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CIB Marine Bancshares, Inc. Announces First Quarter 2022 Results

CIB Marine Bancshares, Inc.
CIB Marine Bancshares, Inc.

BROOKFIELD, Wis., April 22, 2022 (GLOBE NEWSWIRE) -- CIB Marine Bancshares, Inc. (the “Company” or “CIBM”) (OTCQX: CIBH), the holding company of CIBM Bank, announced its unaudited results of operations and financial condition for the first quarter of 2022. Changes to markets over the past quarter and year have impacted the Company’s level and composition of income and mortgage lending activity has declined in the rising mortgage rate environment. Net income for the quarter ended March 31, 2022, was $0.9 million, or $0.69 basic and $0.50 diluted earnings per share, compared to $2.1 million, or $1.67 basic and $0.97 diluted earnings per share, for the same period of 2021.

Financial highlights for the quarter include:

  • Net interest income and margin in the first quarter of 2022 were $5.5 million and 3.05%, respectively, compared to $5.7 million and 3.23% in the same period of 2021. The change was primarily the result of a reduction in residential loans held for sale balances due to lower mortgage volume, an increase in lower yielding interest bearing cash and due from, a decline in PPP loan fees, and the issuance of 4.50% coupon bearing subordinated debt.

  • Net mortgage banking revenues were $1.4 million for the first quarter of 2022 compared to $5.0 million for the same period of 2021. The change was due to a significant decline in loan originations (from $143 million to $58 million) due to an increase of almost 100 basis points in average mortgage rates over the same period, as well as tightening margins in the industry due to competitive pressures in the lower volume environment. Related mortgage compensation expenses were also down $1.8 million in the first quarter of 2022 compared to the same period in 2021.

  • Asset quality ratios were strong at March 31, 2022. 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 0.19% and 0.13%, respectively, compared to 0.21% and 0.14% at December 31, 2021, and 0.52% and 0.23% at March 31, 2021. With asset quality measures continuing to report near cycle best levels, easing COVID infection levels, and loan balances down for the quarter, CIBM reversed $0.3 million in provisions for future loan losses compared to a nominal provision in the same period of 2021.

  • Tangible book value attributable to the common stock was $55.13 per share outstanding at March 31, 2022, compared to $57.06 at December 31, 2021, and $53.25 at March 31, 2021. The change at CIBM is similar to the experience across the industry. With a 100 basis point or more increase in US Treasury rates in the 2- to 5-year terms over the first quarter, the unrealized losses in the available for sale securities portfolio increased, representing $2.19 in tangible book value per share at March 31, 2022.

  • Deposits for checking, savings, and money market accounts in aggregate grew by $12 million from December 31, 2021, to March 31, 2022, due to marketing activity and continued relatively low short-term interest rates. As short-term federal funds and US T-Bill interest rates rise over the course of the year, pressure on balances is expected to increase.

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Mr. J. Brian Chaffin, CIBM’s President and CEO, commented, “Tightening margins and the impact of seasonal and cyclical factors on mortgage volumes have led to a decline in the operating results for our mortgage banking division. With mortgage volumes expected to be down significantly compared to the last two years, we are taking this opportunity to make an important upgrade in our mortgage loan operating system, which will provide a better loan origination experience for employees and customers alike.

“Interest rates across the curve have shifted significantly upwards, with federal funds rates expected to increase from near 0% at the beginning of the year to over 2.0% by year-end as part of the Fed’s inflation fighting monetary policy action plan. We expect this to dampen loan demand, economic activity, and certain asset prices significantly, and it has already changed recession risks materially over the coming year or two. We plan to continue adjusting underwriting standards to reflect future credit risks and actively managing the loan portfolio.

“The increase in interest rates is widely expected to reduce lower-cost deposit growth in the industry. However, lower loan demand and significant balance sheet liquidity are expected to slow the increase in deposit costs at CIBM and in the industry.

“Two years ago, we began Project Falcon with the primary goal of changing our deposit mix and cost of funds. Since then, our percentile rank for annual interest bearing liability costs within our national peer size category has declined from the 83rd to the 35th on a year-on-year basis.

“Project Falcon also focuses on identifying and implementing internal process improvements and efficiency-enhancing technologies that allow us to maximize our internal capacity. In addition, we continue to focus on hiring and retaining highly talented employees, providing them the tools they need to be successful in our industry, and rewarding their success at competitive levels.

