CIB Marine Bancshares, Inc. Announces First Quarter 2024 Results

BROOKFIELD, Wis., April 19, 2024 (GLOBE NEWSWIRE) -- CIB Marine Bancshares, Inc. (the “Company” or “CIB Marine”) (OTCQX: CIBH), the holding company of CIBM Bank (the “Bank”), announced its unaudited results of operations and financial condition for the quarter and three months ended March 31, 2024. During the quarter, CIBM Bank’s loan portfolio growth slowed to $14 million and deposits grew $45 million, allowing the Bank to reduce borrowings by $45 million, improve its liquidity profile, and control cost of funds. The Mortgage Division improved its operating results versus the first quarter of 2023, but did have an operating loss as a result of the severe production environment created by higher interest rates and lack of housing supply.

Income before tax was $0.2 million for the first quarter of 2024, nominally higher than the fourth quarter of 2023. Net income was $0.2 million for the first quarter of 2024 or $0.13 basic and $0.10 diluted net income per share, compared to a loss of $0.9 million during the fourth quarter of 2023 or $0.67 basic and $0.67 diluted net loss per share. Net income for the first quarter of 2023 was $0.2 million or $0.17 basic or $0.13 diluted net income per share .

Financial highlights for the quarter include:

CIBM Bank’s loan portfolio balances increased $14 million, primarily from funding prior commercial real estate construction loans and other new commercial segment loans. This is down from $33 million of growth in the fourth quarter of 2023. Loan portfolio growth is expected to continue to decline due to higher loan rates and balance sheet management. Deposits increased by $45 million, primarily in time deposits and money market accounts, as lower-cost fundings were used to reduce higher-cost short term borrowings from the Federal Home Loan Bank of Chicago (“FHLB”). This helped to control some of the cost of funds pressures for the period and improved the Bank’s liquidity profile as the loan to deposit ratio declined from 98% at December 31, 2023, to 94% at March 31, 2024, and borrowing availability with the FHLB increased.
As of March 31, 2024, non-performing assets, modified loans to borrowers experiencing financial difficulty, and loans 90 days or more past due and still accruing to total assets and nonaccrual loans to total loans ratios were 0.89% and 0.48%, respectively, compared to 0.90% and 0.50%, respectively, on December 31, 2023, and 0.14% and 0.08%, respectively, on March 31, 2023. Also, as of March 31, 2024, the allowance for credit losses on loans (“ACLL”) to loans was 1.23% compared to an ACLL of 1.27% on December 31, 2023, and 1.51% on March 31, 2023. The ACLL qualitative factors, including in the assessment of the ACLL, include economic forecasts obtained from third parties. Over the course of 2023 and the first quarter of 2024, gross domestic product and unemployment forecasts have improved with declining recession risk resulting in a lower ACLL to loans ratio.
Net interest margin was down 12 basis points from the prior quarter as the increase in the cost of funds was more than the increase in the yields on earning assets. Although progress was made in controlling the cost of funds by reducing our high-cost borrowings and replacing them with lower cost deposits, this progress was offset by certain other deposit relationship cost increases and higher cost renewals of time deposits. Net interest income was down $0.2 million from the fourth quarter of 2023 and down $0.9 million from the first quarter of 2023.
For the quarter ended March 31, 2024, Banking Division net income was $0.8 million, down $0.2 million from the same period in 2023, and Mortgage Division net loss was $0.3 million, improved by $0.2 million due to prior cost saving actions and certain new hire costs in 2023, despite the continued market challenges. The remaining $0.3 million net loss was from parent company sub-debt and administration expenses.

Reflecting on the quarter, Mr. J. Brian Chaffin, CIB Marine’s President and CEO, commented, “We have had some real successes this past quarter in a number of areas. Our solid deposit growth has resulted in an improved liquidity profile and, based on current forecasts, we believe it will lead to improved net interest margins in the future. Our targeted cost controls from last year are in place and have offset some of the decline in revenues.

“In this environment of constrained revenues, we continue to use balance sheet management to improve capital ratios in support of future preferred stock redemptions. Under this strategy, we expect slow – possibly even negative – loan growth in the foreseeable future, as well as possible asset sales, such as the sale of $2.7 million SBA 7(a) guaranteed loans for a gain of $0.2 million that we completed in the first quarter.

