Back to mobile site

Form 8-K Citizens Community Banco For: Jan 27

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 8/20/2026

1. MRNA
2. KEYS
3. KLAR
4. PANW
5. SPY
6. MRK
7. HD
8. DVLT
9. NBIS
10. AMLX

January 27, 2020 8:41 AM EST



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  January 27, 2020

CITIZENS COMMUNITY BANCORP, INC.
(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of incorporation)
001-33003
 
20-5120010
(Commission File Number)
 
(I.R.S. Employer Identification No.)

2174 EastRidge Center, Eau Claire,
Wisconsin
 
 
54701
(Address of Principal Executive Offices)
 
(Zip Code)

715-836-9994
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
  
 o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
 o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
 o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
 o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $.01 par value per share
CZWI
NASDAQ Global Market SM

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter.)
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨






Item 2.02.  Results of Operations and Financial Condition.

On January 27, 2020, Citizens Community Bancorp, Inc. issued a press release (the "Press Release") announcing results for the three and twelve months ended December 31, 2019.  A copy of the Press Release is attached as Exhibit 99.1 to this report.  The attached Exhibit 99.1 is furnished pursuant to Item 2.02 of Form 8-K.
 
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 8.01.  Other Events.

On January 23, 2020, the Board of Directors declared an annual cash dividend of $0.21 per share, to holders of record as of February 5, 2020, payable on February 19, 2020.

Item 9.01.  Financial Statements and Exhibits.

(d)    Exhibits.  The following exhibit is being furnished herewith:





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
CITIZENS COMMUNITY BANCORP, INC.
 
 
 
Date: January 27, 2020
 
By:
 
/s/ James S. Broucek
 
 
 
 
James S. Broucek
 
 
 
 
Chief Financial Officer





 
 EXHIBIT 99.1
bancorp_logoa25.jpg
Citizens Community Bancorp, Inc. Earns $3.2 Million, or $0.28 Per Share, in 4Q19;
Fourth Quarter Highlighted by Net Loan Growth of $53 Million;
Net Income Increased 125% to $9.5 Million in 2019
Declared a $0.21 dividend per share
EAU CLAIRE, WI, January 27, 2020 - Citizens Community Bancorp, Inc. (the “Company”) (Nasdaq: CZWI), the parent company of Citizens Community Federal N.A. (the “Bank” or “CCFBank”), today reported earnings of $3.2 million, or $0.28 per diluted share, for the quarter ended December 31, 2019, compared to $1.2 million, or $0.11 per diluted share, for the previous quarter ended September 30, 2019. In the December 2019 quarter, the Company benefited from (1) significantly lower operating expense, (2) slightly higher net interest income prior to loan loss provisions, (3) slightly higher non-interest income, and (4) lower tax expenses. These items were partially offset by higher loan loss provisions largely associated with strong loan growth.
For the year ended December 31, 2019, net income increased 125% to $9.5 million, or $0.85 per share compared to $4.2 million, or $0.49 per share for the twelve months ended December 31, 2018.
Net income as adjusted (non-GAAP)1 was $3.0 million or $0.26 per diluted share for the quarter ended December 31, 2019 compared to net income as adjusted (non-GAAP) of $3.4 million or $0.30 per diluted share for the quarter ended September 30, 2019. The current quarter adjusted results were impacted by $104,000 of acquisition-related expenses and the tax impact of certain acquired BOLI policies, due to recent tax rule changes, of $300,000.
The following table reports key financial metric ratios based on a net income and net income as adjusted basis:
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
Ratios based on net income:
 
 
 
Return on average assets (annualized)
 
0.84
%
 
0.34
%
 
0.47
%
 
0.68
%
 
0.46
%
Return on average equity (annualized)
 
8.41
%
 
3.35
%
 
3.66
%
 
6.59
%
 
3.92
%
Efficiency ratio (non-GAAP)
 
67
%
 
85
%
 
78
%
 
73
%
 
80
%
Net interest margin
 
3.41
%
 
3.34
%
 
3.56
%
 
3.37
%
 
3.46
%
Ratios based on net income as adjusted (non-GAAP):
 
 
 
 
 
 
 
 
 
 
Return on average assets as adjusted2 (annualized)
 
0.79
%
 
0.93
%
 
0.82
%
 
0.76
%
 
0.58
%
Return on average equity as adjusted3 (annualized)
 
7.85
%
 
9.22
%
 
6.38
%
 
7.44
%
 
4.92
%
Efficiency ratio4 (non-GAAP)
 
66
%
 
66
%
 
68
%
 
68
%
 
76
%

“We experienced strong annualized loan growth of 16% in the quarter. We saw continued economic strength and low unemployment in the Eau Claire, Mankato and Twin Cities markets and maintained continuity in our

1






Commercial Banking team. The mix of business was led by CRE, Construction and C&I, while our Ag exposure decreased modestly in the quarter. The year end loan balance exceeding quarterly average loans by $41 million will provide a nice start for 2020. Our net interest margin increased modestly. Non-interest income was strong again this quarter due to increased mortgage banking activity, i.e. purchases and refinancings, but winter will slow purchase activity in Q1 2020. We will continue to refine our expense levels to offset the persistent margin pressure,” said Stephen Bianchi, Chairman, President and Chief Executive Officer. “We were encouraged by sustained milk prices above break-even in the dairy segment and average yields in row crops (mainly corn), despite a wet spring in early 2019, which slowed planting.”

On January 23, 2020, the Board of Directors declared an annual cash dividend of $.21 per share, a 5% increase from 2019, to shareholders of record as of February 5, 2020 payable on February 19, 2020.
December 31, 2019 Highlights: (as of or for the periods ended December 31, 2019, compared to September 30, 2019)

•
Total assets increased to $1.53 billion at December 31, 2019 from $1.48 billion at September 30, 2019, reflecting strong loan growth during the quarter.

•
Loans receivable increased to $1.18 billion at December 31, 2019 from $1.12 billion at September 30, 2019. Loans receivable growth of $53.0 million was due to increased commercial real estate, commercial non-real estate and construction loan originations, partially offset by the reductions in the Legacy loan portfolio consisting of originated indirect paper and one-to-four family loans.

•
Book value per share increased to $13.36 at December 31, 2019 from $13.13 at September 30, 2019. Tangible book value per share (non-GAAP)5 increased to $9.89 at December 31, 2019 from $9.60 at September 30, 2019, reflecting earnings and the reduction of intangible assets, partially offset by the negative impact of a decrease in the unrealized gain on the securities portfolio.

•
The net interest margin increased to 3.41% for the quarter ended December 31, 2019 from 3.34% the prior quarter. The increase was influenced by a 7 basis point increase in accretion of purchase credit impaired loans due to payoffs.
 
•
Loan loss provisions increased to $1.4 million for the quarter ended December 31, 2019 from $575,000 the previous quarter, largely reflecting the expanding loan portfolio. The provisions for each period were primarily due to continued new originated loan growth and charge-offs without specific reserves associated with the underlying loans ($111,000 in the fourth quarter compared to $156,000 in the third quarter).

