Citizens Community Bancorp, Inc. Earns $3.5 Million, or $0.31 Per Share in 3Q20; Criticized Assets Decline 27%; Nonperforming Assets Decline 14.3%
Citizens Community Bancorp reported earnings of $3.5 million ($0.31 per share) for the quarter ended September 30, 2020, an increase from $3.1 million ($0.28 per share) in the previous quarter. Adjusted net income was $3.3 million ($0.30 per share), up from $2.8 million ($0.25 per share). The company saw lower net interest income due to loan portfolio reductions but benefited from high mortgage loan sales. Book value per share increased to $14.10, reflecting a 7% annualized growth. Non-performing assets decreased significantly, indicating improved asset quality. However, COVID-19-related loan loss provisions increased.
- Net income increased to $3.5 million for Q3 2020, up from $3.1 million in Q2.
- Adjusted net income rose to $3.3 million, compared to $2.8 million in the prior quarter.
- Tangible book value per share increased to $10.75, reflecting a 12% annualized growth.
- Non-performing assets decreased by 14% quarter-over-quarter, indicating improved asset quality.
- Net interest income decreased to $11.9 million from $12.3 million in Q2 2020.
- Loan portfolio shrank due to repayments and selective refinancing decisions.
- COVID-19 related loan loss provisions increased to $3.5 million over three quarters.
EAU CLAIRE, Wis., Oct. 27, 2020 (GLOBE NEWSWIRE) -- 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
The Company’s third quarter operating results reflected: (1) modestly lower net interest income largely due to loan portfolio reductions, (2) lower loan loss provisions, while increasing COVID-19-related qualitative provision, (3) a continued robust refinancing market which led to all-time high gains on sale of mortgage loans and (4) lower non-interest expenses due to reduced compensation expense and decreased impairment of mortgage servicing right assets.
Book value per share was
The increase in book value and tangible book value (non-GAAP)5 in the third quarter reflects net income of
“We were pleased with the continued execution of our strategic priorities. This year we have increased tangible book value
“As expected, COVID-19 deferrals remain concentrated in the hospitality segment where occupancy rates have been tracking with national averages. We are working with our clients as the pandemic persists by requiring additional support from the borrower in exchange for further deferral periods. Restaurants, especially quick service, have rebounded and many have resumed full payment status. All other segments have or are scheduled to return to regular payment status. Nevertheless, we have increased loan loss reserves adding
For the nine months ended September 30, 2020, the Company earned
September 30, 2020 Highlights: (as of or for the 3-month period ended September 30, 2020, compared to June 30, 2020)
- Stockholders’ equity as a percent of total assets increased from
9.51% to9.70% during the quarter. Tangible common equity (non-GAAP)5 relative to tangible assets (non-GAAP)5, less SBA Paycheck Protection Program (“PPP”) loans increased to8.29% at September 30, 2020 compared to8.03% at June 30, 2020.
- The Bank recorded provision for loan losses of
$1.50 million for the quarter ended September 30, 2020, compared to$1.75 million for the quarter ended June 30, 2020. In continued anticipation of a COVID-19 related adverse economic impact, the COVID-19 related provision was$1.5 million in the quarter ended September 30, 2020 increasing the allowance for loan losses allocated to COVID-19 to$3.5 million . This was a modest increase from the$1.25 million provided for COVID-19 for the quarter ended June 30, 2020. The COVID-19 pandemic continued to result in reduced operating capacity and uncertainty regarding potential future revenue and cash flows for certain businesses, including bank borrowers. Hotels and restaurants represent our portfolios’ two industry sectors most directly and adversely affected by the COVID-19 pandemic. These sectors’ loans totaled approximately$102 million and$39 million , respectively, at September 30, 2020.
- As of September 30, 2020, the Bank’s COVID-19 related modifications under Section 4013 of the CARES Act, totaled
$126.7 million , or10% of gross loans versus$197.3 million , or15% of gross loans at June 30, 2020. At September 30, 2020, hotel industry sector loans represent approximately$71 million of the approved deferrals and the restaurant industry sectors represent approximately$5 million . The Bank has approximately$50 million of total payment deferrals expiring in the fourth quarter of 2020.
