BROOKFIELD, Wis., July 18, 2023 (GLOBE NEWSWIRE) -- CIB Marine Bancshares, Inc. (the “Company” or “CIBM”) (OTCQX: CIBH), the holding company of CIBM Bank (the “Bank”), announced its unaudited results of operations and financial condition for the quarter and six months ended June 30, 2023. During the quarter, CIBM Bank grew its loan portfolio, expanded its mortgage operations, and completed the sale of the retail deposits from its Danville, Illinois, branch. The Mortgage Division had a small operating profit in the second quarter versus a significant loss in the first quarter of 2023, and the Bank’s cost of funds were sharply higher.   Net income for the quarter was $1.2 million, or $0.88 basic and $0.64 diluted earnings per share, compared to $0.9 million, or $0.68 basic and $0.49 diluted earnings per share, for the same period of 2022. Net income for the six months ended June 30, 2023, was $1.4 million, or $1.06 basic and $0.77 diluted earnings per share, compared to $1.8 million, or $1.38 basic and $1.00 diluted earnings per share, for the same period of 2022.   

Financial highlights for the quarter and six-month period include:

  • $23 million in retail deposits from the Bank’s Danville, Illinois, branch were sold for a gain of $1.5 million, net of conversion-related data processing costs. In addition, approximately $0.2 million additional costs were incurred related to the deposit sale and the recently announced closure of the Danville branch during the first half of 2023 so that the combined effect was $1.3 million in total income and $1.0 million on a tax adjusted basis.
  • Loan portfolio balances increased $70 million year to date, comprised primarily of $38 million in residential mortgage loans and $31 million in commercial segment loans; and from March 31, 2023, to June 30, 2023, loan portfolio balances increased $39 million with $30 million in residential mortgage loans and $9 million in commercial segment loans. Loan growth is likely to slow significantly in the third quarter as more of the future residential mortgage loan originations will be sold in the foreseeable future.   During the first half of the year, the Mortgage Division originated $126 million in residential mortgage loans with roughly two-thirds of the originated loans sold or held for sale. The remainder are held in the Bank’s loan portfolio with the majority of those loans having the following terms: 5/1 ARM, 7/1 ARM, or 15-year fixed. Over the prior eight years, the Mortgage Division’s loans originated for sale ranged from 79% to 93% of its total originations.
    • As of June 30, 2023, 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 0.13% and 0.02%, respectively, compared to 0.20% and 0.16%, respectively, on December 31, 2022, and 0.25% and 0.22%, respectively, on June 30, 2022. Also, as of June 30, 2023, the allowance for credit losses on loans (“ACLL”) to loans was 1.39% compared to an allowance for loan and lease losses of 1.37% at December 31, 2022, and 1.46% at June 30, 2022. The ACLL is down 12 basis points from March 31, 2023, due to improved economic forecasts and other qualitative factors, as well as a higher portion of the loan portfolio being in residential loans that generally have a lower expected loss rate than commercial segment loans.
  • Net interest income and margin were $11.4 million and 3.06%, respectively, for the six months ended June 30, 2023, compared to $11.4 million and 3.15%, respectively, in the same period of 2022. The six-month period in 2023 had $0.3 million less Paycheck Protection Program loan fee accretion income and $0.1 million more subordinated debt interest expense compared to the same period in 2022, both of which were partially offset by a $22 million rise in average balances in earning assets. The net interest margin declined 9 basis points compared to same six month period in 2022 due to a number of factors, including a $24 million decline in average non-interest bearing deposit balances as higher short-term interest rates attracted money into interest bearing products, and a 44 basis point increase in the cost of interest bearing liabilities over the increase in yields on interest earning assets in part due to growth in generally tighter spread residential mortgage loans and the effects of an inverted yield curve.
    • Cost of funds is up significantly this year due to a shift in deposit mix as customers seek higher returns in a rising rate environment and to maximize their FDIC insurance coverage. Total deposits are down $15 million since December 31, 2022, with noninterest-bearing deposits down $22 million, and interest-bearing deposits up $7 million, largely in reciprocal and time deposit products. After adjusting for the sale of the Danville branch’s retail deposits, total deposits are up $8 million with noninterest-bearing deposits down $20 million, and interest-bearing deposits up $28 million.
  • For the six months ended June 30, 2023, Banking Division net income was $2.3 million and Mortgage Division net loss was $0.5 million. The remaining $0.4 million on net loss was from parent company sub-debt and administration expenses. Residential mortgage loan originations are up $15 million compared to the same six-month period from 2022. The Mortgage Division added 40 commission-based loan originators since the end of the third quarter of 2022 and approximately seven operations/administration employees, improving the Division’s operating efficiencies. Although total loan originations are up for the Mortgage Division, the average number of loans per lender are down as markets remain adversely affected by higher mortgage interest rates compared to recent years and tight housing supply. In addition, tighter mortgage loan margins have persisted. Recently hired mortgage lenders are expected to become more fully established and up-front growth costs should diminish in the second half of 2023.