•
Non-interest income increased to $3.8 million for the quarter ended December 31, 2019 from $3.6 million during the prior quarter. The increase included increased gain on sale of loans, proceeds from a life insurance policy on a former borrower recorded in other income and gains on the sale of investment securities.

•
Total non-interest expense was $10.4 million for the fourth quarter of 2019, compared to $13.0 million in the prior quarter and $9.8 million for the quarter ended December 31, 2018. Total non-interest expense for the current quarter reflects $104,000 in merger related expenses versus $2.9 million in the third quarter of 2019 and $1.1 million in the fourth quarter of 2018.

•
The fourth quarter ended December 31, 2019 was favorably impacted by the FDIC application of the Small Bank Assessment Credits of approximately $150,000 which resulted in a negative expense in FDIC deposit insurance totaling $60,000.

•
Nonperforming assets declined to $19.7 million at December 31, 2019, or 1.29% of total assets, compared to $21.5 million at September 30, 2019, or 1.46% of total assets. All categories of non-accruing loans declined

2






modestly, over the quarter while accruing loans past due 90 days or more remained flat and OREO increased slightly, from $1.3 million at September 30, 2019 to $1.4 million at December 31, 2019.

Estimated Bank and Company capital ratios exceeded regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at December 31, 2019:
 
 
Citizens Community Federal N.A.
 
Citizens Community Bancorp, Inc.
 
To Be Well Capitalized Under Prompt Corrective Action Provisions
Tier 1 leverage ratio (to adjusted total assets)
 
10.4%
 
7.8%
 
5.0%
Tier 1 capital (to risk weighted assets)
 
12.1%
 
9.1%
 
8.0%
Common equity tier 1 capital (to risk weighted assets)
 
12.1%
 
9.1%
 
6.5%
Total capital (to risk weighted assets)
 
13.0%
 
11.1%
 
10.0%

Balance Sheet and Asset Quality Review

Asset growth continued in the quarter ended December 31, 2019, fueled primarily by new loan originations. Total assets were $1.53 billion at December 31, 2019, compared to $1.48 billion at September 30, 2019 and $1.29 billion one year earlier.

In the quarter, the Company sold substantially all of its municipal securities and recognized a gain on sale of $116,000. The Company purchased corporate debt securities and agency issued mortgage-backed securities with the proceeds from the municipal sale. There was a modest reduction in the portfolio due to amortization.

Gross loans increased $52.6 million during the quarter, net of the decrease in Legacy loans of $15.0 million. Gross loans increased to $1.19 billion at December 31, 2019 compared to $1.13 billion at September 30, 2019. New commercial real estate, commercial non-real estate and construction loans represented the majority of the loan growth, while agricultural related loans slightly declined and Legacy loans continued their planned reductions. Approximately $12.7 million of the loan growth was represented by draws on lines of credit taken on December 31, 2019 with the proceeds deposited into the customer’s money market accounts at the Bank, and repaid on January 2, 2020.
 
The Community Banking loan portfolio, consisting of commercial, agricultural and consumer loans, grew to $971.3 million or 81.8%, of gross loans. Commercial real estate loans increased to $514.5 million at December 31, 2019, or 43.3% of total loans, from $465.0 million the prior quarter. The Bank’s agricultural real estate loans and non real estate portfolio decreased $6.1 million in the quarter to $123.1 million or 10.4% of the gross loan portfolio. The total agricultural portfolio is split by approximately 45% of secured real estate, 28% term debt and 27% of operating lines.

The Legacy loan portfolio consisting of indirect paper and one-to-four family loans decreased $15.1 million to $215.9 million at December 31, 2019, or 18.2% of total loans, from $231.0 million at September 30, 2019. The decline in Legacy loans reflect the planned runoff of originated indirect paper and one-to-four family residential real estate loans.

The allowance for loan and lease losses increased to $10.3 million, at December 31, 2019, representing 0.88% of total loans, compared to $9.2 million and 0.82% of total loans at September 30, 2019. Approximately 35.2% of the Bank’s loan portfolio represents acquired performing loans and marked to fair value as of the acquisition date. Associated with the acquired loan portfolio is $6.3 million of discount related to purchased credit impaired acquired loans. Net charge offs were $257,000 for the quarter ended December 31, 2019, compared to $157,000 for the

3






quarter ended September 30, 2019. Approximately $145,000 of the charge-offs were on non-accrual loans where the resolution will be foreclosure and liquidating the collateral. The charge-off reduced the loan balance to current estimated liquidation value of the collateral. The $145,000 charge-off was equal to the prior quarter specific reserve.

Nonperforming assets decreased to $19.7 million, or 1.29% of total assets at December 31, 2019, compared to $21.5 million or 1.46% at September 30, 2019. The decrease in the most recent quarter reflects improvement in all nonaccrual loan categories. Classified assets increased $2.0 million during the current quarter to $41.9 million. Included in classified assets are agricultural real estate loans of approximately $10.5 million at December 31, 2019, compared to $7.7 million at September 30, 2019, and agricultural non-real estate loans of approximately $1.9 million at December 31, 2019, compared to $2.0 million at September 30, 2019.

As previously disclosed, due to finalizing the current year purchase accounting on the F. & M. Bancorp. of Tomah, Inc. (“F&M”) acquisition, goodwill was reduced by $0.342 million. This reduction was due to Department of Treasury issued guidance in the fourth quarter, which changed the taxable nature of certain acquired bank owned life insurance. As a result, total goodwill decreased from $31.8 million at September 30, 2019 to $31.5 million at December 31, 2019.

Deposits increased $34.0 million to $1.20 billion at December 31, 2019 from $1.16 billion at September 30, 2019. This growth helped to fund the strong loan growth. Included in this growth is $12.7 million in money market deposits due to draws on lines of credit previously discussed in the loan growth section above. Deposit growth benefited from the seasonal nature of commercial deposit customer activity. Growth was partially offset by the maturity of brokered and institutional certificates of deposit, which were replaced by lower cost FHLB advances. Brokered and institutional certificates decreased to $53.4 million at December 31, 2019 from $64.4 million at September 30, 2019.

Total stockholders’ equity increased to $150.6 million at December 31, 2019, from $148.0 million one quarter earlier, as the Company benefitted from the addition of earnings and a reduction in unearned deferred compensation offset partially by a reduction in accumulated other comprehensive income. Tangible book value per share (non-GAAP)5 was $9.89 at December 31, 2019, compared to $9.60 at September 30, 2019. Stockholders’ equity as a percent of total assets was 9.83% at December 31, 2019, compared to 10.03% at September 30, 2019. Tangible common equity (non-GAAP)5 as a percent of tangible assets (non-GAAP) was 7.47% at December 31, 2019, compared to 7.54% at September 30, 2019.

