Markets Wired

BROOKFIELD, Wis., Oct. 11, 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 third quarter of 2019.  Income before taxes for the quarter was $1.1 million compared to $1.2 million for the same period in 2018, and for the nine months ending September 30, 2019, it was $3.0 million compared to $3.3 million for the same period in 2018.

A summary of financial results for the quarter and nine months ended September 30, 2019, is attached.  Select highlights include:

• Tangible book value per share and stated book value per share at September 30, 2019, were $3.03 and $2.68 per share of common stock, respectively, compared to $2.82 and $2.45, respectively, at December 31, 2018.  The increase reflects reported income for the nine months ended September 30, 2019, improved net accumulated other comprehensive income (loss) due to improved available for sale security fair values as a result of lower market interest rates, and discounts to the repurchase of preferred stock in the third quarter.
• Income before taxes for subsidiary CIBM Bank was $1.2 million for the quarter compared to $1.7 million for the same period in 2018, and $3.3 million for the nine months ended September 30, 2019, compared to $4.2 million for the same period in 2018.  Comparing the two nine-month periods, there was a decline in net interest income of $0.4 million due primarily to rising cost of funds and a reduction in SBA reverse repo balances, a decline in non-interest income of $0.2 million due to lower SBA gains on sale as a result of lower origination volumes in part offset by stronger mortgage banking revenues, an increase in provision to allowance for loan losses of $0.1 million and an increase in non-interest expenses by $0.3 million lead by higher compensation, collection and occupancy and premise expenses.
• Non-performing assets, restructured loans, and loans 90 days or more past due and still accruing to total assets was 1.40% at September 30, 2019, versus 1.45% at December 31, 2018, and 1.11% at September 30, 2018. The increase from one year ago is primarily the result of one loan placed on non-accrual during the fourth quarter of 2018.  CIB Marine’s allowance for loan losses was 1.49% at September 30, 2019, versus 1.62% at December 31, 2018, and 1.62% at September 30, 2018.  The decline was primarily due to a $0.5 million charge-off of a loan that was previously reserved for.

Mr. J. Brian Chaffin, President and CEO of CIBM, commented, “Our SBA and Mortgage Divisions’ net revenues were up $0.4 million and $0.8 million, respectively, from second quarter of 2019 due to stronger loan production from both.  Notably, the Mortgage Division has had stronger production and higher earnings on that production during 2019 versus the year prior.  This can be attributed to solid purchase money and elevated refinance activity on lower mortgage rates so far this year and a number of new lender hires.”

He added, “Our net interest margin improved by 6 basis points from the prior quarter and printed the best result since the third quarter of 2018.  We are encouraged that the cost of funds has begun to turn lower and we expect the decline to pick up in the two quarters ahead as we expect a significant amount of maturing time deposits originated near the peak of the rate cycle last year and early this year to reprice at lower rates.

“Finally, during the third quarter, we approved and accepted the repurchase of 2,229 shares of preferred stock as part of the second of three planned preferred stock modified Dutch auctions held pursuant to our 2018 amendments to the Articles of Incorporation.  The total price for the shares was $1.6 million, resulting in a discount of $0.3 million to the $1.9 million carrying value of the preferred stock shares.  The discount was transferred to paid-in capital for common stock during the third quarter.  As a reminder, a $3.5 million liability currently exists for the purchase of 4,923 preferred shares, which CIBM anticipates settling on or before December 1, 2019, as agreed to in 2018.”

