SOURCE: CIB Marine Bancshares, Inc.

CIB Marine Bancshares, Inc.

April 13, 2017 16:29 ET

CIB Marine Bancshares, Inc. Announces 2017 First Quarter Results

WAUKESHA, WI--(Marketwired - April 13, 2017) - CIB Marine Bancshares, Inc. (the "Company" or "CIBM") (OTCQB: CIBH), the holding company of CIBM Bank (the "Bank"), today announces its results of operations and financial condition for the first quarter of 2017. Net income for the first quarter was $0.9 million or $0.05 per share basic. This compares to net income of $1.1 million or $0.06 per share basic for the fourth quarter of 2016 and net income of $1.0 million or $0.05 per share basic for the first quarter of 2016.

Select highlights for the quarter include:

  • Return on average assets for the first quarter of 2017 is 0.56%, compared to 0.66% for the fourth quarter of 2016 and 0.66% for the first quarter of 2016. Both of the prior periods reported significant recovery of prior loan related losses whereas there was none in the current quarter.
  • Our book and tangible book value per share of common stock are reported at $0.60 and $1.08, respectively, compared to $0.41 and $0.90 from one year prior.
  • Net income for subsidiary CIBM Bank was $1.1 million, compared to net income of $1.2 million for the fourth quarter of 2016 boosted by a large loan loss recovery and $0.7 million for the first quarter of 2016. Improvements are due to higher net interest income and gains on sale of SBA loans, as well as lower noninterest expense.
  • Net interest income of $4.7 million for the quarter is an increase of $0.2 million from the fourth quarter of 2016 and $0.3 million from the first quarter of 2016.
  • Non-interest income of $1.9 million for the quarter was on par with $1.9 million from the fourth quarter of 2016. Non-interest income for the first quarter of 2016 was $2.1 million and included $0.4 million in net gains from sale of OREO assets net of other write-downs.

"CIB Marine's performance reflected continued gains consistent with our business plan. Our net interest income grew due to higher earning asset volumes and the new Fed rate hikes. Gains on sale of SBA loans of $0.4 million reported in net gains on sale of assets is an early sign of the kind of performance our new SBA Lending division is capable of providing. Retail banking generated more than $20 million gross in new deposits to assist funding prior asset growth and a reduction in our FHLB borrowings. At Avenue Mortgage, although off to a seasonally slower start, the month of March showed signs of strength as the home purchase markets started to heat up and our new and growing lending team in central Illinois is just getting started," said Mr. J. Brian Chaffin, President and CEO of CIB Marine Bancshares, Inc.

Mr. Chaffin added, "We are excited to introduce our Affordable Loan Program to assist low and moderate income households in our communities and the creation of a new Community Development Officer position. Early indicators are very positive and show what a positive force the company and its employees can have within the communities we live and work."

Mr. Chaffin then noted, "As referenced in our shareholder letter dated April 3, 2017, we have included with this release a summary analysis of the potential impact preferred stock repurchases under various discount scenarios would have on book value. More information and a proposal for common shareholders to vote on will be included in the Proxy Statement for the 2017 Annual Shareholder Meeting."

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates 11 banking offices in Illinois, Wisconsin and Indiana and 4 separate 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.

Notice that Preferred Dividend has not been declared: Pursuant to Sections 5.4(e)(v) and 5.5(e)(v) of the Company's Articles of Incorporation, notice is hereby given that the Board of Directors of the Company has not declared a dividend on its Series A Preferred Stock or its Series B Convertible Preferred Stock for the period ended March 31, 2017 and, accordingly, no dividend will be paid to preferred shareholders for such Dividend Period.