“Finally, to support our preferred stock redemption plan, we issued $10 million in subordinated debentures during the first quarter of 2022. The 10-year notes bear interest at 4.50% per annum through February 18, 2027, and thereafter pay a quarterly floating rate equal to the Three-Month Term SOFR plus 275 basis. With two years of improved operating results, strong asset quality, and a substantial reduction in preferred stock already completed, the market presented an opportunity for this lower cost of capital to be obtained.”

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates ten 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

3 Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

March 31,

March 31,

2022

2021

2021

2021

2021

2022

2021

(Dollars in thousands, except share and per share data)

Selected Statement of Operations Data:

Interest and dividend income

$

5,879

$

6,244

$

6,311

$

6,239

$

6,265

$

5,879

$

6,265

Interest expense

413

387

417

456

536

413

536

Net interest income

5,466

5,857

5,894

5,783

5,729

5,466

5,729

Provision for (reversal of) loan losses

(325

)

(502

)

(413

)

(300

)

20

(325

)

20

Net interest income after provision for (reversal of) loan losses

5,791

6,359

6,307

6,083

5,709

5,791

5,709

Noninterest income (1)

1,705

2,718

4,072

3,135

5,146

1,705

5,146

Noninterest expense

6,262

7,641

7,517

7,279

7,940

6,262

7,940

Income before income taxes

1,234

1,436

2,862

1,939

2,915

1,234

2,915

Income tax expense

334

336

788

558

798

334

798

Net income

$

900

$

1,100

$

2,074

$

1,381

$

2,117

$

900

$

2,117

Common Share Data:

Basic net income per share (2)

$

0.69

$

1.28

$

1.61

$

1.08

$

1.67

$

0.69

$

1.67

Diluted net income per share (2)

0.50

0.92

0.94

0.63

0.97

0.50

0.97

Dividend

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Tangible book value per share (3)

55.13

57.06

55.60

54.19

53.25

55.13

53.25

Book value per share (3)

52.64

54.55

50.58

49.16

48.21

52.64

48.21

Weighted average shares outstanding - basic

1,295,573

1,287,438

1,286,536

1,282,917

1,268,947

1,295,573

1,268,947

Weighted average shares outstanding - diluted

1,792,181

1,784,005

2,208,493

2,208,600

2,185,433

1,792,181

2,185,433

Financial Condition Data:

Total assets

$

764,641

$

745,393

$

775,912

$

753,660

$

752,715

$

764,641

$

752,715

Loans

529,212

543,819

559,079

553,642

540,206

529,212

540,206

Allowance for loan losses

(8,011

)

(8,352

)

(8,699

)

(9,165

)

(9,253

)

(8,011

)

(9,253

)

Investment securities

109,533

106,647

102,243

108,825

112,400

109,533

112,400

Deposits

631,953

618,991

624,579

609,964

608,433

631,953

608,433

Borrowings

36,789

27,049

34,577

29,592

30,736

36,789

30,736

Stockholders' equity

89,931

91,780

108,984

107,051

105,593

89,931

105,593

Financial Ratios and Other Data:

Performance Ratios:

Net interest margin (4)

3.05

%

3.18

%

3.21

%

3.26

%

3.23

%

3.05

%

3.23

%

Net interest spread (5)

2.98

%

3.10

%

3.12

%

3.16

%

3.13

%

2.98

%

3.13

%

Noninterest income to average assets (6)

0.97

%

1.43

%

2.13

%

1.68

%

2.79

%

0.97

%

2.79

%

Noninterest expense to average assets

3.35

%

3.98

%

3.92

%

3.91

%

4.27

%

3.35

%

4.27

%

Efficiency ratio (7)

85.98

%

88.87

%

75.34

%

81.69

%

72.72

%

85.98

%

72.72

%

Earnings on average assets (8)

0.48

%

0.57

%

1.08

%

0.74

%

1.14

%

0.48

%

1.14

%

Earnings on average equity (9)

3.98

%

4.47

%

7.59

%

5.18

%

8.10

%

3.98

%

8.10

%

Asset Quality Ratios:

Nonaccrual loans to loans (10)