- The sum of special mention and substandard assets, or criticized assets, decreased
$15.2 million to$40.7 million at September 30, 2020 from$55.9 million at June 30, 2020, a decrease of27% .
- The allowance for loan losses on originated loans, excluding PPP loans, increased to
1.65% . Since PPP loans are guaranteed by the SBA, they are excluded from this reserve calculation. Additionally, loans acquired through acquisition were effectively marked to market value at the time of their acquisition and were also excluded from this reserve calculation.
- On August 12, 2020, the Bank announced the fourth quarter closure of three branch operations located at Minnesota Lake, Minnesota, Eau Claire, Wisconsin, and Eleva, Wisconsin. The branch operations will be consolidated into nearby branch locations.
Balance Sheet and Asset Quality
Total assets increased
Cash and cash equivalents increased to
Loans receivable decreased to
The originated loan portfolio declined
The allowance for loan losses increased to
Allowance for Loan Losses Percentages
(in thousands, except ratios)
| September 30, 2020 | June 30, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||
| Originated loans, net of deferred fees and costs | $ | 777,340 | $ | 789,075 | $ | 762,127 | $ | 687,290 | ||||||||||
| SBA PPP loans, net of deferred fees | 135,177 | 132,800 | — | — | ||||||||||||||
| Acquired loans, net of unamortized discount | 317,622 | 359,300 | 415,253 | 437,088 | ||||||||||||||
| Loans, end of period | $ | 1,230,139 | $ | 1,281,175 | $ | 1,177,380 | $ | 1,124,378 | ||||||||||
| SBA PPP loans, net of deferred fees | (135,177) | (132,800) | — | — | ||||||||||||||
| Loans, net of SBA PPP loans and deferred fees | $ | 1,094,962 | $ | 1,148,375 | $ | 1,177,380 | $ | 1,124,378 | ||||||||||
| Allowance for loan losses allocated to originated loans | $ | 12,809 | $ | 12,109 | $ | 9,551 | $ | 8,694 | ||||||||||
| Allowance for loan losses allocated to other loans | 2,027 | 1,264 | 769 | 483 | ||||||||||||||
| Allowance for loan losses | $ | 14,836 | $ | 13,373 | $ | 10,320 | $ | 9,177 | ||||||||||
| Non-accretable difference on purchased credit impaired loans | $ | 1,661 | $ | 3,355 | $ | 6,290 | $ | 6,737 | ||||||||||
| ALL as a percentage of loans, end of period | ||||||||||||||||||
| ALL as a percentage of loans, net of SBA PPP loans and deferred fees | ||||||||||||||||||
| ALL allocated to originated loans as a percentage of originated loans, net of deferred fees and costs | ||||||||||||||||||
| ALL plus non-accretable difference as a percentage of loans, net of SBA PPP loans and deferred fees and costs | ||||||||||||||||||
One of the Company’s strategic objectives for 2020 was to reduce nonperforming assets and classified assets.
