CIB Marine Bancshares : Announces 2021 Third Quarter Results

FOR IMMEDIATE RELEASE	FOR INFORMATION CONTACT:
October 12, 2021	J. Brian Chaffin, President & CEO
	[phone]
	[e-mail]

CIB MARINE BANCSHARES, INC. ANNOUNCES THIRD QUARTER 2021 RESULTS

BROOKFIELD, Wis. - 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 nine months and quarter ended September 30, 2021. Net income for the nine months was $5.6 million compared to $5.9 million for the same period in 2020; and $2.1 million for the quarter compared to $3.4 million for the same quarter the prior year, which included record quarterly operating results for the Bank's Mortgage Banking Division due to the significant mortgage refinance activity related to lower interest rates in 2020.

Financial highlights include:

• Return on average assets was 0.99% for the nine-month period, compared to 1.05% for the same period in 2020; and 1.08% for the quarter compared to 1.73% for the same quarter in 2020.
• Common stock tangible book value increased to $56.14 per share outstanding at September 30, 2021, compared to $52.28 at December 31, 2020, and $50.35 at September 30, 2020, reflecting a 12-month increase of 11.5%.
• Net interest income for the nine months and the quarter increased by $0.9 million and decreased by $0.3 million, respectively, compared to the same periods in 2020. The primary reason for the improvement is a 61 basis point decline in the cost of interest bearing liabilities over the respective time period, while the yield on interest earning assets declined by only 37 basis points. The change in the cost of interest bearing liabilities is primarily due to repricing products and accounts in a lower rate environment and a shift in balances from higher-rate time deposits to lower-rate money market and non-interest bearing checking accounts. The increase in net interest income combined with slower asset yield declines due to the relatively high percentage of fixed rate earning assets, resulted in a 3.23% net interest margin for the nine month period, which is up 13 basis points from September 30, 2020.
• Loan portfolio asset quality and environmental factors contributed to a $0.7 million reversal of loan loss provisions during the nine-month period in 2021 compared to provisions of $1.0

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million for the same period in 2020, for a difference of $1.6 million between the two periods.

• At the same time, there was a $2.9 million decrease in non-interest income during the nine- month period compared to the same period in 2020. Mortgage banking operating results remain strong with elevated earnings, although not as high as the same period in 2020 due, in part, to a significantly lower level of rate refinance activity as rates are higher and the market is experiencing refinance burnout.
• Non-performingassets, restructured loans, and loans 90 days or more past due and still accruing to total assets and nonaccrual loans to total loans were 0.25% and 0.18%, respectively, at September 30, 2021, down from 0.54% and 0.23%, respectively, at December 31, 2020, and 0.60% and 0.22%, respectively, at September 30, 2020. The results continue to be near this credit cycle's best, partially due to collection related activity and federal monetary policy and fiscal support measures for businesses and households.
• During 2020 and 2021, CIBM Bank originated $63 million in Paycheck Protection Program
• 1. loans. As of September 30, 2021, PPP loan balances paid down to approximately $17 million, with substantially all paid off PPP loans to date receiving 100% forgiveness funding from the SBA.
• Balance sheet liquidity is currently supported by robust deposit levels, with checking account deposits up $32.6 million and savings and money market account deposits up $43.7 million, since year-end. The increases reflect ongoing marketing activity and the general market liquidity conditions bolstered by federal fiscal and monetary policies (e.g., low interest rates and liquidity support programs).

Mr. J. Brian Chaffin, CIB Marine's President and CEO, commented, "Continued strong results in commercial and residential mortgage lending were complimented by a sizeable increase in activity by our Government Guaranteed Lending Division, which has generated $7.8 million in SBA 7(a) and 504 loan originations year to date. In addition, after a significant build up by CIB Marine and peers in the allowance for loan losses last year, we have been cautiously unwinding that in 2021 due to improved asset quality in the portfolio and economic conditions supported by prior monetary and fiscal support measures for businesses and households."

Noting the improved deposit mix and net interest margin, Mr. Chaffin commented, "Our Project Falcon initiatives, combined with market liquidity conditions, have supported improvement in our deposit mix and lower cost of funds, which extended our net interest margin's positive trend into the third quarter. Since year-end 2020, our checking and savings deposit product balances have increased $76 million, with time deposits down $38 million. Both CIB Marine and the market have perceptively high levels of cash and cash equivalents in the balance sheet, primarily due to the uncertain nature of the stability of checking

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and money market product balances."