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

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,
		2019			2019			2019			2018			2018					2019			2018
	(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data
Interest and dividend income	$	7,035		$	7,078		$	7,015		$	7,009		$	6,798				$	21,128		$	19,194
Interest expense		2,183			2,256			2,178			2,064			1,767					6,617			4,358
Net interest income		4,852			4,822			4,837			4,945			5,031					14,511			14,836
Provision for (reversal of) loan losses		327			(67	)		(158	)		(1,195	)		(13	)				102			10
Net interest income after provision for
(reversal of) loan losses		4,525			4,889			4,995			6,140			5,044					14,409			14,826
Noninterest income (1)		3,835			2,710			1,362			1,546			3,063					7,907			7,863
Noninterest expense		7,233			6,557			5,505			6,415			6,871					19,295			19,432
Income before income taxes		1,127			1,042			852			1,271			1,236					3,021			3,257
Income tax expense		93			281			229			313			345					603			875
Net income	$	1,034		$	761		$	623		$	958		$	891				$	2,418		$	2,382
Common Share Data
Basic net income per share (2)	$	0.07		$	0.04		$	0.03		$	0.05		$	0.14				$	0.15		$	0.23
Diluted net income per share (2)		0.04			0.02			0.02			0.03			0.07					0.08			0.12
Dividend		0.00			0.00			0.00			0.00			0.00					0.00			0.00
Tangible book value per share (3)		3.03			2.97			2.90			2.82			2.71					3.03			2.71
Book value per share (3)		2.68			2.60			2.53			2.45			2.34					2.68			2.34
Weighted average shares outstanding – basic		18,455,408			18,290,674			18,232,169			18,232,169			18,232,169					18,281,049			18,201,320
Weighted average shares outstanding – diluted		32,536,354			33,009,983			32,815,744			32,757,855			34,589,375					32,835,500			35,958,705
Financial Condition Data
Total assets	$	700,711		$	708,270		$	702,152		$	721,259		$	723,733				$	700,711		$	723,733
Loans		508,758			513,755			489,273			491,337			507,677					508,758			507,677
Allowance for loan losses		(7,560	)		(7,251	)		(7,865	)		(7,947	)		(8,217	)				(7,560	)		(8,217	)
Investment securities		120,648			124,784			123,500			121,281			118,345					120,648			118,345
Deposits		557,745			535,367			542,938			536,931			523,729					557,745			523,729
Borrowings		38,468			69,174			57,220			86,710			104,357					38,468			104,357
Stockholders’ equity		94,082			94,035			92,507			91,035			88,993					94,082			88,993
Financial Ratios and Other Data
Performance Ratios:
Net interest margin (4)		2.95	%		2.89	%		2.94	%		2.89	%		2.97	%				2.93	%		3.10	%
Net interest spread (5)		2.62	%		2.58	%		2.64	%		2.62	%		2.72	%				2.61	%		2.87	%
Noninterest income to average assets (6)		2.19	%		1.52	%		0.76	%		0.84	%		1.72	%				1.49	%		1.56	%
Noninterest expense to average assets		4.14	%		3.72	%		3.14	%		3.54	%		3.82	%				3.67	%		3.82	%
Efficiency ratio (7)		83.44	%		87.45	%		89.24	%		99.18	%		84.63	%				86.39	%		85.38	%
Earnings on average assets (8)		0.59	%		0.43	%		0.36	%		0.53	%		0.50	%				0.46	%		0.47	%
Earnings on average equity (9)		4.35	%		3.28	%		2.76	%		4.23	%		3.77	%				3.48	%		3.30	%
Asset Quality Ratios:
Nonaccrual loans to loans (10)		1.14	%		1.12	%		1.29	%		1.34	%		0.73	%				1.14	%		0.73	%
Nonaccrual loans, restructured loans and
loans 90 days or more past due and still
accruing to total loans (10)		1.44	%		1.45	%		1.66	%		1.62	%		1.09	%				1.44	%		1.09	%
Nonperforming assets, restructured loans
and loans 90 days or more past due and still
accruing to total assets (10)		1.40	%		1.40	%		1.51	%		1.45	%		1.11	%				1.40	%		1.11	%
Allowance for loan losses to total loans (10)		1.49	%		1.41	%		1.61	%		1.62	%		1.62	%				1.49	%		1.62	%
Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or
more past due and still accruing (10)		103.07	%		97.34	%		96.96	%		99.72	%		148.99	%				103.07	%		148.99	%
Net charge-offs (recoveries) annualized
to average loans (10)		0.01	%		0.44	%		(0.06	%)		(0.74	%)		(0.14	%)				0.13	%		-0.14	%
Capital Ratios:
Total equity to total assets		13.43	%		13.28	%		13.17	%		12.62	%		12.30	%				13.43	%		12.30	%
Total risk-based capital ratio		15.20	%		15.32	%		15.56	%		15.34	%		14.43	%				15.20	%		14.43	%
Tier 1 risk-based capital ratio		13.95	%		14.07	%		14.31	%		14.09	%		13.18	%				13.95	%		13.18	%
Leverage capital ratio		10.86	%		10.64	%		10.39	%		10.10	%		9.90	%				10.86	%		9.90	%
Other Data:
Number of employees (full-time equivalent)		182			180			177			183			188					182			188
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 of $0.3 million for the third quarter and nine months ended September 30, 2019, $0.1 million for the second quarter of 2018, $1.7 million for the third quarter of 2018, and $1.8 million for the nine months ended September 30, 2018.
(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. As presented here, shares of common outstanding excludes unvested Restricted Stock Awards totalling 918,665 shares of common stock at September 30, 2019.
(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)
	September 30,			June 30,			March 31,			December 31,			September 30,
		2019			2019			2019			2018			2018
	(Dollars in Thousands, Except Shares)
Assets
Cash and due from banks	$	9,582		$	8,791		$	8,168		$	13,037		$	10,055
Reverse repurchase agreements		4,083			18,347			42,729			58,662			45,076
Securities available for sale		118,211			122,365			121,115			118,926			116,013
Equity securities at fair value		2,437			2,419			2,385			2,355			2,332
Loans held for sale		25,347			8,450			4,467			4,632			8,145
Loans		508,758			513,755			489,273			491,337			507,677
Allowance for loan losses		(7,560	)		(7,251	)		(7,865	)		(7,947	)		(8,217	)
Net loans		501,198			506,504			481,408			483,390			499,460
Federal Home Loan Bank Stock		926			2,363			2,003			3,172			3,870
Premises and equipment, net (1)		7,083			7,386			7,220			4,498			4,409
Accrued interest receivable		1,646			1,820			1,873			1,570			1,858
Deferred tax assets, net		20,455			20,703			21,156			21,422			22,410
Other real estate owned, net		2,466			2,466			2,466			2,486			2,494
Bank owned life insurance		4,666			4,640			4,613			4,590			4,565
Goodwill and other intangible assets		159			165			171			176			181
Other assets		2,452			1,851			2,378			2,343			2,865
Total Assets	$	700,711		$	708,270		$	702,152		$	721,259		$	723,733
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing demand	$	63,694		$	62,424		$	62,553		$	63,507		$	69,165
Interest-bearing demand		50,683			32,649			32,467			33,660			33,701
Savings		202,866			192,133			188,110			181,432			164,603
Time		240,502			248,161			259,808			258,332			256,260
Total deposits		557,745			535,367			542,938			536,931			523,729
Short-term borrowings		38,468			69,174			57,220			86,710			104,357
Accrued interest payable		711			725			727			710			694
Other liabilities		9,705			8,969			8,760			5,873			5,960
Total liabilities		606,629			614,235			609,645			630,224			634,740
Stockholders’ Equity
Preferred stock, $1 par value; 5,000,000
authorized shares at September 30, 2019; 7% fixed rate noncumulative perpetual issued; 40,888 shares of series A and 3,217 shares of series B; convertible; $44.1 million aggregate liquidation preference		37,489			39,384			39,384			39,384			39,384
Common stock, $1 par value; 75,000,000
authorized shares; 18,868,329 issued shares; 18,646,427 outstanding shares (2)		18,868			18,543			18,456			18,456			18,454
Capital surplus		161,110			160,991			160,930			160,815			160,716
Accumulated deficit		(123,377	)		(124,412	)		(125,173	)		(125,796	)		(126,754	)
Accumulated other comprehensive income (loss), net		526			63			(556	)		(1,290	)		(2,273	)
Treasury stock 221,902 shares at cost		(534	)		(534	)		(534	)		(534	)		(534	)
Total stockholders’ equity		94,082			94,035			92,507			91,035			88,993
Total liabilities and stockholders’ equity	$	700,711		$	708,270		$	702,152		$	721,259		$	723,733
(1) The adoption of the new lease accounting standards effective January 1, 2019 resulted in $2.8 million of right of use assets being recorded in premise and equipment, net and a corresponding liability in other liabilities.
(2) Both issued and outstanding shares as stated here exclude 918,665 shares of unvested restricted stock awards.