Review of Operations

Net interest income was $11.8 million for the fourth quarter of 2019, compared to $11.6 million for the third quarter of 2019, and $10.0 million for the quarter ended December 31, 2018. The net interest margin (“NIM”) increased to 3.41% for the fourth quarter of 2019 compared to 3.34% in the preceding quarter and 3.56% for the like quarter one year earlier. For the year ended December 31, 2019, net interest income increased to $43.5 million compared to $32.8 million one year earlier, as net interest income expanded due to multiple bank acquisitions. The net interest margin declined in fiscal 2019 to 3.37% from 3.46% one year earlier.

For the quarter ended December 31, 2019, the Company’s net interest margin benefited from prepayments on purchased credit impaired loans of $270,000, or nine basis points compared to $50,000, or two basis points in the prior quarter. Scheduled accretion for acquired performing loans, was $233,000, $234,000, and $182,000 for the quarters ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

The yield on interest earnings assets remained at 4.67% for the fourth quarter of 2019, compared to the prior quarter, and increased 5 basis points from the fourth quarter one year earlier. The increase in purchased credit impaired accretion in the quarter of 7 basis points helped offset the 7 basis point reduction in loan yields. The cost of interest-bearing liabilities decreased 6 basis points to 1.50% for the fourth quarter from 1.56% one quarter earlier,

4






and increased 20 basis points from one year earlier. The primary decrease in fourth quarter funding costs was due to lower FHLB advances and other borrowing costs.

Loan loss provisions increased to $1.4 million for the quarter ended December 31, 2019 from $575,000 for the quarter ended September 30, 2019. For the year ended December 31, 2019, loan loss provisions totaled $3.60 million compared to $2.15 million one year earlier. The provisions for each period were due to (1) continued new originated loan growth, (2) charge-offs without specific reserves associated with the underlying loans as noted above and (3) specific reserves increases. There was no provision on the $12.7 million lines of credit drawn in late December and repaid on January 2, 2020. Additionally, in the fourth quarter, there was provision of approximately $475,000 for specific reserves, largely on certain specific commercial loans. In the third quarter, there was approximately $150,000 increase in specific reserves primarily related to certain specific residential loans. The largest increase in specific reserves was approximately $325,000 on a newly classified, acquired loan, in the current quarter. The credit is secured by agricultural real estate and was to fund the building of poultry barns. Late in 2019, our borrower lost his contract with the end producer, due to the end producer’s bankruptcy filing. Our borrower is working to replace the end producer. We expect to have resolution on this credit in 2020, which may involve foreclosure.

Total non-interest income was $3.8 million for the fourth quarter compared to $3.6 million for the preceding quarter and $2.5 million for the fourth quarter one year ago. The relative increase in non-interest income in the fourth quarter reflects higher gains on the sale of loans and receipt of a one-time payment of approximately $196,000 on a loan charged-off prior to CCFBank’s acquisition .

For the year ended December 31, 2019, total non-interest income was $15.0 million compared to $8.0 million one year earlier. The growth year over year is due largely to acquisitions, the gain on sale of our former Michigan branch and increased retail and commercial customer activity.

Total non-interest expense decreased to $10.4 million for the fourth quarter of 2019, compared to $13.0 million in the prior quarter and $9.8 million for the quarter ended December 31, 2018.

Total non-interest expense for the year ended December 31, 2019 was $42.7 million compared to $32.4 million. The increase in fiscal 2019 generally reflects increased expenses associated with the acquisition of two banks.

The decrease in total non-interest expense for the current quarter relative to the previous quarter is primarily due to lower merger expenses. In addition, the full impact of normalizing acquisition activity lead to lower data processing expenses and lower advertising, and marketing and public relations costs.
   
The expense reduction was also helped by lower FDIC insurance costs, discussed previously.

Higher compensation and benefit costs, which increased $0.4 million to $5.7 million, were largely due to higher incentive costs, primarily due to the impact of our strong loan and deposit growth.

Merger related expenses incurred in the quarter ended December 31, 2019 and included in the consolidated statement of operations consisted of the following: (1) $23,000 recorded in professional services and (2) $81,000 recorded in other non-interest expense.

Merger related expenses incurred in the quarter ended September 30, 2019 and included in the consolidated statement of operations consisted of the following: (1) $200,000 recorded in professional services and (2) $2.7 million recorded in other non-interest expense.

Provisions for income taxes were $562,000, or an effective tax rate of 15.1% for the fourth quarter ended December 31, 2019 compared to $430,000, or an effective tax rate of 25.8% during the preceding quarter.


5






“During the fourth quarter, as previously disclosed, we reduced tax expense by $300,000 due to clarifications on the tax treatment for certain United Bank acquired bank owned life insurance. In addition, we realized approximately $100,000 lower tax expense related to the tax treatment finalization of certain outstanding acquisition items,” said Jim Broucek, Executive Vice President and Chief Financial Officer.

These financial results are preliminary until the Form 10-K is filed in March 2020.

About the Company
Citizens Community Bancorp, Inc. (NASDAQ: “CZWI”) is the holding company of the Bank, a national bank based in Altoona, Wisconsin, currently serving customers primarily in Wisconsin and Minnesota through 28 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas. The Bank offers traditional community banking services to businesses, Ag operators and consumers, including one-to-four family mortgages.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this release are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified using forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “estimates,” “intend,” “may,” “preliminary,” “planned,” “potential,” “should,” “will,” “would” or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the operations and business environment of the Company and the Bank. These uncertainties include the conditions in the financial markets and economic conditions generally; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; the sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; our ability to realize the benefits of net deferred tax assets; our ability to maintain or increase our market share; acts of terrorism and political or military actions by the United States or other governments; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or Bank; increases in FDIC insurance premiums or special assessments by the FDIC; disintermediation risk; our inability to obtain needed liquidity; risks related to the success of the acquisition of F. & M. Bancorp. of Tomah, Inc. (“F&M”) through merger (the “F&M Merger”) and integration of F&M into the Company’s operations; the risk that the combined company may be unable to retain the Company and/or F&M personnel successfully after the F&M Merger is completed; our ability to successfully execute our acquisition growth strategy; risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits; our ability to raise capital needed to fund growth or meet regulatory requirements; the possibility that our internal controls and procedures could fail or be circumvented; our ability to attract and retain key personnel; our ability to keep pace with technological change; cybersecurity risks; changes in federal or state tax laws; changes in accounting principles, policies or guidelines and their impact on financial performance; restrictions on our ability to pay dividends; and the potential volatility of our stock price. Stockholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Company’s performance are discussed further in Part I, Item 1A, “Risk Factors,” in the Company’s Form 10-K, for the transition period ended December 31, 2018 filed with the Securities and Exchange Commission (“SEC”) on March 8, 2019 and the Company’s subsequent filings with the SEC. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as net income as adjusted, tangible book value per share and tangible common equity as a percent of tangible assets, which management believes may be helpful in understanding the Company’s results of operations or financial position and comparing results over different periods.

