EAU CLAIRE, Wis., Oct. 28, 2024 (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 $3.3 million and earnings per diluted share of $0.32 for the third quarter ended September 30, 2024, compared to $3.7 million and earnings per diluted share of $0.35 for the quarter ended June 30, 2024, and $2.5 million and $0.24 earnings per diluted share for the quarter ended September 30, 2023, respectively.
The Company's third quarter 2024 operating results reflected the following changes from the second quarter of 2024: (1) no loan forbearance interest income in the third quarter compared to $0.2 million in the second quarter; (2) a $1.1 million decrease in negative provision for credit losses to $0.4 million in the third quarter; and (3) higher non-interest income of $1.0 million due to $0.5 million higher gain on sale of loans and $0.6 million lower net losses on sale of equity securities in the third quarter of 2024.
Book value per share improved to $17.88 at September 30, 2024, compared to $17.10 at June 30, 2024, and $15.80 at September 30, 2023. Tangible book value per share (non-GAAP)1 was $14.64 at September 30, 2024, compared to $13.91 at June 30, 2024, and a 16.1% increase from $12.61 at September 30, 2023. For the third quarter of 2024, tangible book value was positively influenced by net income, net unrealized gains on the available for sale securities portfolio and intangible amortization. Stockholders' equity as a percentage of total assets was 10.01% at September 30, 2024, compared to 9.77% at June 30, 2024. Tangible common equity ("TCE”) as a percent of tangible assets (non-GAAP)1 was 8.35% at September 30, 2024, compared to 8.09% at June 30, 2024, with the changes above impacted favorably by asset shrinkage.
"We continued to execute on our strategic objectives during the third quarter that further strengthened franchise value. The quarter reflected our balance sheet optimization efforts, which increased tangible common equity levels and allowed for the continued repurchase of shares at prices that were accretive to tangible book value per share and earnings per share. The TCE ratio increased to 8.35%, from 8.09% in the prior quarter, which included the impact of repurchasing 223 thousand shares. Deposits, net of the decrease in brokered deposits, increased $31 million. While credit metrics were impacted by an increase in nonperforming loans, the increase largely reflected one lending relationship. Meanwhile, we continue to maintain a healthy reserve for credit losses to total loans at 1.47%,” stated Stephen Bianchi, Chairman, President, and Chief Executive Officer.
September 30, 2024, Highlights:
- Quarterly earnings were $3.3 million, or $0.32 per diluted share for the quarter ended September 30, 2024, a decrease from the quarter ended June 30, 2024, earnings of $3.7 million, or $0.35 per diluted share, and an increase from the quarter ended September 30, 2023, earnings of $2.5 million, or $0.24 per diluted share.
- Net interest income decreased $0.3 million for the current quarter ended September 30, 2024, from $11.6 million for the quarter ended June 30, 2024, and decreased from $12.1 million for the quarter ended September 30, 2023. The decrease in net interest income from the second quarter of 2024 was primarily due to lower non-recurring interest income of $0.2 million recognized in the second quarter from curing technical defaults on performing loans.
- The net interest margin was 2.63% for the quarter ended September 30, 2024, compared to 2.72% for the previous quarter, and 2.79% for the quarter ended September 30, 2023. The net interest margin declined nine basis points in the third quarter, of which five basis points were due to no interest income recognition from curing technical defaults.
- In the third quarter ended September 30, 2024, a negative provision for credit losses of $0.4 million was recorded compared to a negative provision for credit losses of $1.525 million in the quarter ended June 30, 2024, and a negative provision for credit losses of $0.30 million for the quarter ended September 30, 2023. The third quarter's negative provision was due to decreases in on-balance sheet allowance for credit losses ("ACL”) of $0.1 million and a $0.3 million decrease in off-balance sheet ACL due to a reduction in unfunded loan commitments.
- Non-interest income increased $1.0 million in the third quarter of 2024, due to $0.5 million of higher gain on sale of loans and $0.6 million of lower net losses on equity securities and was $0.4 million higher compared to the third quarter of 2023, due to higher gain on sale of loans.
- Non-interest expense increased $122 thousand to $10.4 million from $10.3 million for the previous quarter and increased $452 thousand from $10.0 million one year earlier.
- Gross loans decreased by $3.9 million during the third quarter ended September 30, 2024, to $1.43 billion, compared to June 30, 2024.
- Total deposits increased $1.1 million, more than offsetting the $30.1 million decrease in brokered deposits during the quarter ended September 30, 2024, to $1.52 billion, compared to June 30, 2024.
- Federal Home Loan Bank advances decreased $10.5 million to $21.0 million at September 30, 2024, from $31.5 million at June 30, 2024.