Reflecting on the past six months, Mr. J. Brian Chaffin, CIBM’s President and CEO, commented, “We have completed a number of significant projects in the first half of 2023. First, we more than doubled our Mortgage Division sales force with approximately one-half of our new lenders based in newly established northeastern U.S. markets. Despite relatively high rates, housing stock in short supply, and tight margins, the Mortgage Division was able to turn a profit in the second quarter after a significant loss in the first quarter, with loan production year to date spread evenly between the new loan originators and the Division’s existing staff. Second, and somewhat related, we increased our residential loan portfolio size after seeing it shrink over the prior three years. These new loans have higher yields than prior portfolio loans and continue to be lower risk and lower margin relative to the marginal cost of funds. Finally, we completed the sale of our Danville branch’s retail deposits for a gain and announced the branch’s closure as a part of our long-term strategic plan to improve efficiencies and focus attention on our core markets.”

He added, “Our Retail Banking, Corporate Banking, and Government Guaranteed Lending Divisions have continued their relationship development success this year. To date, the combined Corporate Banking and Government Guaranteed Lending Divisions are well ahead of their annual budget goals for loan and deposit growth and, excluding the effects of the sale of the Danville retail deposit sale, total deposit balances are up, in part due to the Retail Banking Division’s deposit retention and growth activities.

“Continued strong credit quality coupled with a resilient economy with a better forecast, and other qualitative factors, has eased our allowance for credit losses on loans.”

Looking ahead, he concluded, “The key challenges and areas of focus for the Company during the second half of the year will include continuing the improvement in Mortgage Division operating results; growth and retention of core loan and deposit relationships; and mitigating the rising cost of funds, partly through expense controls on certain programs, services, and capital.”

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates ten banking offices in Illinois, Wisconsin, and Indiana, and has mortgage loan officers and/or offices in ten states. 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 6 Months Ended
 June 30,March 31,December 31,September 30,June 30, June 30,June 30,
  2023  2023  2022  2022  2022   2023  2022 
 (Dollars in thousands, except share and per share data)
Selected Statement of Operations Data:        
Interest and dividend income$9,152 $8,472 $7,808 $7,234 $6,411  $17,624 $12,290 
Interest expense 3,643  2,601  1,664  823  517   6,244  930 
Net interest income 5,509  5,871  6,144  6,411  5,894   11,380  11,360 
Provision for (reversal of) credit losses (246) 159  (642) 34  40   (87) (285)
Net interest income after provision for (reversal of) loan losses 5,755  5,712  6,786  6,377  5,854   11,467  11,645 
Noninterest income (1) 3,298  1,410  791  1,313  1,660   4,708  3,365 
Noninterest expense 7,457  6,805  6,316  6,311  6,374   14,262  12,636 
Income before income taxes 1,596  317  1,261  1,379  1,140   1,913  2,374 
Income tax expense 431  89  351  352  251   520  585 
Net income$1,165 $228 $910 $1,027 $889 $-$1,393 $1,789 
         
