Citizens Community Bancorp Inc 8-K, filed Jan 23, 2023
Citizens Community Bancorp Inc. (CZWI)
8-K
2023-01-23
For: 2023-01-23
View Original
Added on
July 04, 2026
About this 8-K
Citizens Community Bancorp Inc filed this 8-K on January 23, 2023.
Items reported
- Item 2.02: Financial results
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
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 23, 2023
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
| (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||
(Address and Zip Code of principal executive offices)
(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):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
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 23, 2023, Citizens Community Bancorp, Inc. (the “Company”) issued a press release announcing our financial results for the three and twelve months ended December 31, 2022 and posted its Earnings Release Supplement and Earnings Release Presentation to its website. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K, a copy of the Earnings Release Supplement is attached hereto as Exhibit 99.2 and a copy of the Earnings Release Presentation is attached hereto as Exhibit 99.3. The attached Exhibits 99.1, 99.2 and 99.3 are furnished pursuant to Item 2.02 of Form 8-K.
The information in this Item 2.02, Item 9.01 and Exhibits 99.1, 99.2 and 99.3 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of such section, nor shall it be deemed incorporated by reference in any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
Item 8.01. Other Events.
On January 19, 2023, the Board of Directors declared an annual cash dividend of $0.29 per share to shareholders of record as of February 3, 2023, payable on February 17, 2023.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibit is being furnished herewith:
| 104 | The cover page from this Current Report on Form 8-K in Inline XBRL (Extensible Business Reporting Language) | ||||
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 23, 2023 | By: | /s/ James S. Broucek | ||||||||||||
| James S. Broucek | ||||||||||||||
| Chief Financial Officer | ||||||||||||||
EXHIBIT 99.1
Citizens Community Bancorp, Inc. Reports Earnings of $0.45 Per Share in 4Q22
and $1.69 Per Share in 2022;
Net Loan Growth Up 2.6% From Prior Quarter;
Board of Directors Increase Annual Dividend 12% to $0.29 Per Share
EAU CLAIRE, WI, January 23, 2023 - 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 $4.7 million and earnings per diluted share of $0.45 for the quarter ended December 31, 2022, compared to $4.0 million and $0.38 per diluted share for the quarter ended September 30, 2022, and $6.1 million and $0.58 per diluted share for the quarter ended December 31, 2021, respectively. For the fiscal year ended December 31, 2022, earnings were $17.8 million, or $1.69 per diluted share, compared to earnings of $21.3 million, or $1.98 per diluted share for the prior year.
The Company’s fourth quarter 2022 operating results reflected the following changes from the third quarter of 2022: (1) higher non-interest income of $0.4 million due to increases in net gains on investment securities of $0.8 million due to the write-up on equity securities to estimated fair value, partially offset by lower fee income; (2) lower non-interest expense of $0.9 million primarily due to various compensation decreases and gains on sale of repossessed assets; and (3) higher loan loss provision due to loan growth.
“Our fourth quarter results reflect strong loan growth and improved operating efficiencies,” stated Stephen Bianchi, Chairman, President and Chief Executive Officer. “In anticipation of inflationary increases within vendor contracts and higher compensation expense, our team continued to identify expense savings including the closing of two branches during the fourth quarter and one branch during the prior quarter. Net loan growth of 2.6% compared to the linked quarter was solid, although we see annual loan growth moderating to low single digit percentage growth in 2023 and typically Q1 is challenging as winter persists. Higher interest rates also appear to be affecting new project feasibility, but we continue to see unemployment below national averages in our markets and customer attitudes are generally positive about the coming year.”
Book value per share was $16.03 at December 31, 2022, compared to $15.59 at September 30, 2022, and $16.27 at December 31, 2021. Tangible book value per share (non-GAAP)1 was $12.77 at December 31, 2022, compared to $12.32 at September 30, 2022, and $12.90 at December 31, 2021. For the quarter, tangible book value increased by net income and intangible amortization, partially offset by an increase in unrealized losses in the securities available for sale portfolio. These unrealized losses have negatively impacted both book and tangible book value in the second, third and fourth quarters, with the amount of the unrealized loss moderating in the third and fourth quarters of 2022. For the year, net income was mostly offset by the unrealized loss impact on book value resulting in tangible book value per share declining slightly at December 31, 2022 compared to one year earlier.
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December 31, 2022 Highlights: (as of or for the 3-month period ended December 31, 2022 compared to September 30, 2022 and December 31, 2021.)
•Quarterly earnings of $4.7 million, or $0.45 per diluted share for the quarter ended December 31, 2022, increased from the quarter ended September 30, 2022, earnings of $4.0 million or $0.38 per diluted share, and decreased from the quarter ended December 31, 2021, earnings of $6.1 million or $0.58 per diluted share.
•Quarterly earnings, as adjusted (non-GAAP)1, were $5.2 million, or $0.49 per diluted share for the quarter ended December 31, 2022, compared to $4.2 million or $0.40 per diluted share for the quarter ended September 30, 2022, and $6.1 million or $0.58 per diluted share for the fourth quarter ended December 31, 2021.
•Earnings for the year ended December 31, 2022, were $17.8 million, or $1.69 per share, which is a decrease from $21.3 million, or $1.98 per share, for the prior year. The Company grew net interest income, despite lower SBA PPP net loan fee accretion in 2022 compared to 2021. The positive benefit of higher net interest income was more than offset by higher provision for loan losses, lower gain on sale of loans and a modest increase in non-interest expense. The non-interest expense increase in 2022 reflected the new market tax credit depletion and branch closure expenses. Annual earnings as adjusted (non-GAAP)1 were $18.5 million, or $1.76 per diluted share for the year ended December 31, 2022, compared to $21.3 million, or $1.99 per diluted share for the year ended December 31, 2021.
•Net interest income was flat from the third quarter of 2022 at $14.5 million and increased $0.1 million from the fourth quarter of 2021 and $2.7 million for the year ended December 31, 2022, to $56.4 million. Net interest income was positively impacted by loan growth, the contractual increase in loan and investment yields and lower interest expense on debt due to the mid-August redemption of $15 million of 6.75% subordinated debt. Meanwhile, interest expense on deposits and FHLB borrowed funds increased due to repricing of deposits to higher rates and a larger balance of FHLB borrowings.
•The net interest margin without SBA PPP net loan fee accretion and loan purchase accretion was flat relative to the previous quarter, ending seven quarters of net interest margin expansion. For the quarter ended December 31, 2022, the net interest margin without SBA PPP net loan fee accretion and loan purchase accretion was 3.33% compared to 3.09% for the comparable quarter one year earlier.
•The provision for loan losses for the quarter ended December 31, 2022, was $0.70 million due to loan growth, compared to $0.38 million for the quarter ended September 30, 2022, and $1.48 million for the year ended December 31, 2022. No loan loss provision was realized during the quarter ended December 31, 2021, or the year ended December 31, 2021, due to lower CARES Act Section 4013 deferrals, low net charge-off or low net recoveries, decreases in criticized assets and improving economic conditions in our markets.
•The efficiency ratio improved to 61% for the quarter ended December 31, 2022, from 64% for the quarter September 30, 2022.
•Originated loans increased by $46.3 million during the fourth quarter of 2022, with strong originations in commercial real estate, multi-family real estate and residential mortgages held in the loan portfolio. As a result of current market conditions, residential 10/1 ARM loan originations were added to the portfolio. The acquired loan portfolio declined $10.5 million.
•Nonperforming assets were $12.7 million at December 31, 2022 compared to $12.6 million at September 30, 2022.
•Substandard loans decreased by $2.9 million to $17.3 million at December 31, 2022, compared to $20.2 million at September 30, 2022.
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•Special mention loans decreased $8.0 million during the quarter ended December 31, 2022.
•The Company repurchased 58 thousand shares of the Company’s common stock in the fourth quarter. As of December 31, 2022, approximately 243 thousand shares remain available for repurchase under the current share repurchase authorization.
•Stockholders’ equity as a percent of total assets was 9.20% at December 31, 2022, compared to 9.17% at September 30, 2022. Tangible common equity (“TCE”) as a percent of tangible assets (non-GAAP)1 was 7.47% at December 31, 2022, compared to 7.40% at September 30, 2022.
•On January 19, 2023, the Board of Directors declared a $0.29 per share annual dividend, an increase of 12%, to shareholders of record as of February 3, 2023 and payable February 17, 2023.
•In December 2022, a new branch was opened in La Crosse, Wisconsin, bringing the branch count to 23. La Crosse is a market similar to Eau Claire and Mankato and the branch should enhance the efforts of the Company’s commercial bankers already working in that market.
Balance Sheet and Asset Quality
Total assets increased modestly by $36.2 million during the quarter to $1.82 billion at December 31, 2022, compared to $1.78 billion at September 30, 2022.
Securities available for sale decreased $1.8 million during the quarter ended December 31, 2022, to $166.0 million from $167.8 million at September 30, 2022. This decrease was primarily due to principal repayments and a modest reduction in the market value of the portfolio, partially offset by the purchase of bank holding company issued capital instruments of $2.8 million.
Securities held to maturity decreased $1.2 million to $96.4 million during the quarter ended December 31, 2022, from $97.6 million at September 30, 2022, due to principal repayments.
Total loans receivable increased to $1.412 billion at December 31, 2022, from $1.376 billion at September 30, 2022. The originated loan portfolio increased $46.3 million in the quarter. The growth was due to strong loan fundings and growth in the commercial, multi-family and residential real estate portfolios totaling $49.8 million.
The allowance for loan losses increased to $17.9 million at December 31, 2022, representing 1.27% of total loans receivable. At September 30, 2022, the allowance for loan losses was 1.25% of total loans receivable. For the quarter ended December 31, 2022, the Bank had net recoveries of $22 thousand.
Allowance for Loan Losses Percentages
(in thousands, except ratios)
| December 31, 2022 | September 30, 2022 | June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||
| Loans, end of period | $ | 1,411,784 | $ | 1,375,876 | $ | 1,346,855 | $ | 1,310,963 | ||||||||||||||||||
| SBA PPP loans, net of deferred fees | — | — | — | (8,457) | ||||||||||||||||||||||
| Loans, net of SBA PPP loans and deferred fees | $ | 1,411,784 | $ | 1,375,876 | $ | 1,346,855 | $ | 1,302,506 | ||||||||||||||||||
| Allowance for loan losses | $ | 17,939 | $ | 17,217 | $ | 16,825 | $ | 16,913 | ||||||||||||||||||
| ALL as a percentage of loans, end of period | 1.27 | % | 1.25 | % | 1.25 | % | 1.29 | % | ||||||||||||||||||
Nonperforming assets remained relatively flat at $12.7 million or 0.70% of total assets at December 31, 2022, compared to $12.6 million or 0.71% at September 30, 2022, as the sale of a closed branch office was offset by the addition of OREO properties associated with recently closed branch office buildings. Acquired nonaccrual loans
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decreased to $2.3 million at December 31, 2022, from $2.5 million at September 30, 2022. Originated nonperforming assets increased to $10.2 million or 0.56% of total assets for the most recent quarter.
| (in thousands) | ||||||||||||||||||||||||||||||||
| December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||
| Special mention loan balances | $ | 12,170 | $ | 20,178 | $ | 17,274 | $ | 1,849 | $ | 4,536 | ||||||||||||||||||||||
| Substandard loan balances | 17,319 | 20,227 | 20,680 | 24,822 | 22,817 | |||||||||||||||||||||||||||
| Criticized loans, end of period | $ | 29,489 | $ | 40,405 | $ | 37,954 | $ | 26,671 | $ | 27,353 | ||||||||||||||||||||||
Special mention loans decreased $8.0 million, largely due to principal repayments received.
Substandard loans decreased modestly by $2.9 million to $17.3 million at December 31, 2022, compared to $20.2 million at September 30, 2022. The decrease in the fourth quarter was largely due to the payoff of substandard loans.
Deposits decreased $9.6 million to $1.42 billion at December 31, 2022, from $1.43 billion at September 30, 2022. All deposit categories reflected lower balances except certificate of deposit (“CD”) accounts, which increased $36.2 million. The increase partially reflects the addition of $20 million of brokered CD’s. The remaining increase in CD’s was partially due to customers moving savings balances to CD accounts. Commercial deposits fell in the quarter as commercial customers decreased their cash balances to support the needs of their businesses.
The Company repurchased 58 thousand shares of the Company’s common stock in the fourth quarter. As of December 31, 2022, approximately 243 thousand shares remain available for repurchase under the current share repurchase authorization.
Review of Operations
Net interest income remained flat at $14.5 million for the fourth quarter ended December 31, 2022, relative to the quarter ended September 30, 2022, and increased slightly from $14.4 million for the quarter ended December 31, 2021, which included $1.3 million of SBA PPP net loan fee accretion. “Our interest rate risk profile remains neutral with repricing asset yields largely offsetting repricing borrowings and deposits. We expect to see a modest reduction in the net interest margin in the first quarter of 2023, due to end of period CD interest rates at December 31, 2022 exceeding average fourth quarter 2022 CD interest rates by 39 basis points. At December 31, 2022, our 13% on-balance sheet liquidity ratio, along with our almost $260 million FHLB borrowing availability was more than sufficient to offset future funding needs,” said Jim Broucek, Executive Vice President and Chief Financial Officer.
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The table below shows the impact of accretion related to purchased credit impaired loans and SBA PPP net loan fees on interest income and NIM.
Net interest income and net interest margin analysis:
(in thousands, except yields and rates)
| Three months ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 14,478 | 3.40 | % | $ | 14,457 | 3.43 | % | $ | 14,267 | 3.46 | % | $ | 13,167 | 3.25 | % | $ | 14,384 | 3.50 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less non-accretable difference realized as interest from payoff of purchased credit impaired (“PCI”) loans | $ | (109) | (0.02) | % | $ | (34) | (0.01) | % | $ | (70) | (0.02) | % | $ | (26) | (0.01) | % | $ | (2) | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences | $ | (32) | (0.01) | % | $ | (117) | (0.06) | % | $ | (308) | (0.08) | % | $ | (11) | — | % | $ | (200) | (0.05) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less scheduled accretion interest | $ | (169) | (0.04) | % | $ | (247) | (0.03) | % | $ | (255) | (0.06) | % | $ | (264) | (0.07) | % | $ | (264) | (0.06) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Without loan purchase accretion | $ | 14,168 | 3.33 | % | $ | 14,059 | 3.33 | % | $ | 13,634 | 3.30 | % | $ | 12,866 | 3.17 | % | $ | 13,918 | 3.39 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less SBA PPP net loan fee accretion | $ | — | — | % | $ | — | — | % | $ | (39) | (0.01) | % | $ | (259) | (0.06) | % | $ | (1,251) | (0.30) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Without SBA PPP net loan fee accretion and loan purchase accretion | $ | 14,168 | 3.33 | % | $ | 14,059 | 3.33 | % | $ | 13,595 | 3.29 | % | $ | 12,607 | 3.11 | % | $ | 12,667 | 3.09 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan loss provisions for the quarter ended December 31, 2022, were $0.7 million largely reflecting the expanding loan portfolio. Loan loss provisions for the quarters ended September 30, 2022, and June 30, 2022, were $0.4 million, with both quarters helped by reductions in specific reserves due to payoffs on the underlying loans. There were no loan loss provisions for the quarters ended March 31, 2022 or December 31, 2021.
Non-interest income increased to $2.9 million in the quarter ended December 31, 2022, compared to $2.5 million in the quarter ended September 30, 2022, and decreased from $4.4 million in the quarter ended December 31, 2021. The increase in the fourth quarter of 2022, compared to the third quarter of 2022, was largely due to gains on investment securities partially offset by slightly lower service charges on deposit accounts, loan servicing income and loan fees, and service charge income. Relative to the comparable quarter one year earlier, non-interest income was lower as a result of lower gain on sale of loans and lower loan servicing income.
Total non-interest expense decreased $0.9 million in the fourth quarter of 2022 to $10.3 million, compared to $11.3 million for the quarter ended September 30, 2022, and $10.5 million for the quarter ended December 31, 2021. The decrease from the third quarter of 2022 was due to: (1) (a) a decrease in compensation of $0.7 million due to a lower incentive compensation related to the third quarter catch-up accruals of $0.2 million, (b) lower compensation paid due to a lower head count of $0.2 million and (c) some one-time seasonal factors of $0.3 million; (2) a reduction in the amortization of core deposit intangible assets of $0.2 million; and (3) gains on sale of repossessed assets of $0.4 million due to the sale of a closed branch office. Partially offsetting these decreases were increases in other non-interest expense of $0.3 million, due to higher branch closure costs primarily associated with reductions in value of the two closed branches in the quarter of $0.6 million.
Provision for income taxes increased to $1.6 million in the fourth quarter of 2022 from $1.3 million in the third quarter of 2022. The provision for income taxes decreased to $5.8 million for fiscal year 2022 from $7.7 million for fiscal year 2021. The decrease in fiscal year 2022 is due to lower pre-tax income and a lower tax rate due to the impact of the new market tax credit purchased in the first quarter of 2022. The tax credits are expected to be realized over the next seven years. The effective tax rate was 25.6% in the fourth quarter of 2022, compared to 24.3% the previous quarter and
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26.7% for the comparable prior year quarter. The effective tax rate for 2022 was 24.7% compared to 26.6% for the prior year.
