BROOKFIELD, Wis., Jan. 25, 2019 (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 year-end 2018. Net income for the year ended December 31, 2018, was $3.3 million or $0.28 basic and $0.15 diluted earnings per share, compared to $27.0 million or $1.49 basic and $0.74 diluted earnings per share for the same period of 2017. Net income for 2017 included a tax benefit of $22.6 million that reflected special tax adjustment entries related to deferred tax assets and net income for 2018 included a tax expense of $1.2 million. Income before income taxes for the year ended December 31, 2018, was $4.5 million compared to $4.3 million for the same period of 2017.
Select highlights for the quarter and year include:
Income before taxes was $1.3 million for the quarter ended December 31, 2018, compared to $1.2 million in the same period of 2017. Comparing the two periods, there was a $0.1 million decrease in net interest income, due primarily to rising cost of funds; a $0.5 million decline in noninterest income, due to lower mortgage loan production; a $1.0 million increase in the reversal of loan losses, due to a significant recovery of prior charge-offs; and a $0.3 million increase in expenses, primarily from higher compensation, other, and equipment expenses.
Tangible book value per share and stated book value per share at December 31, 2018, were $2.82 and $2.45 per share of common stock, respectively, reflecting increases of $0.29 and $0.41 versus the prior year ending numbers. The increases were due primarily to net income and the $1.8 million discount to the carry value of the preferred stock repurchased in 2018 that was accretive to the common shareholders.
Income before taxes for subsidiary CIBM Bank was $5.7 million for the year 2018 compared to $5.2 million for the same period of 2017. The improved earnings reflect increases of $0.4 million in net interest income and $0.6 million in non-interest income, as well as a reversal of provisions for loan losses of $1.2 million; offset in part by a $1.8 million increase in expenses, primarily due to higher compensation expenses.
Net interest income increased $0.4 million for the year 2018 compared to 2017. The increase was primarily due to increases of $16 million and $6 million in average balances in SBA reverse repurchase agreements and investment securities, respectively. Both are lower margined asset classes that contributed to the 6 basis point decline in the net interest margin. Earning asset yields were up 27 basis points and the cost of funds were up 40 basis points for the year 2018 versus 2017.
Non-interest income increased by $0.7 million in 2018 versus 2017. The increase was primarily the result of a $7 million increase in SBA 7(a) loans originated for sale in 2018 versus 2017.
A reversal of provisions for loan losses of $1.2 million was recorded in 2018 versus a provision of $0.2 million in 2017. The 2018 reversal of provisions for loan losses was primarily due to $2.0 million in recoveries of loans previously charged off versus $0.6 million in charge-offs during the year.
Non-performing assets, restructured loans, and loans 90 days or more past due and still accruing to total assets was 1.45% at December 31, 2018, versus 1.13% on the same date in 2017. Despite significant collection activity on lower quality assets during the year, the increase in the rate reflects primarily one commercial real estate loan that was placed on non-accrual during the fourth quarter of 2018.
Mr. J. Brian Chaffin, President and CEO of CIB Marine Bancshares, Inc., commented, “Results in 2018 were affected by a number of different factors, including: higher SBA loan originations; higher compensation costs; costs related to the repurchase of preferred stock; rising cost of funds due to deposit based funding competition and a one percentage point increase in the federal funds target rate; the growth in lower margined, lower risk assets like the SBA reverse repurchase agreement; and moderated net loan growth. Although commercial loan portfolio originations exceeded our goals, net loan balances increased by a modest $8 million as new loans were offset in part by collections of some lower quality loans and higher prepayments of quality loans due in part to strategic sales by borrowers of the real estate serving as collateral.”
Regarding preferred stock repurchases he stated, “During January 2019, CIBM bid to repurchase 14,688.94 shares of Series A Preferred Stock and 1,155.6 shares of Series B Preferred Stock. The repurchase opportunity came about rapidly as a result of the liquidation of an investment trust (or Collateralized Debt Obligation) that has held the respective preferred shares of CIBM since 2009. CIBM’s bid met the financial requirements for repurchase described in prior communications with shareholders, however, CIBM was not the winning bidder.”