He concluded, "Finally, thanks to the approval granted by our common and preferred shareholders at their meetings held on September 24, 2021, we have moved forward with our Preferred Stock Redemption Plan and expect to execute the $18 million Initial Redemption in October. Nearly 50% of all outstanding preferred shares will be redeemed on a pro-rata basis at $825 per share. With a current carrying value and liquidation preference of $850 and $1,000 per preferred share, respectively, the transaction represents a discount to the carrying value of the redeemed shares of approximately $545,000, or $0.42 per outstanding share of common stock. Further, following the Initial Redemption, the dilution that would occur with the conversion of the Series B Shares to common shares (which may occur only in certain, limited circumstances) will be reduced from 40% to 24% of the total issued and outstanding common shares on a pro-forma,fully-diluted basis."

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.

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CIB MARINE BANCSHARES, INC.

Selected Unaudited Consolidated Financial Data

								At or for the
					Quarters Ended								9 Months Ended
	September 30,		June 30,		March 31,	December 31,	September 30,			September 30,	September 30,
		2021		2021		2021		2020		2020				2021		2020
Selected Statement of Operations Data:				(Dollars in thousands, except share and per share data)
Interest and dividend income	$	6,311	$	6,239	$	6,265	$	6,489	$	7,202			$	18,815	$	20,507
Interest expense		417		456		536		765		1,017				1,409		4,049
Net interest income		5,894		5,783		5,729		5,724		6,185				17,406		16,458
Provision for (reversal of) loan losses		(413)		(300)		20		101		501				(693)		952
Net interest income after provision for
(reversal of) loan losses		6,307		6,083		5,709		5,623		5,684				18,099		15,506
Noninterest income (1)		4,072		3,135		5,146		6,566		8,104				12,353		15,235
Noninterest expense		7,517		7,279		7,940		9,317		9,056				22,736		22,686
Income before income taxes		2,862		1,939		2,915		2,872		4,732				7,716		8,055
Income tax expense		788		558		798		565		1,322				2,144		2,178
Net income	$	2,074	$	1,381	$	2,117	$	2,307	$	3,410			$	5,572	$	5,877
Common Share Data:
Basic net income per share (2)	$	1.63	$	1.08	$	1.67	$	1.82	$	2.69			$	4.36	$	4.69
Diluted net income per share (2)		0.94		0.63		0.97		1.06		1.56				2.55		2.73
Dividend		0.00		0.00		0.00		0.00		0.00				0.00		0.00
Tangible book value per share (3)		56.14		54.19		53.25		52.28		50.35				56.14		50.35
Book value per share (3)		51.07		49.16		48.21		47.19		45.27				51.07		45.27
Weighted average shares outstanding ‐ basic		1,274,216		1,282,917		1,268,947		1,267,584		1,267,582				1,277,464		1,260,499
Weighted average shares outstanding ‐ diluted		2,196,173		2,208,600		2,185,433		2,181,142		2,181,868				2,188,547		2,163,850
Financial Condition Data:
Total assets	$	775,912	$	753,660	$	752,715	$	750,982	$	793,604			$	775,912	$	793,604
Loans		559,079		553,642		540,206		539,227		546,351				559,079		546,351
Allowance for loan losses		(8,699)		(9,165)		(9,253)		(9,122)		(9,037)				(8,699)		(9,037)
Investment securities		102,243		108,825		112,400		108,492		107,351				102,243		107,351
Deposits		624,579		609,964		608,433		586,373		593,370				624,579		593,370
Borrowings		34,577		29,592		30,736		51,310		87,994				34,577		87,994
Stockholders' equity		108,984		107,051		105,593		103,704		101,271				108,984		101,271
Financial Ratios and Other Data:
Performance Ratios:
Net interest margin (4)		3.21%		3.26%		3.23%		3.14%		3.30%				3.23%		3.10%
Net interest spread (5)		3.12%		3.16%		3.13%		3.01%		3.16%				3.14%		2.90%
Noninterest income to average assets (6)		2.13%		1.68%		2.79%		3.43%		4.12%				2.20%		2.72%
Noninterest expense to average assets		3.92%		3.91%		4.27%		4.86%		4.60%				4.03%		4.06%
Efficiency ratio (7)		75.34%		81.69%		72.72%		75.77%		63.38%				76.28%		71.71%
Earnings on average assets (8)		1.08%		0.74%		1.14%		1.20%		1.73%				0.99%		1.05%
Earnings on average equity (9)		7.59%		5.18%		8.10%		8.83%		13.51%				6.95%		8.05%
Asset Quality Ratios:
Nonaccrual loans to loans (10)		0.18%		0.19%		0.23%		0.23%		0.32%				0.18%		0.32%
Nonaccrual loans, restructured loans and
loans 90 days or more past due and still
accruing to total loans (10)		0.27%		0.32%		0.37%		0.40%		0.49%				0.27%		0.49%
Nonperforming assets, restructured loans
and loans 90 days or more past due and still
accruing to total assets (10)		0.25%		0.29%		0.52%		0.54%		0.60%				0.25%		0.60%
Allowance for loan losses to total loans (10)		1.56%		1.66%		1.71%		1.69%		1.65%				1.56%		1.65%
Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or
more past due and still accruing (10)		575.33%		519.26%		459.21%		421.14%		338.59%				575.33%		338.59%
Net charge‐offs (recoveries) annualized
to average loans (10)		0.04%		‐0.16%		‐0.08%		0.01%		‐0.04%		‐0.07%		‐0.02%
Capital Ratios:
Total equity to total assets		14.05%		14.20%		14.03%		13.81%		12.76%				14.05%		12.76%
Total risk‐based capital ratio		18.14%		18.02%		18.15%		17.44%		16.13%				18.14%		16.13%
Tier 1 risk‐based capital ratio		16.88%		16.76%		16.89%		16.19%		14.87%				16.88%		14.87%
Leverage capital ratio		12.44%		12.32%		11.88%		11.46%		11.20%				12.44%		11.20%
Other Data:
Number of employees (full‐time equivalent)		179		176		179		176		176				179		176
Number of banking facilities		10		10		10		11		11				10		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 of $0.03 million for the 9 months ended September 30, 2020.
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.