“In addition, due to continued challenges in mortgage banking largely originating from a shortfall in housing supply and high interest rates, and after evaluating many options, we significantly reduced ongoing operating costs for future periods with reductions of operations and less productive sales staff, and adjusted certain fees and compensation arrangements at the end of the first quarter of 2024 to improve the range of potential outcomes to include a profitable year in the Mortgage Division.”

He concluded, “We plan on covering a number of important topics related to our operating results and capital plans for our shareholders in more detail at the Annual Shareholder Meeting scheduled for Thursday, April 25 ^th . We encourage shareholders to visit our website for additional details regarding our virtual shareholder meeting, and to review the meeting materials.”

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates nine banking offices in Illinois, Wisconsin, and Indiana, and has mortgage loan officers and/or offices in nine 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.

CIB MARINE BANCSHARES, INC.
Selected Unaudited Consolidated Financial Data

	At or for the
	Quarters Ended															3 Months Ended
	March 31,			December 31,			September			June 30,			March 31,			March 31,			March 31,
		2024			2023			30, 2023			2023			2023			2024			2023
	(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data:
Interest and dividend income	$	11,801		$	11,328		$	10,117		$	9,152		$	8,472		$	11,801		$	8,472
Interest expense		6,840			6,190			5,180			3,643			2,601			6,840			2,601
Net interest income		4,961			5,138			4,937			5,509			5,871			4,961			5,871
Provision for (reversal of) credit losses		(28	)		135			(140	)		(246	)		159			(28	)		159
Net interest income after provision for (reversal of) credit losses		4,989			5,003			5,077			5,755			5,712			4,989			5,712
Noninterest income (1)		1,627			1,824			2,368			3,298			1,410			1,627			1,410
Noninterest expense		6,421			6,669			7,007			7,457			6,805			6,421			6,805
Income before income taxes		195			158			438			1,596			317			195			317
Income tax expense		17			1,050			59			431			89			17			89
Net income (loss)	$	178		$	(892	)	$	379		$	1,165		$	228		$	178		$	228

Common Share Data:
Basic net income (loss) per share	$	0.13		$	(0.67	)	$	0.28		$	0.88		$	0.17		$	0.13		$	0.17
Diluted net income (loss) per share		0.10			(0.67	)		0.21			0.64			0.13			0.10			0.13
Dividend		0.00			0.00			0.00			0.00			0.00			0.00			0.00
Tangible book value per share (2)		52.59			53.35			52.05			52.47			53.28			52.59			53.28
Book value per share (2)		50.84			51.58			50.28			50.70			51.48			50.84			51.48
Weighted average shares outstanding - basic		1,341,181			1,334,163			1,333,889			1,318,460			1,308,603			1,341,181			1,308,603
Weighted average shares outstanding - diluted		1,820,498			1,813,207			1,814,716			1,815,593			1,803,218			1,820,498			1,803,218
Financial Condition Data:
Total assets	$	897,595		$	899,060		$	874,247		$	819,521		$	787,244		$	897,595		$	787,244
Loans		736,019			722,084			688,446			647,823			608,492			736,019			608,492
Allowance for credit losses on loans		(9,087	)		(9,136	)		(8,947	)		(8,999	)		(9,193	)		(9,087	)		(9,193	)
Investment securities		119,300			131,529			130,476			114,661			126,001			119,300			126,001
Deposits		772,377			727,565			644,165			613,808			632,339			772,377			632,339
Borrowings		32,120			76,956			138,469			113,950			65,173			32,120			65,173
Stockholders' equity		85,091			85,075			83,313			83,876			83,615			85,091			83,615
Financial Ratios and Other Data:
Performance Ratios:
Net interest margin (3)		2.29	%		2.41	%		2.43	%		2.90	%		3.22	%		2.29	%		3.22	%
Net interest spread (4)		1.63	%		1.79	%		1.85	%		2.42	%		2.82	%		1.63	%		2.82	%
Noninterest income to average assets (5)		0.73	%		0.78	%		1.15	%		1.68	%		0.72	%		0.73	%		0.72	%
Noninterest expense to average assets		2.87	%		3.00	%		3.31	%		3.77	%		3.58	%		2.87	%		3.58	%
Efficiency ratio (6)		97.20	%		97.13	%		95.06	%		84.35	%		93.90	%		97.20	%		93.90	%
Earnings on average assets (7)		0.08	%		-0.40	%		0.18	%		0.59	%		0.12	%		0.08	%		0.12	%
Earnings on average equity (8)		0.84	%		-4.21	%		1.78	%		5.53	%		1.11	%		0.84	%		1.11	%
Asset Quality Ratios:
Nonaccrual loans to loans (9)		0.48	%		0.50	%		0.50	%		0.02	%		0.08	%		0.48	%		0.08	%
Nonaccrual loans, modified loans to borrowers experiencing financial difficulty, loans 90 days or more past due and still accruing to total loans		1.04	%		1.07	%		0.56	%		0.11	%		0.12	%		1.04	%		0.12	%
Nonaccrual loans, modified loans to borrowers experiencing financial difficulty, loans 90 days or more past due and still accruing to total assets		0.89	%		0.90	%		0.49	%		0.13	%		0.14	%		0.89	%		0.14	%
Allowance for credit losses on loans to total loans (9)		1.23	%		1.27	%		1.30	%		1.39	%		1.51	%		1.23	%		1.51	%
Allowance for credit losses on loans to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (9)		118.77	%		118.59	%		231.01	%		1283.74	%		1262.77	%		118.77	%		1262.77	%
Net charge-offs (recoveries) annualized to average loans (9)		0.03	%		0.01	%		-0.01	%		-0.02	%		-0.02	%		0.03	%		-0.02	%
Capital Ratios:
Total equity to total assets		9.48	%		9.46	%		9.53	%		10.23	%		10.62	%		9.48	%		10.62	%
Total risk-based capital ratio		13.07	%		13.24	%		13.58	%		14.31	%		14.84	%		13.07	%		14.84	%
Tier 1 risk-based capital ratio		10.48	%		10.62	%		10.91	%		11.54	%		11.99	%		10.48	%		11.99	%
Leverage capital ratio		8.50	%		8.62	%		8.93	%		9.43	%		9.56	%		8.50	%		9.56	%
Other Data:
Number of employees (full-time equivalent)		177			193			194			206			202			177			202
Number of banking facilities		9			9			9			10			10			9			10