CIB MARINE BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
	At or for the
	Quarters Ended																9 Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,				September 30,		September 30,
		2019			2019			2019			2018			2018				2019		2018
	(Dollars in thousands)
Interest Income
Loans	$	5,992		$	5,811		$	5,693		$	5,686		$	5,638			$	17,496	$	16,135
Loans held for sale		152			97			85			86			112				334		302
Securities		810			868			804			828			720				2,482		2,215
Other investments		81			302			433			409			328				816		542
Total interest income		7,035			7,078			7,015			7,009			6,798				21,128		19,194
Interest Expense
Deposits		2,027			1,949			1,805			1,547			1,343				5,781		3,329
Short-term borrowings		156			307			373			517			424				836		1,029
Total interest expense		2,183			2,256			2,178			2,064			1,767				6,617		4,358
Net interest income		4,852			4,822			4,837			4,945			5,031				14,511		14,836
Provision for (reversal of) loan losses		327			(67	)		(158	)		(1,195	)		(13	)			102		10
Net interest income after provision for
(reversal of) loan losses		4,525			4,889			4,995			6,140			5,044				14,409		14,826
Noninterest Income
Deposit service charges		101			95			83			79			105				279		326
Other service fees		30			29			20			31			30				79		104
Mortgage Banking revenue, net		2,936			2,148			978			1,057			1,760				6,062		5,289
Other income		150			179			165			143			173				494		458
Net gains (losses) on sale of securities available for sale		0			0			0			0			(7	)			0		15
Unrealized gains (losses) recognized on equity securities		18			34			30			23			(18	)			82		(75	)
Net gains on sale of assets		600			225			86			213			1,020				911		1,746
Total noninterest income		3,835			2,710			1,362			1,546			3,063				7,907		7,863
Noninterest Expense
Compensation and employee benefits		5,309			4,445			3,687			4,206			4,514				13,441		13,252
Equipment		335			353			335			364			351				1,023		999
Occupancy and premises		420			437			456			423			378				1,313		1,217
Data Processing		165			160			166			169			184				491		500
Federal deposit insurance		(5	)		66			82			74			51				143		148
Professional services		198			207			140			270			623				545		1,079
Telephone and data communication		86			83			78			86			78				247		235
Insurance		70			52			53			47			60				175		184
Other expense		655			754			508			776			632				1,917		1,818
Total noninterest expense		7,233			6,557			5,505			6,415			6,871				19,295		19,432
Income from operations
before income taxes		1,127			1,042			852			1,271			1,236				3,021		3,257
Income tax expense		93			281			229			313			345				603		875
Net income		1,034			761			623			958			891				2,418		2,382
Preferred stock dividend		0			0			0			0			0				0		0
Discount from repurchase of preferred shares		308			0			0			0			1,703				308		1,808
Net income allocated to
common stockholders	$	1,342		$	761		$	623		$	958		$	2,594			$	2,726	$	4,190