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, 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  Three Months Ended
   March 31,  December 31,  September 30,  June 30,  March 31,  March 31,  March 31,
   2017  2016  2016  2016  2016  2017  2016
   (Dollars in thousands, except share and per share data)
Selected Statement of Operations Data                                    
Interest and dividend income  $5,562   $5,273   $5,286   $5,214   $5,176   $5,562   $5,176  
Interest expense   892    793    740    729    735    892    735  
 Net interest income   4,670    4,480    4,546    4,485    4,441    4,670    4,441  
Provision for (reversal of) loan losses   228    (796 )  69    118    61    228    61  
 Net interest income after provision for (reversal of) loan losses   4,442    5,276    4,477    4,367    4,380    4,442    4,380  
Noninterest income (1)   1,847    1,908    2,651    2,788    2,053    1,847    2,053  
Noninterest expense   5,401    6,127    6,220    5,951    5,481    5,401    5,481  
 Income (loss) before income taxes   888    1,057    908    1,204    952    888    952  
Income tax expense   0    (5 )  40    15    0    0    0  
 Net income (loss)  $888   $1,062   $868   $1,189   $952   $888   $952  
                                     
Common Share Data                                    
 Basic net income (loss) per share  $0.05   $0.06   $0.05   $0.07   $0.05   $0.05   $0.05  
 Diluted net income (loss) per share   0.02    0.03    0.02    0.03    0.03    0.02    0.03  
 Dividend   0    0    0    0    0    0    0  
 Tangible book value per share (2)   1.08    1.01    1.04    0.99    0.90    1.08    0.90  
 Book value per share (2)   0.60    0.53    0.56    0.51    0.41    0.60    0.41  
 Weighted average shares outstanding - basic   18,127,892    18,127,892    18,127,892    18,127,892    18,127,892    18,127,892    18,127,892  
 Weighted average shares outstanding - diluted   36,193,353    36,082,522    35,818,022    35,631,892    35,631,892    36,193,353    35,631,892  
Financial Condition Data                                    
 Total assets  $631,160   $653,559   $632,628   $615,708   $597,089   $631,160   $597,089  
 Loans   483,501    483,518    466,057    461,859    470,424    483,501    470,424  
 Allowance for loan losses   (7,567 )  (7,592 )  (8,549 )  (8,219 )  (8,235 )  (7,567 )  (8,235 )
 Investment securities   111,745    112,072    103,853    103,542    97,474    111,745    97,474  
 Deposits   497,144    483,097    476,428    468,377    467,334    497,144    467,334  
 Borrowings   60,837    96,944    81,636    72,833    57,929    60,837    57,929  
 Stockholders' equity   70,819    69,523    70,094    69,266    67,475    70,819    67,475  
Financial Ratios and Other Data                                    
 Performance Ratios:                                    
  Net interest margin (3)   3.02 %  2.84 %  2.95 %  3.11 %  3.15 %  3.02 %  3.15 %
  Net interest spread (4)   2.87 %  2.70 %  2.80 %  2.96 %  3.00 %  2.87 %  3.00 %
  Noninterest income to average assets (5)   1.16 %  1.18 %  1.68 %  1.88 %  1.42 %  1.16 %  1.42 %
  Noninterest expense to average assets   3.40 %  3.79 %  3.93 %  4.02 %  3.78 %  3.40 %  3.78 %
  Efficiency ratio (6)   82.88 %  95.91 %  86.42 %  81.82 %  84.40 %  82.88 %  84.40 %
  Earnings (loss) on average assets (7)   0.56 %  0.66 %  0.55 %  0.80 %  0.66 %  0.56 %  0.66 %
  Earnings (loss) on average equity (8)   5.10 %  5.93 %  4.89 %  6.98 %  5.75 %  5.10 %  5.75 %
Asset Quality Ratios:                                    
 Nonaccrual loans to loans (9)   1.32 %  1.26 %  1.16 %  0.81 %  0.81 %  1.32 %  0.81 %
 Nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing to total loans (9)   1.65 %  1.60 %  1.58 %  1.63 %  1.64 %  1.65 %  1.64 %
 Nonperforming assets, restructured loans and loans 90 days or more past due and still accruing to total assets (9)   1.77 %  1.67 %  1.32 %  1.59 %  1.94 %  1.77 %  1.94 %
 Allowance for loan losses to total loans   1.57 %  1.57 %  1.83 %  1.78 %  1.75 %  1.57 %  1.75 %
 Allowance for loan losses to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (9)   94.67 %  97.99 %  116.08 %  109.14 %  106.74 %  94.67 %  106.74 %
 Net charge-offs (recoveries) annualized to average loans   0.21 %  0.14 %  -0.22 %  0.12 %  -0.10 %  0.21 %  -0.10 %
Capital Ratios:                                    
 Total equity to total assets   11.02 %  10.64 %  11.08 %  11.25 %  11.30 %  11.02 %  11.30 %
 Total risk-based capital ratio   15.90 %  15.40 %  15.66 %  15.60 %  15.19 %  15.90 %  15.19 %
 Tier 1 risk-based capital ratio   14.65 %  14.15 %  14.41 %  14.34 %  13.93 %  14.65 %  13.93 %
 Leverage capital ratio   11.21 %  11.14 %  11.20 %  11.69 %  11.72 %  11.21 %  11.72 %
Other Data:                                    
 Number of employees (full-time equivalent)   181    171    169    167    180    181    180  
 Number of banking facilities   11    11    11    11    11    11    11  
   