_{(1) Noninterest income includes gains and losses on securities.}
_{(2) 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.}
_{(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 stockholders' 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,
		2024			2023			2023			2023			2023
	(Dollars in Thousands, Except Shares)
Assets
Cash and due from banks	$	7,727		$	9,491		$	9,203		$	14,444		$	16,490
Reverse repurchase agreements		-			-			-			-			-
Securities available for sale		117,160			129,370			128,413			112,532			123,838
Equity securities at fair value		2,140			2,159			2,063			2,129			2,163
Loans held for sale		8,048			9,209			15,011			14,726			10,848

Loans		736,019			722,084			688,446			647,823			608,492
Allowance for credit losses on loans		(9,087	)		(9,136	)		(8,947	)		(8,999	)		(9,193	)
Net loans		726,932			712,948			679,499			638,824			599,299

Federal Home Loan Bank Stock		2,328			2,709			4,645			2,818			1,897
Premises and equipment, net		3,550			3,602			3,675			3,879			3,969
Accrued interest receivable		3,271			2,983			2,748			2,036			2,118
Deferred tax assets, net		14,849			14,753			16,815			16,790			16,464
Other real estate owned, net		375			375			375			375			375
Bank owned life insurance		6,291			6,247			6,204			6,160			6,119
Goodwill and other intangible assets		64			64			70			76			81
Other assets		4,860			5,150			5,526			4,732			3,583
Total assets	$	897,595		$	899,060		$	874,247		$	819,521		$	787,244

Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand	$	87,621		$	89,025		$	88,674		$	93,487		$	94,700
Interest-bearing demand		92,092			90,232			73,086			82,484			93,388
Savings		261,998			256,059			254,211			247,339			259,907
Time		330,666			292,249			228,194			190,498			184,344
Total deposits		772,377			727,565			644,165			613,808			632,339
Short-term borrowings		22,383			67,227			128,748			104,238			55,469
Long-term borrowings		9,737			9,729			9,721			9,712			9,704
Accrued interest payable		1,982			1,883			1,491			963			557
Other liabilities		6,025			7,581			6,809			6,924			5,560
Total liabilities		812,504			813,985			790,934			735,645			703,629