- The effective tax rate was 21.48% for the quarter ended September 30, 2024, compared to 22.1% for the quarter ended June 30, 2024, and 50.5% for the quarter ended September 30, 2023. The change in tax rate from 2023 is largely due to the Wisconsin state legislation in the third quarter of 2023, eliminating the Company's state income tax in Wisconsin.
- Nonperforming assets increased to $17.1 million at September 30, 2024, compared to $10.3 million at June 30, 2024. The increase was largely due to one agricultural real estate loan relationship in forestry services that moved from special mention to substandard and was placed on nonaccrual in the third quarter.
- Common stock totaling 223 thousand shares were repurchased in the third quarter of 2024 at an average price of $12.91 per share.
- The efficiency ratio was 72% for the quarters ended September 30, 2024 and June 30, 2024.
Total assets decreased by $3.2 million during the quarter to $1.80 billion at September 30, 2024.
Securities available for sale ("AFS”) increased $3.0 million during the quarter ended September 30, 2024, to $149.4 million from $146.4 million at June 30, 2024. The increase was due to: (1) pre-tax unrealized gains of $4.6 million; and (2) a purchase of $2.9 million of agency MBS to support the Bank's CRA program partially offset by principal repayments of $4.5 million.
Securities held to maturity ("HTM”) decreased $1.6 million to $87.0 million during the quarter ended September 30, 2024, from $88.6 million at June 30, 2024, due to principal repayments.
The on-balance sheet liquidity ratio, which is defined as the fair market value of AFS and HTM securities that are not pledged and cash on deposit with other financial institutions, was 11.46% of total assets at September 30, 2024, compared to 11.48% at June 30, 2024. On-balance sheet liquidity, collateralized new borrowing capacity and uncommitted federal funds borrowing availability was $718 million, or 269%, of uninsured and uncollateralized deposits at September 30, 2024, and $714 million, or 289%, at June 30, 2024.
Gross loans decreased by $3.9 million during the third quarter ended September 30, 2024, due to loan payoffs exceeding origination activity and construction loan fundings.
The office loan portfolio totaled $31.0 million at quarter end and consists of 71 loans. There was one criticized loan in this portfolio during the quarter ended September 30, 2024, totaling $0.2 million and there have been no charge-offs in the trailing twelve months.
The allowance for credit losses on loans decreased by $0.2 million to $21.0 million at September 30, 2024, representing 1.47% of total loans receivable compared to 1.48% of total loans receivable at June 30, 2024. For the quarter ended September 30, 2024, the Bank recorded negative provision of $0.4 million which included a negative provision on ACL for loans of $0.1 million and a negative provision of $0.3 million on ACL for unfunded commitments.
Allowance for Credit Losses ("ACL”) - Loans Percentage
(in thousands, except ratios)
| September 30, 2024 | June 30, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||||
| Loans, end of period | $ | 1,424,828 | $ | 1,428,588 | $ | 1,460,792 | $ | 1,447,529 | |||||||
| Allowance for credit losses - Loans | $ | 21,000 | $ | 21,178 | $ | 22,908 | $ | 22,973 | |||||||
| ACL - Loans as a percentage of loans, end of period | 1.47 | % | 1.48 | % | 1.57 | % | 1.59 | % | |||||||
In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $0.460 million at September 30, 2024, $0.712 million at June 30, 2024, and $1.571 million at September 30, 2023, classified in other liabilities on the consolidated balance sheets.
Allowance for Credit Losses - Unfunded Commitments:
(in thousands)
| September 30, 2024 and Three Months Ended | September 30, 2023 and Three Months Ended | September 30, 2024 and Nine Months Ended | September 30, 2023 and Nine Months Ended | ||||||||||
| ACL - Unfunded commitments - beginning of period | $ | 712 | $ | 1,544 | $ | 1,250 | $ | - | |||||
| Cumulative effect of ASU 2016-13 adoption | - | - | - | 1,537 | |||||||||
| (Reductions) additions to ACL - Unfunded commitments via provision for credit losses charged to operations | (252 | ) | 27 | (790 | ) | 34 | |||||||
| ACL - Unfunded commitments - end of period | $ | 460 | $ | 1,571 | $ | 460 | $ | 1,571 | |||||
Special mention loans increased by $2.2 million to $11.0 million at September 30, 2024, compared to $8.8 million at June 30, 2024. The increase is largely due to one loan of $8.7 million, which is secured by a multi-family unit. The addition of the multi-family unit to special mention was partially offset by the movement of a $7.7 million agricultural real estate loan relationship in forestry services that moved to substandard and was placed on nonaccrual.
