Attached files
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| 8-K - 8-K - Citizens Community Bancorp Inc. | a8kearningsrelczwi20161231.htm |
Exhibit 99.1
Citizens Community Bancorp, Inc. Earnings Increase 11% YOY for First Quarter Fiscal 2017;
Driven by Growth in Earnings and Strong Revenues
EAU CLAIRE, WI, January 30, 2017 - Citizens Community Bancorp, Inc. (the "Company") (Nasdaq: CZWI), the parent company of Citizens Community Federal N.A. (the “Bank”), today reported fiscal first quarter GAAP earnings increased 11% to $940,000, or $0.18 per diluted share, compared to $847,000, or $0.16 per diluted share, one year earlier, and significantly improved from $176,000, or $0.04 per diluted share, in the immediate preceding quarter. Excluding merger expenses and branch closure costs, core earnings (non-GAAP) increased 51% to $1.3 million, or $0.25 per share for Q1 fiscal 2017, compared to $892,000, or $0.17 per share, a year ago and grew 72% from $785,000, or $0.15 per share in the preceding quarter.
Core earnings is a non-GAAP measure that management believes provides a better understanding of 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 started fiscal 2017 with momentum from the Community Bank of Northern Wisconsin ("CBN") integration which helped generate a 25% growth in revenue and 51% increase in core earnings year-over-year,” said Stephen Bianchi, President and Chief Executive Officer. “Our efforts to streamline our operations, reduce branch expenses, close and consolidate branch locations and remix our balance sheet, are beginning to generate results. While the rise in interest rates last quarter interrupted some loan closings, we are encouraged by our commercial loan pipeline and deposit generation priorities for the coming year."
“The integration of the CBN acquisition, completed in May 2016, is proceeding on plan and we are on track to achieve projected cost reductions,” Bianchi continued. “We are pleased with the customer retention efforts and the contributions to our financial results from this transaction.” Total assets increased 18% to $686.4 million at December 31, 2016, from $581.8 million at December 31, 2015, reflecting a 21% increase in net loans and a 17% increase in deposits. Total assets decreased 1% from $695.9 million in the immediate prior quarter largely related to exiting the indirect loan business, and account closures related to recently announced branch closings."
First Quarter Fiscal 2017 Financial Highlights: (at or for the periods ended December 31, 2016, compared to December 31, 2015 and /or September 30, 2016.)
• | GAAP Earnings were $940,000, or $0.18 per diluted share, for Q1 fiscal 2017 compared to $847,000, or $0.16 per diluted share, for Q1 fiscal 2016, and $176,000, or $0.04 per diluted share, for Q4 fiscal 2016. |
• | Core earnings (non-GAAP) grew 51% to $1.3 million for Q1 fiscal 2017, compared to $892,000 for the quarter ended December 31, 2015, and increased 72% from $785,000 for the quarter ended September 30, 2016. Core earnings (non-GAAP) primarily reflect adjustments related to merger-related costs of the CBN acquisition on May 16, 2016, and the costs associated with the closing of four branches as part of the planned exit from the Eastern Wisconsin market. |
• | The net interest margin improved to 3.36% for Q1 fiscal 2017, compared to 3.22% for the three months ended December 31, 2015 and 3.32% for the three months ended September 30, 2016. |
• | Total assets increased 18% to $686.4 million at December 31, 2016, from $581.8 million at December 31, 2015, primarily due to contributions of $111.7 million in loans from the acquisition of CBN in May 2016. Total assets declined slightly from $695.9 million, at September 30, 2016. |
• | Total net loans grew 21% to $543.0 million at December 31, 2016, compared to $447.2 million at December 31, 2015, and declined by 4% from $568.4 million, on a linked quarter basis, reflecting our increased focus on secondary market lending for one to four family residential loans and exiting the indirect lending business. |
• | Total deposits increased 17% to $535.1 million at December 31, 2016, from $457.7 million at December 31, 2015, and declined 4% from $557.7 million at September 30, 2016. |
• | The allowance for loan and leases losses as a percentage of total loans was 1.08% at December 31, 2016, compared to 1.42% one year earlier. |