Common Share Data:         
Basic net income per share (2)$0.88 $0.17 $0.81 $0.78 $0.68  $1.06 $1.38 
Diluted net income per share (2) 0.64  0.13  0.59  0.57  0.49   0.77  1.00 
Dividend 0.00  0.00  0.00  0.00  0.00   0.00  0.00 
Tangible book value per share (3) 52.47  53.28  53.19  52.24  53.68   52.47  53.68 
Book value per share (3) 50.70  51.48  51.39  49.78  51.22   50.70  51.22 
Weighted average shares outstanding - basic 1,318,460  1,308,603  1,308,279  1,308,752  1,307,341   1,313,553  1,300,239 
Weighted average shares outstanding - diluted 1,815,593  1,803,218  1,796,947  1,797,721  1,798,008   1,809,435  1,793,815 
Financial Condition Data:        
Total assets$819,521 $787,244 $752,997 $762,965 $774,356  $819,521 $774,356 
Loans 647,823  608,492  577,303  564,841  549,175   647,823  549,175 
Allowance for credit losses on loans (4) (8,999) (9,193) (7,894) (8,061) (8,010)  (8,999) (8,010)
Investment securities 114,661  126,001  124,421  127,954  122,483   114,661  122,483 
Deposits 613,808  632,339  628,869  633,234  642,500   613,808  642,500 
Borrowings 113,950  65,173  34,485  37,168  37,693   113,950  37,693 
Stockholders' equity 83,876  83,615  83,503  87,228  89,111   83,876  89,111 
Financial Ratios and Other Data:        
Performance Ratios:        
Net interest margin (5) 2.90% 3.22% 3.32% 3.45% 3.23%  3.06% 3.15%
Net interest spread (6) 2.42% 2.82% 3.02% 3.29% 3.14%  2.62% 3.06%
Noninterest income to average assets (7) 1.68% 0.72% 0.41% 0.72% 0.91%  1.21% 0.94%
Noninterest expense to average assets 3.77% 3.58% 3.27% 3.24% 3.34%  3.68% 3.35%
Efficiency ratio (8) 84.35% 93.90% 91.13% 80.73% 83.52%  88.65% 84.72%
Earnings on average assets (9) 0.59% 0.12% 0.47% 0.53% 0.47%  0.36% 0.47%
Earnings on average equity (10) 5.53% 1.11% 4.15% 4.52% 3.96%  3.35% 3.97%
Asset Quality Ratios:        
Nonaccrual loans to loans (11) 0.02% 0.08% 0.16% 0.13% 0.22%  0.02% 0.22%
Nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing to total loans (4) 0.11% 0.12% 0.20% 0.17% 0.28%  0.11% 0.28%
Nonperforming assets, restructured loans and loans 90 days or more past due and still accruing to total assets (4) 0.13% 0.14% 0.20% 0.18% 0.25%  0.13% 0.25%
Allowance for credit losses on loans to total loans (4)(11) 1.39% 1.51% 1.37% 1.43% 1.46%  1.39% 1.46%
Allowance for credit losses on loans to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (4)(11) 1283.74% 1262.77% 684.06% 852.11% 512.48%  1283.74% 512.48%
Net charge-offs (recoveries) annualized to average loans (11) -0.02% -0.02% -0.33% -0.01% 0.03%  -0.02% 0.02%
Capital Ratios:        
Total equity to total assets 10.23% 10.62% 11.09% 11.43% 11.51%  10.23% 11.51%
Total risk-based capital ratio 14.31% 14.84% 15.71% 16.42% 16.85%  14.31% 16.85%
Tier 1 risk-based capital ratio 11.54% 11.99% 12.78% 13.48% 13.85%  11.54% 13.85%
Leverage capital ratio 9.43% 9.56% 9.73% 10.16% 10.20%  9.43% 10.20%
Other Data:        
Number of employees (full-time equivalent) 206  202  189  166  159   206  159 
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 $0.1 million for the quarter and year ended December 31, 2022.
(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) Allowance for credit losses on loans is allowance for loan losses in ending dates and periods prior to June 30, 2023.
(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)
      
 June 30,March 31,December 31,September 30,June 30,
  2023  2023  2022  2022  2022 
 (Dollars in Thousands, Except Shares)
Assets     
Cash and due from banks$14,444 $16,490 $19,667 $36,454 $68,097 
Reverse repurchase agreements -  -  -  -  - 
Securities available for sale 112,532  123,838  122,292  125,830  120,265 
Equity securities at fair value 2,129  2,163  2,129  2,124  2,218 
Loans held for sale 14,726  10,848  5,057  6,471  7,519 
      
Loans 647,823  608,492  577,303  564,841  549,175 
Allowance for credit losses on loans (1) (8,999) (9,193) (7,894) (8,061) (8,010)
Net loans 638,824  599,299  569,409  556,780  541,165 
      
Federal Home Loan Bank Stock 2,818  1,897  1,897  1,897  2,897 
Premises and equipment, net 3,879  3,969  4,081  4,159  4,138 
Accrued interest receivable 2,036  2,118  1,915  1,807  1,644 
Deferred tax assets, net 16,790  16,464  16,273  16,977  16,142 
Other real estate owned, net 375  375  375  403  403 
Bank owned life insurance 6,160  6,119  6,076  6,040  6,002 
Goodwill and other intangible assets 76  81  87  92  98 
Other assets 4,732  3,583  3,739  3,931  3,768 
Total Assets$819,521 $787,244 $752,997 $762,965 $774,356 
      
Liabilities and Stockholders' Equity      
Deposits:     
Noninterest-bearing demand$93,487 $94,700 $115,186 $134,765 $129,457 
Interest-bearing demand 82,484  93,388  76,918  79,306  66,495 
Savings 247,339  259,907  260,159  254,146  287,159 
Time 190,498  184,344  176,606  165,017  159,389 
Total deposits 613,808  632,339  628,869  633,234  642,500 
Short-term borrowings 104,238  55,469  24,789  27,480  28,013 
Long-term borrowings 9,712  9,704  9,696  9,688  9,680 
Accrued interest payable 963  557  554  227  287 
Other liabilities 6,924  5,560  5,586  5,108  4,765 
Total liabilities 735,645  703,629  669,494  675,737  685,245 
      
