WAUKESHA, Wis., Jan. 31, 2018 (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 fourth quarter and year-end 2017.  During the fourth quarter of 2017, CIB Marine made special tax adjustment entries related to its deferred tax assets, including a partial reversal of its valuation allowance, and, as a result, it reported net income after tax of $23.9 million for the fourth quarter of 2017 and $27.0 million for the year 2017.  Pre-tax net income for the fourth quarter of 2017 was $1.2 million or $0.07 basic and $0.03 diluted earnings per share, compared to $1.1 million for the same period of 2016 and $0.06 basic and $0.03 diluted earnings per share. Pre-tax net income for the year ended December 31, 2017, was $4.3 million or $0.24 basic and $0.12 diluted earnings per share, compared to $4.1 million or $0.23 basic and $0.12 diluted per share for the same period of 2016.

Select highlights for the quarter and year include:

• At December 31, 2016, CIB Marine reported a deferred tax asset (“DTA”) of $41.6 million net of liabilities and a full valuation allowance resulting in a net DTA of $0.  At December 31, 2017, CIB Marine reports a DTA of $30.3 million net of liabilities and a valuation allowance of $7.7 million for a net DTA of $22.6 million.  CIB Marine’s recent earnings history and earnings outlooks, in addition to other facts and circumstances, were supportive of a valuation allowance adjustment at the end of 2017.  The $7.7 million valuation allowance at December 31, 2017, represents the estimate at this time of state tax assets that are not anticipated to be utilized prior to their expiration.
• The $11.3 million reduction in the gross DTA between 2017 and 2016 is primarily due to the change in tax laws, including a federal tax rate decrease from 35% to 21%, and the utilization of tax assets during 2017 to reduce federal and state tax obligations. 
• The federal Tax Cuts and Jobs Act passed in December 2017 resulted in a reduction of federal tax rates and eliminated the 20% alternative minimum tax, which was applicable to CIB Marine after use of tax assets on approximately 10% of its taxable income in 2017 and prior years. 
• The adjustment in the valuation allowance against the DTAs at the end of 2017 resulted in a credit to tax expense of $24.4 million, thereby increasing net income after tax.  As a result of the valuation allowance adjustments, CIB Marine will now report full tax expenses at applicable tax rates.  However, those tax expenses reduce the carrying value of DTAs and, for the most part, are not remitted as tax payments.  At applicable tax rates, a tax expense of $1.7 million was recorded against $4.3 million of pre-tax net income for 2017.     
• Return on average assets was 4.19% for the year 2017, reflecting the tax entries and improved composition of operating income from core operating activities.  Pre-tax, the return on average assets was 0.67% for the years 2017 and 2016.
• Pre-tax net income for subsidiary CIBM Bank was $1.6 million for the fourth quarter of 2017 compared to $1.2 million for the same period of 2016, and $5.2 million for the year 2017 compared to $4.3 million for the same period of 2016.  Despite higher provisions for loan losses, CIBM Bank achieved improved revenues and lower expenses than the prior year.  After tax, net income was $20.9 million reflecting $5.2 million in pre-tax operating income, $2.0 million in tax expense, and a $17.7 million credit tax provision to adjust the valuation allowance for the DTAs at CIBM Bank. 
• Net interest income increased $1.4 million for the year 2017 compared to 2016. The increase was primarily due to improved rate spreads and higher average earning asset volumes.
• Non-interest income declined by $0.7 million in 2017 versus 2016.  However, after adjusting for a $1.1 million difference in gain on sale of OREO between 2016 and 2017, the results were improved by $0.4 million.  Improved core operating activities were primarily reflected in a $1.0 million increase in 2017 in gain on sale of SBA 7(a) loans versus 2016.  Net mortgage banking revenues were down $0.6 million due primarily to the increase in interest rates and a corresponding reduction in mortgage refinancing.   
• Provisions for loan losses were $0.2 million in 2017, reflecting an increase of $0.8 million over 2016.  Although 2017 was another successful collection year, 2016 results reflected substantially more in recoveries.
• Non-performing assets to total assets declined to 1.13% at December 31, 2017, versus 1.67% at year-end 2016, reflecting a stronger economy and success in collection activities.     