• | Asset quality declined during the quarter and the year with nonperforming assets to total assets at 1.08% at December 31, 2016, compared to 0.62% in the preceding quarter and 0.42% a year ago. This increase was mainly due to the deterioration of two larger, acquired agricultural real estate loans. |
• | Bank capital ratios exceeded regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at December 31, 2016: |
Citizens Community Federal N.A. | To Be Well Capitalized Under Prompt Corrective Action Provisions | |||
Total capital (to risk weighted assets) | 14.7% | 10.0% | ||
Tier 1 capital (to risk weighted assets) | 13.5% | 8.0% | ||
Common equity tier 1 capital (to risk weighted assets) | 13.5% | 6.5% | ||
Tier 1 leverage ratio (to adjusted total assets) | 9.8% | 5.0% | ||
• | Tangible book value was $11.09 per share at December 31, 2016, compared to $11.86 per share a year ago. |
Balance Sheet and Asset Quality Review
Total assets were $686.4 million at December 31, 2016, compared to $581.8 million at December 31, 2015, and $695.9 million at September 30, 2016. The increase in total assets from a year ago primarily reflects higher cash levels and loan outstandings primarily due to the CBN acquisition, while the decline in total assets on a linked quarter basis is mainly due to the decision made to discontinue indirect lending and reduced emphasis on one to four family residential loans.
Total net loans grew 21% to $543.0 million at December 31, 2016, from $447.2 million at December 31, 2015, and declined 4% from $568.4 million at September 30, 2016. The increase in loans year-over-year was primarily due to the CBN acquisition, which included $111.7 million of net loans. The decline in the loan balances from the immediate prior quarter was primarily due to decreased levels of one to four family loans and a decreased investment in indirect consumer loans. At the same time, commercial and agricultural loan balances increased over the past quarter reflecting increased emphasis on internally underwritten loans.
At December 31, 2016, commercial, agricultural, multi-family, construction and land development loans totaled 36.2% of the total loan portfolio. One to four family residential real estate loans represented 32.1% of the total loan portfolio, while consumer related non-real estate loans totaled 31.7% of the total loan portfolio - down from 32.7% in the prior quarter.
Total deposits grew 17% to $535.1 million at December 31, 2016, compared to $457.7 million at December 31, 2015, and declined 4% from $557.7 million at September 30, 2016. Non-interest bearing demand deposits more than doubled year-over-year and grew 5% on a linked quarter basis. Despite the decline in total deposits on a linked quarter basis, demand deposits, both interest bearing and non-interest bearing, more than doubled and savings deposits increased 76% over the past year. Money market accounts declined 11% year-over-year, while certificate accounts increased 8% year-over-year. Non-certificate accounts increased to 52% of total deposits at December 31, 2016, from 47% a year ago. The change in composition of deposits reflects a combination of deposit run-off related to the CBN acquisition, the announced closure of the four Eastern Wisconsin branches and the increase in commercial deposit accounts.
Federal Home Loan Bank ("FHLB") advances and other borrowings totaled $73.5 million at December 31, 2016, compared to $59.3 million at September 30, 2016. To facilitate the purchase of CBN, the Company obtained an adjustable-rate, $11.0 million loan with a maturity date of May 15, 2021.
Nonperforming assets ("NPAs") totaled $7.4 million, or 1.08% of total assets, at December 31, 2016, compared to $2.4 million, or 0.42% of total assets, at December 31, 2015, and $4.3 million, or 0.62% of total assets, at September 30, 2016. This increase was mainly due to the deterioration of two larger, acquired agricultural loans.
The allowance for loan and lease losses at December 31, 2016, totaled $5.9 million and represented 1.08% of total loans, compared to $6.1 million and 1.06% of total loans at September 30, 2016. Net charged off loans totaled $151,000 and $130,000 and represented 0.11% and 0.12% of average loans on an annualized basis at December 31, 2016 and 2015, respectively.