(1) Noninterest income includes gains and losses on securities.
(2) 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.
(3) Net interest margin is the ratio of net interest income to average interest-earning assets.
(4) Net interest spread is the yield on average interest-earning assets less the rate on average interest-bearing liabilities.
(5) Noninterest income to average assets excludes gains and losses on securities.
(6) The efficiency ratio is noninterest expense divided by the sum of net interest income plus noninterest income, excluding gains and losses on securities.
(7) Earnings on average assets are net income divided by average total assets.
(8) Earnings on average equity are net income divided by average common equity.
(9) Excludes loans held for sale.
 
 
 
CIB MARINE BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
            
   March 31, December 31, September 30, June 30, March 31,
   2017 2016 2016 2016 2016
   (Dollars in thousands, except share data)
Assets                      
Cash and due from banks  $12,773  $10,291  $11,427  $9,808  $9,136  
Reverse repurchase agreements   11,019   24,275   27,560   20,313   -  
Securities available for sale   111,745   112,072   103,853   103,542   97,474  
Loans held for sale   2,448   11,469   15,875   11,602   10,176  
                       
Loans   483,501   483,518   466,057   461,859   470,424  
Allowance for loan losses   (7,567 ) (7,592 ) (8,549 ) (8,219 ) (8,235 )
 Net loans   475,934   475,926   457,508   453,640   462,189  
                       
Federal Home Loan Bank Stock   2,070   3,803   3,803   2,170   2,170  
Premises and equipment, net   4,369   4,427   4,256   4,358   4,716  
Accrued interest receivable   1,377   1,382   1,289   1,290   1,468  
Other real estate owned, net   3,153   3,159   982   2,283   3,859  
Bank owned life insurance   4,414   4,389   4,363   4,336   4,310  
Goodwill and other intangible assets   215   221   226   232   237  
Other assets   1,643   2,145   1,486   2,134   1,354  
  Total Assets  $631,160  $653,559  $632,628  $615,708  $597,089  
                       
Liabilities and Stockholders' Equity                      
Deposits:                      
 Noninterest-bearing demand  $76,088  $77,154  $87,216  $82,460  $74,564  
 Interest-bearing demand   33,027   33,832   29,821   31,508   32,096  
 Savings   192,175   176,435   169,390   175,955   175,576  
 Time   195,854   195,676   190,001   178,454   185,098  
  Total deposits   497,144   483,097   476,428   468,377   467,334  
Short-term borrowings   60,837   96,944   81,636   72,833   57,929  
Accrued interest payable   327   349   319   335   339  
Other liabilities   2,033   3,646   4,151   4,897   4,012  
  Total liabilities   560,341   584,036   562,534   546,442   529,614  
                       