Nonperforming assets decreased to
Substandard and special mention loans declined
| (in thousands) | ||||||||||||||||||||
| September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | ||||||||||||||||
| Special mention loan balances | $ | 7,777 | $ | 19,958 | $ | 19,387 | $ | 10,856 | $ | 12,959 | ||||||||||
| Substandard loan balances | 32,922 | 35,911 | 38,393 | 39,892 | 38,527 | |||||||||||||||
| Criticized loans, end of period | $ | 40,699 | $ | 55,869 | $ | 57,780 | $ | 50,748 | $ | 51,486 | ||||||||||
Deposits decreased
On August 27, 2020, the Company issued ten-year,
Review of Operations
Net interest income was
Net interest income and net interest margin with and without loan purchase accounting:
(in thousands, except yields and rates)
| Three months ended | |||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||||||||||||||||||||||||||||
| Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | ||||||||||||||||||||||||||||||||||||
| With loan purchase accretion | $ | 11,909 | $ | 12,303 | $ | 12,671 | $ | 11,775 | $ | 11,593 | |||||||||||||||||||||||||||||||||||
| Less non-accretable difference realized as interest from payoff of purchased credit impaired loans | (130) | (0.03)% | (196) | (0.05)% | (1,043) | (0.30)% | (271) | (0.08)% | (50) | (0.01)% | |||||||||||||||||||||||||||||||||||
| Less accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences | — | —% | (99) | (0.03)% | — | —% | — | —% | — | —% | |||||||||||||||||||||||||||||||||||
| Less scheduled accretion interest | (276) | (0.07)% | (247) | (0.07)% | (233) | (0.07)% | (233) | (0.07)% | (233) | (0.08)% | |||||||||||||||||||||||||||||||||||
| Without loan purchase accretion | $ | 11,503 | $ | 11,761 | $ | 11,395 | $ | 11,271 | $ | 11,310 | |||||||||||||||||||||||||||||||||||
The yield on interest earning assets was
Loan loss provisions were
Non-interest income increased to a quarter end high of
Total non-interest expense declined to
Provisions for income taxes were
These financial results are preliminary until the Form 10-Q is filed in November 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 residential mortgage loans.
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; adverse impacts to the Company or Bank arising from the COVID-19 pandemic; 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 maintain our reputation; 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 ongoing integration of F. & M. Bancorp. of Tomah, Inc. into the Company’s operations; 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 year ended December 31, 2019 filed with the Securities and Exchange Commission (“SEC”) on March 10, 2020 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, net income as adjusted per share, tangible book value, 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.
Net income as adjusted and net income as adjusted per share are non-GAAP measures 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, 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
CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
(in thousands, except shares and per share data)
| September 30, 2020 (unaudited) | June 30, 2020 (unaudited) | December 31, 2019 (audited) | September 30, 2019 (unaudited) | |||||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 115,474 | $ | 39,581 | $ | 55,840 | $ | 52,276 | ||||||||||||
| Other interest-bearing deposits | 3,752 | 3,752 | 4,744 | 5,245 | ||||||||||||||||
| Securities available for sale “AFS” | 150,908 | 162,716 | 180,119 | 182,956 | ||||||||||||||||
| Securities held to maturity “HTM” | 16,927 | 10,541 | 2,851 | 3,665 | ||||||||||||||||
| Equity securities with readily determinable fair value | 187 | 188 | 246 | 241 | ||||||||||||||||
| Other investments | 15,075 | 15,193 | 15,005 | 12,622 | ||||||||||||||||
| Loans receivable | 1,230,139 | 1,281,175 | 1,177,380 | 1,124,378 | ||||||||||||||||
| Allowance for loan losses | (14,836) | (13,373) | (10,320) | (9,177) | ||||||||||||||||
| Loans receivable, net | 1,215,303 | 1,267,802 | 1,167,060 | 1,115,201 | ||||||||||||||||
| Loans held for sale | 4,938 | 8,876 | 5,893 | 3,262 | ||||||||||||||||
| Mortgage servicing rights |
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FAQ
What were Citizens Community Bancorp's earnings for Q3 2020?
The company reported earnings of $3.5 million, or $0.31 per share, for the quarter ended September 30, 2020.
How did the net income compare from Q2 to Q3 2020 for CZWI?
Net income increased from $3.1 million ($0.28 per share) in Q2 to $3.5 million ($0.31 per share) in Q3 2020.
What is the book value per share for Citizens Community Bancorp as of September 30, 2020?
The book value per share increased to $14.10 as of September 30, 2020.
How much did COVID-19 related loan loss provisions increase for CZWI?
COVID-19 related loan loss provisions increased to $3.5 million over the last three quarters.
What was the decrease in non-performing assets for CZWI in Q3 2020?
Non-performing assets decreased by 14% during Q3 2020.
Citizens Community Bancorp, Inc.
NASDAQ:CZWICZWI RankingsCZWI Latest NewsCZWI Stock Data
160.24M
9.52M
4.91%
54.77%
0.29%
Banks - Regional
Savings Institution, Federally Chartered
United States of America
EAU CLAIRE
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