 2021 and the years ahead, with possible adverse impact to our clients and banking operations.”

Mr. Chaffin also announced, “Our Chief Credit Officer, Paul Melnick, has announced his intent to retire in 2021 and his successor, Mr. Scott Winkel, assumed the duties of Chief Credit Officer, effective January 1, 2021. As part of our transition plan, Paul will continue assisting the bank as the Director of Special Assets, where he will focus on problem loan work-outs and coordinate a smooth transition of the Credit Administration function.” Mr. Chaffin continued, “Scott joined CIBM Bank in 2020 with more than 25 years of banking and credit administration experience. We are delighted to welcome him to our executive management team and fortunate to have someone with his knowledge and familiarity with our banking markets on board. Over the next six months, Scott and Paul will be working closely to ensure long-term, consistent performance and maintain our strong credit culture.”

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 12 Months Ended
 December 31,September 30,June 30,March 31,December 31, December 31,December 31,
  2020  2020  2020  2020  2019   2020  2019 
 (Dollars in thousands, except share and per share data)
Selected Statement of Operations Data:        
Interest and dividend income$6,489 $7,202 $6,669 $6,636 $6,820  $26,996 $27,948 
Interest expense 765  1,017  1,343  1,689  2,030   4,814  8,647 
Net interest income 5,724  6,185  5,326  4,947  4,790   22,182  19,301 
Provision for loan losses 101  501  249  202  715   1,053  817 
Net interest income after provision for        
loan losses 5,623  5,684  5,077  4,745  4,075   21,129  18,484 
Noninterest income (1) 6,566  8,104  4,489  2,642  2,249   21,801  10,156 
Noninterest expense 9,317  9,056  7,308  6,322  6,879   32,003  26,174 
Income (loss) before income taxes 2,872  4,732  2,258  1,065  (555)  10,927  2,466 
Income tax expense (benefit) 565  1,322  575  281  (180)  2,743  423 
Net income (loss)$2,307 $3,410 $1,683 $784 $(375) $8,184 $2,043 
         
Common Share Data (2):        
Basic net income (loss) per share (3)$1.82 $2.69 $1.36 $0.63 $(0.30) $6.51 $1.92 
Diluted net income (loss) per share (3) 1.06  1.56  0.79  0.36  (0.30)  3.79  1.08 
Dividend 0.00  0.00  0.00  0.00  0.00   0.00  0.00 
Tangible book value per share (4) 52.28  50.35  47.25  46.05  44.86   52.28  44.86 
Book value per share (4) 47.19  45.27  42.00  40.95  39.66   47.19  39.66 
Weighted average shares outstanding - basic 1,267,582  1,267,582  1,266,174  1,248,270  1,243,095   1,262,277  1,227,111 
Weighted average shares outstanding - diluted 2,181,140  2,181,868  2,160,201  2,155,313  2,155,302   2,167,730  2,180,776 
Financial Condition Data:        
Total assets$750,982 $793,604 $793,151 $705,473 $703,791  $750,982 $703,791 
Loans 539,227  546,351  535,692  513,992  513,705   539,227  513,705 
Allowance for loan losses (9,122) (9,037) (8,483) (8,107) (8,007)  (9,122) (8,007)
Investment securities 108,492  107,351  113,303  120,105  120,398   108,492  120,398 
Deposits 586,373  593,370  566,811  531,999  530,190   586,373  530,190 
Borrowings 51,310  87,994  120,233  68,950  73,847   51,310  73,847 
Stockholders' equity 103,704  101,271  97,347  95,841  93,404   103,704  93,404 
Financial Ratios and Other Data:        
Performance Ratios:        
Net interest margin (5) 3.14% 3.30% 2.96% 3.04% 2.86%  3.11% 2.91%
Net interest spread (6) 3.01% 3.16% 2.76% 2.78% 2.55%  2.93% 2.60%
Noninterest income to average assets (7) 3.43% 4.12% 2.36% 1.51% 1.28%  2.90% 1.43%
Noninterest expense to average assets 4.86% 4.60% 3.86% 3.67% 3.88%  4.26% 3.72%
Efficiency ratio (8) 75.77% 63.38% 74.61% 83.74% 97.57%  72.85% 89.07%
Earnings (loss) on average assets (9) 1.20% 1.73% 0.89% 0.45% -0.21%  1.09% 0.29%
Earnings (loss) on average equity (10) 8.83% 13.51% 6.97% 3.32% -1.56%  8.26% 2.18%
Asset Quality Ratios:        
Nonaccrual loans to loans (11) 0.23% 0.32% 0.92% 0.97% 1.09%  0.23% 1.09%
Nonaccrual loans, restructured loans and        
 loans 90 days or more past due and still        
 accruing to total loans (11) 0.40% 0.49% 1.07% 1.25% 1.38%  0.40% 1.38%
Nonperforming assets, restructured loans        
and loans 90 days or more past due and still        
accruing to total assets (11) 0.54% 0.60% 1.02% 1.24% 1.35%  0.54% 1.35%
Allowance for loan losses to total loans (11) 1.69% 1.65% 1.58% 1.58% 1.56%  1.69% 1.56%
Allowance for loan losses to nonaccrual loans,        
restructured loans and loans 90 days or        
more past due and still accruing (11) 421.14% 338.59% 147.79% 126.26% 112.66%  421.14% 112.66%
Net charge-offs (recoveries) annualized        
to average loans (11) 0.01% -0.04% -0.09% 0.08% 0.21%  -0.01% 0.15%
Capital Ratios:        
Total equity to total assets 13.81% 12.76% 12.27% 13.59% 13.27%  13.81% 13.27%
Total risk-based capital ratio 17.44% 16.13% 15.49% 15.36% 15.19%  17.44% 15.19%
Tier 1 risk-based capital ratio 16.19% 14.87% 14.23% 14.11% 13.94%  16.19% 13.94%
Leverage capital ratio 11.46% 11.20% 10.82% 11.08% 10.71%  11.46% 10.71%
Other Data:        
Number of employees (full-time equivalent) 176  176  177  177  176   176  176 
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 1:15 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 12 months ended 2019 and $0.03 million for the 2nd quarter and 12 months ended 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)
      