0.13

%

0.14

%

0.18

%

0.19

%

0.23

%

0.13

%

0.23

%

Nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing to total loans (10)

0.20

%

0.21

%

0.27

%

0.32

%

0.37

%

0.20

%

0.37

%

Nonperforming assets, restructured loans and loans 90 days or more past due and still accruing to total assets (10)

0.19

%

0.21

%

0.25

%

0.29

%

0.52

%

0.19

%

0.52

%

Allowance for loan losses to total loans (10)

1.51

%

1.54

%

1.56

%

1.66

%

1.71

%

1.51

%

1.71

%

Allowance for loan losses to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (10)

742.45

%

726.26

%

575.33

%

519.26

%

459.21

%

742.45

%

459.21

%

Net charge-offs (recoveries) annualized to average loans (10)

0.01

%

-0.11

%

0.04

%

-0.16

%

-0.08

%

0.01

%

-0.08

%

Capital Ratios:

Total equity to total assets

11.76

%

12.31

%

14.05

%

14.20

%

14.03

%

11.76

%

14.03

%

Total risk-based capital ratio

17.52

%

15.53

%

18.14

%

18.02

%

18.12

%

17.52

%

18.12

%

Tier 1 risk-based capital ratio

14.43

%

14.28

%

16.89

%

16.76

%

16.86

%

14.43

%

16.86

%

Leverage capital ratio

10.27

%

10.22

%

12.44

%

12.32

%

11.88

%

10.27

%

11.88

%

Other Data:

Number of employees (full-time equivalent)

172

177

179

176

179

172

179

Number of banking facilities

10

10

10

10

10

10

10

(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 of $0.5 million for the quarter ended December 31, 2021.

(3) 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.

(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 stockholders' equity.

(10) Excludes loans held for sale.


CIB MARINE BANCSHARES, INC.

Consolidated Balance Sheets (unaudited)

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

2021

2021

2021

(Dollars in Thousands, Except Shares)

Assets

Cash and due from banks

$

88,605

$

59,184

$

69,217

$

52,467

$

51,691

Reverse repurchase agreements

-

-

-

-

-

Securities available for sale

107,237

104,240

99,813

106,383

109,965

Equity securities at fair value

2,296

2,407

2,430

2,442

2,435

Loans held for sale

9,567

9,859

18,258

13,168

18,136

Loans

529,212

543,819

559,079

553,642

540,206

Allowance for loan losses

(8,011

)

(8,352

)

(8,699

)

(9,165

)

(9,253

)

Net loans

521,201

535,467

550,380

544,477

530,953

Federal Home Loan Bank Stock

3,140

3,140

3,140

3,140

3,140

Premises and equipment, net

4,226

4,200

3,979

3,873

4,476

Accrued interest receivable

1,611

1,605

1,813

1,916

1,983

Deferred tax assets, net

15,758

14,731

15,193

15,632

16,417

Other real estate owned, net

403

403

403

403

1,875

Bank owned life insurance

5,966

5,930

5,894

4,861

4,831

Goodwill and other intangible assets

103

109

115

120

126

Other assets

4,528

4,118

5,277

4,778

6,687

Total Assets

$

764,641

$

745,393

$

775,912

$

753,660

$

752,715

Liabilities and Stockholders' Equity

Deposits:

Noninterest-bearing demand

$

124,724

$

120,479

$

122,441

$

121,862

$

109,466

Interest-bearing demand

67,362

63,693

62,414

61,439

63,033

Savings

294,255

289,943

287,609

266,085

268,026

Time

145,612

144,876

152,115

160,578

167,908

Total deposits

631,953

618,991

624,579

609,964

608,433

Short-term borrowings

27,117

27,049

34,577

29,592

30,736

Long-term borrowings

9,672

-

-

-

-

Accrued interest payable

144

100

111

127

140

Other liabilities

5,824

7,473

7,661

6,926

7,813

Total liabilities

674,710

653,613

666,928

646,609

647,122

Stockholders' Equity

Preferred stock, $1 par value; 5,000,000 authorized shares at March 31, 2022 and December 31, 2021; 7% fixed rate noncumulative perpetual issued; 20,463 shares and 40,690 shares of series A and 1,610 shares and 3,201 shares of series B; convertible; $22.1 million and $43.9 million aggregate liquidation preference, respectively