“Although the latest opportunity could not be achieved within the disciplined parameters we have established, the previously reported $1.8 million discount to the carry value of shares repurchased in 2018 provided a nice bump to the book value of CIBM’s common stock. CIBM plans to hold the second of three annual modified Dutch auctions during the first half of 2019; more information will be forthcoming. Given our limited amount of cash on hand, the price CIBM is willing to pay to repurchase preferred stock will require significant discounting to our current carrying value of the preferred stock in order to compensate for any possible dilutive effects of a capital raise, if needed to fund a repurchase, and any potential adverse consequences to our current $21 million in deferred tax assets,” he reminded shareholders.
“Lastly, our name unification project has begun as we phase out the use of our legacy market names and roll out the use of the bank name, CIBM Bank, in all markets and divisions. This will help us build a common brand name in all markets, save marketing costs over time and unify our purpose and mission under one name and logo,” he concluded.
CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates eleven banking offices and four 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.
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,
2018 2018 2018 2018 2017 2018 2017
(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data
Interest and dividend income $ 7,009 $ 6,798 $ 6,387 $ 6,009 $ 6,177 $ 26,203 $ 23,527
Interest expense 2,064 1,767 1,406 1,185 1,121 6,422 4,126
Net interest income 4,945 5,031 4,981 4,824 5,056 19,781 19,401
Provision for (reversal of) loan losses (1,195 ) (13 ) 149 (126 ) (218 ) (1,185 ) 206
Net interest income after provision for
(reversal of) loan losses 6,140 5,044 4,832 4,950 5,274 20,966 19,195
Noninterest income (1) 1,546 3,063 2,968 1,832 2,015 9,409 8,730
Noninterest expense 6,415 6,871 6,737 5,824 6,070 25,847 23,615
Income before income taxes 1,271 1,236 1,063 958 1,219 4,528 4,310
Income tax expense (benefit) 313 345 241 289 (22,689 ) 1,188 (22,644 )
Net income $ 958 $ 891 $ 822 $ 669 $ 23,908 $ 3,340 $ 26,954
Common Share Data
Basic net income per share (2) $ 0.05 $ 0.14 $ 0.05 $ 0.04 $ 1.32 $ 0.28 $ 1.49
Diluted net income per share (2) 0.03 0.07 0.02 0.02 0.65 0.15 0.74
Tangible book value per share (3) 2.82 2.71 2.58 2.54 2.53 2.82 2.53
Book value per share (3) 2.45 2.34 2.10 2.06 2.04 2.45 2.04
Financial Condition Data
Total assets $ 721,259 $ 723,733 $ 694,812 $ 663,580 $ 662,394 $ 721,259 $ 662,394
Loans 491,337 507,677 488,762 472,746 483,611 491,337 483,611
Allowance for loan losses (7,947 ) (8,217 ) (8,055 ) (7,331 ) (7,701 ) (7,947 ) (7,701 )
Investment securities 121,281 118,345 119,571 115,596 114,801 121,281 114,801
Deposits 536,931 523,729 517,452 484,258 478,633 536,931 478,633
Borrowings 86,710 104,357 76,427 79,227 84,217 86,710 84,217
Stockholders’ equity 91,035 88,993 97,313 97,407 97,066 91,035 97,066
Financial Ratios and Other Data
Performance Ratios:
Net interest margin (4) 2.89 % 2.97 % 3.15 % 3.20 % 3.25 % 3.05 % 3.11 %
Net interest spread (5) 2.62 % 2.72 % 2.92 % 3.00 % 3.05 % 2.80 % 2.93 %
Noninterest income to average assets (6) 0.84 % 1.72 % 1.77 % 1.15 % 1.26 % 1.37 % 1.36 %
Noninterest expense to average assets 3.54 % 3.82 % 3.99 % 3.63 % 3.79 % 3.75 % 3.67 %