6






Net income as adjusted is a non-GAAP measure that eliminates the impact of certain expenses such as acquisition and branch closure costs and related data processing termination fees, legal costs, severance pay, accelerated depreciation expense and lease termination fees, the gain on sale of branch deposits and fixed assets and the net impact of the Tax Cuts and Jobs Act of 2017, which management believes enhances investors’ ability to better understand the underlying business performance and trends related to core business activities. Merger related charges represent expenses to either satisfy contractual obligations of acquired entities without any useful benefit to the Company or to convert and consolidate customer records onto the Company platforms. These costs are unique to each transaction based on the contracts in existence at the merger date. Tangible book value per share and tangible common equity as a percent of tangible assets are non-GAAP measures that eliminate the impact of preferred stock equity, goodwill and intangible assets on our financial position. Management believes these measures are useful in assessing the strength of our financial position.
Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions.
Contact: Steve Bianchi, CEO
(715)-836-9994


7






CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
(in thousands)
 
 
December 31, 2019 (unaudited)
 
September 30, 2019 (unaudited)
 
December 31, 2018 (audited)
Assets
 
 
 
 
 
 
Cash and cash equivalents
 
$
55,840

 
$
52,276

 
$
45,778

Other interest bearing deposits
 
4,744

 
5,245

 
7,460

Securities available for sale “AFS”
 
180,119

 
182,956

 
146,725

Securities held to maturity “HTM”
 
2,851

 
3,665

 
4,850

Equity securities with readily determinable fair value
 
246

 
241

 
—

Non-marketable equity securities, at cost
 
15,005

 
12,622

 
11,261

Loans receivable
 
1,177,380

 
1,124,378

 
992,556

Allowance for loan losses
 
(10,320
)
 
(9,177
)
 
(7,604
)
Loans receivable, net
 
1,167,060

 
1,115,201

 
984,952

Loans held for sale
 
5,893

 
3,262

 
1,927

Mortgage servicing rights
 
4,282

 
4,245

 
4,486

Office properties and equipment, net
 
21,106

 
20,938

 
13,513

Accrued interest receivable
 
4,738

 
4,993

 
4,307

Intangible assets
 
7,587

 
7,999

 
7,501

Goodwill
 
31,498

 
31,841

 
31,474

Foreclosed and repossessed assets, net
 
1,460

 
1,373

 
2,570

Bank owned life insurance
 
23,063

 
22,895

 
17,792

Other assets
 
5,757

 
5,612

 
3,328

TOTAL ASSETS
 
$
1,531,249

 
$
1,475,364

 
$
1,287,924

Liabilities and Stockholders’ Equity
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
Deposits
 
$
1,195,702

 
$
1,161,750

 
$
1,007,512

Federal Home Loan Bank advances
 
130,971

 
113,466

 
109,813

Other borrowings
 
43,560

 
44,545

 
24,647

Other liabilities
 
10,463

 
7,574

 
7,765

Total liabilities
 
1,380,696

 
1,327,335

 
1,149,737

Stockholders’ equity:
 
 
 
 
 
 
Common stock— $0.01 par value, authorized 30,000,000; 11,266,954; 11,270,710 and 10,953,512 shares issued and outstanding, respectively
 
113

 
113

 
109

Additional paid-in capital
 
128,856

 
128,926

 
125,512

Retained earnings
 
22,517

 
19,348

 
15,264

Unearned deferred compensation
 
(462
)
 
(630
)
 
(857
)
Accumulated other comprehensive income (loss)
 
(471
)
 
272

 
(1,841
)
Total stockholders’ equity
 
150,553

 
148,029

 
138,187

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
1,531,249

 
$
1,475,364

 
$
1,287,924

Note: Certain items previously reported were reclassified for consistency with the current presentation.

8






CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2019 (unaudited)
 
September 30, 2019 (unaudited)
 
December 31, 2018 (audited)
 
December 31, 2019 (unaudited)
 
December 31, 2018 (unaudited)
Interest and dividend income:
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
 
$
14,611

 
$
14,646

 
$
11,839

 
$
54,647

 
$
38,657

Interest on investments
 
1,535

 
1,577

 
1,208

 
5,776

 
3,874

Total interest and dividend income
 
16,146

 
16,223

 
13,047

 
60,423

 
42,531

Interest expense:
 
 
 
 
 
 
 
 
 
 
Interest on deposits
 
3,284

 
3,371

 
2,131

 
12,174

 
6,472

Interest on FHLB borrowed funds
 
508

 
639

 
482

 
2,721

 
1,531

Interest on other borrowed funds
 
579

 
620

 
394

 
2,015

 
1,712

Total interest expense
 
4,371

 
4,630

 
3,007

 
16,910

 
9,715

Net interest income before provision for loan losses
 
11,775

 
11,593

 
10,040

 
43,513

 
32,816

Provision for loan losses
 
1,400

 
575

 
950

 
3,525

 
2,150

Net interest income after provision for loan losses
 
10,375

 
11,018

 
9,090

 
39,988

 
30,666

Non-interest income:
 
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
 
612

 
625

 
619

 
2,368

 
1,951

Interchange income
 
468

 
476

 
336

 
1,735

 
1,314

Loan servicing income
 
772

 
714

 
510

 
2,674

 
1,561

Gain on sale of loans
 
902

 
679

 
388

 
2,462

 
1,037

Loan fees and service charges
 
285

 
471

 
273

 
1,145

 
640

Insurance commission income
 
161

 
197

 
162

 
734

 
716

Gains (losses) on investment securities
 
120

 
96

 
—

 
271

 
(17
)
Gain on sale of branch
 
—

 
—

 
—

 
2,295

 
—

Other
 
464

 
363

 
238

 
1,291

 
755

Total non-interest income
 
3,784

 
3,621

 
2,526

 
14,975

 
7,957

Non-interest expense:
 
 
 
 
 
 
 
 
 
 
Compensation and benefits
 
5,720

 
5,295

 
4,946

 
20,325

 
16,370

Occupancy
 
972

 
905

 
808

 
3,697

 
3,078

Office
 
539

 
599

 
464

 
2,188

 
1,775

Data processing
 
985

 
1,092

 
993

 
3,938

 
3,217

Amortization of intangible assets
 
412

 
412

 
325

 
1,497

 
808

Amortization of mortgage servicing rights
 
286

 
325

 
175

 
1,108

 
420

Advertising, marketing and public relations
 
240

 
315

 
226

 
1,214

 
822

FDIC premium assessment
 
(60
)
 
78

 
144

 
258

 
474

Professional services
 
496

 
561

 
1,118

 
2,457

 
2,753

Losses (gains) on repossessed assets, net
 
18

 
(16
)
 
(30
)
 
(125
)
 
491

Other
 
820

 
3,409

 
625

 
6,129

 
2,207

Total non-interest expense
 
10,428

 
12,975

 
9,794

 
42,686

 
32,415

Income before provision for income taxes
 
3,731

 
1,664

 
1,822

 
12,277

 
6,208

Provision for income taxes
 
562

 
430

 
561

 
2,814

 
2,004

Net income attributable to common stockholders
 
$
3,169

 
$
1,234

 
$
1,261

 
$
9,463

 
$
4,204

Per share information:
 
 
 
 
 
 
 
 
 
 
Basic earnings
 
$
0.28

 
$
0.11

 
$
0.12

 
$
0.85

 
$
0.58

Diluted earnings
 
$
0.28

 
$
0.11

 
$
0.12

 
$
0.85

 
$
0.49

Cash dividends paid
 
$
—

 
$
—

 
$
—

 
$
0.20

 
$
0.20

Book value per share at end of period
 
$
13.36

 
$
13.13

 
$
12.62

 
$
13.36

 
$
12.62

Tangible book value per share at end of period (non-GAAP)
 
$
9.89

 
$
9.60

 
$
9.06

 
$
9.89

 
$
9.06

Note: Certain items previously reported were reclassified for consistency with the current presentation.