 December 31, September 30, June 30, March 31, December 31,
  2020  2020  2020  2020  2019 
 (Dollars in Thousands, Except Shares)
Assets     
Cash and due from banks$29,927 $30,544 $9,120 $9,006 $8,970 
Reverse repurchase agreements -  8,208  18,117  3,622  11,196 
Securities available for sale 106,014  104,866  110,818  117,640  117,972 
Equity securities at fair value 2,478  2,485  2,485  2,465  2,426 
Loans held for sale 42,977  67,496  83,997  24,988  16,928 
      
Loans 539,227  546,351  535,692  513,992  513,705 
Allowance for loan losses (9,122) (9,037) (8,483) (8,107) (8,007)
Net loans 530,105  537,314  527,209  505,885  505,698 
      
Federal Home Loan Bank Stock 3,140  3,140  2,948  2,947  2,587 
Premises and equipment, net 4,682  4,667  4,679  4,769  4,274 
Accrued interest receivable 2,050  2,075  1,973  1,610  1,486 
Deferred tax assets, net 16,292  18,547  19,325  19,509  20,069 
Other real estate owned, net 1,875  2,103  2,334  2,335  2,396 
Bank owned life insurance 4,802  4,774  4,745  4,718  4,691 
Goodwill and other intangible assets 131  137  142  148  154 
Other assets 6,509  7,248  5,259  5,831  4,944 
Total Assets$750,982 $793,604 $793,151 $705,473 $703,791 
      
Liabilities and Stockholders' Equity      
Deposits:     
Noninterest-bearing demand$92,544 $91,134 $90,450 $67,459 $70,175 
Interest-bearing demand 59,679  61,262  54,288  47,760  45,512 
Savings 243,888  225,724  205,470  196,797  204,976 
Time 190,262  215,250  216,603  219,983  209,527 
Total deposits 586,373  593,370  566,811  531,999  530,190 
Short-term borrowings 51,310  54,052  77,273  68,950  73,847 
Long-term borrowings -  33,942  42,960  -  - 
Accrued interest payable 246  398  447  543  603 
Other liabilities 9,349  10,571  8,313  8,140  5,747 
Total liabilities 647,278  692,333  695,804  609,632  610,387 
      