Stockholders' Equity                      
Preferred stock, $1 par value; 5,000,000                      
authorized shares; 7% fixed rate noncumulative perpetual issued-55,624 shares of series A and 4,376 shares of series B; convertible; aggregate liquidation preference- $60,000   51,000   51,000   51,000   51,000   51,000  
Common stock, $1 par value; 50,000,000 authorized shares; 18,346,391 issued shares; 18,135,344 outstanding shares   18,346   18,346   18,346   18,346   18,346  
Capital surplus   158,602   158,552   158,510   158,493   158,493  
Accumulated deficit   (154,629 ) (155,517 ) (156,579 ) (157,446 ) (158,636 )
Accumulated other comprehensive loss, net   (1,971 ) (2,329 ) (654 ) (598 ) (1,199 )
Treasury stock 218,499 shares at cost   (529 ) (529 ) (529 ) (529 ) (529 )
  Total stockholders' equity   70,819   69,523   70,094   69,266   67,475  
  Total liabilities and stockholders' equity  $631,160  $653,559  $632,628  $615,708  $597,089  
                   
                   
                   
CIB MARINE BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
                      
   At or for the
   Quarters Ended  Three Months Ended
   March 31,  December 31,  September 30,  June 30,  March 31,  March 31,  March 31,
   2017  2016  2016  2016  2016  2017  2016
   (Dollars in thousands)
                               
Interest Income                              
Loans  $4,826  $4,493   $4,540   $4,635  $4,572  $4,826  $4,572
Loans held for sale   46   141    153    95   83   46   83
Securities   611   563    513    478   517   611   517
Other investments   79   76    80    6   4   79   4
 Total interest income   5,562   5,273    5,286    5,214   5,176   5,562   5,176
                               
Interest Expense                              
Deposits   749   697    659    692   705   749   705
Short-term borrowings   143   96    81    37   30   143   30
 Total interest expense   892   793    740    729   735   892   735
 Net interest income   4,670   4,480    4,546    4,485   4,441   4,670   4,441
Provision for (reversal of) loan losses   228   (796 )  69    118   61   228   61
 Net interest income after provision for (reversal of) loan losses   4,442   5,276    4,477    4,367   4,380   4,442   4,380
                               
Noninterest Income                              
Deposit service charges   113   121    125    121   103   113   103
Other service fees   46   45    47    52   67   46   67
Mortgage Banking revenue, net   1,142   1,414    2,285    2,102   1,336   1,142   1,336
Other income   97   136    206    96   117   97   117
Net gains on sale of securities   0   0    0    0   0   0   0
Net gains (losses) on sale of assets and (writedowns)   449   192    (12 )  417   430   449   430
 Total noninterest income   1,847   1,908    2,651    2,788   2,053   1,847   2,053
                               
Noninterest Expense                              
Compensation and employee benefits   3,705   4,228    4,426    4,143   3,624   3,705   3,624
Equipment   290   305    277    293   273   290   273
Occupancy and premises   390   390    377    389   435   390   435
Data Processing   140   123    185    151   154   140   154
Federal deposit insurance   87   92    105    106   106   87   106
Professional services   200   156    157    213   249   200   249
Telephone and data communication   81   90    92    99   109   81   109
Insurance   59   60    60    56   54   59   54
Other expense   449   683    541    501   477   449   477
 Total noninterest expense   5,401   6,127    6,220    5,951   5,481   5,401   5,481
Income (loss) from operations before income taxes   888   1,057    908    1,204   952   888   952
Income tax expense   0   (5 )  40    15   0   0   0
 Net income (loss)   888   1,062    868    1,189   952   888   952
Preferred stock dividend   0   0    0    0   0   0   0
 Net income (loss) allocated to common stockholders  $888  $1,062   $868   $1,189  $952  $888  $952
CIB Marine Bancshares, Inc.
Summary of Preferred Stock Repurchase Program Scenario Analysis
 
In a letter to shareholders dated April 3, 2017, we discussed a plan to be presented to shareholders at the 2017 Annual Shareholder Meeting on May 25, 2017, in Champaign, Illinois. The Company intends to create a non-mandatory preferred stock repurchase program if the common and preferred shareholders vote in favor of an amendment to the Company's Articles of Incorporation permitting individually negotiated repurchases of the preferred stock. The repurchase of preferred stock at a discount to par is accretive for the Company and its shareholders, and creates the opportunity for liquidity for preferred shareholders who choose for themselves to sell their stock at a mutually agreeable price. The analysis below demonstrates the accretion to book value of preferred stock repurchases under various discount scenarios.
 