Stockholders' Equity
Preferred stock, $1 par value; 5,000,000 authorized shares at both March 31, 2024 and December 31, 2023; 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			13,806			13,806
Common stock, $1 par value; 75,000,000 authorized shares; 1,368,987 and 1,349,392 issued shares; 1,354,918 and 1,335,323 outstanding shares at March 31, 2024 and December 31, 2023, respectively. (1)		1,369			1,349			1,349			1,349			1,324
Capital surplus		181,380			181,282			181,144			181,050			180,903
Accumulated deficit		(105,157	)		(105,335	)		(104,443	)		(104,822	)		(105,987	)
Accumulated other comprehensive income, net		(5,773	)		(5,493	)		(8,009	)		(6,973	)		(5,897	)
Treasury stock, 14,791 shares on March 31, 2024 and December 31, 2023 (2)		(534	)		(534	)		(534	)		(534	)		(534	)
Total stockholders' equity		85,091			85,075			83,313			83,876			83,615
Total liabilities and stockholders' equity	$	897,595		$	899,060		$	874,247		$	819,521		$	787,244

_{(1) Both issued and outstanding shares as stated here exclude 51,018 shares and 48,308 shares of unvested restricted stock awards at March 31, 2024 and December 31, 2023, respectively.}
_{(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			September			June 30,			March 31,		March 31,			March 31,
		2024			31, 2023			30, 2023			2023			2023		2024			2023
	(Dollars in thousands)

Interest Income
Loans	$	10,394		$	9,752		$	8,718		$	7,942		$	7,121	$	10,394		$	7,121
Loans held for sale		142			200			227			155			84		142			84
Securities		1,231			1,330			1,132			985			1,031		1,231			1,031
Other investments		34			46			40			70			236		34			236
Total interest income		11,801			11,328			10,117			9,152			8,472		11,801			8,472

Interest Expense
Deposits		6,227			5,071			3,918			3,076			2,364		6,227			2,364
Short-term borrowings		493			998			1,141			445			118		493			118
Long-term borrowings		120			121			121			122			119		120			119
Total interest expense		6,840			6,190			5,180			3,643			2,601		6,840			2,601
Net interest income		4,961			5,138			4,937			5,509			5,871		4,961			5,871
Provision for (reversal of) credit losses		(28	)		135			(140	)		(246	)		159		(28	)		159
Net interest income after provision for (reversal of) credit losses		4,989			5,003			5,077			5,755			5,712		4,989			5,712

Noninterest Income
Deposit service charges		66			74			101			76			79		66			79
Other service fees		(5	)		3			6			11			16		(5	)		16
Mortgage banking revenue, net		1,209			1,397			1,984			1,636			1,008		1,209			1,008
Other income		163			165			132			171			110		163			110
Net gains on sale of securities available for sale		0			0			0			0			0		0			0
Unrealized gains (losses) recognized on equity securities		(18	)		96			(66	)		(34	)		34		(18	)		34
Net gains (loss) on sale of SBA loans		202			0			0			0			151		202			151
Net gains (losses) on sale of assets and (writedowns)		10			89			211			1,438			12		10			12
Total noninterest income		1,627			1,824			2,368			3,298			1,410		1,627			1,410

Noninterest Expense
Compensation and employee benefits		4,289			4,369			4,631			5,101			4,550		4,289			4,550
Equipment		462			493			484			504			475		462			475
Occupancy and premises		436			415			490			404			438		436			438
Data Processing		212			224			245			221			199		212			199
Federal deposit insurance		199			170			123			150			87		199			87
Professional services		199			243			271			317			278		199			278
Telephone and data communication		56			66			57			56			61		56			61
Insurance		81			79			82			68			88		81			88
Other expense		487			610			624			636			629		487			629
Total noninterest expense		6,421			6,669			7,007			7,457			6,805		6,421			6,805
Income from operations before income taxes		195			158			438			1,596			317		195			317
Income tax expense		17			1,050			59			431			89		17			89
Net (loss) income		178			(892	)		379			1,165			228		178			228
Preferred stock dividend		0			0			0			0			0		0			0
Discount from repurchase of preferred stock		0			0			0			0			0		0			0
Net income (loss) allocated to common stockholders	$	178		$	(892	)	$	379		$	1,165		$	228	$	178		$	228