Tangible common stockholders' equity was 8.57% of tangible assets at December 31, 2016, compared to 8.55% at September 30, 2016. Tangible book value per common share was $11.09 at December 31, 2016 compared to $11.22 at September 30, 2016.
Capital ratios for the Bank continued to remain well above regulatory requirements with Tier 1 capital to risk weighted assets of 13.5% at December 31, 2016, up from 12.9% at September 30, 2016. Tier 1 leverage capital to adjusted total assets improved to 9.8% at quarter end compared to 9.3% the preceding quarter. These regulatory ratios were higher than the required minimum levels of 6.00% for Tier 1 capital to risk weighted assets and 4.00% for Tier 1 leverage capital to adjusted total assets.
Review of Operations
Net interest income increased 22% to $5.6 million for the fiscal first quarter of 2017, compared to $4.6 million for the fiscal first quarter of 2016, primarily due to growth in the loan portfolio. Net interest income declined 3% from $5.7 million on a linked quarter basis mainly due to a reduction in the loan portfolio.
For the fiscal fourth quarter ended September 30, 2016, the Company's operations reflected $1.1 million in one-time costs associated with the CBN acquisition and announced branch closures.
For the fiscal first quarter of 2017, the net interest margin expanded 14 basis points to 3.36% from 3.22% one year earlier, and 3.32% for the fiscal fourth quarter ended September 30, 2016, primarily due to higher earning asset yields.
No provision for loan losses was recorded for the fiscal first quarter of 2017 nor for the fiscal fourth quarter of 2016, compared to $75,000 for the fiscal first quarter of 2016. Management believes the Bank is amply reserved for any loan losses with an allowance for loan losses totaling $5.9 million at December 31, 2016. Total charged off loans were $215,000 for the fiscal first quarter of 2017, compared to $179,000 a year ago and $718,000 for the fiscal fourth quarter ended September 30, 2016. Allowance for loan losses increased as a percentage of total loans to 1.08% as of December 31, 2016 compared to 1.06% as of September 30, 2016.
Noninterest income totaled $1.3 million for the fiscal first quarter of 2017, compared to $950,000 a year ago and $1.1 million for the immediate preceding quarter. Overdraft fees and charges have decreased industry wide, as customers utilize online and mobile tools to better manage their finances, an industry trend we have also experienced. Offsetting this traditional fee income source, was our secondary market fee income generated from customer mortgage activity due to advantages over the ARM loan portfolio mortgage offering.
Total noninterest expense was $5.5 million in the fiscal first quarter of 2017 compared to $4.1 million for the quarter ended December 31, 2015. The current quarter saw a $461,000 decrease in salaries and related benefits from the prior quarter, which included employees of the CBN acquisition, and has yet to show the full compensation savings from four branch closings during the current quarter and other branch closing costs. Occupancy expenses increased year-over-year due to branch closure costs for the four branches in Eastern Wisconsin.
These financial results are preliminary until the Form 10-Q is filed in February 2017.
About the Company
Citizens Community Federal N.A., a wholly owned subsidiary of Citizens Community Bancorp, Inc., is a full-service national bank based in Altoona, Wisconsin, serving more than 50,000 customers in Wisconsin, Minnesota and Michigan through 16 branch locations. The Company’s stock trades on the NASDAQ Global Market under the symbol “CZWI.”