9






Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
(in thousands, except per share data)
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
 
 
 
 
GAAP earnings before income taxes
 
$
3,731

 
$
1,664

 
$
1,822

 
$
12,277

 
$
6,208

Merger related costs (1)
 
104

 
2,911

 
1,057

 
3,880

 
1,426

Branch closure costs (2)
 
—

 
—

 
12

 
15

 
31

Audit and Financial Reporting (3)
 
—

 
—

 
135

 
358

 
135

Gain on sale of branch
 
—

 
—

 
—

 
(2,295
)
 
—

Net income as adjusted before income taxes (4)
 
3,835

 
4,575

 
3,026

 
14,235

 
7,800

Provision for income tax on net income as adjusted (5)
 
579

 
1,180

 
832

 
3,260

 
2,519

Tax impact of certain acquired BOLI policies (6)
 
300

 
—

 
—

 
300

 
—

Total Provision for income tax
 
879

 
1,180

 
832

 
3,560

 
2,519

Net income as adjusted after income taxes (non-GAAP) (4)
 
$
2,956

 
$
3,395

 
$
2,194

 
$
10,675

 
$
5,281

GAAP diluted earnings per share, net of tax
 
$
0.28

 
$
0.11

 
$
0.12

 
$
0.85

 
$
0.49

Merger related costs, net of tax
 
0.01

 
0.19

 
0.07

 
0.27

 
0.11

Branch closure costs, net of tax
 
—

 
—

 
—

 
—

 
—

Audit and Financial Reporting
 
—

 
—

 
0.01

 
0.02

 
0.01

Gain on sale of branch
 
—

 
—

 
—

 
(0.15
)
 
—

Tax impact of certain acquired BOLI policies (6)
 
(0.03
)
 
—

 
—

 
(0.03
)
 
—

Diluted earnings per share, as adjusted, net of tax (non-GAAP)
 
$
0.26

 
$
0.30

 
$
0.20

 
$
0.96

 
$
0.61

 
 
 
 


 
 
 
 
 
 
Average diluted shares outstanding
 
11,275,961

 
11,198,667

 
10,967,386

 
11,121,435

 
8,601,909


(1) Costs incurred are included as professional fees and other non-interest expense in the consolidated statement of operations and include costs of $0, $61,000 and $461,000 for the quarters ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively, and $341,000 and $811,000 for the twelve months ended December 31, 2019 and 2018, respectively, which are nondeductible expenses for federal income tax purposes.
(2) Branch closure costs include severance pay recorded in compensation and benefits, accelerated depreciation expense and lease termination fees included in occupancy and other costs included in other non-interest expense in the consolidated statement of operations.
(3) Audit and financial reporting costs include additional audit and professional fees related to the change in our year end from September 30 to December 31.
(4) Net income as adjusted is a non-GAAP measure that management believes enhances the market’s ability to assess the underlying business performance and trends related to core business activities.
(5) Provision for income tax on net income as adjusted is calculated at our effective tax rate for each respective period presented.
(6) Tax impact of certain BOLI policies acquired from United Bank equal to $300,000.








10







Nonperforming Assets:
(in thousands, except ratios)
 
 
December 31, 2019 and Three Months Ended
 
September 30, 2019 and Three Months Ended
 
December 31, 2018 and Three Months Ended
Nonperforming assets:
 
 
 
 
 
 
Nonaccrual loans
 
 
 
 
 
 
Commercial real estate
 
$
5,655

 
$
6,324

 
$
808

Agricultural real estate
 
5,726

 
6,191

 
2,019

Commercial non-real estate
 
1,850

 
2,072

 
1,314

Agricultural non-real estate
 
1,702

 
1,989

 
762

One to four family
 
2,063

 
2,255

 
2,331

Consumer non-real estate
 
168

 
191

 
120

Total nonaccrual loans
 
$
17,164

 
$
19,022

 
$
7,354

Accruing loans past due 90 days or more
 
1,104

 
1,099

 
736

Total nonperforming loans (“NPLs”)
 
18,268

 
20,121

 
8,090

Other real estate owned (“OREO”)
 
1,429

 
1,348

 
2,522

Other collateral owned
 
31

 
25

 
48

Total nonperforming assets (“NPAs”)
 
$
19,728

 
$
21,494

 
$
10,660

Troubled Debt Restructurings (“TDRs”)
 
$
12,594

 
$
11,795

 
$
8,722

Nonaccrual TDRs
 
$
5,306

 
$
4,601

 
$
2,667

Average outstanding loan balance
 
$
1,136,330

 
$
1,143,252

 
$
921,951

Loans, end of period
 
$
1,177,380

 
$
1,124,378

 
$
992,556

Total assets, end of period
 
$
1,531,249

 
$
1,475,364

 
$
1,287,924

Allowance for loan losses (“ALL”), at beginning of period
 
$
9,177

 
$
8,759

 
$
6,748

Loans charged off:
 
 
 
 
 
 
Commercial/Agricultural real estate
 
(156
)
 
—

 
—

Commercial/Agricultural non-real estate
 
—

 
—

 
—

Residential real estate
 
(16
)
 
(133
)
 
(43
)
Consumer non-real estate
 
(119
)
 
(46
)
 
(79
)
Total loans charged off
 
(291
)
 
(179
)
 
(122
)
Recoveries of loans previously charged off:
 
 
 
 
 
 
Commercial/Agricultural real estate
 
—

 
—

 
—

Commercial/Agricultural non-real estate
 
—

 
—

 
—

Residential real estate
 
3

 
1

 
4

Consumer non-real estate
 
31

 
21

 
24

Total recoveries of loans previously charged off:
 
34

 
22

 
28

Net loans charged off (“NCOs”)
 
(257
)
 
(157
)
 
(94
)
Additions to ALL via provision for loan losses charged to operations
 
1,400

 
575

 
950

ALL, at end of period
 
$
10,320

 
$
9,177

 
$
7,604

Ratios:
 
 
 
 
 
 
ALL to NCOs (annualized)
 