18,762

18,762

37,308

37,308

37,308

Common stock, $1 par value; 75,000,000 authorized shares; 1,317,958 and 1,306,660 issued shares; 1,303,889 and 1,292,591 outstanding shares at March 31, 2022 and December 31, 2021, respectively. (1)

1,318

1,307

1,302

1,301

1,295

Capital surplus

180,431

180,360

179,557

179,421

179,291

Accumulated deficit

(107,997

)

(108,897

)

(109,997

)

(112,071

)

(113,452

)

Accumulated other comprehensive income, net

(2,049

)

782

1,348

1,626

1,685

Treasury stock, 14,791 shares on March 31, 2022 and December 31, 2021 (2)

(534

)

(534

)

(534

)

(534

)

(534

)

Total stockholders' equity

89,931

91,780

108,984

107,051

105,593

Total liabilities and stockholders' equity

$

764,641

$

745,393

$

775,912

$

753,660

$

752,715

(1) Both issued and outstanding shares as stated here exclude 69,232 shares of unvested restricted stock awards at March 31, 2022 and 66,299 shares at December 31, 2021.

(2) Treasury stock includes 722 shares held by subsidiary bank CIBM Bank.


CIB MARINE BANCSHARES, INC.

Consolidated Statements of Operations (Unaudited)

At or for the

Quarters Ended

3 Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

March 31,

March 31,

2022

2021

2021

2021

2021

2022

2021

(Dollars in thousands)

Interest Income

Loans

$

5,254

$

5,572

$

5,646

$

5,583

$

5,524

$

5,254

$

5,524

Loans held for sale

58

131

135

95

175

58

175

Securities

537

516

509

551

555

537

555

Other investments

30

25

21

10

11

30

11

Total interest income

5,879

6,244

6,311

6,239

6,265

5,879

6,265

Interest Expense

Deposits

350

379

409

447

512

350

512

Short-term borrowings

7

8

8

9

24

7

24

Long-term borrowings

56

0

0

0

0

56

0

Total interest expense

413

387

417

456

536

413

536

Net interest income

5,466

5,857

5,894

5,783

5,729

5,466

5,729

Provision for (reversal of) loan losses

(325

)

(502

)

(413

)

(300

)

20

(325

)

20

Net interest income after provision for (reversal of) loan losses

5,791

6,359

6,307

6,083

5,709

5,791

5,709

Noninterest Income

Deposit service charges

88

95

97

90

84

88

84

Other service fees

25

23

35

43

40

25

40

Mortgage banking revenue, net

1,430

2,300

3,626

2,763

4,983

1,430

4,983

Other income

212

185

186

280

192

212

192

Net gains on sale of securities available for sale

0

0

0

0

0

0

0

Unrealized gains (losses) recognized on equity securities

(112

)

(23

)

(12

)

7

(43

)

(112

)

(43

)

Net gains (loss) on sale of SBA loans

31

120

151

0

0

31

0

Net gains (losses) on sale of assets and (writedowns)

31

18

(11

)

(48

)

(110

)

31

(110

)

Total noninterest income

1,705

2,718

4,072

3,135

5,146

1,705

5,146

Noninterest Expense

Compensation and employee benefits

4,229

5,334

5,436

5,099

5,956

4,229

5,956

Equipment

442

446

390

384

379

442

379

Occupancy and premises

422

400

395

443

434

422

434

Data Processing

166

167

105

181

185

166

185

Federal deposit insurance

52

51

46

47

48

52

48

Professional services

224

353

227

328

253

224

253

Telephone and data communication

61

67

70

56

60

61

60

Insurance

85

72

66

64

68

85

68

Other expense

581

751

782

677

557

581

557

Total noninterest expense

6,262

7,641

7,517

7,279

7,940

6,262

7,940

Income from operations before income taxes

1,234

1,436

2,862

1,939

2,915

1,234

2,915

Income tax expense

334

336

788

558

798

334

798

Net income

900

1,100

2,074

1,381

2,117

900

2,117

Preferred stock dividend

0

0

0

0

0

0

0

Discount from repurchase of preferred stock

0

546

0

0

0

0

0

Net income allocated to common stockholders

$

900

$

1,646

$

2,074

$

1,381

$

2,117

$

900

$

2,117