Efficiency ratio (7) 99.18 % 84.63 % 84.56 % 87.28 % 85.84 % 88.44 % 83.95 %
Earnings on average assets (8) 0.53 % 0.50 % 0.49 % 0.42 % 14.93 % 0.48 % 4.19 %
Earnings on average equity (9) 4.23 % 3.77 % 3.36 % 2.78 % 124.19 % 3.52 % 36.85 %
Asset Quality Ratios:
Nonaccrual loans to loans (10) 1.34 % 0.73 % 0.53 % 0.19 % 0.69 % 1.34 % 0.69 %
Nonaccrual loans, restructured loans and
loans 90 days or more past due and still
accruing to total loans (10) 1.62 % 1.09 % 0.82 % 0.53 % 1.02 % 1.62 % 1.02 %
Nonperforming assets, restructured loans
and loans 90 days or more past due and still
accruing to total assets (10) 1.45 % 1.11 % 0.94 % 0.85 % 1.13 % 1.45 % 1.13 %
Allowance for loan losses to total loans 1.62 % 1.62 % 1.65 % 1.55 % 1.59 % 1.62 % 1.59 %
Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or
more past due and still accruing (10) 99.72 % 148.99 % 200.97 % 294.77 % 156.68 % 99.72 % 156.68 %
Net charge-offs (recoveries) annualized
to average loans -0.74 % -0.14 % -0.48 % 0.21 % -0.01 % -0.29 % 0.02 %
Capital Ratios:
Total equity to total assets 12.62 % 12.30 % 14.01 % 14.68 % 14.65 % 12.62 % 14.65 %
Total risk-based capital ratio 15.34 % 14.43 % 16.40 % 16.90 % 16.62 % 15.34 % 16.62 %
Tier 1 risk-based capital ratio 14.09 % 13.18 % 15.14 % 15.64 % 15.36 % 14.09 % 15.36 %
Leverage capital ratio 10.10 % 9.90 % 11.70 % 12.15 % 12.39 % 10.10 % 12.39 %
Other Data:
Number of employees (full-time equivalent) 183 188 184 184 183 183 183
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. This difference was $1.8 million and none for the twelve month and three month periods ending December 31, 2018.
(3) Tangible book value per share is the shareholder 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 shareholder equity less the liquidation preference of the preferred stock, divided by the total shares of common outstanding.
(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 common equity.
(10) Excludes loans held for sale.
CIB MARINE BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
December 31, September 30, June 30, March 31, December 31,
2018 2018 2018 2018 2017
Assets
Cash and due from banks $ 13,037 $ 10,055 $ 9,752 $ 10,829 $ 14,371
Reverse repurchase agreements 58,662 45,076 28,403 23,032 5,449
Securities available for sale 121,281 118,345 119,571 115,596 114,801
Loans held for sale 4,632 8,145 15,407 6,689 11,070
Loans 491,337 507,677 488,762 472,746 483,611
Allowance for loan losses (7,947 ) (8,217 ) (8,055 ) (7,331 ) (7,701 )
Net loans 483,390 499,460 480,707 465,415 475,910
Federal Home Loan Bank Stock 3,172 3,870 2,610 2,857 3,083
Premises and equipment, net 4,498 4,409 4,296 4,314 4,334
Accrued interest receivable 1,570 1,858 1,580 1,583 1,558
Deferred tax assets, net 21,422 22,410 22,604 22,836 22,613
Other real estate owned, net 2,486 2,494 2,494 3,164 2,584
Bank owned life insurance 4,590 4,565 4,541 4,516 4,494
Goodwill and other intangible assets 176 181 187 193 198
Other assets 2,343 2,865 2,660 2,556 1,929
Total Assets $ 721,259 $ 723,733 $ 694,812 $ 663,580 $ 662,394
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing demand $ 63,507 $ 69,165 $ 72,839 $ 74,397 $ 70,024
Interest-bearing demand 33,660 33,701 32,615 34,657 32,979
Savings 181,432 164,603 175,343 182,795 182,581
Time 258,332 256,260 236,655 192,409 193,049