These financial results are preliminary until the Form 10-K is filed in March 2023.
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 23 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,” “on pace,” “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 conditions in the financial markets and economic conditions generally; adverse impacts to the Company or Bank arising from the COVID-19 pandemic; acts of terrorism and political or military actions by the United States or other governments; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; higher lending risks associated with our commercial and agricultural banking activities; the sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; disintermediation risk; our ability to maintain our reputation; our ability to maintain or increase our market share; our ability to realize the benefits of net deferred tax assets; our inability to obtain needed liquidity; our ability to raise capital needed to fund growth or meet regulatory requirements; our ability to attract and retain key personnel; our ability to keep pace with technological change; prevalence of fraud and other financial crimes; cybersecurity risks; the possibility that our internal controls and procedures could fail or be circumvented; 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; restrictions on our ability to pay dividends; the potential volatility of our stock price; accounting standards for loan losses; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or Bank; public company reporting obligations; changes in federal or state tax laws; and changes in accounting principles, policies or guidelines and their impact on financial performance. 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, 2021, filed with the Securities and Exchange Commission (“SEC”) on March 2, 2022 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.
1 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, tangible common equity as a percent of tangible assets and return on average tangible common equity, 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 eliminate the impact of certain expenses such as branch closure costs and related severance pay, accelerated depreciation expense and lease termination fees, and the gain on sale of branch deposits and fixed assets. Tangible book value, tangible book value per
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share, tangible common equity as a percent of tangible assets and return on average tangible common equity are non-GAAP measures that eliminate the impact of 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
(CZWI-ER)
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CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
(in thousands, except shares and per share data)
| December 31, 2022 (unaudited) | September 30, 2022 (unaudited) | December 31, 2021 (audited) | ||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 35,363 | $ | 29,411 | $ | 47,691 | ||||||||||||||||||||||||||||||||
| Other interest bearing deposits | 249 | 368 | 1,511 | |||||||||||||||||||||||||||||||||||
| Securities available for sale “AFS” | 165,991 | 167,764 | 203,068 | |||||||||||||||||||||||||||||||||||
| Securities held to maturity “HTM” | 96,379 | 97,610 | 71,141 | |||||||||||||||||||||||||||||||||||
| Equity investments | 1,794 | 1,461 | 1,328 | |||||||||||||||||||||||||||||||||||
| Other investments | 15,834 | 15,907 | 15,305 | |||||||||||||||||||||||||||||||||||
| Loans receivable | 1,411,784 | 1,375,876 | 1,310,963 | |||||||||||||||||||||||||||||||||||
| Allowance for loan losses | (17,939) | (17,217) | (16,913) | |||||||||||||||||||||||||||||||||||
| Loans receivable, net | 1,393,845 | 1,358,659 | 1,294,050 | |||||||||||||||||||||||||||||||||||
| Loans held for sale | — | 666 | 6,670 | |||||||||||||||||||||||||||||||||||
| Mortgage servicing rights, net | 4,262 | 4,371 | 4,161 | |||||||||||||||||||||||||||||||||||
| Office properties and equipment, net | 20,493 | 21,427 | 21,169 | |||||||||||||||||||||||||||||||||||
| Accrued interest receivable | 5,285 | 4,716 | 3,916 | |||||||||||||||||||||||||||||||||||
| Intangible assets | 2,449 | 2,701 | 3,898 | |||||||||||||||||||||||||||||||||||
| Goodwill | 31,498 | 31,498 | 31,498 | |||||||||||||||||||||||||||||||||||
| Foreclosed and repossessed assets, net | 1,271 | 1,584 | 1,408 | |||||||||||||||||||||||||||||||||||
| Bank owned life insurance (“BOLI”) | 24,954 | 24,784 | 24,312 | |||||||||||||||||||||||||||||||||||
| Other assets | 16,719 | 17,275 | 8,502 | |||||||||||||||||||||||||||||||||||
| TOTAL ASSETS | $ | 1,816,386 | $ | 1,780,202 | $ | 1,739,628 | ||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||
| Deposits | $ | 1,424,720 | $ | 1,434,368 | $ | 1,387,535 | ||||||||||||||||||||||||||||||||
| Federal Home Loan Bank (“FHLB”) advances | 142,530 | 102,530 | 111,527 | |||||||||||||||||||||||||||||||||||
| Other borrowings | 72,409 | 72,351 | 58,426 | |||||||||||||||||||||||||||||||||||
| Other liabilities | 9,639 | 7,634 | 11,274 | |||||||||||||||||||||||||||||||||||
| Total liabilities | 1,649,298 | 1,616,883 | 1,568,762 | |||||||||||||||||||||||||||||||||||
| Stockholders’ equity: | ||||||||||||||||||||||||||||||||||||||
| Common stock— $0.01 par value, authorized 30,000,000; 10,425,119, 10,478,210 and 10,502,442 shares issued and outstanding, respectively | 104 | 105 | 105 | |||||||||||||||||||||||||||||||||||
| Additional paid-in capital | 119,240 | 119,638 | 119,925 | |||||||||||||||||||||||||||||||||||
| Retained earnings | 65,400 | 60,833 | 50,675 | |||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive (loss) income | (17,656) | (17,257) | 161 | |||||||||||||||||||||||||||||||||||
| Total stockholders’ equity | 167,088 | 163,319 | 170,866 | |||||||||||||||||||||||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,816,386 | $ | 1,780,202 | $ | 1,739,628 | ||||||||||||||||||||||||||||||||
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, 2022 (unaudited) | September 30, 2022 (unaudited) | December 31, 2021 (unaudited) | December 31, 2022 (unaudited) | December 31, 2021 (audited) | ||||||||||||||||||||||||||||||||||
| Interest and dividend income: | ||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 17,042 | $ | 15,937 | $ | 15,158 | $ | 61,639 | $ | 58,172 | ||||||||||||||||||||||||||||
| Interest on investments | 2,317 | 2,022 | 1,604 | 7,758 | 5,863 | |||||||||||||||||||||||||||||||||
| Total interest and dividend income | 19,359 | 17,959 | 16,762 | 69,397 | 64,035 | |||||||||||||||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||||||||||||||||
| Interest on deposits | 2,695 | 1,681 | 1,261 | 6,429 | 5,850 | |||||||||||||||||||||||||||||||||
| Interest on FHLB borrowed funds | 1,127 | 568 | 388 | 2,303 | 1,572 | |||||||||||||||||||||||||||||||||
| Interest on other borrowed funds | 1,059 | 1,253 | 729 | 4,296 | 2,946 | |||||||||||||||||||||||||||||||||
| Total interest expense | 4,881 | 3,502 | 2,378 | 13,028 | 10,368 | |||||||||||||||||||||||||||||||||
| Net interest income before provision for loan losses | 14,478 | 14,457 | 14,384 | 56,369 | 53,667 | |||||||||||||||||||||||||||||||||
| Provision for loan losses | 700 | 375 | — | 1,475 | — | |||||||||||||||||||||||||||||||||
| Net interest income after provision for loan losses | 13,778 | 14,082 | 14,384 | 54,894 | 53,667 | |||||||||||||||||||||||||||||||||
| Non-interest income: | ||||||||||||||||||||||||||||||||||||||
| Service charges on deposit accounts | 513 | 535 | 470 | 2,018 | 1,726 | |||||||||||||||||||||||||||||||||
| Interchange income | 583 | 597 | 577 | 2,343 | 2,354 | |||||||||||||||||||||||||||||||||
| Loan servicing income | 527 | 611 | 762 | 2,439 | 3,322 | |||||||||||||||||||||||||||||||||
| Gain on sale of loans | 144 | 194 | 1,268 | 1,474 | 5,399 | |||||||||||||||||||||||||||||||||
| Loan fees and service charges | 179 | 267 | 158 | 679 | 705 | |||||||||||||||||||||||||||||||||
| Net gains (losses) on investment securities | 708 | (55) | 879 | 541 | 1,224 | |||||||||||||||||||||||||||||||||
| Other | 219 | 323 | 293 | 936 | 1,094 | |||||||||||||||||||||||||||||||||
| Total non-interest income | 2,873 | 2,472 | 4,407 | 10,430 | 15,824 | |||||||||||||||||||||||||||||||||
| Non-interest expense: | ||||||||||||||||||||||||||||||||||||||
| Compensation and related benefits | 5,241 | 5,900 | 5,987 | 22,128 | 22,723 | |||||||||||||||||||||||||||||||||
| Occupancy | 1,353 | 1,429 | 1,384 | 5,490 | 5,327 | |||||||||||||||||||||||||||||||||
| Data processing | 1,355 | 1,382 | 1,186 | 5,453 | 5,560 | |||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 252 | 399 | 399 | 1,449 | 1,596 | |||||||||||||||||||||||||||||||||
| Mortgage servicing rights expense, net | 157 | 197 | 163 | 222 | 191 | |||||||||||||||||||||||||||||||||
| Advertising, marketing and public relations | 255 | 300 | 409 | 1,017 | 986 | |||||||||||||||||||||||||||||||||
| FDIC premium assessment | 118 | 119 | 156 | 470 | 551 | |||||||||||||||||||||||||||||||||
| Professional services | 555 | 382 | 350 | 1,707 | 1,542 | |||||||||||||||||||||||||||||||||
| Gains on repossessed assets, net | (378) | (8) | (50) | (395) | (199) | |||||||||||||||||||||||||||||||||
| New market tax credit depletion | 162 | 163 | — | 650 | — | |||||||||||||||||||||||||||||||||
| Other | 1,266 | 1,014 | 541 | 3,552 | 2,255 | |||||||||||||||||||||||||||||||||
| Total non-interest expense | 10,336 | 11,277 | 10,525 | 41,743 | 40,532 | |||||||||||||||||||||||||||||||||
| Income before provision for income taxes | 6,315 | 5,277 | 8,266 | 23,581 | 28,959 | |||||||||||||||||||||||||||||||||
| Provision for income taxes | 1,619 | 1,284 | 2,209 | 5,820 | 7,693 | |||||||||||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | 4,696 | $ | 3,993 | $ | 6,057 | $ | 17,761 | $ | 21,266 | ||||||||||||||||||||||||||||
| Per share information: | ||||||||||||||||||||||||||||||||||||||
| Basic earnings | $ | 0.45 | $ | 0.38 | $ | 0.58 | $ | 1.69 | $ | 1.98 | ||||||||||||||||||||||||||||
| Diluted earnings | $ | 0.45 | $ | 0.38 | $ | 0.58 | $ | 1.69 | $ | 1.98 | ||||||||||||||||||||||||||||
| Cash dividends paid | $ | — | $ | — | $ | — | $ | 0.26 | $ | 0.23 | ||||||||||||||||||||||||||||
| Book value per share at end of period | $ | 16.03 | $ | 15.59 | $ | 16.27 | $ | 16.03 | $ | 16.27 | ||||||||||||||||||||||||||||
| Tangible book value per share at end of period (non-GAAP) | $ | 12.77 | $ | 12.32 | $ | 12.90 | $ | 12.77 | $ | 12.90 | ||||||||||||||||||||||||||||
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, 2022 | September 30, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| GAAP pretax income | $ | 6,315 | $ | 5,277 | $ | 8,266 | $ | 23,581 | $ | 28,959 | ||||||||||||||||||||||||||||
| Branch closure costs (1) | 646 | 302 | — | 981 | — | |||||||||||||||||||||||||||||||||
| FHLB borrowings prepayment fee (2) | — | — | — | — | 102 | |||||||||||||||||||||||||||||||||
| Pretax income as adjusted (3) | 6,961 | 5,579 | 8,266 | 24,562 | 29,061 | |||||||||||||||||||||||||||||||||
| Provision for income tax on net income as adjusted (4) | 1,785 | 1,357 | 2,209 | 6,062 | 7,722 | |||||||||||||||||||||||||||||||||
| Net income as adjusted (non-GAAP) (3) | $ | 5,176 | $ | 4,222 | $ | 6,057 | $ | 18,500 | $ | 21,339 | ||||||||||||||||||||||||||||
| GAAP diluted earnings per share, net of tax | $ | 0.45 | $ | 0.38 | $ | 0.58 | $ | 1.69 | $ | 1.98 | ||||||||||||||||||||||||||||
| Branch closure costs, net of tax (5) | 0.04 | 0.02 | — | 0.07 | — | |||||||||||||||||||||||||||||||||
| FHLB borrowings prepayment fee | — | — | — | — | 0.01 | |||||||||||||||||||||||||||||||||
| Diluted earnings per share, as adjusted, net of tax (non-GAAP) | $ | 0.49 | $ | 0.40 | $ | 0.58 | $ | 1.76 | $ | 1.99 | ||||||||||||||||||||||||||||
| Average diluted shares outstanding | 10,460,025 | 10,519,079 | 10,516,130 | 10,513,773 | 10,726,539 | |||||||||||||||||||||||||||||||||
(1) Branch closure costs include severance pay recorded in compensation and benefits and accelerated depreciation expense included in other non-interest expense in the consolidated statement of operations.
(2) FHLB borrowings prepayment fee resulted from the early termination of $8 million in FHLB borrowings at a weighted average rate of 2.19% and weighted average maturity of 8.75 months included in other non-interest expense in the consolidated statement of operations.
(3) Pretax income as adjusted and 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.
(4) Provision for income tax on net income as adjusted is calculated at our effective tax rate for each respective period presented.
(5) Branch closure costs, net of tax is rounded to $0.04 to balance to diluted earnings per share, as adjusted, net of tax (non-GAAP).