Mr. J. Brian Chaffin, President and CEO of CIB Marine Bancshares, Inc. commented, “Results in 2017 reflected improved core operating activities and successes in key initiatives.  Despite rising interest rates and lower refinance volumes, our non-interest income benefited from the growth of our Government Guaranteed Lending Division, with SBA 7(a) sales activities contributing an additional $1 million to revenues in 2017.  In addition, our average loan volumes were higher by $20 million and our average deposit volumes were higher by $19 million in 2017.”

Addressing the special tax adjustment entries, Mr. Chaffin added, “Our recent earnings, financial condition, and continued earnings outlook were important in our analysis and timing for reversing a portion of our DTA valuation allowance.  As a reminder, the DTA primarily originated from prior losses which more recently have been reducing our tax expenses and payment obligations.  Our $22.6 million net DTAs represents the amount of future tax payments that we will not need to make based on reasonable estimates of our near term and long term taxable income forecasts.  The protection of the tax assets should be important to all of our shareholders.  A change in share ownership under federal tax laws could trigger a Section 382 limitation that would likely cause a significant increase in our valuation allowance against our tax assets.  I would encourage any shareholder who may engage in a transaction that could trigger a Section 382 limitation to review our third quarter shareholder letter from November 2017 for more information.”

Mr. Chaffin concluded, “2017 reflected some of the rewards to our customers, employees and shareholders for the strategic adjustments we have made in the past few years, aided by a stronger economy.  We have made significant strides in hiring new lenders within some markets and have improved our small business lending products and delivery.”