Total deposits 536,931 523,729 517,452 484,258 478,633
Short-term borrowings 86,710 104,357 76,427 79,227 84,217
Accrued interest payable 710 694 497 398 383
Other liabilities 5,873 5,960 3,123 2,290 2,095
Total liabilities 630,224 634,740 597,499 566,173 565,328
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 50,107 51,000 51,000
Common stock, $1 par value; 75,000,000
authorized shares; 18,455,610 issued shares; 18,244,563 outstanding shares 18,456 18,454 18,454 18,384 18,384
Capital surplus 160,815 160,716 158,903 158,749 158,672
Accumulated deficit (125,796 ) (126,754 ) (127,140 ) (127,962 ) (128,563 )
Accumulated other comprehensive loss, net (1,290 ) (2,273 ) (2,477 ) (2,230 ) (1,893 )
Treasury stock 221,902 shares at cost (534 ) (534 ) (534 ) (534 ) (534 )
Total stockholders’ equity 91,035 88,993 97,313 97,407 97,066
Total liabilities and stockholders’ equity $ 721,259 $ 723,733 $ 694,812 $ 663,580 $ 662,394
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,
2018 2018 2018 2018 2017 2018 2017
(Dollars in thousands)
Interest Income
Loans $ 5,686 $ 5,638 $ 5,372 $ 5,125 $ 5,384 $ 21,821 $ 20,395
Loans held for sale 86 112 117 73 102 388 331
Securities 828 720 720 775 643 3,043 2,492
Other investments 409 328 178 36 48 951 309
Total interest income 7,009 6,798 6,387 6,009 6,177 26,203 23,527
Interest Expense
Deposits 1,547 1,343 1,038 948 910 4,876 3,347
Short-term borrowings 517 424 368 237 211 1,546 779
Total interest expense 2,064 1,767 1,406 1,185 1,121 6,422 4,126
Net interest income 4,945 5,031 4,981 4,824 5,056 19,781 19,401
Provision for (reversal of) loan losses (1,195 ) (13 ) 149 (126 ) (218 ) (1,185 ) 206
Net interest income after provision for
(reversal of) loan losses 6,140 5,044 4,832 4,950 5,274 20,966 19,195
Noninterest Income
Deposit service charges 79 105 110 111 126 405 500
Other service fees 31 30 40 34 36 135 181
Mortgage Banking revenue, net 1,057 1,760 2,155 1,374 1,507 6,346 6,497
Other income 143 173 153 132 229 601 580
Net gains (losses) on sale of securities available for sale 0 (7 ) 0 22 0 15 0
Unrealized gains (losses) recognized on equity securities 23 (18 ) (18 ) (39 ) 0 (52 ) 0
Net gains (losses) on sale of assets
and (writedowns) 213 1,020 528 198 117 1,959 972
Total noninterest income 1,546 3,063 2,968 1,832 2,015 9,409 8,730
Noninterest Expense
Compensation and employee benefits 4,206 4,514 4,682 4,056 4,015 17,458 16,152
Equipment 364 351 337 311 309 1,363 1,238
Occupancy and premises 423 378 422 417 413 1,640 1,570
Data Processing 169 184 162 154 143 669 587
Federal deposit insurance 74 51 48 49 24 222 247
Professional services 270 623 290 166 330 1,349 818
Telephone and data communication 86 78 79 78 90 321 346
Insurance 47 60 63 61 62 231 277
Other expense 776 632 654 532 684 2,594 2,380
Total noninterest expense 6,415 6,871 6,737 5,824 6,070 25,847 23,615
Income from operations
before income taxes 1,271 1,236 1,063 958 1,219 4,528 4,310
Income tax expense (benefit) 313 345 241 289 (22,689 ) 1,188 (22,644 )
Net income 958 891 822 669 23,908 3,340 26,954
Preferred stock dividend 0 0 0 0 0 0 0
Discount from repurchase of preferred shares 0 1,808 0 0 0 1,808 0
Net income allocated to
common stockholders $ 958 $ 2,699 $ 822 $ 669 $ 23,908 $ 5,148 $ 26,954
FOR INFORMATION CONTACT:
J. Brian Chaffin, President & CEO
(217) 355-0900
brian.chaffin@cibmbank.com