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CIB MARINE BANCSHARES, INC.

Consolidated Balance Sheets (unaudited)

	September 30,		June 30,		March 31,	December 31,	September 30,
		2021		2021		2021		2020		2020
Assets				(Dollars in Thousands, Except Shares)
								$	30,544
Cash and due from banks	$	69,217	$	52,467	$	51,691	$	29,927
Reverse repurchase agreements		‐		‐		‐		‐		8,208
Securities available for sale		99,813		106,383		109,965		106,014		104,866
Equity securities at fair value		2,430		2,442		2,435		2,478		2,485
Loans held for sale		18,258		13,168		18,136		42,977		67,496
Loans		559,079		553,642		540,206		539,227		546,351
Allowance for loan losses		(8,699)		(9,165)		(9,253)		(9,122)		(9,037)
Net loans		550,380		544,477		530,953		530,105		537,314
Federal Home Loan Bank Stock		3,140		3,140		3,140		3,140		3,140
Premises and equipment, net		3,979		3,873		4,476		4,682		4,667
Accrued interest receivable		1,813		1,916		1,983		2,050		2,075
Deferred tax assets, net		15,193		15,632		16,417		16,292		18,547
Other real estate owned, net		403		403		1,875		1,875		2,103
Bank owned life insurance		5,894		4,861		4,831		4,802		4,774
Goodwill and other intangible assets		115		120		126		131		137
Other assets		5,277		4,778		6,687		6,509		7,248
Total Assets	$	775,912	$	753,660	$	752,715	$	750,982	$	793,604
Liabilities and Stockholders' Equity
Deposits:					$	109,466	$	92,544	$	91,134
Noninterest‐bearing demand	$	122,441	$	121,862
Interest‐bearing demand		62,414		61,439		63,033		59,679		61,262
Savings		287,609		266,085		268,026		243,888		225,724
Time		152,115		160,578		167,908		190,262		215,250
Total deposits		624,579		609,964		608,433		586,373		593,370
Short‐term borrowings		34,577		29,592		30,736		51,310		54,052
Long‐term borrowings		‐		‐		‐		‐		33,942
Accrued interest payable		111		127		140		246		398
Other liabilities		7,661		6,926		7,813		9,349		10,571
Total liabilities		666,928		646,609		647,122		647,278		692,333
Stockholders' Equity
Preferred stock, $1 par value; 5,000,000 authorized
shares at both September 30, 2021 and December 31,
2020; 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		37,308		37,308
Common stock, $1 par value; 75,000,000 authorized
shares; 1,289,494 and 1,285,385 issued shares;
1,275,425 and 1,268,316 outstanding shares at
September 30, 2021 and December 31, 2020,
respectively. (1)		1,302		1,301		1,295		1,282		1,282
Capital surplus		179,557		179,421		179,291		179,188		179,090
Accumulated deficit		(109,997)		(112,071)		(113,452)		(115,569)		(117,875)
Accumulated other comprehensive income, net		1,348		1,626		1,685		2,029		2,000
Treasury stock, 14,791 shares on September 30, 2021
and December 31, 2020		(534)		(534)		(534)		(534)		(534)
Total stockholders' equity		108,984		107,051		105,593		103,704		101,271
Total liabilities and stockholders' equity	$	775,912	$	753,660	$	752,715	$	750,982	$	793,604

(1) Both issued and outstanding shares as stated here exclude 67,837 shares of unvested restricted stock awards at September 30, 2021 and 59,842 shares at December 31, 2020.

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