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CST: 21/09/2019 20:49:29   

CIB Marine Bancshares, Inc. Announces 2018 Results

239 Days ago

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  

 

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