Stockholders' Equity      
Preferred stock, $1 par value; 5,000,000 authorized shares at both June 30, 2023 and December 31, 2022; 7% fixed rate noncumulative perpetual issued; 14,633 shares of series A and 1,610 shares of series B; convertible; $16.2 million aggregate liquidation preference 13,806  13,806  13,806  18,762  18,762 
Common stock, $1 par value; 75,000,000 authorized shares; 1,348,716 and 1,323,547 issued shares; 1,334,647 and 1,309,478 outstanding shares at June 30, 2023 and December 31, 2022, respectively. (2) 1,349  1,324  1,324  1,324  1,324 
Capital surplus 181,050  180,903  180,777  180,664  180,544 
Accumulated deficit (104,822) (105,987) (105,025) (106,081) (107,108)
Accumulated other comprehensive income, net (6,973) (5,897) (6,845) (6,907) (3,877)
Treasury stock, 14,791 shares on March 31, 2023 and December 31, 2022 (3) (534) (534) (534) (534) (534)
Total stockholders' equity 83,876  83,615  83,503  87,228  89,111 
Total liabilities and stockholders' equity$819,521 $787,244 $752,997 $762,965 $774,356 
      
(1) Allowance for credit losses on loans is allowance for loan losses in ending dates and periods prior to June 30, 2023.
(2) Both issued and outstanding shares as stated here exclude 52,373 shares of unvested restricted stock awards at June 30, 2023 and 58,897 shares at December 31, 2022.
(3) 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 6 Months Ended
 June 30,March 31,December 31,September 30,June 30, June 30,June 30,
  2023  2023 2022  2022  2022   2023  2022 
 (Dollars in thousands)
         
Interest Income        
Loans$7,942 $7,121$6,426 $6,029 $5,542  $15,063 $10,796 
Loans held for sale 155  84 63  96  90   239  148 
Securities 985  1,031 948  826  683   2,016  1,220 
Other investments 70  236 371  283  96   306  126 
Total interest income 9,152  8,472 7,808  7,234  6,411   17,624  12,290 
         
Interest Expense        
Deposits 3,076  2,364 1,452  662  384   5,440  734 
Short-term borrowings 445  118 91  40  12   563  19 
Long-term borrowings 122  119 121  121  121   241  177 
Total interest expense 3,643  2,601 1,664  823  517   6,244  930 
Net interest income 5,509  5,871 6,144  6,411  5,894   11,380  11,360 
Provision for (reversal of) credit losses (246) 159 (642) 34  40   (87) (285)
Net interest income after provision for        
(reversal of) loan losses 5,755  5,712 6,786  6,377  5,854   11,467  11,645 
         
Noninterest Income        
Deposit service charges 76  79 82  86  92   155  180 
Other service fees 11  16 15  18  71   27  96 
Mortgage banking revenue, net 1,636  1,008 597  1,126  1,268   2,644  2,698 
Other income 171  110 117  147  141   281  353 
Net gains on sale of securities available for sale 0  0 0  0  0   0  0 
Unrealized gains (losses) recognized on equity securities (34) 34 4  (93) (78)  0  (190)
Net gains (loss) on sale of SBA loans 0  151 0  0  126   151  157 
Net gains (losses) on sale of assets and (writedowns) 1,438  12 (24) 29  40   1,450  71 
Total noninterest income 3,298  1,410 791  1,313  1,660   4,708  3,365 
         
Noninterest Expense        
Compensation and employee benefits 5,101  4,550 4,061  4,240  4,175   9,651  8,404 
Equipment 504  475 466  396  439   979  881 
Occupancy and premises 404  438 399  390  408   842  830 
Data Processing 221  199 202  205  171   420  337 
Federal deposit insurance 150  87 70  58  51   237  103 
Professional services 317  278 415  244  284   595  508 
Telephone and data communication 56  61 66  61  60   117  121 
Insurance 68  88 85  74  74   156  159 
Other expense 636  629 552  643  712   1,265  1,293 
Total noninterest expense 7,457  6,805 6,316  6,311  6,374   14,262  12,636 
Income from operations        
before income taxes 1,596  317 1,261  1,379  1,140   1,913  2,374 
Income tax expense 431  89 351  352  251   520  585 
Net income  1,165  228 910  1,027  889   1,393  1,789 
Preferred stock dividend 0  0 0  0  0   0  0 
Discount from repurchase of preferred stock 0  0 146  0  0   0  0 
Net income allocated to common stockholders$1,165 $228$1,056 $1,027 $889  $1,393 $1,789 
         


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Source: CIB Marine Bancshares, Inc.

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