1,003.89
%
 
1,461.31
%
 
2,022.34
%
NCOs (annualized) to average loans
 
0.09
%
 
0.05
%
 
0.04
%
ALL to total loans
 
0.88
%
 
0.82
%
 
0.77
%
NPLs to total loans
 
1.55
%
 
1.79
%
 
0.82
%
NPAs to total assets
 
1.29
%
 
1.46
%
 
0.83
%


11







Nonaccrual Loans Rollforward:
(in thousands)
 
Quarter Ended
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
Balance, beginning of period
$
19,022

 
$
13,612

 
$
7,210

Additions
779

 
1,493

 
906

Acquired nonaccrual loans
—

 
5,898

 
941

Charge offs
(198
)
 
(134
)
 
(40
)
Transfers to OREO
(425
)
 
(209
)
 
(201
)
Return to accrual status
(14
)
 
(53
)
 
—

Payments received
(1,957
)
 
(1,539
)
 
(1,429
)
Other, net
(43
)
 
(46
)
 
(33
)
Balance, end of period
$
17,164

 
$
19,022

 
$
7,354

Other Real Estate Owned Rollforward:
(in thousands)
 
Quarter Ended
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
Balance, beginning of period
$
1,348

 
$
1,354

 
$
2,749

Loans transferred in
495

 
209

 
201

Branch properties sales
—

 
—

 
—

Sales
(378
)
 
(220
)
 
(210
)
Write-downs
(64
)
 
—

 
—

Other, net
28

 
5

 
(218
)
Balance, end of period
$
1,429

 
$
1,348

 
$
2,522


Troubled Debt Restructurings in Accrual Status
(in thousands, except number of modifications)
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
Number of
Modifications
 
Recorded
Investment
 
Number of
Modifications
 
Recorded
Investment
 
Number of
Modifications
 
Recorded
Investment
Troubled debt restructurings: Accrual Status
 
 
 
 
 
 
 
 
 
 
 
Commercial/Agricultural real estate
19

 
$
3,622

 
18

 
$
3,574

 
15

 
$
2,209

Commercial/Agricultural non-real estate
2

 
366

 
4

 
452

 
2

 
428

Residential real estate
40

 
3,233

 
39

 
3,094

 
34

 
3,319

Consumer non-real estate
7

 
67

 
8

 
74

 
13

 
99

Total loans
68

 
$
7,288

 
69

 
$
7,194

 
64

 
$
6,055

 

 


12






Loan Composition - Detail
(in thousands)

To help better understand the Bank’s loan trends, we have added the table below. The loan categories and amounts shown are the same as on the following page and are presented in a different format. The Community Banking loan portfolios reflect the Bank’s strategy to grow its commercial banking business and consumer lending. The Legacy loan portfolios reflect the Bank’s strategy to sell substantially all newly originated one to four family loans in the secondary market and the discontinuation of originated and purchased indirect paper loans, effective in the first quarter of fiscal 2017.

 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
Community Banking Loan Portfolios:
 
 
 
 
 
 
Commercial/Agricultural real estate:
 
 
 
 
 
 
Commercial real estate
 
$
514,459

 
$
465,046

 
$
357,959

Agricultural real estate
 
85,363

 
89,441

 
86,015

Multi-family real estate
 
87,008

 
87,758

 
69,400

Construction and land development
 
86,410

 
65,550

 
22,691

Commercial/Agricultural non-real estate:
 
 
 
 
 
 
Commercial non-real estate
 
133,734

 
127,232

 
112,427

Agricultural non-real estate
 
37,780

 
39,827

 
36,327

Residential real estate:
 
 
 
 
 
 
Purchased HELOC loans
 
8,407

 
10,120

 
12,883

Consumer non-real estate:
 
 
 
 
 
 
Other consumer
 
18,186

 
18,770

 
20,214

Total Community Banking Loan Portfolios
 
971,347

 
903,744

 
717,916

 
 
 
 
 
 
 
Legacy Loan Portfolios:
 
 
 
 
 
 
Residential real estate:
 
 
 
 
 
 
One to four family
 
176,332

 
188,070

 
209,926

Consumer non-real estate:
 
 
 
 
 
 
Originated indirect paper
 
39,585

 
42,894

 
56,585

Purchased indirect paper
 
—

 
—

 
15,006

Total Legacy Loan Portfolios
 
215,917

 
230,964

 
281,517

Gross loans
 
$
1,187,264

 
$
1,134,708

 
$
999,433




13






Loan Composition
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
Originated Loans:
 
 
 
 
 
 
Commercial/Agricultural real estate:
 
 
 
 
 
 
Commercial real estate
 
$
302,546


$
244,809


$
200,875

Agricultural real estate
 
34,026


34,527


29,589

Multi-family real estate
 
71,877


69,556


61,574

Construction and land development
 
71,467


52,319


15,812

Commercial/Agricultural non-real estate:
 





Commercial non-real estate
 
89,730


80,941


73,518

Agricultural non-real estate
 
20,717


22,057


17,341

Residential real estate:
 
 
 
 
 
 
One to four family
 
108,619

 
114,507

 
121,053

Purchased HELOC loans
 
8,407

 
10,120

 
12,883

Consumer non-real estate:
 
 
 
 
 
 
Originated indirect paper
 
39,585

 
42,894

 
56,585

Purchased indirect paper
 
—

 
—

 
15,006

Other Consumer
 
15,546

 
15,718

 
15,553

Total originated loans
 
$
762,520

 
$
687,448

 
$
619,789

Acquired Loans:
 
 
 
 
 
 
Commercial/Agricultural real estate:
 
 
 
 
 
 
Commercial real estate
 
$
211,913

 
$
220,237

 
$
157,084

Agricultural real estate
 
51,337

 
54,914

 
56,426

Multi-family real estate
 
15,131

 
18,202

 
7,826

Construction and land development
 
14,943

 
13,231

 
6,879

Commercial/Agricultural non-real estate:
 
 
 
 
 
 
Commercial non-real estate
 
44,004

 
46,291

 
38,909

Agricultural non-real estate
 
17,063

 
17,770

 
18,986

Residential real estate:
 
 
 
 
 
 
One to four family
 
67,713

 
73,563

 
88,873

Consumer non-real estate:
 
 
 
 
 
 
Other Consumer
 
2,640

 
3,052

 
4,661

Total acquired loans
 
$
424,744

 
$
447,260

 
$
379,644

Total Loans:
 
 
 
 
 
 
Commercial/Agricultural real estate:
 
 
 
 
 
 
Commercial real estate
 
514,459

 
$
465,046

 
357,959

Agricultural real estate
 
85,363

 
89,441

 
86,015

Multi-family real estate
 
87,008

 
87,758

 
69,400

Construction and land development
 
86,410

 
65,550

 
22,691

Commercial/Agricultural non-real estate:
 
 
 
 
 
 
Commercial non-real estate
 
133,734

 
127,232

 
112,427

Agricultural non-real estate
 
37,780

 
39,827

 
36,327

Residential real estate:
 
 
 
 
 
 
One to four family
 
176,332

 
188,070

 
209,926

Purchased HELOC loans
 
8,407

 
10,120

 
12,883

Consumer non-real estate:
 