CIB Marine Bancshares, Inc. is the holding company for CIBM Bank, which operates eleven banking offices and four 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, 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																Years Ended
	December 31,			September 30,			June 30,			March 31,			December 31,				December 31,			December 31,
		2017			2017			2017			2017			2016				2017			2016
	(Dollars in thousands, except share and per share data)
Selected Statement of Operations Data
Interest and dividend income	$	6,177		$	6,056		$	5,732		$	5,562		$	5,273			$	23,527		$	20,949
Interest expense		1,121			1,140			973			892			793				4,126			2,997
Net interest income		5,056			4,916			4,759			4,670			4,480				19,401			17,952
Provision for (reversal of) loan losses		(218	)		149			47			228			(796	)			206			(548	)
Net interest income after provision for
(reversal of) loan losses		5,274			4,767			4,712			4,442			5,276				19,195			18,500
Noninterest income (1)		2,015			2,257			2,611			1,847			1,908				8,730			9,400
Noninterest expense (benefit)		6,070			5,865			6,279			5,401			6,127				23,615			23,779
Income before income taxes		1,219			1,159			1,044			888			1,057				4,310			4,121
Income tax expense (benefit)		(22,689	)		25			20			0			(5	)			(22,644	)		50
Net income	$	23,908		$	1,134		$	1,024		$	888		$	1,062			$	26,954		$	4,071
Common Share Data
Basic net income per share	$	1.32		$	0.06		$	0.06		$	0.05		$	0.06			$	1.49		$	0.22
Diluted net income per share		0.65			0.03			0.03			0.02			0.03				0.74			0.11
Dividend		0			0			0			0			0				0			0
Tangible book value per share (2)		2.53			1.23			1.16			1.08			1.01				2.53			1.01
Book value per share (2)		2.04			0.75			0.68			0.60			0.53				2.04			0.53
Weighted average shares outstanding - basic		18,161,989			18,161,989			18,153,029			18,127,892			18,127,892				18,149,660			18,127,892
Weighted average shares outstanding - diluted		36,512,804			36,512,804			36,516,207			36,193,353			36,082,522				36,434,384			35,791,952
Financial Condition Data
Total assets	$	662,394		$	640,340		$	650,051		$	631,160		$	653,559			$	662,394		$	653,559
Loans		483,611			490,089			488,289			483,501			483,518				483,611			483,518
Allowance for loan losses		(7,701	)		(7,905	)		(7,653	)		(7,567	)		(7,592	)			(7,701	)		(7,592	)
Investment securities		114,801			112,670			111,160			111,745			112,072				114,801			112,072
Deposits		478,633			479,285			493,364			497,144			483,097				478,633			483,097
Borrowings		84,217			84,903			82,025			60,837			96,944				84,217			96,944
Stockholders' equity		97,066			73,556			72,279			70,819			69,523				97,066			69,523
Financial Ratios and Other Data
Performance Ratios:
Net interest margin (3)		3.25	%		3.07	%		3.09	%		3.02	%		2.84	%			3.11	%		3.01	%
Net interest spread (4)		3.05	%		2.88	%		2.92	%		2.87	%		2.70	%			2.93	%		2.86	%
Noninterest income to average assets (5)		1.26	%		1.37	%		1.65	%		1.16	%		1.18	%			1.36	%		1.53	%
Noninterest expense to average assets		3.79	%		3.55	%		3.96	%		3.40	%		3.79	%			3.67	%		3.88	%
Efficiency ratio (6)		85.84	%		81.76	%		85.20	%		82.88	%		95.91	%			83.95	%		86.94	%
Earnings on average assets (7)		14.93	%		0.69	%		0.65	%		0.56	%		0.66	%			4.19	%		0.66	%
Earnings on average equity (8)		124.19	%		6.11	%		5.71	%		5.10	%		5.93	%			36.85	%		5.88	%
Asset Quality Ratios:
Nonaccrual loans to loans (9)		0.69	%		0.99	%		0.99	%		1.32	%		1.26	%			0.69	%		1.26	%
Nonaccrual loans, restructured loans and
loans 90 days or more past due and still
accruing to total loans (9)		1.02	%		1.30	%		1.36	%		1.65	%		1.60	%			1.02	%		1.60	%
Nonperforming assets, restructured loans
and loans 90 days or more past due and still
accruing to total assets (9)		1.13	%		1.49	%		1.51	%		1.77	%		1.67	%			1.13	%		1.67	%
Allowance for loan losses to total loans		1.59	%		1.61	%		1.57	%		1.57	%		1.57	%			1.59	%		1.57	%
Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or
more past due and still accruing (9)		156.68	%		124.21	%		72.81	%		94.67	%		97.99	%			156.68	%		97.99	%
Net charge-offs (recoveries) annualized
to average loans		-0.01	%		-0.08	%		-0.03	%		0.21	%		0.14	%			0.02	%		-0.02	%
Capital Ratios:
Total equity to total assets		14.65	%		11.49	%		11.12	%		11.02	%		10.64	%			14.65	%		10.64	%
Total risk-based capital ratio		16.62	%		16.05	%		15.93	%		15.90	%		15.40	%			16.62	%		15.40	%
Tier 1 risk-based capital ratio		15.36	%		14.80	%		14.68	%		14.65	%		14.15	%			15.36	%		14.15	%
Leverage capital ratio		12.39	%		11.41	%		11.56	%		11.21	%		11.14	%			12.39	%		11.14	%
Other Data:
Number of employees (full-time equivalent)		183			179			181			181			171				183			171
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)
	December 31,			September 30,			June 30,			March 31,			December 31,
		2017			2017			2017			2017			2016
	(Dollars in thousands, except share data)
Assets
Cash and due from banks	$	14,371		$	9,569		$	10,462		$	12,773		$	10,291
Reverse repurchase agreements		5,449			10,289			20,440			11,019			24,275
Securities available for sale		114,801			112,670			111,160			111,745			112,072
Loans held for sale		11,070			7,164			9,166			2,448			11,469
Loans		483,611			490,089			488,289			483,501			483,518
Allowance for loan losses		(7,701	)		(7,905	)		(7,653	)		(7,567	)		(7,592	)
Net loans		475,910			482,184			480,636			475,934			475,926
Federal Home Loan Bank Stock		3,083			3,128			2,948			2,070			3,803
Premises and equipment, net		4,334			4,371			4,309			4,369			4,427
Accrued interest receivable		1,558			1,507			1,386			1,377			1,382
Deferred tax assets, net		22,613			-			-			-			-
Other real estate owned, net		2,584			3,153			3,153			3,153			3,159
Bank owned life insurance		4,494			4,468			4,441			4,414			4,389
Goodwill and other intangible assets		198			204			209			215			221
Other assets		1,929			1,633			1,741			1,643			2,145
Total Assets	$	662,394		$	640,340		$	650,051		$	631,160		$	653,559
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand	$	70,024		$	72,875		$	79,888		$	76,088		$	77,154
Interest-bearing demand		32,979			31,756			31,961			33,027			33,832
Savings		182,581			174,174			183,608			192,175			176,435
Time		193,049			200,480			197,907			195,854			195,676
Total deposits		478,633			479,285			493,364			497,144			483,097
Short-term borrowings		84,217			84,903			82,025			60,837			96,944
Accrued interest payable		383			404			358			327			349
Other liabilities		2,095			2,192			2,025			2,033			3,646
Total liabilities		565,328			566,784			577,772			560,341			584,036
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; 18,383,891 issued shares; 18,172,844 outstanding shares		18,384			18,384			18,384			18,346			18,346
Capital surplus		158,672			158,713			158,640			158,602			158,552
Accumulated deficit		(128,563	)		(152,471	)		(153,605	)		(154,629	)		(155,517	)
Accumulated other comprehensive loss, net		(1,893	)		(1,537	)		(1,611	)		(1,971	)		(2,329	)
Treasury stock 221,902 shares at cost		(534	)		(533	)		(529	)		(529	)		(529	)
Total stockholders' equity		97,066			73,556			72,279			70,819			69,523
Total liabilities and stockholders' equity	$	662,394		$	640,340		$	650,051		$	631,160		$	653,559

 

CIB MARINE BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
	At or for the
	Quarters Ended													Years Ended
	December 31,			September 30,		June 30,		March 31,		December 31,				December 31,			December 31,
		2017		2017		2017		2017			2016				2017			2016
	(Dollars in thousands)
Interest Income
Loans	$	5,384		$	5,188	$	4,997	$	4,826	$	4,493			$	20,395		$	18,240
Loans held for sale		102			104		79		46		141				331			472
Securities		643			640		598		611		563				2,492			2,071
Other investments		48			124		58		79		76				309			166
Total interest income		6,177			6,056		5,732		5,562		5,273				23,527			20,949
Interest Expense
Deposits		910			871		817		749		697				3,347			2,753
Short-term borrowings		211			269		156		143		96				779			244
Total interest expense		1,121			1,140		973		892		793				4,126			2,997
Net interest income		5,056			4,916		4,759		4,670		4,480				19,401			17,952
Provision for (reversal of) loan losses		(218	)		149		47		228		(796	)			206			(548	)
Net interest income after provision for
(reversal of) loan losses		5,274			4,767		4,712		4,442		5,276				19,195			18,500
Noninterest Income
Deposit service charges		126			132		129		113		121				500			470
Other service fees		36			45		54		46		45				181			211
Mortgage Banking revenue, net		1,507			1,821		2,027		1,142		1,414				6,497			7,137
Other income		229			127		127		97		136				580			555
Net gains on sale of securities		0			0		0		0		0				0			0
Net gains (losses) on sale of assets
and (writedowns)		117			132		274		449		192				972			1,027
Total noninterest income		2,015			2,257		2,611		1,847		1,908				8,730			9,400
Noninterest Expense
Compensation and employee benefits		4,015			4,099		4,333		3,705		4,228				16,152			16,421
Equipment		309			320		319		290		305				1,238			1,148
Occupancy and premises		413			386		381		390		390				1,570			1,591
Data Processing		143			168		136		140		123				587			613
Federal deposit insurance		24			55		81		87		92				247			409
Professional services		330			158		130		200		156				818			775
Telephone and data communication		90			87		88		81		90				346			390
Insurance		62			60		96		59		60				277			230
Other expense		684			532		715		449		683				2,380			2,202
Total noninterest expense		6,070			5,865		6,279		5,401		6,127				23,615			23,779
Income from operations
before income taxes		1,219			1,159		1,044		888		1,057				4,310			4,121
Income tax expense (benefit)		(22,689	)		25		20		0		(5	)			(22,644	)		50
Net income		23,908			1,134		1,024		888		1,062				26,954			4,071
Preferred stock dividend		0			0		0		0		0				0			0
Net income allocated to
common stockholders	$	23,908		$	1,134	$	1,024	$	888	$	1,062			$	26,954		$	4,071

FOR INFORMATION CONTACT:
J. Brian Chaffin, President & CEO
(217) 355-0900
brian.chaffin@cibmbank.com

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