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CIB Marine Bancshares, Inc. Announces 2020 Results

CIB Marine Bancshares, Inc.
·20-min read

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