 
 
 
 
 
Originated indirect paper
 
39,585

 
42,894

 
56,585

Purchased indirect paper
 
—

 
—

 
15,006

Other Consumer
 
18,186

 
18,770

 
20,214

Gross loans
 
$
1,187,264

 
$
1,134,708

 
$
999,433

Unearned net deferred fees and costs and loans in process
 
(393
)
 
(158
)
 
409

Unamortized discount on acquired loans
 
(9,491
)
 
(10,172
)
 
(7,286
)
Total loans receivable
 
$
1,177,380

 
$
1,124,378

 
$
992,556

    

14






Deposit Composition:
(in thousands)
 
 
December 31,
2019
 
September 30,
2019
 
December 31, 2018
Non-interest bearing demand deposits
 
$
168,157

 
$
174,202

 
$
155,405

Interest bearing demand deposits
 
223,102

 
209,644

 
169,310

Savings accounts
 
156,599

 
165,419

 
192,310

Money market accounts
 
246,430

 
193,654

 
126,021

Certificate accounts
 
401,414

 
418,831

 
364,466

Total deposits
 
$
1,195,702

 
$
1,161,750

 
$
1,007,512



Average balances, Interest Yields and Rates:
(in thousands, except yields and rates)
 
 
Three months ended December 31, 2019
 
Three months ended September 30, 2019
 
Three months ended December 31, 2018
 
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Rate (1)
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Rate (1)
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Rate (1)
Average interest earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
31,327

 
$
122

 
1.55
%
 
$
32,376

 
$
203

 
2.49
%
 
$
40,733

 
$
195

 
1.90
%
Loans receivable
 
1,136,330

 
14,611

 
5.10
%
 
1,143,252

 
14,646

 
5.08
%
 
921,951

 
11,839

 
5.09
%
Interest bearing deposits
 
4,904

 
30

 
2.43
%
 
5,577

 
34

 
2.42
%
 
7,268

 
40

 
2.18
%
Investment securities (1)
 
185,920

 
1,222

 
2.62
%
 
185,921

 
1,174

 
2.56
%
 
145,114

 
861

 
2.47
%
Non-marketable equity securities, at cost
 
14,209

 
161

 
4.50
%
 
13,072

 
166

 
5.04
%
 
7,974

 
112

 
5.57
%
Total interest earning assets (1)
 
$
1,372,690

 
$
16,146

 
4.67
%
 
$
1,380,198

 
$
16,223

 
4.67
%
 
$
1,123,040

 
$
13,047

 
4.62
%
Average interest bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Savings accounts
 
$
152,841

 
$
172

 
0.45
%
 
$
158,967

 
$
155

 
0.39
%
 
$
165,434

 
$
145

 
0.35
%
Demand deposits
 
216,021

 
389

 
0.71
%
 
219,955

 
550

 
0.99
%
 
162,866

 
166

 
0.40
%
Money market accounts
 
210,398

 
565

 
1.07
%
 
200,647

 
593

 
1.17
%
 
140,321

 
367

 
1.04
%
CD’s
 
367,278

 
1,951

 
2.11
%
 
381,331

 
1,870

 
1.95
%
 
309,428

 
1,329

 
1.70
%
IRA’s
 
43,809

 
207

 
1.87
%
 
44,184

 
203

 
1.82
%
 
37,789

 
124

 
1.30
%
Total deposits
 
$
990,347

 
$
3,284

 
1.32
%
 
$
1,005,084

 
$
3,371

 
1.33
%
 
$
815,838

 
$
2,131

 
1.04
%
FHLB advances and other borrowings
 
165,660

 
1,087

 
2.60
%
 
169,908

 
1,259

 
2.94
%
 
99,595

 
876

 
3.49
%
Total interest bearing liabilities
 
$
1,156,007

 
$
4,371

 
1.50
%
 
$
1,174,992

 
$
4,630

 
1.56
%
 
$
915,433

 
$
3,007

 
1.30
%
Net interest income
 
 
 
$
11,775

 
 
 
 
 
$
11,593

 
 
 
 
 
$
10,040

 
 
Interest rate spread
 
 
 
 
 
3.17
%
 
 
 
 
 
3.11
%
 
 
 
 
 
3.32
%
Net interest margin (1)
 
 
 
 
 
3.41
%
 
 
 
 
 
3.34
%
 
 
 
 
 
3.56
%
Average interest earning assets to average interest bearing liabilities
 
 
 
 
 
1.19

 
 
 
 
 
1.17

 
 
 
 
 
1.23


(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the quarters ended December 31, 2019, September 30, 2019 and December 31, 2018. The FTE adjustment to net interest income included in the rate calculations totaled $8,000, $27,000 and $43,000 for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively.



15






 
 
Twelve months ended December 31, 2019
 
Twelve months ended December 31, 2018
 
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Rate (1)
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Rate (1)
Average interest earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
29,948

 
$
672

 
2.24
%
 
$
28,044

 
$
435

 
1.55
%
Loans receivable
 
1,074,952

 
54,647

 
5.08
%
 
782,846

 
38,658

 
4.94
%
Interest bearing deposits
 
5,841

 
137

 
2.35
%
 
7,735

 
157

 
2.03
%
Investment securities (1)
 
171,747

 
4,332

 
2.60
%
 
127,191

 
2,856

 
2.40
%
Non-marketable equity securities, at cost
 
12,442

 
635

 
5.10
%
 
7,930

 
425

 
5.36
%
Total interest earning assets (1)
 
$
1,294,930

 
$
60,423

 
4.68
%
 
$
953,746

 
$
42,531

 
4.48
%
Average interest bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Savings accounts
 
$
155,848

 
$
651

 
0.42
%
 
$
112,056

 
$
285

 
0.25
%
Demand deposits
 
204,296

 
1,677

 
0.82
%
 
153,234

 
551

 
0.36
%
Money market accounts
 
182,103

 
1,988

 
1.09
%
 
122,791

 
937

 
0.76
%
CD’s
 
352,924

 
7,114

 
2.02
%
 
280,871

 
4,297

 
1.53
%
IRA’s
 
42,134

 
744

 
1.77
%
 
34,349

 
402

 
1.17
%
Total deposits
 
$
937,305

 
$
12,174

 
1.30
%
 
$
703,301

 
$
6,472

 
0.92
%
FHLB advances and other borrowings
 
156,885

 
4,736

 
3.02
%
 
107,120

 
3,243

 
3.03
%
Total interest bearing liabilities
 
$
1,094,190

 
$
16,910

 
1.55
%
 
$
810,421

 
$
9,715

 
1.20
%
Net interest income
 
 
 
$
43,513

 
 
 
 
 
$
32,816

 
 
Interest rate spread
 
 
 
 
 
3.13
%
 
 
 
 
 
3.28
%
Net interest margin (1)
 
 
 
 
 
3.37
%
 
 
 
 
 
3.46
%
Average interest earning assets to average interest bearing liabilities
 
 
 
 
 
1.18

 
 
 
 
 
1.18


(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the twelve months ended December 31, 2019 and the three months ended December 31, 2018 and 24.5% for the nine months ended September 30, 2018. The FTE adjustment to net interest income included in the rate calculations totaled $120,000 and $201,000 for the twelve months ended December 31, 2019 and December 31, 2018, respectively.


