Citizens Community Bank Announces First Quarter 2015 Results

SOUTH HILL, Va., May 7, 2015 /PRNewswire/ -- Citizens Community Bank (OTCQB: CZYB) today announced its unaudited results of operations for the first quarter of 2015.

Earnings

Citizens Community Bank is pleased to report net earnings of $205,759 to common shareholders after preferred stock dividends of $10,000 for the first quarter of 2015.  Earnings per share on a basic and dilutive basis were $0.14 and return on average assets was 0.49%.  For the first quarter of 2014, the Bank reported net income of $269,474 after preferred stock dividends of $10,000 or $0.18 per share on a basic and diluted basis.  Net income for the first quarter of 2014 included $137,338 of interest income which represented a full interest recovery of a large non-performing loan.  Absent this one-time interest income adjustment, net income before tax for the first quarter of 2015 was $305,659, compared to $260,305 for the first quarter of 2014, an increase of $45,354 or 17.4% year-over-year.

President and CEO James R. Black stated, "We experienced solid results for the first quarter of 2015 with improvement in core earnings and a stronger balance sheet.  Despite a temporary reduction in outstanding loans from the fourth quarter of 2014, the loan pipeline is healthy and we expect modest loan growth for the remainder of the year.  Our financial focus remains on balanced growth coupled with core earnings enhancements.  We continue to make progress on refining and improving our business development strategies and overall business model as a community bank. Concurrently, we are also working diligently on executing our capital plan as it relates to our preferred stock held through the Small Business Lending Fund." 

Net interest income increased by $102,918 or 7.7% from the first quarter of 2014, after exclusion of the one-time adjustment mentioned earlier.  The net interest margin for the first quarter of 2015 was 3.67%; inclusion and exclusion of the one-time interest income adjustment resulted in a net interest margin of 3.96% and 3.59%, respectively, for the first quarter of 2014.  The yield on earning assets was 4.39% for the first quarter of 2015, 43 basis points under the first quarter of 2014, and 7 basis points lower than the first quarter of 2014 without consideration of the recovery of interest income on the previously mentioned nonperforming loan.  The weighted cost of funds for the first quarter of 2015 was 0.78%, a 16 basis point improvement over the first quarter of 2014.  This is attributed to lower repricing of the certificate of deposit portfolio and funds disintermediating into other deposit categories here at CCB. 

Noninterest income totaled $201,014 for the first quarter of 2015, a decrease of $3,913 or 1.9% from the first quarter of 2014, at $204,926.  Fee income from overdrafts and NSF's was $41,493 at March 31, 2015; this is a decrease of $24,621 or 37.2% from 2014 to 2015 as a result of ongoing compliance and regulatory challenges to the collection of these items.  Noninterest expense for the first quarter of 2015 was $1,337,791, an increase of $53,651 or 4.2% from the first quarter of 2014.  Several broad expense categories have increased year-over-year.  Salary expense is 13.9% higher as a result of the opening of the Henderson, NC branch in April 2014 and the North Raleigh loan production office in late 2014.  Likewise, data processing expense increased 20.1% with the addition of two locations and increases in normal operating costs.  Net gains on the sale of other real estate totaled $11,912 at March 31, 2015, compared to a net loss of $1,894 at March 31, 2014.  There were no valuation write downs to other real estate owned during the first quarter of 2015 or 2014, and no provision expense was required.  As the levels of other real estate owned decrease, so too do the accompanying legal and collection fees and the expenses to carry the properties. 

Growth

At March 31, 2015, total assets were $172.7 million, up $7.3 million, or 4.4% from March 31, 2014.  Gross loans at March 31, 2015 were $133.4 million, an increase of $8.0 million or 6.4% from March 31, 2014.  Net loans at March 31, 2015 were $131.4 million, compared to $133.7 million at December 31, 2014, with the $2.3 million contraction due to anticipated and unanticipated paydowns, one of which was a $678 thousand loan participation.  Loan demand has shown modest improvement; however, we will not compromise asset quality, liquidity, or interest rate risk purely for growth.  Deposits totaled $147.4 million, an increase of $5.5 million or 3.9% over March 31, 2014 and $4.5 million or 3.1% over December 31, 2014.  Over the same comparable period, noninterest bearing demand deposits increased $3.3 million or 15.5%, interest-bearing checking and savings deposits increased $6.6 million or 4.1%, and time deposits were virtually flat.

Asset Quality

No provision expense was taken for the first quarter of 2015 or 2014.  At March 31, 2015, net recoveries totaled $4,079 compared to net charge-offs of $10,802 at March 31, 2014.  The allowance for loan losses represented 1.46% of loans as of March 31, 2015, compared to 1.43% on December 31, 2014 and 1.59% as of March 31, 2014. Nonperforming loans, which exclude performing troubled debt restructurings, equaled $403,463 or 0.30% at March 31, 2015 compared to $386,826 or 0.31% at March 31, 2014.  There are no loans which are delinquent over 90 days and still accruing interest at March 31, 2015.   As always, appropriate risk management through maintenance of high asset quality standards and an adequate reserve for loan losses continue to be priorities for the Bank.    

At March 31, 2015, other real estate owned totaled $718 thousand with $762 thousand at December 31, 2014 and $1.0 million at March 31, 2014.  Total nonperforming assets at March 31, 2015 were $1.1 million or 0.65% of total assets, compared to $1.1 million or 0.63% of total assets at December 31, 2014, and $1.4 million or 0.85% of total assets at March 31, 2014.   Total classified assets continue to decrease, with a total of $4.3 million at March 31, 2015 compared to $6.4 million at March 31, 2014.      

Capital

As of January 1, 2015, CCB reported its capital ratios under the new BASEL III international guidelines which are designed to better identify balance sheet risk and provide more effective buffers against losses which could be incurred.  As of March 31, 2015, total risk-based capital was 18.3% compared to 17.6% one year ago, and significantly higher than the 10.0% minimum regulatory requirement for well capitalized institutions. Tier 1 leverage was 12.6%, up from 12.4% at March 31, 2014.  The common equity tier 1 capital ratio, which is a new ratio introduced in BASEL III and excludes preferred stock, was 13.9% at March 31, 2015 compared to a required regulatory minimum of 4.5%. 

Citizens Community Bank is a Virginia state chartered bank headquartered in South Hill, Virginia.  Opened in December 1999, it operates five branches, three in south central Virginia, two in northern North Carolina as well as a loan production office in Oxford, North Carolina. For more information and additional financial data, please visit www.ccbsite.com.

This press release contains "forward-looking statements" that concern future events which are subject to risks and uncertainties.  Any such statements are based on certain assumptions and analyses by the Bank and other factors it believes are appropriate in the circumstances and at the time at which such statements are made.  The Bank's actual results, events and developments may differ materially from those contemplated by any forward-looking statement.  The Bank has no responsibility to update such forward-looking statements.

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SOURCE Citizens Community Bank