REPURCHASE SCENARIO AT 30% of Liquidation Preference
End of Year 2016 2017 2018 2019 2020 2021 2022 2023
Repurchase Price of Series A as % of Liquidation Preference   30% 30% 30% 30%      
Preferred Series A Outstanding, end of period 55,624 35,624 25,624 15,624 0      
Cash Used for Repurchase   $6,000,000 $3,000,000 $3,000,000 $4,687,200 no remaining Preferred Series A
 Total Shares of Series A Repurchased   20,000.00 10,000.00 10,000.00 15,624.00      
 Tangible Book Value per Common Share, basic $1.03 $1.83 $2.40 $2.97 $3.71      
 Book Value per Common Share, basic $0.53 $1.49 $2.15 $2.79 $3.67      
REPURCHASE SCENARIO AT 70% of Liquidation Preference
End of Year 2016 2017 2018 2019 2020 2021 2022 2023
Repurchase Price of Series A as % of Liquidation Preference   70% 70% 70% 70% 70% 70% 70%
Preferred Series A Outstanding, end of period 55,624 47,053 42,767 38,481 34,195 29,910 25,624 21,338
Cash Used for Repurchase   $6,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000
 Total Shares of Series A Repurchased   8,571.43 4,285.71 4,285.71 4,285.71 4,285.71 4,285.71 4,285.71
 Tangible Book Value per Common Share, basic $1.03 $1.30 $1.60 $1.90 $2.20 $2.53 $2.86 $3.18
 Book Value per Common Share, basic $0.53 $0.86 $1.21 $1.53 $1.87 $2.23 $2.60 $2.96
REPURCHASE SCENARIO AT 30%, 50% then 70% of Liquidation Preference
End of Year 2016 2017 2018 2019 2020 2021 2022 2023
Repurchase Price of Series A as % of Liquidation Preference   30% 50% 70% 70% 70% 70% 70%
Preferred Series A Outstanding, end of period 55,624 35,624 29,624 25,338 21,053 16,767 12,481 8,195
Cash Used for Repurchase   $6,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000
 Total Shares of Series A Repurchased   20,000.00 6,000.00 4,285.71 4,285.71 4,285.71 4,285.71 4,285.71
 Tangible Book Value per Common Share, basic $1.03 $1.83 $2.21 $2.51 $2.82 $3.15 $3.47 $3.80
 Book Value per Common Share, basic $0.53 $1.49 $1.93 $2.25 $2.60 $2.96 $3.32 $3.68
Assumptions
1) Sufficient cash is available from earnings and liquidity to support the repurchase plan, and at the same time support a strong capital position at the subsidiary bank and the company on a consolidated basis.
2) The amendments proposed in the 2017 Proxy Statement are approved by all necessary parties and any and all regulatory approvals are obtained to engage in the repurchase activity.
3) Repurchased shares are cancelled and not retained as treasury stock.
4) Common Stock Issued and Outstanding as reflected in the basic shares used to determine the book values per share reflect 0% forfeiture of Restricted Stock Awards.
5) The Tangible Book Values and Book Values per share reflect both the accretive affects of the repurchase program and a baseline earnings forecast for purposes of demonstrating the potential outcomes.
The scenarios are an expression of possible outcomes with willing parties, free to chose for themselves when and at what prices they are willing to sell their shares of preferred stock for cash. The scenarios do not fully reflect all possible outcomes or the potential upside to the Preferred Shareholders should they retain their holdings.

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