Substandard loans increased by $6.8 million to $21.2 million at September 30, 2024, compared to $14.4 million at June 30, 2024, due to the addition of the forestry services loan relationship noted above.
Nonperforming assets increased to $17.1 million at September 30, 2024, compared to $10.3 million at June 30, 2024 largely due to the previously mentioned forestry services loan relationship.
| (in thousands) | ||||||||||||||
| September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||
| Special mention loan balances | $ | 11,047 | $ | 8,848 | $ | 13,737 | $ | 18,392 | $ | 20,043 | ||||
| Substandard loan balances | 21,202 | 14,420 | 14,733 | 19,596 | 16,171 | |||||||||
| Criticized loans, end of period | $ | 32,249 | $ | 23,268 | $ | 28,470 | $ | 37,988 | $ | 36,214 | ||||
Total deposits increased $1.1 million during the quarter ended September 30, 2024, to $1.52 billion. Consumer deposits increased $22.1 million, including an increase in CDs of $17.9 million. Commercial deposits increased by $20.0 million. Brokered deposits decreased $30.1 million as the company decreased brokered MMDAs by $24.6 million and $5.5 million in brokered CDs matured and were not replaced. Public deposits decreased $10.9 million, largely due to expected seasonal outflows.
Deposit Portfolio Composition
(in thousands)
| September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||
| Consumer deposits | $ | 844,808 | $ | 822,665 | $ | 827,290 | $ | 814,899 | $ | 794,970 | ||||
| Commercial deposits | 432,361 | 412,385 | 414,088 | 423,762 | 429,358 | |||||||||
| Public deposits | 176,844 | 187,698 | 202,175 | 182,172 | 163,734 | |||||||||
| Brokered deposits | 66,654 | 96,796 | 83,936 | 98,259 | 85,173 | |||||||||
| Total deposits | $ | 1,520,667 | $ | 1,519,544 | $ | 1,527,489 | $ | 1,519,092 | $ | 1,473,235 | ||||
Deposit Composition
(in thousands)
| September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||
| Non-interest-bearing demand deposits | $ | 256,840 | $ | 255,703 | $ | 248,537 | $ | 265,704 | $ | 275,790 | ||||
| Interest-bearing demand deposits | 346,971 | 353,477 | 361,278 | 343,276 | 336,962 | |||||||||
| Savings accounts | 169,096 | 170,946 | 177,595 | 176,548 | 183,702 | |||||||||
| Money market accounts | 366,067 | 370,164 | 387,879 | 374,055 | 312,689 | |||||||||
| Certificate accounts | 381,693 | 369,254 | 352,200 | 359,509 | 364,092 | |||||||||
| Total deposits | $ | 1,520,667 | $ | 1,519,544 | 1,527,489 | $ | 1,519,092 | $ | 1,473,235 | |||||
At September 30, 2024, the deposit portfolio composition was 56% consumer, 28% commercial, 12% public, and 4% brokered deposits compared to 54% consumer, 27% commercial, 12% public, and 7% brokered deposits at June 30, 2024.
Uninsured and uncollateralized deposits were $267.1 million, or 18% of total deposits, at September 30, 2024, and $246.7 million, or 16% of total deposits, at June 30, 2024. Uninsured deposits alone at September 30, 2024, were $413.6 million, or 27% of total deposits, and $401.6 million, or 26% of total deposits at June 30, 2024.
Federal Home Loan Bank advances decreased $10.5 million to $21.0 million at September 30, 2024, from $31.5 million one quarter earlier.
Common stock totaling 223 thousand shares were repurchased in the third quarter of 2024 at an average price of $12.91 per share. For the nine-month period ended September 30, 2024, 382 thousand shares of common stock were repurchased at an average price of $12.32 per share. There are 333 thousand shares remaining under the July 2024 Board of Director repurchase authorization plan.
Review of Operations
Net interest income decreased $0.3 million for the current quarter ended September 30, 2024, from $11.6 million for the quarter ended June 30, 2024, and decreased from $12.1 million for the quarter ended September 30, 2023. The decrease in net interest income from the second quarter of 2024 was primarily due to lower non-recurring interest income of $0.2 million recognized from curing technical defaults on performing loans during the prior quarter. The net interest margin declined nine basis points in the third quarter, of which five basis points were due to no interest income recognition from curing technical defaults.
Net interest income and net interest margin analysis:
(in thousands, except yields and rates)
| Three months ended | ||||||||||||||||||||||||||||||||||
| September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||
| As reported | $ | 11,285 | 2.63 | % | $ | 11,576 | 2.72 | % | $ | 11,905 | 2.77 | % | $ | 11,747 | 2.69 | % | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
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