10
| Loan Composition (in thousands) | December 31, 2022 | September 30, 2022 | June 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Originated Loans: | ||||||||||||||||||||||||||
| Commercial/Agricultural real estate: | ||||||||||||||||||||||||||
| Commercial real estate | $ | 640,816 | $ | 610,348 | $ | 596,001 | $ | 578,395 | ||||||||||||||||||
| Agricultural real estate | 69,431 | 62,302 | 57,323 | 52,372 | ||||||||||||||||||||||
| Multi-family real estate | 205,601 | 193,758 | 175,964 | 174,050 | ||||||||||||||||||||||
| Construction and land development | 101,681 | 116,147 | 114,017 | 78,613 | ||||||||||||||||||||||
| C&I/Agricultural operating: | ||||||||||||||||||||||||||
| Commercial and industrial | 127,115 | 124,350 | 124,113 | 107,937 | ||||||||||||||||||||||
| Agricultural operating | 23,124 | 20,847 | 20,287 | 26,202 | ||||||||||||||||||||||
| Residential mortgage: | ||||||||||||||||||||||||||
| Residential mortgage | 84,783 | 77,307 | 65,707 | 63,855 | ||||||||||||||||||||||
| Purchased HELOC loans | 3,262 | 3,357 | 3,419 | 3,871 | ||||||||||||||||||||||
| Consumer installment: | ||||||||||||||||||||||||||
| Originated indirect paper | 10,236 | 11,234 | 12,736 | 15,971 | ||||||||||||||||||||||
| Other consumer | 6,894 | 7,016 | 7,472 | 8,473 | ||||||||||||||||||||||
| Originated loans before SBA PPP loans | 1,272,943 | 1,226,666 | 1,177,039 | 1,109,739 | ||||||||||||||||||||||
| SBA PPP loans | — | — | — | 8,755 | ||||||||||||||||||||||
| Total originated loans | $ | 1,272,943 | $ | 1,226,666 | $ | 1,177,039 | $ | 1,118,494 | ||||||||||||||||||
| Acquired Loans: | ||||||||||||||||||||||||||
| Commercial/Agricultural real estate: | ||||||||||||||||||||||||||
| Commercial real estate | $ | 85,155 | $ | 91,340 | $ | 106,916 | $ | 120,070 | ||||||||||||||||||
| Agricultural real estate | 18,477 | 19,405 | 20,484 | 26,123 | ||||||||||||||||||||||
| Multi-family real estate | 3,307 | 3,914 | 3,965 | 4,299 | ||||||||||||||||||||||
| Construction and land development | 811 | 1,703 | 1,171 | 907 | ||||||||||||||||||||||
| C&I/Agricultural operating: | ||||||||||||||||||||||||||
| Commercial and industrial | 8,898 | 10,465 | 14,889 | 14,230 | ||||||||||||||||||||||
| Agricultural operating | 5,682 | 5,186 | 4,182 | 5,386 | ||||||||||||||||||||||
| Residential mortgage: | ||||||||||||||||||||||||||
| Residential mortgage | 20,606 | 21,426 | 22,868 | 27,135 | ||||||||||||||||||||||
| Consumer installment: | ||||||||||||||||||||||||||
| Other consumer | 256 | 294 | 313 | 401 | ||||||||||||||||||||||
| Total acquired loans | $ | 143,192 | $ | 153,733 | $ | 174,788 | $ | 198,551 | ||||||||||||||||||
| Total Loans: | ||||||||||||||||||||||||||
| Commercial/Agricultural real estate: | ||||||||||||||||||||||||||
| Commercial real estate | $ | 725,971 | $ | 701,688 | $ | 702,917 | $ | 698,465 | ||||||||||||||||||
| Agricultural real estate | 87,908 | 81,707 | 77,807 | 78,495 | ||||||||||||||||||||||
| Multi-family real estate | 208,908 | 197,672 | 179,929 | 178,349 | ||||||||||||||||||||||
| Construction and land development | 102,492 | 117,850 | 115,188 | 79,520 | ||||||||||||||||||||||
| C&I/Agricultural operating: | ||||||||||||||||||||||||||
| Commercial and industrial | 136,013 | 134,815 | 139,002 | 122,167 | ||||||||||||||||||||||
| Agricultural operating | 28,806 | 26,033 | 24,469 | 31,588 | ||||||||||||||||||||||
| Residential mortgage: | ||||||||||||||||||||||||||
| Residential mortgage | 105,389 | 98,733 | 88,575 | 90,990 | ||||||||||||||||||||||
| Purchased HELOC loans | 3,262 | 3,357 | 3,419 | 3,871 | ||||||||||||||||||||||
| Consumer installment: | ||||||||||||||||||||||||||
| Originated indirect paper | 10,236 | 11,234 | 12,736 | 15,971 | ||||||||||||||||||||||
| Other consumer | 7,150 | 7,310 | 7,785 | 8,874 | ||||||||||||||||||||||
| Gross loans before SBA PPP loans | $ | 1,416,135 | $ | 1,380,399 | $ | 1,351,827 | $ | 1,308,290 | ||||||||||||||||||
| SBA PPP loans | — | — | — | 8,755 | ||||||||||||||||||||||
| Gross loans | $ | 1,416,135 | $ | 1,380,399 | $ | 1,351,827 | $ | 1,317,045 | ||||||||||||||||||
| Unearned net deferred fees and costs and loans in process | (2,585) | (2,447) | (2,338) | (2,482) | ||||||||||||||||||||||
| Unamortized discount on acquired loans | (1,766) | (2,076) | (2,634) | (3,600) | ||||||||||||||||||||||
| Total loans receivable | $ | 1,411,784 | $ | 1,375,876 | $ | 1,346,855 | $ | 1,310,963 | ||||||||||||||||||
11
Nonperforming Originated and Acquired Assets
(in thousands, except ratios)
| December 31, 2022 | September 30, 2022 | June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||
| Nonperforming assets: | ||||||||||||||||||||||||||
| Originated nonperforming assets: | ||||||||||||||||||||||||||
| Nonaccrual loans | $ | 8,947 | $ | 8,294 | $ | 7,770 | $ | 6,448 | ||||||||||||||||||
| Accruing loans past due 90 days or more | 213 | 169 | 700 | 63 | ||||||||||||||||||||||
| Total originated nonperforming loans (“NPL”) | 9,160 | 8,463 | 8,470 | 6,511 | ||||||||||||||||||||||
| Other real estate owned (“OREO”) | 1,041 | — | — | — | ||||||||||||||||||||||
| Other collateral owned | 6 | — | 10 | 2 | ||||||||||||||||||||||
| Total originated nonperforming assets (“NPAs”) | $ | 10,207 | $ | 8,463 | $ | 8,480 | $ | 6,513 | ||||||||||||||||||
| Acquired nonperforming assets: | ||||||||||||||||||||||||||
| Nonaccrual loans | $ | 2,257 | $ | 2,478 | $ | 2,664 | $ | 5,217 | ||||||||||||||||||
| Accruing loans past due 90 days or more | 33 | 79 | 14 | 97 | ||||||||||||||||||||||
| Total acquired nonperforming loans (“NPL”) | 2,290 | 2,557 | 2,678 | 5,314 | ||||||||||||||||||||||
| Other real estate owned (“OREO”) | 224 | 1,584 | 1,427 | 1,406 | ||||||||||||||||||||||
| Other collateral owned | — | — | — | — | ||||||||||||||||||||||
| Total acquired nonperforming assets (“NPAs”) | $ | 2,514 | $ | 4,141 | $ | 4,105 | $ | 6,720 | ||||||||||||||||||
| Total nonperforming assets (“NPAs”) | $ | 12,721 | $ | 12,604 | $ | 12,585 | $ | 13,233 | ||||||||||||||||||
| Loans, end of period | $ | 1,411,784 | $ | 1,375,876 | $ | 1,346,855 | $ | 1,310,963 | ||||||||||||||||||
| Total assets, end of period | $ | 1,816,386 | $ | 1,780,202 | $ | 1,763,607 | $ | 1,739,628 | ||||||||||||||||||
| Ratios: | ||||||||||||||||||||||||||
| Originated NPLs to total loans | 0.65 | % | 0.61 | % | 0.63 | % | 0.50 | % | ||||||||||||||||||
| Acquired NPLs to total loans | 0.16 | % | 0.19 | % | 0.20 | % | 0.41 | % | ||||||||||||||||||
| Originated NPAs to total assets | 0.56 | % | 0.48 | % | 0.48 | % | 0.37 | % | ||||||||||||||||||
| Acquired NPAs to total assets | 0.14 | % | 0.23 | % | 0.23 | % | 0.39 | % | ||||||||||||||||||
12
Nonperforming Assets
(in thousand, except ratios)
| December 31, 2022 | September 30, 2022 | June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||
| Nonperforming assets: | ||||||||||||||||||||||||||||||||||||||
| Nonaccrual loans | ||||||||||||||||||||||||||||||||||||||
| Commercial real estate | $ | 5,736 | $ | 5,848 | $ | 5,275 | $ | 5,374 | ||||||||||||||||||||||||||||||
| Agricultural real estate | 2,742 | 2,729 | 3,169 | 3,490 | ||||||||||||||||||||||||||||||||||
| Construction and land development | — | 43 | 43 | — | ||||||||||||||||||||||||||||||||||
| Commercial and industrial (“C&I”) | 552 | 188 | 211 | 298 | ||||||||||||||||||||||||||||||||||
| Agricultural operating | 890 | 668 | 555 | 993 | ||||||||||||||||||||||||||||||||||
| Residential mortgage | 1,253 | 1,246 | 1,122 | 1,433 | ||||||||||||||||||||||||||||||||||
| Consumer installment | 31 | 50 | 59 | 77 | ||||||||||||||||||||||||||||||||||
| Total nonaccrual loans | $ | 11,204 | $ | 10,772 | $ | 10,434 | $ | 11,665 | ||||||||||||||||||||||||||||||
| Accruing loans past due 90 days or more | 246 | 248 | 714 | 160 | ||||||||||||||||||||||||||||||||||
| Total nonperforming loans (“NPLs”) | 11,450 | 11,020 | 11,148 | 11,825 | ||||||||||||||||||||||||||||||||||
| Foreclosed and repossessed assets, net | 1,271 | 1,584 | 1,437 | 1,408 | ||||||||||||||||||||||||||||||||||
| Total nonperforming assets (“NPAs”) | $ | 12,721 | $ | 12,604 | $ | 12,585 | $ | 13,233 | ||||||||||||||||||||||||||||||
| Troubled Debt Restructurings (“TDRs”) | $ | 7,788 | $ | 9,336 | $ | 8,712 | $ | 12,523 | ||||||||||||||||||||||||||||||
| Nonaccrual TDRs | $ | 2,617 | $ | 2,426 | $ | 2,549 | $ | 4,539 | ||||||||||||||||||||||||||||||
| Loans, end of period | $ | 1,411,784 | $ | 1,375,876 | $ | 1,346,855 | $ | 1,310,963 | ||||||||||||||||||||||||||||||
| Total assets, end of period | $ | 1,816,386 | $ | 1,780,202 | $ | 1,763,607 | $ | 1,739,628 | ||||||||||||||||||||||||||||||
| Ratios: | ||||||||||||||||||||||||||||||||||||||
| NPLs to total loans | 0.81 | % | 0.80 | % | 0.83 | % | 0.90 | % | ||||||||||||||||||||||||||||||
| NPAs to total assets | 0.70 | % | 0.71 | % | 0.71 | % | 0.76 | % | ||||||||||||||||||||||||||||||
Deposit Composition
(in thousands)
| December 31, 2022 | September 30, 2022 | June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||
| Non-interest bearing demand deposits | $ | 284,722 | $ | 285,670 | $ | 276,815 | $ | 276,631 | ||||||||||||||||||
| Interest bearing demand deposits | 371,210 | 394,924 | 401,857 | 396,231 | ||||||||||||||||||||||
| Savings accounts | 220,019 | 236,107 | 239,322 | 222,674 | ||||||||||||||||||||||
| Money market accounts | 323,435 | 328,544 | 328,718 | 288,985 | ||||||||||||||||||||||
| Certificate accounts | 225,334 | 189,123 | 153,498 | 203,014 | ||||||||||||||||||||||
| Total deposits | $ | 1,424,720 | $ | 1,434,368 | $ | 1,400,210 | $ | 1,387,535 | ||||||||||||||||||
13
Average Balances, Interest Yields and Rates
(in thousands, except yields and rates)
| Three Months Ended December 31, 2022 | Three Months Ended September 30, 2022 | Three Months Ended December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 8,134 | $ | 88 | 4.29 | % | $ | 11,043 | $ | 60 | 2.16 | % | $ | 45,758 | $ | 15 | 0.13 | % | ||||||||||||||||||||||||||||||||||||||
| Loans receivable | 1,399,244 | 17,041 | 4.83 | % | 1,370,897 | 15,937 | 4.61 | % | 1,271,956 | 15,158 | 4.73 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing deposits | 337 | 2 | 2.35 | % | 1,079 | 7 | 2.57 | % | 1,512 | 8 | 2.10 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Investment securities (1) | 264,064 | 1,990 | 3.01 | % | 274,868 | 1,768 | 2.57 | % | 296,444 | 1,404 | 1.88 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Other investments | 15,783 | 238 | 5.98 | % | 14,910 | 187 | 4.98 | % | 15,081 | 177 | 4.66 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest earning assets (1) | $ | 1,687,562 | $ | 19,359 | 4.55 | % | $ | 1,672,797 | $ | 17,959 | 4.26 | % | $ | 1,630,751 | $ | 16,762 | 4.08 | % | ||||||||||||||||||||||||||||||||||||||
| Average interest bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings accounts | $ | 217,537 | $ | 307 | 0.56 | % | $ | 227,985 | $ | 204 | 0.36 | % | $ | 217,460 | $ | 92 | 0.17 | % | ||||||||||||||||||||||||||||||||||||||
| Demand deposits | 379,011 | 836 | 0.88 | % | 413,033 | 575 | 0.55 | % | 384,477 | 259 | 0.27 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Money market accounts | 316,791 | 710 | 0.89 | % | 331,469 | 519 | 0.62 | % | 288,683 | 207 | 0.28 | % | ||||||||||||||||||||||||||||||||||||||||||||
| CD’s | 180,146 | 773 | 1.70 | % | 136,624 | 335 | 0.97 | % | 183,137 | 607 | 1.31 | % | ||||||||||||||||||||||||||||||||||||||||||||
| IRA’s | 33,600 | 69 | 0.81 | % | 34,446 | 48 | 0.55 | % | 38,453 | 96 | 0.99 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total deposits | $ | 1,127,085 | $ | 2,695 | 0.95 | % | $ | 1,143,557 | $ | 1,681 | 0.58 | % | $ | 1,112,210 | $ | 1,261 | 0.45 | % | ||||||||||||||||||||||||||||||||||||||
| FHLB advances and other borrowings | 212,051 | 2,186 | 4.09 | % | 192,338 | 1,821 | 3.76 | % | 170,475 | 1,117 | 2.60 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | $ | 1,339,136 | $ | 4,881 | 1.45 | % | $ | 1,335,895 | $ | 3,502 | 1.04 | % | $ | 1,282,685 | $ | 2,378 | 0.74 | % | ||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 14,478 | $ | 14,457 | $ | 14,384 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate spread | 3.10 | % | 3.22 | % | 3.34 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin (1) | 3.40 | % | 3.43 | % | 3.50 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Average interest earning assets to average interest bearing liabilities | 1.26 | 1.25 | 1.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(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, 2022, September 30, 2022 and December 31, 2021. The FTE adjustment to net interest income included in the rate calculations totaled $0, $0 and $0 thousand for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively.
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| Twelve Months Ended December 31, 2022 | Twelve Months Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||
| 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 | $ | 19,796 | $ | 203 | 1.03 | % | $ | 99,839 | $ | 122 | 0.12 | % | ||||||||||||||||||||||||||
| Loans receivable | 1,351,052 | 61,639 | 4.56 | % | 1,216,244 | 58,172 | 4.78 | % | ||||||||||||||||||||||||||||||
| Interest bearing deposits | 1,106 | 24 | 2.17 | % | 2,047 | 45 | 2.20 | % | ||||||||||||||||||||||||||||||
| Investment securities (1) | 278,056 | 6,767 | 2.43 | % | 271,715 | 5,009 | 1.84 | % | ||||||||||||||||||||||||||||||
| Other investments | 15,230 | 764 | 5.02 | % | 15,025 | 687 | 4.57 | % | ||||||||||||||||||||||||||||||
| Total interest earning assets (1) | $ | 1,665,240 | $ | 69,397 | 4.17 | % | $ | 1,604,870 | $ | 64,035 | 3.99 | % | ||||||||||||||||||||||||||
| Average interest bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
| Savings accounts | $ | 225,204 | $ | 730 | 0.32 | % | $ | 212,867 | $ | 369 | 0.17 | % | ||||||||||||||||||||||||||
| Demand deposits | 403,289 | 1,881 | 0.47 | % | 367,103 | 1,047 | 0.29 | % | ||||||||||||||||||||||||||||||
| Money market accounts | 317,879 | 1,721 | 0.54 | % | 269,620 | 783 | 0.29 | % | ||||||||||||||||||||||||||||||
| CD’s | 153,085 | 1,853 | 1.21 | % | 224,708 | 3,200 | 1.42 | % | ||||||||||||||||||||||||||||||
| IRA’s | 35,192 | 244 | 0.69 | % | 39,699 | 451 | 1.14 | % | ||||||||||||||||||||||||||||||
| Total deposits | $ | 1,134,649 | $ | 6,429 | 0.57 | % | $ | 1,113,997 | $ | 5,850 | 0.53 | % | ||||||||||||||||||||||||||
| FHLB advances and other borrowings | 189,274 | 6,599 | 3.49 | % | 173,029 | 4,518 | 2.61 | % | ||||||||||||||||||||||||||||||
| Total interest bearing liabilities | $ | 1,323,923 | $ | 13,028 | 0.98 | % | $ | 1,287,026 | $ | 10,368 | 0.81 | % | ||||||||||||||||||||||||||
| Net interest income | $ | 56,369 | $ | 53,667 | ||||||||||||||||||||||||||||||||||
| Interest rate spread | 3.19 | % | 3.18 | % | ||||||||||||||||||||||||||||||||||
| Net interest margin (1) | 3.39 | % | 3.34 | % | ||||||||||||||||||||||||||||||||||
| Average interest earning assets to average interest bearing liabilities | 1.26 | 1.25 | ||||||||||||||||||||||||||||||||||||
(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, 2022 and December 31, 2021. The FTE adjustment to net interest income included in the rate calculations totaled $1 and $3 thousand for the twelve months ended December 31, 2022 and December 31, 2021, respectively.
15
The following table reports key financial metric ratios based on a net income as adjusted basis:
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
| Ratios based on net income: | |||||||||||||||||||||||||||||||||||||||||||||||
| Return on average assets (annualized) | 1.03 | % | 0.89 | % | 1.37 | % | 1.00 | % | 1.23 | % | |||||||||||||||||||||||||||||||||||||
| Return on average equity (annualized) | 11.32 | % | 9.57 | % | 14.29 | % | 10.70 | % | 12.97 | % | |||||||||||||||||||||||||||||||||||||
Return on average tangible common equity4 (annualized) | 14.85 | % | 12.99 | % | 19.00 | % | 14.36 | % | 17.56 | % | |||||||||||||||||||||||||||||||||||||
| Efficiency ratio | 61 | % | 64 | % | 57 | % | 61 | % | 57 | % | |||||||||||||||||||||||||||||||||||||
| Net interest margin with loan purchase accretion | 3.40 | % | 3.43 | % | 3.50 | % | 3.39 | % | 3.34 | % | |||||||||||||||||||||||||||||||||||||
| Net interest margin without loan purchase accretion | 3.33 | % | 3.33 | % | 3.39 | % | 3.29 | % | 3.25 | % | |||||||||||||||||||||||||||||||||||||
| Ratios based on net income as adjusted (non-GAAP) | |||||||||||||||||||||||||||||||||||||||||||||||
Return on average assets as adjusted2 (annualized) | 1.14 | % | 0.94 | % | 1.37 | % | 1.04 | % | 1.24 | % | |||||||||||||||||||||||||||||||||||||
Return on average equity as adjusted3 (annualized) | 12.47 | % | 10.12 | % | 14.29 | % | 11.15 | % | 13.01 | % | |||||||||||||||||||||||||||||||||||||
Reconciliation of Return on Average Assets as Adjusted (non-GAAP)
(in thousands, except ratios)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
| GAAP earnings after income taxes | $ | 4,696 | $ | 3,993 | $ | 6,057 | $ | 17,761 | $ | 21,266 | |||||||||||||||||||||||||||||||||||||
| Net income as adjusted after income taxes (non-GAAP) (1) | $ | 5,176 | $ | 4,222 | $ | 6,057 | $ | 18,500 | $ | 21,339 | |||||||||||||||||||||||||||||||||||||
| Average assets | $ | 1,803,155 | $ | 1,780,942 | $ | 1,751,609 | $ | 1,775,049 | $ | 1,722,483 | |||||||||||||||||||||||||||||||||||||
| Return on average assets (annualized) | 1.03 | % | 0.89 | % | 1.37 | % | 1.00 | % | 1.23 | % | |||||||||||||||||||||||||||||||||||||
| Return on average assets as adjusted (non-GAAP) (annualized) | 1.14 | % | 0.94 | % | 1.37 | % | 1.04 | % | 1.24 | % | |||||||||||||||||||||||||||||||||||||
(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, 2022 | September 30, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||
| GAAP earnings after income taxes | $ | 4,696 | $ | 3,993 | $ | 6,057 | $ | 17,761 | $ | 21,266 | ||||||||||||||||||||||
| Net income as adjusted after income taxes (non-GAAP) (1) | $ | 5,176 | $ | 4,222 | $ | 6,057 | $ | 18,500 | $ | 21,339 | ||||||||||||||||||||||
| Average equity | $ | 164,621 | $ | 165,528 | $ | 168,165 | $ | 165,921 | $ | 163,987 | ||||||||||||||||||||||
| Return on average equity (annualized) | 11.32 | % | 9.57 | % | 14.29 | % | 10.70 | % | 12.97 | % | ||||||||||||||||||||||
| Return on average equity as adjusted (non-GAAP) (annualized) | 12.47 | % | 10.12 | % | 14.29 | % | 11.15 | % | 13.01 | % | ||||||||||||||||||||||
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
16
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, 2022 | September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||
| Total stockholders’ equity | $ | 167,088 | $ | 163,319 | $ | 170,866 | ||||||||||||||||||||||||||||||||
| Less: Goodwill | (31,498) | (31,498) | (31,498) | |||||||||||||||||||||||||||||||||||
| Less: Intangible assets | (2,449) | (2,701) | (3,898) | |||||||||||||||||||||||||||||||||||
| Tangible common equity (non-GAAP) | $ | 133,141 | $ | 129,120 | $ | 135,470 | ||||||||||||||||||||||||||||||||
| Ending common shares outstanding | 10,425,119 | 10,478,210 | 10,502,442 | |||||||||||||||||||||||||||||||||||
| Book value per share | $ | 16.03 | $ | 15.59 | $ | 16.27 | ||||||||||||||||||||||||||||||||
| Tangible book value per share (non-GAAP) | $ | 12.77 | $ | 12.32 | $ | 12.90 | ||||||||||||||||||||||||||||||||
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, 2022 | September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||
| Total stockholders’ equity | $ | 167,088 | $ | 163,319 | $ | 170,866 | ||||||||||||||||||||||||||||||||
| Less: Goodwill | (31,498) | (31,498) | (31,498) | |||||||||||||||||||||||||||||||||||
| Less: Intangible assets | (2,449) | (2,701) | (3,898) | |||||||||||||||||||||||||||||||||||
| Tangible common equity (non-GAAP) | $ | 133,141 | $ | 129,120 | $ | 135,470 | ||||||||||||||||||||||||||||||||
| Total Assets | $ | 1,816,386 | $ | 1,780,202 | $ | 1,739,628 | ||||||||||||||||||||||||||||||||
| Less: Goodwill | (31,498) | (31,498) | (31,498) | |||||||||||||||||||||||||||||||||||
| Less: Intangible assets | (2,449) | (2,701) | (3,898) | |||||||||||||||||||||||||||||||||||
| Tangible Assets (non-GAAP) | $ | 1,782,439 | $ | 1,746,003 | $ | 1,704,232 | ||||||||||||||||||||||||||||||||
| Total stockholders’ equity to total assets ratio | 9.20 | % | 9.17 | % | 9.82 | % | ||||||||||||||||||||||||||||||||
| Tangible common equity as a percent of tangible assets (non-GAAP) | 7.47 | % | 7.40 | % | 7.95 | % | ||||||||||||||||||||||||||||||||
Reconciliation of Return on Average Tangible Common Equity (non-GAAP)
(in thousands, except ratios)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total stockholders’ equity | $ | 167,088 | $ | 163,319 | $ | 170,866 | $ | 167,088 | $ | 170,866 | ||||||||||||||||||||||||||||||||||||||||
| Less: Goodwill | (31,498) | (31,498) | (31,498) | (31,498) | (31,498) | |||||||||||||||||||||||||||||||||||||||||||||
| Less: Intangible assets | (2,449) | (2,701) | (3,898) | (2,449) | (3,898) | |||||||||||||||||||||||||||||||||||||||||||||
| Tangible common equity (non-GAAP) | $ | 133,141 | $ | 129,120 | $ | 135,470 | $ | 133,141 | $ | 135,470 | ||||||||||||||||||||||||||||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 130,577 | $ | 131,130 | $ | 132,569 | $ | 131,305 | $ | 127,793 | ||||||||||||||||||||||||||||||||||||||||
| GAAP earnings after income taxes | $ | 4,696 | $ | 3,993 | $ | 6,057 | $ | 17,761 | $ | 21,266 | ||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets, net of tax | 190 | 302 | 292 | 1,095 | 1,171 | |||||||||||||||||||||||||||||||||||||||||||||
| Tangible net income | $ | 4,886 | $ | 4,295 | $ | 6,349 | $ | 18,856 | $ | 22,437 | ||||||||||||||||||||||||||||||||||||||||
| Return on average tangible common equity (annualized) | 14.85 | % | 12.99 | % | 19.00 | % | 14.36 | % | 17.56 | % | ||||||||||||||||||||||||||||||||||||||||
17
Reconciliation of Efficiency Ratio
(in thousands, except ratios)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest expense (GAAP) | $ | 10,336 | $ | 11,277 | $ | 10,525 | $ | 41,743 | $ | 40,532 | ||||||||||||||||||||||||||||||||||||||||
| Less amortization of intangibles | (252) | (399) | (399) | (1,449) | (1,596) | |||||||||||||||||||||||||||||||||||||||||||||
| Efficiency ratio numerator (GAAP) | $ | 10,084 | $ | 10,878 | $ | 10,126 | $ | 40,294 | $ | 38,936 | ||||||||||||||||||||||||||||||||||||||||
| Non-interest income | $ | 2,873 | $ | 2,472 | $ | 4,407 | $ | 10,430 | $ | 15,824 | ||||||||||||||||||||||||||||||||||||||||
| Loss (Gain) on investment securities | (708) | 55 | (879) | (541) | (1,224) | |||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 14,478 | 14,457 | 14,384 | 56,369 | 53,667 | |||||||||||||||||||||||||||||||||||||||||||||
| Efficiency ratio denominator (GAAP) | $ | 16,643 | $ | 16,984 | $ | 17,912 | $ | 66,258 | $ | 68,267 | ||||||||||||||||||||||||||||||||||||||||
| Efficiency ratio (GAAP) | 61 | % | 64 | % | 57 | % | 61 | % | 57 | % | ||||||||||||||||||||||||||||||||||||||||
1Net income as adjusted and net income as adjusted per share are non-GAAP financial measures 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)”.
4Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on tangible common equity are non-GAAP measures 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)”, “Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)”, and “Reconciliation of return on average tangible common equity)”.
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EXHIBIT 99.2 Earnings Release Supplement Fourth Quarter 2022
Citizens Community Bancorp, Inc. Table of Contents Cautionary Notes and Additional Disclosures Non‐Owner Occupied CRE Owner Occupied CRE Multi‐family Commercial & Industrial Loans Construction & Development Loans Agricultural Real Estate & Operating Loans Hotel Loans Restaurant Loans Campground Loans Credit Quality/Risk Rating Descriptions Loans by Risk Rating as of December 31, 2022 Loans by Risk Rating as of September 30, 2022 Loans by Risk Rating as of December 31, 2021 Allowance for Loan Losses Delinquency as of December 31, 2022, and September 30, 2022 Delinquency as of June 30, 2022, and December 31, 2021 Nonaccrual Loans Roll forward Other Real Estate Owned Roll forward Troubled Debt Restructurings in Accrual Status Acquired Loans – Non‐Accretable Difference and Accretable Discount Tables SBA PPP loans and SBA PPP net deferred loan fee accretion by year of origination Earnings Per Share Selected Capital Composition Highlights – Bank and Company Page(s) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 19 19 20 21 22 23 1
Cautionary Notes and Additional Disclosures DATES AND PERIODS PRESENTED In this earnings release financial supplement, unless otherwise noted, “20YY” refers to either the corresponding fiscal year-end date or the corresponding 12-months (i.e. fiscal year) then ended. “MMM-YY” refers to either the corresponding quarter-end date, or the corresponding three-month period then ended. CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This earnings release financial supplement may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, descriptions of the financial condition, results of operations, asset and credit quality trends, profitability, projected earnings, future plans, strategies and expectations of Citizens Community Bancorp, Inc. (“CZWI” or the “Company”) and its subsidiary, Citizens Community Federal, National Association (“CCFBank”). The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions of the Company, are generally identifiable by use of the words “believe,” “expect,” “estimates,” “intend,” “anticipate,” “estimate,” “project,” “on pace,” “seek,” “target,” “potential,” “focus,” “may,” “preliminary,” “could,” “should” or similar expressions. These forward-looking statements express management’s current expectations or forecasts of future events, and by their nature, are subject to risks and uncertainties. Therefore, there are a number of factors that might cause actual results to differ materially from those in such statements. These uncertainties include conditions in the financial markets and economic conditions generally; adverse impacts to the Company or CCFBank arising from the COVID-19 pandemic; acts of terrorism and political or military actions by the United States or other governments; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; higher lending risks associated with our commercial and agricultural banking activities; the sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; disintermediation risk; our ability to maintain our reputation; our ability to maintain or increase our market share; our ability to realize the benefits of net deferred tax assets; our inability to obtain needed liquidity; our ability to raise capital needed to fund growth or meet regulatory requirements; our ability to attract and retain key personnel; our ability to keep pace with technological change; prevalence of fraud and other financial crimes; cybersecurity risks; the possibility that our internal controls and procedures could fail or be circumvented; 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; restrictions on our ability to pay dividends; the potential volatility of our stock price; accounting standards for loan losses; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or CCFBank; public company reporting obligations; changes in federal or state tax laws; and changes in accounting principles, policies or guidelines and their impact on financial performance. 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, 2021, filed with the Securities and Exchange Commission (“SEC”) on March 2, 2022, the Company’s Forms 10-Q for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022 filed with the SEC on May 4, 2022, August 4, 2022, and November 7, 2022, respectively, and the Company's subsequent filings with the SEC. The Company undertakes no obligation to make any revisions to the forward-looking statements contained herein or to update them to reflect events or circumstances occurring after the date hereof. NON-GAAP FINANCIAL MEASURES This earnings release financial supplement contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Non-GAAP financial measures referred to herein include net income as adjusted, return on average equity as adjusted, and return on average assets as adjusted. Reconciliations of all non-GAAP financial measures used herein to the comparable GAAP financial measures in the appendix at the end of this presentation. 2
Portfolio Fundamentals 64% 31% 5% Wisconsin Minnesota Other By Geography As of 12/31/22 • Typically well seasoned investors with multiple projects, track record of success and personal financial strength (net worth/Liquidity) • Maximum LTV =<80% with recourse to owners with >20% interest • Term of 5‐10 years with 20 to 25‐year amortizations depending on property type, markets and strength and liquidity of sponsors • Minimum DSC and/or Global DSC covenant required to monitor performance ranging from 1.15x‐1.25x • Conservative underwriting approach emphasizing actual results or market data • Appropriate use of SBA 504/7a for lower cash injection or special use projects Non – Owner Occupied CRE 12/31/2022 9/30/2022 $449 $456 766 769 $587 $593 Approximate Weighted Average LTV 62% 62% 26 26 Trailing 12 Month Net Charge‐Offs 0.02% 0.03% $11.6 $12.0 2.6% 2.6% Weighted Average Seasoning In Months Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Thousands Portfolio Characteristics ‐ Non‐Owner Occupied CRE As of Criticized Loans Millions Criticized Loans as a Percent of Total 23% 21% 12% 11% 10% 8% 5% 5% 3% 2% Investor Residential Hotel CRE ‐ Retail CRE ‐ Senior Living CRE ‐ Office CRE ‐ Warehouse/Mini Storage CRE ‐ Industrial/Manufacturing CRE ‐ Campground CRE ‐ Mixed Use Other Non – Owner Occupied CRE As of 12/31/22 3
17% 15% 14% 10% 9% 8% 8% 7% 12% CRE Campground CRE Industrial/Manufacturing CRE Restaurant CRE Senior Living CRE Retail CRE Mixed Use CRE Warehouse/Mini Storage CRE Office Other Owner Occupied CRE As of 12/31/22 Portfolio Fundamentals 75% 10% 3% 3% 9% Wisconsin Minnesota Pennsylvania Maryland Other By Geography As of 12/31/22 • Underwritten to <80% LTV based on appraised value (<75% for Restaurant) • Term of 5‐10 years with 20‐year amortization • Recourse to owners with greater than 20% interest • DSC covenant of 1.25x on project and/or Global DSC of 1.15x • Appropriate use of SBA 504/7a for lower cash injection or special use projects • By Geography “Other” segment includes borrowers with warm climates, no income tax states Owner Occupied CRE 12/31/2022 9/30/2022 $277 $245 425 418 $651 $587 Approximate Weighted Average LTV 52% 50% 29 29 Trailing 12 Month Net Charge‐Offs 0.00% 0.00% $1.7 $2.6 0.6% 1.1%Criticized Loans as a Precent of Total Weighted Average Seasoning In Months Criticized Loans In Millions Portfolio Characteristics ‐ Owner Occupied CRE Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Thousands As of 4
Portfolio Fundamentals 63% 36% 1% Wisconsin Minnesota Other By Geography As of 12/31/22 20% 43% 23% 4% 8% 2% 2022 2021 2020 2019 2018 Prior By Vintage As of 12/31/22 • Robust housing markets in Eau Claire and Mankato markets supported by student populations at state universities, technical colleges, and growing population and job markets • Multi‐family sponsors experienced owners with multi‐project portfolios • Typically underwritten to 75% LTV based on appraised value with recourse; metro markets and/or strong sponsors may warrant up to 80% LTV • Generally, term of 5‐10 years with 20 to 25‐year amortization (varies by new versus existing, size of market and sponsor strength) • Covenant for minimum DSC/Global DSC Multi-family 12/31/2022 9/30/2022 $209 $198 120 117 $1.74 $1.69 64% 64% Weighted Average Seasoning In Months 22 20 0% 0% $0.0 $0.3 0.0% 0.2%Criticized Loans as a Percent of Total Approximate Weighted Average LTV Trailing 12 Month Net Charge‐Offs Criticized Loans in Millions Portfolio Characteristics ‐ Multi‐family Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Millions As of 5
89% 10% 1% Wisconsin Minnesota Other By Geography As of 12/31/22 18% 18% 12%11% 6% 5% 5% 4% 4% 4% 3% 3% 2% 5% Manufacturing Finance and Insurance Transportation and Warehousing Wholesale Trade Public Admin Real Estate, Rental and Leasing Administrative Support Construction Agriculture Education Services Retail Trade Health Care Other Services Other Commercial & Industrial As of 12/31/22 • Highly diversified, secured loan portfolio underwritten with recourse • Lines of credit reviewed annually and may have borrowing base certificates governing line usage • Fixed asset LTV’s based on age and type of equipment; <5‐year amortization • Use of SBA Guaranty Program (Preferred Lender or General Processing) as appropriate • “Retail Trade” segment consists of Farm Supply, Franchised Hardware, Franchised Auto Parts, Franchised and Non‐franchised Auto Dealers and Repair Shops, Convenience Stores/Gas Stations Commercial & Industrial Loans 12/31/2022 9/30/2022 $136 $135 673 680 $202 $198 26 31 0.08% 0.01% $67 $64 $6.3 $15.1 Criticized Loans as a Precent of Total 4.6% 11.2% Criticized Loans In Millions Weighted Average Seasoning In Months Trailing 12 Month Net Charge‐Offs Committed Line, if collateral In Millions Portfolio Characteristics ‐ Commercial & Industrial Loan Balance In Millions Number of Loans Average Loan Size In Thousands As of Portfolio Fundamentals 6
Portfolio Fundamentals 22% 20% 17% 16% 6% 5% 3% 3% 8% Warehouse/Mini Campgrounds Multi‐Family 1‐4 Family Hospitality Land Mixed Use Retail Other Commercial & Development As of 12/31/22 33% 20%14% 11% 6% 5% 5% 6% Wisconsin Minnesota South Dakota Iowa Illinois Ohio Florida Other By Geography As of 12/31/22 • Underwritten to 75‐80% LTV based on lesser of cost or appraised value with full recourse • Interest only typically up to 18 months (depending on project complexity and seasonal timing) followed by amortization of 15‐25 years (terms vary by property type) • Borrower equity contribution of cash/land value =>15% injected at the beginning of project (cash/land contribution) • Construction loans require 3rd party inspections and title company draws after balancing to sworn construction statement • 1‐4 residential construction centered in eastern Twin Cities and Northwest Wisconsin. Generally, 80% LTC /60%‐80% of AV. Spec building capped. Progress reporting monthly by individual home Construction & Development Loans 12/31/2022 9/30/2022 Loan Balance Outstanding In Millions $102 $118 Number of Loans 122 128 Average Loan Size In Thousands $840 $921 Approximate Weighted Average LTV 54% 58% Trailing 12 Month Net Charge‐Offs 0.00% 0.00% Percent Utilized of Commitments 54% 55% $0.1 $0.2 Criticized Loans as a Percent of Total 0.1% 0.1% Portfolio Characteristics ‐ Construction & Development As of Criticized Loans in Millions 7
36% 25% 17% 22% Crop Other Farming Dairy Other Agricultural As of 12/31/22 Portfolio Fundamentals 72% 25% 3% Wisconsin Minnesota Other By Geography As of 12/31/22 • Producers required to have marketing plans to mitigate volatility of commodities • Appropriate crop/revenue insurance and/or dairy margin protection required • Maximum ag RE LTV of less than 65%; equipment LTV of less than 75% • Appropriate structuring to separate crop production cycles and to match length of loan with asset financed • Use of Farmer Mac, FSA, SBA or USDA programs to address DSC, collateral margins or working capital • Operating and ag loan relationships are typically cross collateralized Agricultural Real Estate & Operating Loans 12/31/2022 9/30/2022 $117 $108 523 535 $223 $201 32 32 0.15% 0.14% Criticized Loans in Millions $6.1 $6.2 5.2% 5.7%Criticized Loans as a Percent of Total Weighted Average Seasoning In Months Trailing 12 Month Net Charge‐Offs Portfolio Characteristics ‐ Agricultural Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Thousands As of 8
64% 28% 8% Limited Service Full Service Other Hotels As of 12/31/22 Portfolio Fundamentals 38% 46% 16% Minnesota Wisconsin Illinois By Geography As of 12/31/22 • Mainly experienced multi project hoteliers and guarantors with strong personal financial statements (net worth and liquidity) • Mainly flagged/franchised limited stay properties • Underwriting consistent with management's conservative approach to Investor CRE, emphasizing actual results in underwriting Hotel Loans 12/31/2022 9/30/2022 $92 $93 26 26 $3.5 $3.6 57% 57% 0.00% 0.00% Criticized Loans in Millions $6.0 $6.2 6.5% 6.7%Criticized Loans as a Precent of Total As of Number of Loans Trailing 12 Month Net Charge Offs Portfolio Characteristics ‐ Hotels Loan Balance Outstanding In Millions Average Loan Size In Millions Approximate Weighted Average LTV 9
67% 15% 7% 4%3% 4% Culver's ‐ Limited Service Restaurants Other National Limited Services Drinking Establishments Bowling Centers Other Restaurants As of 12/31/22 Portfolio Fundamentals 45% 33% 22% Wisconsin Minnesota Other By Geography As of 12/31/22 • Experienced developers/operators of national Limited /Quick Service brands (Culver’s, Subway, Dairy Queen, McDonalds, Jimmy John’s, A&W) • Underwritten to =<80% LTV with full recourse (depending on sponsor history); 20‐year amortization with 5 to 10‐year terms • Use of SBA Guaranty Program (Preferred Lender or General Processing) as appropriate • Drinking establishments may have other collateral pledged and tend to be in smaller communities in our footprint • Lessors of RE include investor and owner‐occupied structure Restaurant Loans 12/31/2022 9/30/2022 $48 $48 74 76 $655 $631 55% 55% 0.00% 0.00% Criticized Loans In Millions $0.8 $0.8 1.7% 1.7%Criticized Loans as a Percent of Total Portfolio Characteristics ‐ Restaurants As of Trailing 12 Month Net Charge‐Offs Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Thousands Approximate Weighted Average LTV 10
20% 31% 34% 4% 4% 7% 2022 2021 2020 2017 2016 Prior By Vintage As of 12/31/22 Portfolio Fundamentals 21% 14% 11% 9%7% 6% 6% 5% 4% 4% 4%4% 5% Wisconsin Ohio Maryland Pennsylvania Utah Kentucky Illinois New York Tennessee Iowa New Jersey South Carolina Other By Geography As of 12/31/22 • Experienced multi‐unit operators and owner‐occupied franchised campgrounds (typically Jellystone Park) • Grounds offer a mix of camping, RV and cabin options with recreational amenities • Park locations within reasonable proximity of metropolitan areas and/or near national and state parks • Underwritten with recourse generally with 5‐10 year terms and 20 year amortization • Use of SBA 7a and 504, or other government guaranteed loan programs as appropriate • 20+ years of history through CCF acquisition with no charge‐off history Campground Loans 12/31/2022 9/30/2022 $87 $80 48 49 $1.8 $1.6 46% 45% 27 28 0.00% 0.00% $0.0 $0.0 Criticized Loans as a Percent of Total 0.0% 0.0% Portfolio Characteristics ‐ Campgrounds As of Weighted Average Seasoning in Months Criticized Loans in Millions Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Millions Approximate Weighted Average LTV Trailing 12 Month Net Charge‐Offs 11
Credit Quality/Risk Ratings: Management utilizes a numeric risk rating system to identify and quantify the Bank’s risk of loss within its loan portfolio. Ratings are initially assigned prior to funding the loan, and may be changed at any time as circumstances warrant. Ratings range from the highest to lowest quality based on factors that include measurements of ability to pay, collateral type and value, borrower stability and management experience. The Bank’s loan portfolio is presented below in accordance with the risk rating framework that has been commonly adopted by the federal banking agencies. The definitions of the various risk rating categories are as follows: 1 through 4 - Pass. A “Pass” loan means that the condition of the borrower and the performance of the loan is satisfactory or better. 5 - Watch. A “Watch” loan has clearly identifiable developing weaknesses that deserve additional attention from management. Weaknesses that are not corrected or mitigated, may jeopardize the ability of the borrower to repay the loan in the future. 6 - Special Mention. A “Special Mention” loan has one or more potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position in the future. 7 - Substandard. A “Substandard” loan is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Assets classified as substandard must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. 8 - Doubtful. A “Doubtful” loan has all the weaknesses inherent in a Substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. 9 - Loss. Loans classified as “Loss” are considered uncollectible, and their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, and a partial recovery may occur in the future. 12
Below is a breakdown of loans by risk rating as of December 31, 2022: 1 to 5 6 7 8 9 TOTAL Originated Loans: Commercial/Agricultural real estate: Commercial real estate $ 628,999 $ 5,771 $ 6,046 $ — $ — $ 640,816 Agricultural real estate 67,248 549 1,634 — — 69,431 Multi-family real estate 205,601 — — — — 205,601 Construction and land development 101,681 — — — — 101,681 C&I/Agricultural operating: Commercial and industrial 120,882 5,526 707 — — 127,115 Agricultural operating 20,896 324 1,904 — — 23,124 Residential mortgage: Residential mortgage 82,236 — 2,547 — — 84,783 Purchased HELOC loans 3,262 — — — — 3,262 Consumer installment: Originated indirect paper 10,190 — 46 — — 10,236 Other consumer 6,878 — 16 — — 6,894 Total originated loans $ 1,247,873 $ 12,170 $ 12,900 $ — $ — $ 1,272,943 Acquired Loans: Commercial/Agricultural real estate: Commercial real estate $ 83,659 $ — $ 1,496 $ — $ — $ 85,155 Agricultural real estate 16,967 — 1,510 — — 18,477 Multi-family real estate 3,307 — — — — 3,307 Construction and land development 704 — 107 — — 811 C&I/Agricultural operating: Commercial and industrial 8,866 — 32 — — 8,898 Agricultural operating 5,522 — 160 — — 5,682 Residential mortgage: Residential mortgage 19,494 — 1,112 — — 20,606 Consumer installment: Other consumer 254 — 2 — — 256 Total acquired loans $ 138,773 $ — $ 4,419 $ — $ — $ 143,192 Total Loans: Commercial/Agricultural real estate: Commercial real estate $ 712,658 $ 5,771 $ 7,542 $ — $ — $ 725,971 Agricultural real estate 84,215 549 3,144 — — 87,908 Multi-family real estate 208,908 — — — — 208,908 Construction and land development 102,385 — 107 — — 102,492 C&I/Agricultural operating: Commercial and industrial 129,748 5,526 739 — — 136,013 Agricultural operating 26,418 324 2,064 — — 28,806 Residential mortgage: Residential mortgage 101,730 — 3,659 — — 105,389 Purchased HELOC loans 3,262 — — — — 3,262 Consumer installment: Originated indirect paper 10,190 — 46 — — 10,236 Other consumer 7,132 — 18 — — 7,150 Gross loans $ 1,386,646 $ 12,170 $ 17,319 $ — $ — $ 1,416,135 Less: Unearned net deferred fees and costs and loans in process (2,585) Unamortized discount on acquired loans (1,766) Allowance for loan losses (17,939) Loans receivable, net $ 1,393,845 13
Below is a breakdown of loans by risk rating as of September 30, 2022: 1 to 5 6 7 8 9 TOTAL Originated Loans: Commercial/Agricultural real estate: Commercial real estate $ 597,339 $ 6,038 $ 6,971 $ — $ — $ 610,348 Agricultural real estate 60,117 648 1,537 — — 62,302 Multi-family real estate 193,484 274 — — — 193,758 Construction and land development 116,103 — 44 — — 116,147 C&I/Agricultural operating: Commercial and industrial 109,485 12,873 1,992 — — 124,350 Agricultural operating 18,589 341 1,917 — — 20,847 Residential mortgage: Residential mortgage 74,473 — 2,834 — — 77,307 Purchased HELOC loans 3,357 — — — — 3,357 Consumer installment: Originated indirect paper 11,177 — 57 — — 11,234 Other consumer 6,972 — 44 — — 7,016 Total originated loans $ 1,191,096 $ 20,174 $ 15,396 $ — $ — $ 1,226,666 Acquired Loans: Commercial/Agricultural real estate: Commercial real estate $ 89,779 $ — $ 1,561 $ — $ — $ 91,340 Agricultural real estate 17,769 — 1,636 — — 19,405 Multi-family real estate 3,914 — — — — 3,914 Construction and land development 1,579 — 124 — — 1,703 C&I/Agricultural operating: Commercial and industrial 10,247 4 214 — — 10,465 Agricultural operating 5,017 — 169 — — 5,186 Residential mortgage: Residential mortgage 20,302 — 1,124 — — 21,426 Consumer installment: Other consumer 291 — 3 — — 294 Total acquired loans $ 148,898 $ 4 $ 4,831 $ — $ — $ 153,733 Total Loans: Commercial/Agricultural real estate: Commercial real estate $ 687,118 $ 6,038 $ 8,532 $ — $ — $ 701,688 Agricultural real estate 77,886 648 3,173 — — 81,707 Multi-family real estate 197,398 274 — — — 197,672 Construction and land development 117,682 — 168 — — 117,850 C&I/Agricultural operating: Commercial and industrial 119,732 12,877 2,206 — — 134,815 Agricultural operating 23,606 341 2,086 — — 26,033 Residential mortgage: Residential mortgage 94,775 — 3,958 — — 98,733 Purchased HELOC loans 3,357 — — — — 3,357 Consumer installment: Originated indirect paper 11,177 — 57 — — 11,234 Other consumer 7,263 — 47 — — 7,310 Gross loans $ 1,339,994 $ 20,178 $ 20,227 $ — $ — $ 1,380,399 Less: Unearned net deferred fees and costs and loans in process (2,447) Unamortized discount on acquired loans (2,076) Allowance for loan losses (17,217) Loans receivable, net $ 1,358,659 14
Below is a breakdown of loans by risk rating as of December 31, 2021: 1 to 5 6 7 8 9 TOTAL Originated Loans: Commercial/Agricultural real estate: Commercial real estate $ 572,724 $ 667 $ 5,004 $ — $ — $ 578,395 Agricultural real estate 50,834 1,267 271 — — 52,372 Multi-family real estate 173,760 290 — — — 174,050 Construction and land development 75,146 — 3,467 — — 78,613 C&I/Agricultural operating: Commercial and industrial 107,798 57 82 — — 107,937 Agricultural operating 23,935 764 1,503 — — 26,202 Residential mortgage: Residential mortgage 60,754 — 3,101 — — 63,855 Purchased HELOC loans 3,706 — 165 — — 3,871 Consumer installment: Originated indirect paper 15,818 — 153 — — 15,971 Other consumer 8,404 — 69 — — 8,473 Originated loans before SBA PPP loans $ 1,092,879 $ 3,045 $ 13,815 $ — $ — $ 1,109,739 SBA PPP loans 8,755 — — — — 8,755 Total originated loans $ 1,101,634 $ 3,045 $ 13,815 $ — $ — $ 1,118,494 Acquired Loans: Commercial/Agricultural real estate: Commercial real estate $ 116,839 $ 1,314 $ 1,917 $ — $ — $ 120,070 Agricultural real estate 21,051 — 5,072 — — 26,123 Multi-family real estate 4,299 — — — — 4,299 Construction and land development 735 172 — — — 907 C&I/Agricultural operating: Commercial and industrial 13,931 5 294 — — 14,230 Agricultural operating 4,936 — 450 — — 5,386 Residential mortgage: Residential mortgage 25,869 — 1,266 — — 27,135 Consumer installment: Other consumer 398 — 3 — — 401 Total acquired loans $ 188,058 $ 1,491 $ 9,002 $ — $ — $ 198,551 Total Loans: Commercial/Agricultural real estate: Commercial real estate $ 689,563 $ 1,981 $ 6,921 $ — $ — $ 698,465 Agricultural real estate 71,885 1,267 5,343 — — 78,495 Multi-family real estate 178,059 290 — — — 178,349 Construction and land development 75,881 172 3,467 — — 79,520 C&I/Agricultural operating: Commercial and industrial 121,729 62 376 — — 122,167 Agricultural operating 28,871 764 1,953 — — 31,588 Residential mortgage: Residential mortgage 86,623 — 4,367 — — 90,990 Purchased HELOC loans 3,706 — 165 — — 3,871 Consumer installment: Originated indirect paper 15,818 — 153 — — 15,971 Other consumer 8,802 — 72 — — 8,874 Gross Loans Before SBA PPP Loans $ 1,280,937 $ 4,536 $ 22,817 $ — $ — $ 1,308,290 SBA PPP loans 8,755 — — — — 8,755 Gross loans $ 1,289,692 $ 4,536 $ 22,817 $ — $ — $ 1,317,045 Less: Unearned net deferred fees and costs and loans in process (2,482) Unamortized discount on acquired loans (3,600) Allowance for loan losses (16,913) Loans receivable, net $ 1,294,050 15
Allowance for Loan Losses (in thousand, except ratios) December 31, 2022 and Three Months Ended September 30, 2022 and Three Months Ended June 30, 2022 and Three Months Ended December 31, 2021 and Three Months Ended Allowance for loan losses (“ALL”), at beginning of period $ 17,217 $ 16,825 $ 16,818 $ 16,832 Loans charged off: Commercial/Agricultural real estate — (48) (122) — C&I/Agricultural operating (36) — (247) — Residential mortgage — — (56) — Consumer installment (14) (9) (16) (5) Total loans charged off (50) (57) (441) (5) Recoveries of loans previously charged off: Commercial/Agricultural real estate 62 35 3 18 C&I/Agricultural operating 8 8 9 62 Residential mortgage — 3 25 1 Consumer installment 2 28 11 5 Total recoveries of loans previously charged off: 72 74 48 86 Net loans charged off (“NCOs”) 22 17 (393) 81 Additions to ALL via provision for loan losses charged to operations 700 375 400 — ALL, at end of period $ 17,939 $ 17,217 $ 16,825 $ 16,913 Average outstanding loan balance $ 1,399,244 $ 1,370,897 $ 1,328,661 $ 1,271,956 Ratios: NCOs (annualized) to average loans (0.01) % — % 0.12 % (0.03) % 16
Delinquency Detail (in thousands) 30-59 Days Past Due and Accruing 60-89 Days Past Due and Accruing Greater Than 89 Days Past Due and Accruing Total Past Due and Accruing Nonaccrual Loans Total Past Due Accruing and Nonaccrual Loans Current Total Loans December 31, 2022 Commercial/Agricultural real estate: Commercial real estate $ 202 $ 88 $ — $ 290 $ 5,736 $ 6,026 $ 719,945 $ 725,971 Agricultural real estate 4,992 — — 4,992 2,742 7,734 80,174 87,908 Multi-family real estate — — — — — — 208,908 208,908 Construction and land development 3,975 — — 3,975 — 3,975 98,517 102,492 C&I/Agricultural operating: Commercial and industrial — 26 — 26 552 578 135,435 136,013 Agricultural operating 826 — — 826 890 1,716 27,090 28,806 Residential mortgage: Residential mortgage 767 479 236 1,482 1,253 2,735 102,654 105,389 Purchased HELOC loans — — — — — — 3,262 3,262 Consumer installment: Originated indirect paper 15 — — 15 27 42 10,194 10,236 Other consumer 39 2 10 51 4 55 7,095 7,150 Total $ 10,816 $ 595 $ 246 $ 11,657 $ 11,204 $ 22,861 $ 1,393,274 $ 1,416,135 September 30, 2022 Commercial/Agricultural real estate: Commercial real estate $ — $ — $ — $ — $ 5,848 $ 5,848 $ 695,840 $ 701,688 Agricultural real estate — 70 — 70 2,729 2,799 78,908 81,707 Multi-family real estate — — — — — — 197,672 197,672 Construction and land development — — — — 43 43 117,807 117,850 C&I/Agricultural operating: Commercial and industrial — — — — 188 188 134,627 134,815 Agricultural operating 74 231 — 305 668 973 25,060 26,033 Residential mortgage: Residential mortgage 1,443 250 244 1,937 1,246 3,183 95,550 98,733 Purchased HELOC loans 117 — — 117 — 117 3,240 3,357 Consumer installment: Originated indirect paper — — 3 3 30 33 11,201 11,234 Other consumer 20 17 1 38 20 58 7,252 7,310 Total $ 1,654 $ 568 $ 248 $ 2,470 $ 10,772 $ 13,242 $ 1,367,157 $ 1,380,399 17
Delinquency Detail (Continued) (in thousands) 30-59 Days Past Due and Accruing 60-89 Days Past Due and Accruing Greater Than 89 Days Past Due and Accruing Total Past Due and Accruing Nonaccrual Loans Total Past Due Accruing and Nonaccrual Loans Current Total Loans June 30, 2022 Commercial/Agricultural real estate: Commercial real estate $ — $ — $ — $ — $ 5,275 $ 5,275 $ 697,642 $ 702,917 Agricultural real estate 78 — — 78 3,169 3,247 74,560 77,807 Multi-family real estate — — — — — — 179,929 179,929 Construction and land development — — — — 43 43 115,145 115,188 C&I/Agricultural operating: Commercial and industrial 7 8 — 15 211 226 138,776 139,002 Agricultural operating 146 — — 146 555 701 23,768 24,469 Residential mortgage: Residential mortgage 1,032 668 712 2,412 1,122 3,534 85,041 88,575 Purchased HELOC loans — — — — — — 3,419 3,419 Consumer installment: Originated indirect paper 13 — — 13 41 54 12,682 12,736 Other consumer 54 3 2 59 18 77 7,708 7,785 Total $ 1,330 $ 679 $ 714 $ 2,723 $ 10,434 $ 13,157 $ 1,338,670 $ 1,351,827 December 31, 2021 Commercial/Agricultural real estate: Commercial real estate $ 36 $ — $ — $ 36 $ 5,374 $ 5,410 $ 693,055 $ 698,465 Agricultural real estate 498 4 — 502 3,490 3,992 74,503 78,495 Multi-family real estate — — — — — — 178,349 178,349 Construction and land development — — — — — — 79,520 79,520 C&I/Agricultural operating: Commercial and industrial — 32 — 32 298 330 121,837 122,167 SBA PPP loans — — — — — — 8,755 8,755 Agricultural operating 1,123 — — 1,123 993 2,116 29,472 31,588 Residential mortgage: Residential mortgage 1,471 487 156 2,114 1,268 3,382 87,608 90,990 Purchased HELOC loans 117 — — 117 165 282 3,589 3,871 Consumer installment: Originated indirect paper 38 27 — 65 55 120 15,851 15,971 Other consumer 58 10 4 72 22 94 8,780 8,874 Total $ 3,341 $ 560 $ 160 $ 4,061 $ 11,665 $ 15,726 $ 1,301,319 $ 1,317,045 18
Nonaccrual Loans Roll forward (in thousands) Quarter Ended December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Balance, beginning of period $ 10,772 $ 10,434 $ 11,858 $ 11,665 $ 11,706 Additions 1,039 257 1,918 720 428 Acquired nonaccrual loans — — — — — Charge offs (37) (4) (437) (15) (1) Transfers to OREO — (27) (65) — (19) Return to accrual status — (117) — (51) (30) Repurchase of government guaranteed loans — 517 Payments received (561) (288) (2,830) (461) (422) Other, net (9) — (10) — 3 Balance, end of period $ 11,204 $ 10,772 $ 10,434 $ 11,858 $ 11,665 Other Real Estate Owned Roll forward (in thousands) Quarter Ended December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Balance, beginning of period $ 1,584 $ 1,427 $ 1,360 $ 1,406 $ 2 Loans transferred in — 27 65 — 46 Branch properties transferred in 1,041 130 — — 1,360 Branch properties sales (1,360) Sales — — — (45) — Write-downs — — — — — Other, net — — 2 (1) (2) Balance, end of period $ 1,265 $ 1,584 $ 1,427 $ 1,360 $ 1,406 Troubled Debt Restructurings in Accrual Status (in thousands, except number of modifications) December 31, 2022 September 30, 2022 June 30, 2022 December 31, 2021 Number of Modifications Recorded Investment Number of Modifications Recorded Investment Number of Modifications Recorded Investment Number of Modifications Recorded Investment Troubled debt restructurings: Accrual Status Commercial/Agricultural real estate 10 $ 1,336 10 $ 1,363 10 $ 2,049 11 $ 4,618 C&I/Agricultural Operating 5 960 6 2,505 4 1,182 3 649 Residential mortgage 36 2,875 37 3,033 36 2,915 36 2,681 Consumer installment — — 2 9 3 17 6 36 Total loans 51 $ 5,171 55 $ 6,910 53 $ 6,163 56 $ 7,984 19
The table below shows the changes in the Bank’s non-accretable difference on purchased credit impaired loans. The second table below shows the changes in the Bank’s accretable loan discount which was established at each acquisition. The Bank has transferred the non-accretable difference on purchased credit impaired loans to accretable discount as collateral coverage improved sufficiently, due to a combination of principal paydowns and/or improving collateral positions. This transferred non- accretable difference to accretable discount is accreted over the remaining maturity of the loan or until payoff, whichever is shorter. Non-accretable Difference (in thousands) December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Non-accretable difference, beginning of period $ 216 $ 410 $ 509 $ 653 $ 686 Additions to non-accretable difference for acquired purchased credit impaired loans — — — — — Non-accretable difference realized as interest from payoffs of purchased credit impaired loans (109) (34) (70) (26) (2) Transfers from non-accretable difference to accretable discount (11) — (29) (86) (31) Non-accretable difference used to reduce loan principal balance — (160) — (32) — Non-accretable difference, end of period $ 96 $ 216 $ 410 $ 509 $ 653 The table below provides the changes in accretable discount for acquired loans. Accretable Discount (in thousands) December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Accretable discount, beginning of period $ 1,860 $ 2,224 $ 2,758 $ 2,947 $ 3,380 Additions to accretable discount for acquired performing loans — — — — — Accelerated accretion from payoff of certain purchased credit impaired loans with transferred non-accretable difference (32) (117) (308) (11) (200) Transfers from non-accretable difference to accretable discount 11 — 29 86 31 Scheduled accretion (169) (247) (255) (264) (264) Accretable discount, end of period $ 1,670 $ 1,860 $ 2,224 $ 2,758 $ 2,947 20
The table below lists the SBA PPP loans and net deferred loan fee accretion balances related to 2020 and 2021 SBA PPP loan originations: SBA PPP Loans and SBA PPP Net Deferred Loan Fee Accretion by Year of Origination (in thousands) 2020 Originations 2021 Originations Total Balance Net Deferred Fee Income Balance Net Deferred Fee Income Balance Net Deferred Fee Income SBA PPP loans, January 1, 2021 $ 123,702 $ 2,991 $ — $ — $ 123,702 $ 2,991 2021 SBA PPP loan originations — — 47,467 1,770 47,467 1,770 Less: 2021 SBA PPP loan forgiveness and fee accretion (52,238) (1,706) — (44) (52,238) (1,750) SBA PPP loans, March 31, 2021 71,464 1,285 47,467 1,726 118,931 3,011 2021 SBA PPP loan originations — — 8,323 1,715 8,323 1,715 Less: 2021 SBA PPP loan forgiveness and fee accretion (50,057) (977) (2,272) (332) (52,329) (1,309) SBA PPP loans, June 30, 2021 21,407 308 53,518 $ 3,109 74,925 3,417 2021 SBA PPP loan originations — — 64 9 64 9 Less: 2021 SBA PPP loan forgiveness and fee accretion (18,286) (279) (25,402) (1,599) (43,688) (1,878) SBA PPP Loans, September 30, 2021 3,121 29 28,180 1,519 31,301 1,548 2021 SBA PPP loan originations — — — — — — Less: 2021 SBA PPP loan forgiveness and fee accretion (993) (25) (21,553) (1,226) (22,546) (1,251) SBA PPP Loans, December 31, 2021 2,128 4 6,627 293 8,755 297 Less: 2022 SBA PPP loan forgiveness and fee accretion (886) (3) (5,798) (255) (6,684) (258) SBA PPP loans, March 31, 2022 1,242 1 829 38 2,071 39 Less: 2022 SBA PPP loan forgiveness and fee accretion (1,242) (1) (829) (38) (2,071) (39) SBA PPP loans, June 30, 2022 $ — $ — $ — $ — $ — $ — 21
On November 30, 2020, the Board of Directors adopted a share repurchase program, pursuant to which Citizens Community Bancorp, Inc. was authorized to repurchase 557 thousand shares of its common stock, or approximately 5% of the outstanding shares on that date. Repurchases made during the quarter ended September 30, 2021, used all remaining shares authorized under this share repurchase program. On July 23, 2021, the Board of Directors adopted a new share repurchase program, pursuant to which Citizens Community Bancorp, Inc. is authorized to repurchase 532,962 shares of its common stock, or approximately 5% of the outstanding shares on that date. Under this new share repurchase program, approximately 58 thousand shares were repurchased during the quarter ended December 31, 2022 and approximately 129 thousand shares were repurchased during the year ended December 31, 2022. As of December 31, 2022, there were 10.4 million shares outstanding and an additional 243 thousand shares could be repurchased under the program. Earnings Per Share (Amounts in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Basic Net income attributable to common shareholders $ 4,696 $ 3,993 $ 6,057 $ 17,761 $ 21,266 Weighted average common shares outstanding 10,453 10,510 10,503 10,505 10,717 Basic earnings per share $ 0.45 $ 0.38 $ 0.58 $ 1.69 $ 1.98 Diluted Net income attributable to common shareholders $ 4,696 $ 3,993 $ 6,057 $ 17,761 $ 21,266 Weighted average common shares outstanding 10,453 10,510 10,503 10,505 10,717 Add: Dilutive stock options outstanding 7 9 13 9 10 Average shares and dilutive potential common shares 10,460 10,519 10,516 10,514 10,727 Diluted earnings per share $ 0.45 $ 0.38 $ 0.58 $ 1.69 $ 1.98 Common stock issued and outstanding 10,425 10,478 10,502 10,425 10,502 22
CITIZENS COMMUNITY FEDERAL N.A. Selected Capital Composition Highlights December 31, 2022 (unaudited) September 30, 2022 (unaudited) June 30, 2022 (unaudited) December 31, 2021 (audited) To Be Well Capitalized Under Prompt Corrective Action Provisions Tier 1 leverage ratio (to adjusted total assets) 11.5% 11.6% 11.4% 10.0% 5.0% Tier 1 capital (to risk weighted assets) 13.0% 13.3% 13.2% 12.2% 8.0% Common equity tier 1 capital (to risk weighted assets) 13.0% 13.3% 13.2% 12.2% 6.5% Total capital (to risk weighted assets) 14.2% 14.4% 14.3% 13.4% 10.0% CITIZENS COMMUNITY BANCORP, INC. Selected Capital Composition Highlights December 31, 2022 (unaudited) September 30, 2022 (unaudited) June 30, 2022 (unaudited) December 31, 2021 (audited) For Capital Adequacy Purposes Tier 1 leverage ratio (to adjusted total assets) 8.5% 8.4% 8.2% 7.9% 4.0% Tier 1 capital (to risk weighted assets) 9.7% 9.6% 9.6% 9.7% 6.0% Common equity tier 1 capital (to risk weighted assets) 9.7% 9.6% 9.6% 9.7% 4.5% Total capital (to risk weighted assets) 14.0% 14.0% 15.1% 13.1% 8.0% 23
2022 Fourth Quarter Results Earnings Release Presentation Exhibit 99.3
Cautionary Notes and Additional Disclosures 2 DATES AND PERIODS PRESENTED Unless otherwise noted, “20YY” refers to either the corresponding fiscal year-end date or the corresponding 12-months (i.e. fiscal year) then ended. “MMM-YY” refers to either the corresponding quarter-end date, or the corresponding three-month period then ended. CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This presentation may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, descriptions of the financial condition, results of operations, asset and credit quality trends, profitability, projected earnings, future plans, strategies and expectations of Citizens Community Bancorp, Inc. (“CZWI” or the “Company”) and its subsidiary, Citizens Community Federal, National Association (“CCFBank”) . The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions of the Company, are generally identifiable by use of the words “believe,” “expect,” “estimates,” “intend,” “anticipate,” “estimate,” “project,” “on pace,” “seek,” “target,” “potential,” “focus,” “may,” “preliminary,” “could,” “should” or similar expressions. These forward-looking statements express management’s current expectations or forecasts of future events, and by their nature, are subject to risks and uncertainties. Therefore, there are a number of factors that might cause actual results to differ materially from those in such statements. These uncertainties include conditions in the financial markets and economic conditions generally; adverse impacts to the Company or CCFBank arising from the COVID-19 pandemic; acts of terrorism and political or military actions by the United States or other governments; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; higher lending risks associated with our commercial and agricultural banking activities; the sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; disintermediation risk; our ability to maintain our reputation; our ability to maintain or increase our market share; our ability to realize the benefits of net deferred tax assets; our inability to obtain needed liquidity; our ability to raise capital needed to fund growth or meet regulatory requirements; our ability to attract and retain key personnel; our ability to keep pace with technological change; prevalence of fraud and other financial crimes; cybersecurity risks; the possibility that our internal controls and procedures could fail or be circumvented; 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; restrictions on our ability to pay dividends; the potential volatility of our stock price; accounting standards for loan losses; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or CCFBank; public company reporting obligations; changes in federal or state tax laws; and changes in accounting principles, policies or guidelines and their impact on financial performance. 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, 2021, filed with the Securities and Exchange Commission ("SEC") on March 2, 2022, the Company’s Form 10-Qs for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022 filed with the SEC on May 4, 2022, August 4, 2022, and November 7, 2022 respectively, and the Company's subsequent filings with the SEC. The Company undertakes no obligation to make any revisions to the forward-looking statements contained herein or to update them to reflect events or circumstances occurring after the date hereof. NON-GAAP FINANCIAL MEASURES These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Non·GAAP financial measures referred to herein include net income as adjusted, EPS as adjusted, ROAA as adjusted, return on average tangible common equity (ROATCE), ROATCE as adjusted, tangible book value, tangible book value per share, efficiency ratio as adjusted and tangible common equity / tangible assets. Reconciliations of all Non·GAAP financial measures used herein to the comparable GAAP financial measures in the appendix at the end of this presentation. SOURCE Unless otherwise noted, internal Company documents
Investment Summary Markets Strong earnings and ROATCE profile with capacity and infrastructure to grow organically 3 Returns Asset Quality Thriving markets with diverse industries and unemployment rates lower than national averages mitigate volatility and support steady growth. Sound underwriting practices and portfolio administration have produced strong credit performance Capital Ratios Solid bank capital ratios and improving holding company regulatory capital ratios Shareholder Friendly Board and Executive Management commitment to the company’s stock evidenced by approved share repurchase authorizations in November 2020 and July 2021 and open market purchases
Performance Objectives Increase Tangible Book and Shareholder Value Maintain Strong Asset Quality Metrics Increase Operating Leverage Sustainable Business Practices Targeted growth in TBV of 8-10% and achieve ROAA and ROATCE in the upper half of its peer group Maintain NPAs, classifieds and NCOs at or better than peer group median Maintain efficiency ratio in the low to mid 60% range by growing revenue and controlling expenses Execute sustainable business practices that strengthen our culture and communities, foster equity, diversity and inclusion and maintain sound corporate and board governance 4
Operating Market Overview CZWI Operates in diverse markets within the northwestern region of Wisconsin, metro Twin Cities and the Mankato, Minnesota MSA Source: S&P Global Market Intelligence 0 0 0 0 0 5
$574 $733 $759 $1,177 $1,238 $1,311 $1,290 $1,347 $1,376 $1,412 $558 $743 $747 $1,196 $1,295 $1,388 $1,428 $1,400 $1,434 $1,425 $696 $941 $975 $1,531 $1,649 $1,740 $1,775 $1,764 $1,780 $1,816 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY Mar-22 Jun-22 Sep-22 Dec-22 Franchise Expansion CZWI has transformed the Company from a consumer bank to a commercial bank to strengthen the earnings profile and franchise. Total Assets Loans Receivable Total Deposits Source: S&P Global Market Intelligence, company filings 6 July 2019 Assets: $192mm Tomah, WI May 2016 Assets: $154mm Rice Lake, WI 2 Central Bank branches February 2016 Deposits: $27mm Northwestern WI August 2017 Assets: $269mm Wells, MN October 2018 Assets: $269mm Osseo, WI
89.2% 82.3% 76.1% 87.1% 73.7% 86.5% 87.1% 84.0% 80.8% 89.6% 74.1% 87.4% 0.0% 25.0% 50.0% 75.0% 100.0% Overall Role Team Supervisor Compensation Organization Colleague Engagement 2021 Favorable 2022 Favorable Excellent Target 75% Values Our six main values are: integrity, commitment, innovation, collaboration, focus, and sustainability. Vision Make more possible for our customers, colleagues, communities, and shareholders! Mission Provide the best products, service, and ideas to our customers every interaction every day. Culture & Engagement 7 91.4% of colleagues participated in annual engagement survey, up from 71.8% in 2021.
Net Income and Diluted EPS Source: S&P Global Market Intelligence, company filings Net Income as Adjusted and Diluted EPS Income as Adjusted are non-GAAP financial measures, which management believes may be helpful in understanding the Company's results of operations or financial position and comparing results over different periods. Reconciliation of Net Income and Diluted EPS Income as Adjusted to the comparable GAAP financial measure can be found in the appendix of this presentation. These measures should not be viewed as a substitute for operating results determined in accordance with GAAP. 8 $2,499 $4,283 $9,463 $12,725 $21,266 $17,761 $4,706 $4,366 $3,993 $4,696 $4,221 $4,962 $10,675 $12,425 $21,339 $18,500 $4,706 $4,391 $4,222 $5,176 -$1,000 $4,000 $9,000 $14,000 $19,000 $24,000 Net Income Net Income Net Income as Adjusted $0.46 $0.58 $0.85 $1.14 $1.98 $1.69 $0.45 $0.41 $0.38 $0.45 $0.78 $0.68 $0.96 $1.11 $1.99 $1.76 $0.45 $0.41 $0.40 $0.49 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 $1.80 $2.00 Diluted EPS Diluted EPS Diluted EPS Income as Adjusted
Book Value, Tangible Book Value and Core Net Revenue Detail Source: S&P Global Market Intelligence, company filings Tangible book value per share is a non-GAAP measure which management believes may be helpful in better assessing capital adequacy. The reconciliation of Tangible book value per share can be found in the appendix of this presentation. These measures should not be viewed as substitutes for operating results determined in accordance with GAAP. 9 $9.78 $11.05 $9.89 $11.18 $12.90 $12.40 $12.36 $12.32 $12.77$12.48 $12.46 $13.36 $14.52 $16.27 $15.72 $15.64 $15.59 $16.03 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY Mar‐22 Jun‐22 Sep‐22 Dec‐22 BOOK VALUE AND TANGIBLE BOOK VALUE PER SHARE TANGIBLE BOOK VALUE PER SHARE BOOK VALUE PER SHARE $22,878 $29,764 $42,686 $43,673 $40,532 $41,743 $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 2017 2018 2019 2020 2021 2022 CORE NET REVENUE DETAIL NET INTEREST INCOME NON-INTEREST INCOME NON-INTEREST EXPENSE $58,488 $68,703 $69,491 $27,019 $37,673 $66,799
Return on average assets as adjusted, return on average tangible common equity (ROATCE) and ROATCE as adjusted are non-GAAP measures, which management believes may be helpful in better understanding the underlying business performance trends related to average assets and average tangible equity. Reconciliations of ROAA as adjusted, ROTCE, and ROTCE as adjusted can be found in the appendix of this presentation. These measures should not be viewed as substitutes for operating results determined in accordance with GAAP. Return on Average Assets and Return on Average Tangible Common Equity Source: SEC filings and Company documents 10 0.34% 0.45% 0.68% 0.80% 1.23% 1.00% 0.58% 0.52% 0.76% 0.78% 1.24% 1.04% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 2017 2018 2019 2020 2021 2022 ROAA ROAA ROAA INCOME AS ADJUSTED 4.5% 5.3% 10.1% 12.1% 17.6% 14.4% 7.5% 6.0% 11.2% 11.8% 17.6% 14.9% 0.0% 5.0% 10.0% 15.0% 20.0% 2017 2018 2019 2020 2021 2022 ROATCE ROATCE ROATCE INCOME AS ADJUSTED
Efficiency Ratio, Net Interest Income (NII) and Net Interest Margin (NIM) The efficiency ratio as adjusted is a non-GAAP measure, which management believes may be helpful in better understanding the underlying business performance trends related to non-interest expense. A reconciliation of the efficiency ratio as adjusted to its comparable GAAP financial measure can be found in the appendix of this presentation. This measure should not be viewed as a substitute for operating results determined in accordance with GAAP. 11 84% 77% 71% 61% 57% 61% 58% 60% 64% 61% 74% 76% 66% 62% 57% 59% 58% 60% 62% 57% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 2017 2018 2019 2020 2021 2022 Mar‐22 Jun‐22 Sep‐22 Dec‐22 EFFICIENCY RATIO EFFICIENCY RATIO EFFICIENCY RATIO AS ADJUSTED $20,077 $22,268 $30,303 $43,513 $50,255 $53,667 $56,369 3.27% 3.31% 3.42% 3.37% 3.40% 3.34% 3.39% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY NII AND NIM NET INTEREST INCOME NET INTEREST MARGIN
Citizens Community Bancorp, Inc. Capital Ratios Note: 2018 FY represents the completion of the 2018 offering of $65 million, but does not include the acquisition of United Bank Source: S&P Global Market Intelligence, company filings 12 6.6% 12.7% 7.7% 7.7% 7.9% 8.0% 8.2% 8.4% 8.5% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY Mar-22 Jun-22 Sep-22 Dec-22 LEVERAGE RATIO 8.8% 16.8% 9.1% 10.5% 9.7% 9.9% 9.6% 9.6% 9.7% 0.0% 5.0% 10.0% 15.0% 20.0% 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY Mar-22 Jun-22 Sep-22 Dec-22 COMMON EQUITY TIER 1 RATIO 12.0% 19.8% 11.2% 14.3% 13.1% 15.8% 15.1% 14.0% 14.0% 0.0% 5.0% 10.0% 15.0% 20.0% 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY Mar-22 Jun-22 Sep-22 Dec-22 TOTAL CAPITAL RATIO Tangible common equity/tangible assets is a non-GAAP measure, which management believes may be helpful in better understanding the underlying business performance trends related to tangible assets and tangible common equity. A reconciliation of tangible common equity and tangible assets to its comparable financial measure can be found in the appendix of the presentation. This measure should not be viewed as a substitute for operating results determined in accordance with GAAP. 6.2% 12.6% 9.9% 7.7% 7.9% 7.5% 7.5% 7.4% 7.5% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY Mar-22 Jun-22 Sep-22 Dec-22 TANGIBLE COMMON EQUITY / TANGIBLE ASSETS
Asset Quality 0.82% 0.89% 0.88% 1.38% 1.29% 1.30% 1.25% 1.25% 1.27% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY Mar‐22 Jun‐22 Sep‐22 Dec‐22 ALLOWANCE FOR LOAN LOSSES (ALLL) ALL AS A % OF TOTAL LOANS 1.49% 1.14% 1.41% 0.70% 0.76% 0.76% 0.71% 0.71% 0.70% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY Mar-22 Jun-22 Sep-22 Dec-22 NON-PERFORMING ASSETS (NPA) / ASSETS Total NPA/Assets 13 73.90% 81.04% 51.19% 150.38% 143.03%137.22% 150.92%156.23%156.67% 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% 140.00% 160.00% 180.00% 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY Mar-22 Jun-22 Sep-22 Dec-22 ALLL / NON-PERFORMING LOANS (NPL) ALLL/NPL 0.07% 0.07% 0.08% 0.08% 0.01% 0.03% 0.03% 0.12% 0.00% ‐0.01% -0.20% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY Mar-22 Jun-22 Sep-22 Dec-22 NET CHARGE OFFS (NCOS)/ AVERAGE LOANS NCOS / AVERAGE LOANS
CRE, C&I, Ag. Related, C&D 91% Residential & HELOC 8% Consumer 1% Loan Portfolio 9/30/2016 12/31/22 CRE, C&I, Ag. Related, C&D 34% Residential & HELOC 33% Consumer 33% ($000s) Sep‐16 Sep‐17 Sep‐18 Dec‐19 Dec‐20 Dec‐21 Mar‐22 Jun‐22 Sep‐22 Dec‐22 Commercial Real Estate $54,600 $109,024 $156,735 $420,383 $425,283 $610,214 $599,825 $612,627 $609,323 $630,857 Housing related CRE $53,475 $77,166 $108,029 $181,084 $204,544 $266,600 $269,436 $270,219 $290,037 $304,022 Commercial & Industrial $31,001 $55,251 $76,254 $133,734 $116,553 $122,167 $121,022 $139,002 $134,815 $136,013 Ag. Real Estate / Ag. Operating $42,845 $91,875 $97,066 $123,143 $101,580 $110,083 $104,473 $102,276 $107,740 $116,714 Q4 2022 Construction & Development $16,580 $19,708 $17,739 $86,410 $98,517 $79,520 $87,880 $115,188 $117,850 $102,492 4.80% Residential mortgage and Purchased HELOC loans $187,738 $247,634 $209,781 $184,739 $137,646 $94,861 $88,261 $91,994 $102,090 $108,651 Yield (1) Indirect Consumer Installment $168,294 $115,287 $78,245 $39,585 $25,851 $15,971 $14,509 $12,736 $11,234 $10,236 Consumer Installment $19,715 $20,668 $18,844 $18,186 $13,213 $8,874 $8,191 $7,785 $7,310 $7,150 Gross Loans Ex SBA PPP Loans $574,248 $736,613 $762,693 $1,187,264 $1,123,187 $1,308,290 $1,293,597 $1,351,827 $1,380,399 $1,416,135 SBA PPP Loans $0 $0 $0 $0 $123,702 $8,755 $2,071 $0 $0 $0 Total Gross Loans $574,248 $736,613 $762,693 $1,187,264 $1,246,889 $1,317,045 $1,295,668 $1,351,827 $1,380,399 $1,416,135 14 (1) Yield excludes SBA PPP accretion, PCI loan accretion, loan purchase accretion, and interest income recognized on nonaccrual loan payoffs
Commercial & Ag Loan Portfolio CZWI has transformed its loan portfolio through organic growth and acquisitions Change has occurred from a primarily consumer focused portfolio to a diversified mix consisting of commercial real estate, agricultural and commercial business loans Credit quality remains a focus in conjunction with loan growth 15 ($000s) Sep‐16 Sep‐17 Sep‐18 Dec‐19 Dec‐20 Dec‐21 Mar‐22 Jun‐22 Sep‐22 Dec‐22 Gross Commercial & Ag Loans: Commercial real estate $88,940 $159,962 $216,703 $514,459 $507,675 $698,465 $689,774 $702,917 $701,688 $725,971 Agricultural real estate $28,198 $68,002 $70,517 $85,363 $68,795 $78,495 $75,716 $77,807 $81,707 $87,908 Multi‐family real estate $19,135 $26,228 $48,061 $87,008 $122,152 $178,349 $179,487 $179,929 $197,672 $208,908 Construction and development $16,580 $19,708 $17,739 $86,410 $98,517 $79,520 $87,880 $115,188 $117,850 $102,492 Commercial and industrial $31,001 $55,251 $76,254 $133,734 $116,553 $122,167 $121,022 $139,002 $134,815 $136,013 Agricultural operating $14,647 $23,873 $26,549 $37,780 $32,785 $31,588 $28,757 $24,469 $26,033 $28,806 Total Gross Commercial & Ag Loans $198,501 $353,024 $455,823 $944,754 $946,477 $1,188,584 $1,182,636 $1,239,312 $1,259,765 $1,290,098
Deposit Composition Focus has been on transforming the deposit composition to core deposits Deposit transformation and growth has been achieved through both acquisitions and organic initiatives 9/30/2016 12/31/2022 Source: S&P Global Market Intelligence, company filings Non Interest Bearing Demand 8% Interest Bearing Demand 9% MMDA & Savings 34% CDs 49% 16 Non Interest Bearing Demand 20% Interest Bearing Demand 26% MMDA & Savings 38% CDs 16% ($000) Sep‐16 Sep‐17 Sep‐18 Dec‐19 Dec‐20 Dec‐21 Mar‐22 Jun‐22 Sep‐22 Dec‐22 Non‐interest‐bearing demand deposits $45,408 $75,318 $87,495 $168,157 $238,348 $276,631 $269,481 $276,815 $285,670 $284,726 Interest bearing demand deposits $48,934 $147,912 $139,276 $223,102 $301,764 $396,231 $423,251 $401,857 $394,924 $371,210 Q4 2022 Savings accounts $52,153 $102,756 $97,329 $156,599 $196,348 $222,674 $241,072 $239,322 $236,107 $220,019 Cost of Deposits Money market accounts $137,234 $125,749 $109,314 $246,430 $245,549 $288,985 $321,409 $328,718 $328,544 $323,435 0.76% Certificate accounts $273,948 $290,769 $313,115 $401,414 $313,247 $203,014 $173,010 $153,498 $189,123 $225,334 Total Deposits $557,677 $742,504 $746,529 $1,195,702 $1,295,256 $1,387,535 $1,428,223 $1,400,210 $1,434,368 $1,424,724 Deposit Composition ‐ Quarter Lookback
$557,677 $742,504 $1,007,512 $1,195,702 $1,295,256 $1,387,535 $1,424,724 $27,884 $32,283 $37,315 $42,704 $51,810 $55,501 $61,945 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 TOTAL DEPOSITS AND DEPOSITS PER BRANCH ($000) Total Deposits Average Deposits Per Branch 23 27 28 25 25 23 Branch Deposit Growth & Efficiency $62 million average branch size as of December 31, 2022, doubling in size over the past 6 years 3 branch locations were consolidated in 2022 1 branch location opened in 2022 in an identified market of opportunity Since FY 2016 19 branches opened or purchased 16 branches closed, consolidated, or sold Includes branch acquisitions and consolidations Source: S&P Global Market Intelligence, company filings 17 20 White Numbers Indicate Branch Count
Appendix 18
Net Interest Margin Analysis Source: S&P Global Market Intelligence, company filings 19 (1) Fully taxable equivalent. The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the quarters ended December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022. Quarter ended December 31, 2022 Quarter ended September 30, 2022 Quarter ended June 30, 2022 Quarter ended March 31, 2022 T Interest Average Interest Average Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ ($ Dollars in Thousands) Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense Rate Average interest earning assets: Cash and cash equivalents 88,134$ 88$ 4.29% 11,043$ 60$ 2.16% 25,195$ 43$ 0.68% 35,208$ 13$ 0.15% Loans receivable 1,399,244 17,041 4.83% 1,370,897 15,937 4.61% 1,328,661 14,893 4.50% 1,304,141 13,767 4.28% Interest‐bearing deposits 337 2 2.35% 1,079 7 2.57% 1,509 8 2.13% 1,511 8 2.15% Investment securities (1) 264,064 1,990 3.01% 274,868 1,768 2.57% 285,332 1,593 2.23% 288,261 1,416 1.99% Non‐marketable equity securities, at cost 15,783 238 5.98% 14,910 187 4.98% 14,969 166 4.45% 15,258 172 4.57% Total interest earning assets 1,767,562$ 19,359$ 4.55% 1,672,797$ 17,959$ 4.26% 1,655,666$ 16,703$ 4.05% 1,644,379$ 15,376$ 3.79% Average interest‐bearing liabilities: Total deposits 1,127,085$ 2,695$ 0.95% 1,143,557$ 1,681$ 0.58% 1,135,198$ 985$ 0.35% 1,132,721$ 1,068$ 0.38% FHLB Advances & Other Borrowings 212,051 2,186 4.09% 192,338 1,821 3.76% 186,050 1,451 3.13% 166,118 1,141 2.79% Total interest bearing liabilities 1,339,136$ 4,881$ 1.45% 1,335,895$ 3,502$ 1.04% 1,321,248$ 2,436$ 0.74% 1,298,839$ 2,209$ 0.69% Net interest income 14,478$ 14,457$ 14,267$ 13,167$ Interest Rate Spread 3.11% 3.22% 3.31% 3.10% Net interest margin 3.40% 3.43% 3.46% 3.25%
Interest Rate Risk 20 (1) Assumes an immediate and parallel shift in the yield curve at all maturities. Note: The tables above may not be indicative of future results. Change in Interest Rates In Basis Points ("bp") Rate Shock in Rates (1) Percent Change Change in Interest Rates In Basis Points ("bp") Rate Shock in Rates (1) Percent Change +100 bp 0% +300 bp ‐5% ‐100 bp ‐1% +200 bp ‐3% ‐200 bp ‐4% +100 bp ‐1% ‐300 bp ‐9% ‐100 bp ‐1% Change in Interest Rates In Basis Points ("bp") Rate Shock in Rates (1) Percent Change Change in Interest Rates In Basis Points ("bp") Rate Shock in Rates (1) Percent Change +100 bp ‐1% +300 bp ‐11% ‐100 bp 1% +200 bp ‐7% ‐200 bp ‐2% +100 bp ‐4% ‐300 bp ‐5% ‐100 bp 0% December 31, 2021December 31, 2022 December 31, 2021December 31, 2022 Economic Value of Equity (EVE) Net Interest Income Over One Year Horizon
21 Reconciliation of Non-GAAP Financial Measures Reconciliation of GAAP Earnings and Core Earnings (non‐GAAP): GAAP pre‐tax earnings 3,822$ 6,609$ 12,277$ 17,280$ 28,959$ 23,581$ 6,212$ 5,777$ 5,277$ 6,315$ Merger related costs (1) 1,860$ 463$ 3,880$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Branch closure costs (2) 951$ 26$ 15$ 165$ ‐$ ‐$ ‐$ 33$ 302$ 646$ Settlement proceeds (3) (283)$ ‐$ ‐$ (131)$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ FHLB borrowings prepayment fee (4) 104$ ‐$ ‐$ ‐$ 102$ 981$ ‐$ ‐$ ‐$ ‐$ Audit and Financial Reporting (5) ‐$ ‐$ 358$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Net gain on sale of branch ‐$ ‐$ (2,295)$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Net gain on sale of acquired business lines (6) ‐$ ‐$ ‐$ (432)$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Income before provision for income taxes as adjusted (7) 6,454$ 7,098$ 14,235$ 16,882$ 29,061$ 24,562$ 6,212$ 5,810$ 5,579$ 6,961$ Provision for income tax on pre‐tax earnings as adjusted (8) 2,233$ 1,798$ 3,260$ 4,457$ 7,722$ 6,062$ 1,506$ 1,419$ 1,357$ 1,785$ Tax impact of certain acquired BOLI policies (9) ‐$ ‐$ 300$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Tax cuts and Jobs Act of 2017 (10) ‐$ 338$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Total provision for income tax as adjusted 2,233$ 2,136$ 3,560$ 4,457$ 7,722$ 6,062$ 1,506$ 1,419$ 1,357$ 1,785$ Net income as adjusted (non‐GAAP) (7) 4,221$ 4,962$ 10,675$ 12,425$ 21,339$ 18,500$ 4,706$ 4,391$ 4,222$ 5,176$ GAAP diluted earnings per share, net of tax 0.46$ 0.58$ 0.85$ 1.14$ 1.98$ 1.69$ 0.45$ 0.41$ 0.38$ 0.45$ Merger related costs, net of tax 0.22$ 0.06$ 0.27$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Branch related costs, net of tax 0.12$ ‐$ ‐$ 0.01$ ‐$ 0.07$ ‐$ ‐$ 0.02$ 0.04$ Settlement proceeds (0.03)$ ‐$ ‐$ (0.01)$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ FHLB borrowings prepayment fee 0.01$ ‐$ ‐$ ‐$ 0.01$ ‐$ ‐$ ‐$ ‐$ ‐$ Tax impact of certain acquired BOLI policies (9) ‐$ ‐$ (0.03)$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Tax Cuts and Jobs Act of 2017 tax provision (10) ‐$ 0.04$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Audit and Financial Reporting, net of tax ‐$ ‐$ 0.02$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Net gain on sale of branch ‐$ ‐$ (0.15)$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Net gain on sale of acquired business lines ‐$ ‐$ ‐$ (0.03)$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Diluted earnings per share, as adjusted, net of tax (non‐GAAP) 0.78$ 0.68$ 0.96$ 1.11$ 1.99$ 1.76$ 0.45$ 0.41$ 0.40$ 0.49$ Average diluted shares outstanding 5,378,548 7,335,247 11,121,435 11,161,811 10,726,539 10,513,773 10,541,306 10,541,905 10,519,079 10,460,025 Mar‐22FY 2017 FY 2018 FY 2019 Dec‐22FY 2020 FY 2021 Jun‐22 Sep‐22FY 2022
(1) All costs incurred are presented as professional fees and other non-interest expense in the consolidated statement of operations and include costs$0, $0, $0, $0, $0 $0, $0, $341,000, $350,000, and $565,000 for the three months ended December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022 and years ended December 31, 2022, December 31, 2021, December 31, 2020, December 31, 2019, September 30, 2018, and September 30, 2017, 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. In addition, other non- interest expense includes costs related to the reduction in valuation of a closed branch office in the fourth quarter of fiscal 2017 and costs associated with three branch closures during the quarter ended December 31, 2020,one branch closure in the quarter ended September 30, 2022, and two branch closures in the quarter ended December 31, 2022. Professional services includes legal costs related to the sale of the Michigan branch included in these Branch closure costs during the quarter ended March 31, 2019. (3) Settlement proceeds includes litigation income from a JP Morgan Residential Mortgage-Backed Security (RMBS) claim. This JP Morgan RMBS was previously owned by the Bank and sold in 2011. (4) The prepayment fee to restructure our FHLB borrowings is included in other non-interest expense in the consolidated statement of operations. (5) 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, effective December 31, 2018. (6) Net gain on sale of acquired business lines resulted from (1) the sale of Wells Insurance Agency and (2) the termination and sale of the wealth management business line sales contract acquired in a former acquisition. (7) Pretax net income as adjusted and net income as adjusted are non-GAAP measures that management believes enhances the markets ability to assess the underlying business performance and trends related to core business activities. (8) Provision for income tax on pre-tax income as adjusted is calculated at our effective tax rate for each respective period presented. (9) Tax impact of certain acquired BOLI policies from United Bank. (10) As a result of the Tax Cuts and Jobs Act of 2017, we recorded a one-time net tax provision of $338,000 in 2018, which is included in provision for income taxes expense in the consolidated statement of operations. 22 Reconciliation of Non-GAAP Financial Measures
Note: All quarterly periods are annualized for net income / net income as adjusted. 23 Reconciliation of Non-GAAP Financial Measures 2017 2018 2019 2020 2021 2022 Mar‐22 Jun‐22 Sep‐22 Dec‐22 Net Income 2,499$ 4,283$ 9,463$ 12,725$ 21,266$ 17,761$ 4,706$ 4,366$ 3,993$ 4,696$ Net Income as adjusted 4,221$ 4,962$ 10,675$ 12,425$ 21,339$ 18,500$ 4,706$ 4,391$ 4,222$ 5,176$ Average assets 731,407$ 954,912$ 1,398,482$ 1,594,053$ 1,722,483$ 1,775,049$ 1,750,114$ 1,764,517$ 1,780,942$ 1,803,155$ Return on average assets 0.34% 0.45% 0.68% 0.80% 1.23% 1.00% 1.09% 0.99% 0.89% 1.03% Return on average assets as adjusted 0.58% 0.52% 0.76% 0.78% 1.24% 1.04% 1.09% 1.00% 0.94% 1.14% 2017 2018 2019 2020 2021 2022 Mar‐22 Jun‐22 Sep‐22 Dec‐22 Common Equity 73,483$ 135,847$ 150,553$ 160,564$ 170,866$ 167,088$ 165,494$ 164,743$ 163,319$ 167,088$ Less: Goodwill (10,444) (10,444) (31,498) (31,498) (31,498) (31,498) (31,498) (31,498) (31,498) (31,498) Less: Core Deposit and other intangibles (5,449) (4,805) (7,587) (5,494) (3,898) (2,449) (3,499) (3,100) (2,701) (2,449) Tangible Common Equity (TCE) 57,590$ 120,598$ 111,468$ 123,572$ 135,470$ 133,141$ 130,497$ 130,145$ 129,120$ 133,141$ Average Tangible Common Equity 58,300$ 89,094$ 105,340$ 115,313$ 127,793$ 131,305$ 132,550$ 129,939$ 131,130$ 130,577$ Net Income 2,499$ 4,283$ 9,463$ 12,725$ 21,266$ 17,761$ 4,706$ 4,366$ 3,993$ 4,696$ Intangible amortization, net of tax 143 417 1,153 1,194 1,171 1,095 302 302 302 190 Tangible Net Income 2,642$ 4,700$ 10,616$ 13,919$ 22,437$ 18,856$ 5,008$ 4,668$ 4,295$ 4,886$ Net Income as adjusted 4,221$ 4,962$ 10,675$ 12,425$ 21,339$ 18,500$ 4,706$ 4,391$ 4,222$ 5,176$ Intangible amortization, net of tax 143 417 1,153 1,194 1,171 1,095 302 302 302 190 Tangible Net Income as adjusted 4,364$ 5,379$ 11,828$ 13,619$ 22,510$ 19,595$ 5,008$ 4,693$ 4,524$ 5,366$ ROATCE 4.5% 5.3% 10.1% 12.1% 17.6% 14.4% 15.3% 14.4% 13.0% 14.8% ROATCE as adjusted 7.5% 6.0% 11.2% 11.8% 17.6% 14.9% 15.3% 14.5% 13.7% 16.3% Return on Average Assets (ROAA) as Adjusted Return on Average Tangible Common Equity (ROATCE) as Adjusted (In thousands except ROATCE and ROATCE as adjusted) (In thousands except ROAA and ROAA as adjusted)
Reconciliation of Non-GAAP Financial Measures Note: All quarterly periods are annualized for net income / net income as adjusted 24 2017 2018 2019 2020 2021 2022 Mar‐22 Jun‐22 Sep‐22 Dec‐22 Non‐interest Expense (GAAP) 22,878$ 29,764$ 42,686$ 43,673$ 40,532$ 41,743$ 9,668$ 10,462$ 11,277$ 10,336$ Less amortization of intangibles (219) (644) (1,496) (1,622) (1,596) (1,449) (399) (399) (399) (252) Efficiency ratio numerator 22,659 29,120 41,190 42,051 38,936 40,294 9,269 10,063 10,878 10,084 Merger related costs (1,860) (463) (3,880) ‐ ‐ ‐ ‐ ‐ ‐ ‐ Branch Closure costs (951) (26) (15) (165) ‐ (981) ‐ (33) (302) (646) Audit and financial reporting ‐ ‐ (358) ‐ ‐ ‐ ‐ ‐ ‐ ‐ Prepayment fee (104) ‐ ‐ ‐ (102) ‐ ‐ ‐ ‐ ‐ Efficiency ratio numerator as adjusted 19,744$ 28,631$ 36,937$ 41,886$ 38,834$ 39,313$ 9,269$ 10,030$ 10,576$ 9,438$ Non‐interest income 4,751$ 7,370$ 14,975$ 18,448$ 15,824$ 10,430$ 2,713$ 2,372$ 2,472$ 2,873$ Net interest margin 22,268 30,303 43,513 50,255 53,667 56,369 13,167 14,267 14,457 14,478 Loss (Gain) on investment securities (111) 17 (271) (110) (1,224) (541) 37 75 55 (708) Efficiency ratio denominator (GAAP) 26,908 37,690 58,217 68,593 68,267 66,258 15,917 16,714 16,984 16,643 Net gain on sale of branch ‐ ‐ (2,295) ‐ ‐ ‐ ‐ ‐ ‐ ‐ Net gain on sale of acquired business l ines ‐ ‐ ‐ (432) ‐ ‐ ‐ ‐ ‐ ‐ Settlement proceeds (283) ‐ ‐ (131) ‐ ‐ ‐ ‐ ‐ ‐ Efficiency ratio denominator as adjusted 26,625$ 37,690$ 55,922$ 68,030$ 68,267$ 66,258$ 15,917$ 16,714$ 16,984$ 16,643$ Efficiency ratio 84% 77% 71% 61% 57% 61% 58% 60% 64% 61% Efficiency ratio as adjusted 74% 76% 66% 62% 57% 59% 58% 60% 62% 57% 2017 2018 2019 2020 2021 2022 Mar‐22 Jun‐22 Sep‐22 Dec‐22 Total Stockholders' equity 73,483$ 135,847$ 150,553$ 160,564$ 170,866$ 167,088$ 165,494$ 164,743$ 163,319$ 167,088$ Less: Goodwill (10,444) (10,444) (31,498) (31,498) (31,498) (31,498) (31,498) (31,498) (31,498) (31,498) Less: Core deposit and intangibles (5,449) (4,805) (7,587) (5,494) (3,898) (2,449) (3,499) (3,100) (2,701) (2,449) Tangible book value (non‐GAAP) 57,590$ 120,598$ 111,468$ 123,572$ 135,470$ 133,141$ 130,497$ 130,145$ 129,120$ 133,141$ Shares outstanding 5,888,816 10,913,853 11,266,954 11,056,349 10,502,442 10,425,119 10,526,781 10,530,415 10,478,210 10,425,119 Book Value 12.48$ 12.45$ 13.36$ 14.52$ 16.27$ 16.03$ 15.72$ 15.64$ 15.59$ 16.03$ TBVPS 9.78$ 11.05$ 9.89$ 11.18$ 12.90$ 12.77$ 12.40$ 12.36$ 12.32$ 12.77$ 2017 2018 2019 2020 2021 2022 Mar‐22 Jun‐22 Sep‐22 Dec‐21 Total Assets 940,664$ 975,409$ 1,167,060$ 1,649,095$ 1,739,628$ 1,816,367$ 1,775,469$ 1,763,607$ 1,780,202$ 1,816,367$ Less: Goodwill (10,444) (10,444) (31,498) (31,498) (31,498) (31,498) (31,498) (31,498) (31,498) (31,498) Less: Core deposit and intangibles (5,449) (4,805) (7,587) (5,494) (3,898) (2,449) (3,499) (3,100) (2,701) (2,449) Tangible Assets (non‐GAAP) 924,771$ 960,160$ 1,127,975$ 1,612,103$ 1,704,232$ 1,782,420$ 1,740,472$ 1,729,009$ 1,746,003$ 1,782,420$ Tangible Common Equity / Tangible Assets 6.2% 12.6% 9.9% 7.7% 7.9% 7.5% 7.5% 7.5% 7.4% 7.5% Efficiency Ratio as Adjusted Tangible Book Value Per Share (TBVPS) as Adjusted Tangible Common Equity / Tangible Assets (In thousands except Tangible Common Equity / Tangible Asets) (In thousands except Shares Outstanding, Book Value and TBVPS) (In thousands except Efficiency Ratio and Efficiency Ratio as adjusted)
Source: S&P Global Market Intelligence, eauclairedevelopment.com, greatermankato.com, Google Images, US Bureau of Labor Statistics Eau Claire MSA: Features a broad-based, diverse economy, which is driven by commercial, housing, retail and medical industries. Mankato MSA: The Mankato market also possesses a broad-based, diverse economy, which is driven by manufacturing, agribusiness, health care and education. Mankato Area EmployersEau Claire Area Employers Market Demographics 25 2.4% 2.5% 3.9% 2.1% 2.4% 2.0% 2.2% 3.2% 1.8% 1.6% 0.0% 2.5% 5.0% Nov‐18 Nov‐19 Nov‐20 Nov‐21 Nov‐22 MSA Unemployment Rates Eau Claire MSA Mankato MSA
Leadership Team Stephen M. Bianchi Chairman of the Board President & CEO Mr. Stephen M. Bianchi, also known as Steve, has been the Chief Executive Officer and President of Citizens Community Bancorp, Inc. and Citizens Community Federal since June 24, 2016. He has been Chairman of Citizens Community Bancorp, Inc. since October 2018 and Citizens Community Federal National Association. As a banking veteran with 36 years of experience, Mr. Bianchi served in several senior management positions at Wells Fargo Bank and with Associated Bank. He served as the Chief Executive Officer at HF Financial Corp. from October 2011 and its President from April 2010 to May 2015. Mr. Bianchi served as the Chief Executive Officer and President of Home Federal Bank, a subsidiary of HF Financial Corp. from August 2012 to May 2015. He served as the Interim Chief Executive Officer and Interim President of HF Financial Corp. from October 2011 until July 2012. Mr. Bianchi served as Senior Vice President at Associated Bank, where he served as Minnesota Regional President and Minnesota Regional Commercial Banking Manager from July 2006 to April 2010. Before that, he served as Twin Cities Business Banking Manager for Wells Fargo Bank, where he held several other management positions over 14 years. He has been a Director of Citizens Community Bancorp, Inc. since May 25, 2017. He has been a Director of Citizens Community Federal since June 24, 2016. Mr. Bianchi received his B.S. degree in Finance and M.B.A. from Providence College. James S. Broucek Executive VP, CFO Principal Accounting Officer, Treasurer & Secretary Mr. James S. Broucek, also known as Jim, has been Chief Financial Officer and Principal Accounting Officer at Citizens Community Bancorp, Inc and Citizens Community Federal since October 31, 2017. He serves as Executive Vice President, CFO, Treasurer, and Secretary of Citizens Community Bancorp, Inc. and of Citizens Community Federal National Association. He served as a Senior Manager of Wipfli LLP (“Wipfli”) from December 2013 to October 2017. Before joining Wipfli, Mr. Broucek held several positions with TCF Financial Corporation (“TCF Financial”) and its subsidiaries from 1995 to 2013, with his last position being Treasurer of TCF Financial. Prior to joining TCF Financial, Mr. Broucek served as the Controller of Great Lakes Bancorp. Mr. Broucek is a banking veteran with 36 years of experience. Mr. Broucek holds a B.A. in mathematics and business administration with a concentration in accounting from Hope College. 26