Stockholders' Equity      
Preferred stock, $1 par value; 5,000,000 authorized shares at both December 31, 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; $43.9 million aggregate liquidation preference 37,308  37,308  37,308  37,490  37,490 
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 December 31, 2020 and December 31, 2019, respectively. (1)(2) 1,282  1,282  19,240  19,162  18,868 
Capital surplus (2) 179,188  179,090  161,032  160,990  161,175 
Accumulated deficit (115,569) (117,875) (121,285) (122,969) (123,753)
Accumulated other comprehensive income, net 2,029  2,000  1,586  1,702  158 
Treasury stock, 14,791 shares on December 31, 2020 and 221,902 shares prior at cost (2) (534) (534) (534) (534) (534)
Total stockholders' equity 103,704  101,271  97,347  95,841  93,404 
Total liabilities and stockholders' equity$750,982 $793,604 $793,151 $705,473 $703,791 
      
(1) Both issued and outstanding shares as stated here exclude 59,842 shares and 815,395 shares of unvested restricted stock awards at December 31, 2020 and 2019, respectively.
(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 then-current market value of $15.75 per share.



CIB MARINE BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
         
 At or for the
 Quarters Ended 12 Months Ended
 December 31,September 30,June 30,March 31,December 31, December 31,December 31,
  2020  2020  2020 2020  2019   2020  2019 
 (Dollars in thousands)
         
Interest Income        
Loans$5,577 $6,054 $5,540$5,703 $5,793  $22,874 $23,289 
Loans held for sale 331  537  451 119  195   1,438  529 
Securities 564  573  661 763  764   2,561  3,246 
Other investments 17  38  17 51  68   123  884 
Total interest income 6,489  7,202  6,669 6,636  6,820   26,996  27,948 
         
Interest Expense        
Deposits 735  942  1,263 1,512  1,856   4,452  7,637 
Short-term borrowings 30  38  54 177  174   299  1,010 
Long-term borrowings 0  37  26 0  0   63  0 
Total interest expense 765  1,017  1,343 1,689  2,030   4,814  8,647 
Net interest income 5,724  6,185  5,326 4,947  4,790   22,182  19,301 
Provision for loan losses 101  501  249 202  715   1,053  817 
Net interest income after provision for        
loan losses 5,623  5,684  5,077 4,745  4,075   21,129  18,484 
         
Noninterest Income        
Deposit service charges 91  89  88 96  98   364  377 
Other service fees 37  36  36 20  23   129  102 
Mortgage banking revenue, net 6,387  7,741  3,990 2,177  2,112   20,295  8,174 
Other income 165  226  266 265  129   922  623 
Net gains on sale of securities available for sale 0  0  0 0  0   0  0 
Unrealized gains (losses) recognized on equity securities (6) 0  20 39  (11)  53  71 
Net gains (loss) on sale of SBA loans 55  (55) 87 437  166   524  1,024 
Net gains (losses) on sale of assets and (writedowns) (163) 67  2 (392) (268)  (486) (215)
Total noninterest income 6,566  8,104  4,489 2,642  2,249   21,801  10,156 
         
Noninterest Expense        
Compensation and employee benefits 7,015  7,329  5,451 4,421  4,701   24,216  18,142 
Equipment 402  352  379 363  394   1,496  1,417 
Occupancy and premises 452  390  407 460  460   1,709  1,773 
Data Processing 178  177  155 164  157   674  648 
Federal deposit insurance 49  48  47 0  (10)  144  133 
Professional services 322  162  242 298  320   1,024  865 
Telephone and data communication 82  71  67 68  81   288  328 
Insurance 62  58  55 54  59   229  234 
Other expense 755  469  505 494  717   2,223  2,634 
Total noninterest expense 9,317  9,056  7,308 6,322  6,879   32,003  26,174 
Income (losses) from operations        
before income taxes 2,872  4,732  2,258 1,065  (555)  10,927  2,466 
Income tax expense (benefit) 565  1,322  575 281  (180)  2,743  423 
Net income (loss) 2,307  3,410  1,683 784  (375)  8,184  2,043 
Preferred stock dividend 0  0  0 0  0   0  0 
Discount from repurchase of preferred stock 0  0  33 0  0   33  308 
Net income (loss) allocated to        
 common stockholders$2,307 $3,410 $1,716$784 $(375) $8,217 $2,351 

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