CITIZENS COMMUNITY FEDERAL N.A.
Selected Capital Composition Highlights
 
 
Estimated December 31, 2019 (unaudited)
 
September 30, 2019 (unaudited)
 
December 31, 2018 (audited)
 
To Be Well Capitalized Under Prompt Corrective Action Provisions
Tier 1 leverage ratio (to adjusted total assets)
 
10.4%
 
10.2%
 
9.7%
 
5.0%
Tier 1 capital (to risk weighted assets)
 
12.1%
 
12.7%
 
11.9%
 
8.0%
Common equity tier 1 capital (to risk weighted assets)
 
12.1%
 
12.7%
 
11.9%
 
6.5%
Total capital (to risk weighted assets)
 
13.0%
 
13.5%
 
12.7%
 
10.0%









16






Reconciliation of Return on Average Assets as Adjusted (non-GAAP):
(in thousands, except ratios)
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
 
 
 
 
GAAP earnings after income taxes
 
$
3,169

 
$
1,234

 
$
1,261

 
$
9,463

 
$
4,204

Net income as adjusted after income taxes (non-GAAP) (1)
 
$
2,956

 
$
3,395

 
$
2,194

 
$
10,675

 
$
5,281

Average assets
 
1,492,834

 
1,454,455

 
1,066,422

 
1,398,482

 
916,540

Return on average assets (annualized)
 
0.84
%
 
0.34
%
 
0.47
%
 
0.68
%
 
0.46
%
Return on average assets as adjusted (non-GAAP) (annualized)
 
0.79
%
 
0.93
%
 
0.82
%
 
0.76
%
 
0.58
%
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of Return on Average Equity as Adjusted (non-GAAP):
(in thousands, except ratios)
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
 
 
 
 
GAAP earnings after income taxes
 
$
3,169

 
$
1,234

 
$
1,261

 
$
9,463

 
$
4,204

Net income as adjusted after income taxes (non-GAAP) (1)
 
$
2,956

 
$
3,395

 
$
2,194

 
$
10,675

 
$
5,281

Average equity
 
149,437

 
146,116

 
136,514

 
143,523

 
107,287

Return on average equity (annualized)
 
8.41
%
 
3.35
%
 
3.66
%
 
6.59
%
 
3.92
%
Return on average equity as adjusted (non-GAAP) (annualized)
 
7.85
%
 
9.22
%
 
6.38
%
 
7.44
%
 
4.92
%
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of Efficiency Ratio as Adjusted (non-GAAP):
(in thousands, except ratios)
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
 
 
 
 
Non-interest expense (GAAP)
 
$
10,428

 
$
12,975

 
$
9,794

 
$
42,686

 
$
32,415

Merger related Costs (1)
 
(104
)
 
(2,911
)
 
(1,057
)
 
(3,880
)
 
(1,426
)
Branch Closure Costs (1)
 
—

 
—

 
(12
)
 
(15
)
 
(31
)
Audit and financial reporting (1)
 
—

 
—

 
(135
)
 
(358
)
 
(135
)
Non-interest expense as adjusted (non-GAAP)
 
10,324

 
10,064

 
8,590

 
38,433

 
30,823

 
 
 
 
 
 
 
 
 
 
 
Non-interest income
 
3,784

 
3,621

 
2,526

 
14,975

 
7,957

Net interest margin
 
11,775

 
11,593

 
10,040

 
43,513

 
32,816

Efficiency ratio denominator (GAAP)
 
15,559

 
15,214

 
12,566

 
58,488

 
40,773

Gain on sale of branch (1)
 
—

 
—

 
—

 
(2,295
)
 
—

Efficiency ratio denominator (non-GAAP)
 
15,559

 
15,214

 
12,566

 
56,193

 
40,773

Efficiency ratio (GAAP)
 
67
%
 
85
%
 
78
%
 
73
%
 
80
%
Efficiency ratio (non-GAAP)
 
66
%
 
66
%
 
68
%
 
68
%
 
76
%
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)

17






Reconciliation of tangible book value per share (non-GAAP):
(in thousands, except per share data)
Tangible book value per share at end of period
 
December 31, 2019
 
September 30, 2019
 
December 31,
2018
Total stockholders’ equity
 
$
150,553

 
$
148,029

 
$
138,187

Less: Goodwill
 
(31,498
)
 
(31,841
)
 
(31,474
)
Less: Intangible assets
 
(7,587
)
 
(7,999
)
 
(7,501
)
Tangible common equity (non-GAAP)
 
$
111,468

 
$
108,189

 
$
99,212

Ending common shares outstanding
 
11,266,954

 
11,270,710

 
10,953,512

Book value per share
 
$
13.36

 
$
13.13

 
$
12.62

Tangible book value per share (non-GAAP)
 
$
9.89

 
$
9.60

 
$
9.06


    
Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP):
(in thousands, except ratios)
Tangible common equity as a percent of tangible assets at end of period
 
December 31, 2019
 
September 30, 2019
 
December 31,
2018
Total stockholders’ equity
 
$
150,553

 
$
148,029

 
$
138,187

Less: Goodwill
 
(31,498
)
 
(31,841
)
 
(31,474
)
Less: Intangible assets
 
(7,587
)
 
(7,999
)
 
(7,501
)
Tangible common equity (non-GAAP)
 
$
111,468

 
$
108,189

 
$
99,212

Total Assets
 
$
1,531,249

 
$
1,475,364

 
$
1,287,924

Less: Goodwill
 
(31,498
)
 
(31,841
)
 
(31,474
)
Less: Intangible assets
 
(7,587
)
 
(7,999
)
 
(7,501
)
Tangible Assets (non-GAAP)
 
$
1,492,164

 
$
1,435,524

 
$
1,248,949

Total stockholders’ equity to total assets ratio
 
9.83
%
 
10.03
%
 
10.73
%
Tangible common equity as a percent of tangible assets (non-GAAP)
 
7.47
%
 
7.54
%
 
7.94
%


1Net income as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends related to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)”.

2Return on average assets as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends relative to average assets. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Return on Average Assets as Adjusted (non-GAAP)”.

3Return on average equity as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends relative to average equity. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Return on Average Equity as Adjusted (non-GAAP)”.

4The efficiency ratio as adjusted (non-GAAP) is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and the Company’s ability to use what it has to generate the most profit possible for shareholders relative to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Efficiency Ratio as Adjusted (non-GAAP)”.

5Tangible book value per share and tangible common equity as a percent of tangible assets are non-GAAP measure that management believes enhances investors’ ability to better understand the Company’s financial position. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of tangible book value per share (non-GAAP)” and “Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)”.


18





Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings