Citizens Community Bancorp, Inc.: Earns $2.5 million for fiscal 2017
Assets Expand 35% From Prior Year
EAU CLAIRE, Wis., Nov. 06, 2017 (GLOBE NEWSWIRE) -- Citizens Community Bancorp, Inc. (the "Company") (Nasdaq:CZWI), the parent company of Citizens Community Federal N.A. (the “Bank”), today reported GAAP earnings decreased to $2.50 million, or $0.46 per diluted share in fiscal 2017, compared to $2.57 million, or $0.49 per diluted share for the prior fiscal year. For the fourth quarter ended September 30, 2017, GAAP earnings showed a loss of $458,000, or $0.08 per diluted share compared to earnings of $1.08 million, or $0.20 per diluted share in the linked quarter and earnings of $176,000, or $0.04 per diluted share for the fourth quarter one year earlier. The 2017 fiscal fourth quarter and year to date operations were negatively impacted by merger expenses including data system conversion expenses, severance costs, higher professional fees, interest expense from acquisition debt, increased loan loss provision associated with organic loan growth and higher compensation costs due to production incentive increases, partially offset by settlement proceeds and the positive impact of the Wells merger.
Core earnings (non-GAAP) increased 20.0% year-over-year to $4.3 million, or $0.79 per diluted share for fiscal 2017, compared to $3.6 million, or $0.67 per diluted share for fiscal 2016. For the fourth quarter of fiscal 2017, core earnings (non-GAAP) were $731,000, or $0.13 per diluted share, compared to $785,000, or $0.15 per diluted share (non-GAAP) for the fourth quarter of fiscal 2016. Fiscal 2017 core earnings exclude merger expenditures and the cost of closing six branches during the year, as well as other costs and proceeds itemized on the accompanying financial table "Reconciliation of GAAP Earnings and Core Earnings (non-GAAP)". Fiscal 2016 core earnings exclude merger expenditures related to the merger with Community Bank of Northern Wisconsin ("CBN") and the cost of closing four branch offices.
Core earnings is a non-GAAP measure that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table "Reconciliation of GAAP Earnings and Core Earnings (non-GAAP)".
“We have made considerable progress during the year improving our balance sheet, core operations and transforming our profile from our credit union heritage during the past year. We will continue to focus on streamlining operations and demonstrating we can grow organically as well as through acquisitions.” said Stephen Bianchi, President and Chief Executive Officer. “Our commercial lending platform continues to expand through the addition of new lending teams and improved performance of our existing lending teams. With solid fourth quarter growth in the commercial loan portfolio, we recorded a loan loss provision for the first time since the quarter ended December 31, 2015.”
Acquisition of Wells Financial Corp.
“We closed the acquisition of Wells Financial Corp. on August 18, 2017, and issued 592,218 Citizens Community Bancorp, Inc. shares to Wells Financial shareholders. The acquisition substantially diversified our loan and deposit portfolios, and expanded our southern Minnesota markets coverage. Within days of closing the acquisition, we were able to convert their core data system to our platform,” said Bianchi.
Fourth Quarter Fiscal 2017 Financial Highlights: (at or for the periods ended September 30, 2017, compared to June 30, 2017 and /or September 30, 2016)
- GAAP net income reflected a loss of $458,000 in Q4 fiscal 2017, compared to earnings of $176,000 from a year ago, and $1.08 million in Q3 fiscal 2017. Fiscal 2017 net income decreased 2.9% to $2.50 million, or $0.46 per diluted share, from $2.57 million, or $0.49 per diluted share for fiscal 2016.
- Expenses for acquisitions and other non-core items totaled $1.8 million pretax, or $0.22 per diluted share, after-tax, in the 4Q fiscal 2017 compared to $1.1 million pretax, or $0.11 per diluted share after-tax in the 4Q 2016. For fiscal 2017, non-core expenses were $2.9 million pretax, or $0.36 per diluted share after-tax, compared to $1.5 million pretax, or $0.18 per diluted share after tax for fiscal 2016.
- Net interest income increased 7.9% to $6.17 million in Q4 fiscal 2017, from $5.72 million in Q4 fiscal 2016. For fiscal 2017, net interest income grew 10.9% to $22.27 million from $20.08 million for fiscal 2016.
- Net interest margin (NIM) was 3.29% for the current quarter, compared to 3.32% for Q4 fiscal 2016. For fiscal 2017, the NIM expanded 4 basis points to 3.31% from 3.27% in fiscal 2016. Incremental interest expense on acquisition debt of approximately $180,000, or 11 basis points, was recorded in the current quarter.
- Loan loss provision increased to $319,000 in Q4 fiscal 2017 compared to no provisions one year earlier and the previous quarter. Provisions were increased primarily related to the organic growth of portfolio loans by approximately $36 million in the quarter.
- Total non-interest income increased 22% to $1.4 million in Q4 fiscal 2017, compared to $1.1 million in Q4 fiscal 2016. For fiscal 2017, total non-interest income grew 21% to $4.8 million from $3.9 million for the like period in 2016. Growth in non-interest income is being driven primarily by settlement proceeds and fee income generated due to the Wells acquisition.
- Net loans were $727.1 million at September 30, 2017, compared to $568.4 million at September 30, 2016 and $513.6 million at June 30, 2017. The larger balance of loans, in the quarter, reflects organic loan growth plus loans acquired in the Wells Financial acquisition.
- Total deposits were $742.5 million at September 30, 2017, compared to $557.7 million at September 30, 2016 and $519.1 million at June 30, 2017. The deposit growth is due to the Wells Financial acquisition, partially offset by deposit runoff in closed branches.
- The allowance for loan and lease losses was 0.81% of total loans at September 30, 2017, compared to 1.06% one year earlier and 1.11% the previous quarter. The lower ratio for Q4 2017 was a result of the larger balance of loans related to the acquisition of Wells Financial that were recorded at fair values and therefore without provisions for losses.
- Nonperforming assets were $14.7 million, or 1.56% of total assets at September 30, 2017, compared to $4.3 million, or 0.62% of total assets at September 30, 2016, and $7.3 million, or 1.10% of total assets at June 30, 2017. Included in nonperforming assets are approximately, $6.2 million of foreclosed properties acquired in the Wells Financial acquisition, including $3.1 million that have loan contracts on which the borrowers are paying according to their contractual terms, but the deed remains in the name of the Bank. The weighted average FICO score for these 24 contracts is 652 and the average loan-to-value is 64%. Additionally, other real estate owned increased $3.4 million due to contract for deed loans classified as other real estate loans, acquired in the Wells merger.