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 by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “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 Company’s operations and business environment. These uncertainties include general economic conditions, in particular, relating to consumer demand for the Bank’s products and services; the Bank’s ability to maintain current deposit and loan levels at current interest rates; competitive and technological developments; deteriorating credit quality, including changes in the interest rate environment reducing interest margins; prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; the Bank’s ability to maintain required capital levels and adequate sources of funding and liquidity; maintaining capital requirements may limit the Bank’s operations and potential growth; changes and trends in capital markets; competitive pressures among depository institutions; effects of critical accounting estimates and judgments; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies overseeing the Bank; the Bank’s ability to implement its cost-savings and revenue enhancement initiatives, including costs associated with its branch consolidation and new market branch growth initiatives; legislative or regulatory changes or actions or significant litigation adversely affecting the Bank; fluctuation of the Company’s stock price; the Bank's ability to attract and retain key personnel; the Bank's ability to secure confidential information through the use of computer systems and telecommunications networks; and the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity. Shareholders, 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 September 30, 2016 filed with the Securities and Exchange Commission on December 29, 2016. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, which management believes may be helpful in understanding the Company's results of operations or financial position and comparing results over different periods. Non-GAAP measures eliminates the impact of certain one-time expenses such as acquisition and branch closure costs and related data processing termination fees, legal costs, severance pay, accelerated depreciation expense and lease termination fees. Merger related charges represent expenses to either satisfy contractual obligations of acquired entities without any useful benefit to the Company or to convert and consolidate customer records onto the Company platforms. These costs are unique to each transaction based on the contracts in existence at the merger date. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions.
Contact: Steve Bianchi, CEO
(715)-836-9994
CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets (unaudited)
(in thousands)
December 31, 2016 | September 30, 2016 | December 31, 2015 (As Restated) | ||||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 20,444 | $ | 10,046 | $ | 15,230 | ||||||
Other interest bearing deposits | 745 | 745 | 3,242 | |||||||||
Securities available for sale "AFS" | 81,136 | 80,123 | 87,161 | |||||||||
Securities held to maturity "HTM" | 6,235 | 6,669 | 7,724 | |||||||||
Non-marketable equity securities, at cost | 5,365 | 5,034 | 4,626 | |||||||||
Loans receivable | 548,904 | 574,439 | 453,649 | |||||||||
Allowance for loan losses | (5,917 | ) | (6,068 | ) | (6,441 | ) | ||||||
Loans receivable, net | 542,987 | 568,371 | 447,208 | |||||||||
Office properties and equipment, net | 5,166 | 5,338 | 2,803 | |||||||||
Accrued interest receivable | 2,073 | 2,032 | 1,586 | |||||||||
Intangible assets | 829 | 872 | 90 | |||||||||
Goodwill | 4,663 | 4,663 | — | |||||||||
Foreclosed and repossessed assets, net | 784 | 776 | 804 | |||||||||
Other assets | 15,987 | 11,196 | 11,296 | |||||||||
TOTAL ASSETS | $ | 686,414 | $ | 695,865 | $ | 581,770 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Liabilities: | ||||||||||||
Deposits | $ | 535,112 | $ | 557,677 | $ | 457,732 | ||||||
Federal Home Loan Bank advances | 73,491 | 59,291 | 58,891 | |||||||||
Other borrowings | 11,000 | 11,000 | — | |||||||||
Other liabilities | 2,985 | 3,353 | 3,005 | |||||||||
Total liabilities | 622,588 | 631,321 | 519,628 | |||||||||
Stockholders’ equity: | ||||||||||||
Common stock—$0.01 par value, authorized 30,000,000; 5,261,170, 5,260,098 and 5,231,265 shares issued and outstanding, respectively | 53 | 53 | 52 | |||||||||
Additional paid-in capital | 54,983 | 54,963 | 54,744 | |||||||||
Retained earnings | 10,047 | 9,107 | 8,011 | |||||||||
Unearned deferred compensation | (205 | ) | (193 | ) | (261 | ) | ||||||
Accumulated other comprehensive (loss) gain | (1,052 | ) | 614 | (404 | ) | |||||||
Total stockholders’ equity | 63,826 | 64,544 | 62,142 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 686,414 | $ | 695,865 | $ | 581,770 | ||||||
CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
Three Months Ended | ||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 (As Restated) | ||||||||||
Interest and dividend income: | ||||||||||||
Interest and fees on loans | $ | 6,530 | $ | 6,784 | $ | 5,250 | ||||||
Interest on investments | 418 | 410 | 424 | |||||||||
Total interest and dividend income | 6,948 | 7,194 | 5,674 | |||||||||
Interest expense: | ||||||||||||
Interest on deposits | 1,119 | 1,212 | 956 | |||||||||
Interest on FHLB borrowed funds | 173 | 168 | 165 | |||||||||
Interest on other borrowed funds | 99 | 96 | — | |||||||||
Total interest expense | 1,391 | 1,476 | 1,121 | |||||||||
Net interest income | 5,557 | 5,718 | 4,553 | |||||||||
Provision for loan losses | — | — | 75 | |||||||||
Net interest income after provision for loan losses | 5,557 | 5,718 | 4,478 | |||||||||
Non-interest income: | ||||||||||||
Net gains on available for sale securities | 29 | 16 | — | |||||||||
Service charges on deposit accounts | 398 | 462 | 423 | |||||||||
Loan fees and service charges | 603 | 411 | 321 | |||||||||
Other | 283 | 253 | 206 | |||||||||
Total non-interest income | 1,313 | 1,142 | 950 | |||||||||
Non-interest expense: | ||||||||||||
Salaries and related benefits | 2,674 | 3,135 | 2,218 | |||||||||
Occupancy | 1,068 | 991 | 569 | |||||||||
Office | 281 | 385 | 252 | |||||||||
Data processing | 472 | 528 | 409 | |||||||||
Amortization of core deposit intangible | 43 | 45 | 14 | |||||||||
Advertising, marketing and public relations | 63 | 245 | 137 | |||||||||
FDIC premium assessment | 83 | 139 | 85 | |||||||||
Professional services | 401 | 579 | 172 | |||||||||
Other | 378 | 682 | 259 | |||||||||
Total non-interest expense | 5,463 | 6,729 | 4,115 | |||||||||
Income before provision for income taxes | 1,407 | 131 | 1,313 | |||||||||
(Provision) benefit for income taxes | (467 | ) | 45 | (466 | ) | |||||||
Net income attributable to common stockholders | $ | 940 | $ | 176 | $ | 847 | ||||||
Per share information: | ||||||||||||
Basic earnings | $ | 0.18 | $ | 0.04 | $ | 0.16 | ||||||
Diluted earnings | $ | 0.18 | $ | 0.04 | $ | 0.16 | ||||||
Cash dividends paid | $ | — | $ | — | $ | — | ||||||
Book value per share at end of period | $ | 12.13 | $ | 12.27 | $ | 11.88 | ||||||
Tangible book value per share at end of period | $ | 11.09 | $ | 11.22 | $ | 11.86 | ||||||
Reconciliation of GAAP Earnings and Core Earnings (non-GAAP):
Three Months Ended | ||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 (As Restated) | ||||||||||
(Dollars in Thousands, except share data) | ||||||||||||
GAAP earnings before income taxes | $ | 1,407 | $ | 131 | $ | 1,313 | ||||||
Merger related costs (1) | — | 444 | — | |||||||||
Branch closure costs (2) | 633 | 614 | 38 | |||||||||
Core earnings before income taxes (3) | 2,040 | 1,189 | 1,351 | |||||||||
Provision for income tax on core earnings at 34% | 694 | 404 | 459 | |||||||||
Core earnings after income taxes (3) | $ | 1,346 | $ | 785 | $ | 892 | ||||||
GAAP diluted earnings per share, net of tax | $ | 0.18 | $ | 0.04 | $ | 0.16 | ||||||
Merger related costs, net of tax | — | 0.05 | — | |||||||||
Branch closure costs, net of tax | 0.07 | 0.06 | 0.01 | |||||||||
Core diluted earnings per share, net of tax | $ | 0.25 | $ | 0.15 | $ | 0.17 | ||||||
Average diluted shares outstanding | 5,293,700 | 5,274,505 | 5,262,718 | |||||||||
(1) Costs incurred are included as data processing, advertising, marketing and public relations, professional fees and other non-interest expense on the income statement.
(2) Branch closure costs include severance pay recorded in salaries and other benefits, accelerated depreciation expense and lease termination fees included in occupancy and other non-interest expense on the income statement.
(3) 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.
Non-performing Assets:
December 31, 2016 and Three Months Ended | September 30, 2016 and Twelve Months Ended | December 31, 2015 and Three Months Ended | ||||||||||
Nonperforming assets: | ||||||||||||
Nonaccrual loans | $ | 5,750 | $ | 3,191 | $ | 848 | ||||||
Accruing loans past due 90 days or more | 894 | 380 | 772 | |||||||||
Total nonperforming loans (“NPLs”) (1) | 6,644 | 3,571 | 1,620 | |||||||||
Other real estate owned (1) | 655 | 725 | 734 | |||||||||
Other collateral owned | 129 | 52 | 70 | |||||||||
Total nonperforming assets (“NPAs”) (1) | $ | 7,428 | $ | 4,348 | $ | 2,424 | ||||||
Troubled Debt Restructurings (“TDRs”) - Originated Loans | $ | 3,529 | $ | 3,733 | $ | 3,794 | ||||||
Nonaccrual TDRs - Originated Loans | $ | 410 | $ | 515 | $ | 311 | ||||||
Average outstanding loan balance | $ | 561,672 | $ | 512,475 | $ | 445,687 | ||||||
Loans, end of period | 548,904 | 574,439 | 453,649 | |||||||||
Total assets, end of period | 686,414 | 695,865 | 581,770 | |||||||||
ALL, at beginning of period | 6,068 | 6,496 | 6,496 | |||||||||
Loans charged off: | ||||||||||||
Residential real estate | (43 | ) | (140 | ) | (41 | ) | ||||||
Commercial/agriculture real estate | — | — | — | |||||||||
Consumer non-real estate | (172 | ) | (460 | ) | (138 | ) | ||||||
Commercial agriculture non-real estate | — | (118 | ) | |||||||||
Total loans charged off | (215 | ) | (718 | ) | (179 | ) | ||||||
Recoveries of loans previously charged off: | ||||||||||||
Residential real estate | 3 | 11 | 2 | |||||||||
Commercial/agriculture real estate | — | — | — | |||||||||
Consumer non-real estate | 61 | 204 | 47 | |||||||||
Commercial agriculture non-real estate | — | — | — | |||||||||
Total recoveries of loans previously charged off: | 64 | 215 | 49 | |||||||||
Net loans charged off (“NCOs”) | (151 | ) | (503 | ) | (130 | ) | ||||||
Additions to ALL via provision for loan losses charged to operations | — | 75 | 75 | |||||||||
ALL, at end of period | $ | 5,917 | $ | 6,068 | $ | 6,441 | ||||||
Ratios: | ||||||||||||
ALL to NCOs (annualized) | 979.64 | % | 1,206.36 | % | 1,238.65 | % | ||||||
NCOs (annualized) to average loans | 0.11 | % | 0.10 | % | 0.12 | % | ||||||
ALL to total loans | 1.08 | % | 1.06 | % | 1.42 | % | ||||||
NPLs to total loans | 1.21 | % | 0.62 | % | 0.36 | % | ||||||
NPAs to total assets | 1.08 | % | 0.62 | % | 0.42 | % | ||||||
(1) Total Nonperforming assets increased due to the CBN acquisition in Fiscal 2016. Acquired nonperforming loans were $5,090 and $1,778 at December 31, 2016 and September 30, 2016, respectively. Acquired real estate owned property balances were $143 and $212 at December 31, 2016 and September 30, 2016, respectively.
Troubled Debt Restructurings:
December 31, 2016 | September 30, 2016 | December 31, 2015 | ||||||||||||||||||
Number of Modifications | Recorded Investment | Number of Modifications | Recorded Investment | Number of Modifications | Recorded Investment | |||||||||||||||
Troubled debt restructurings: | ||||||||||||||||||||
Originated loans: | ||||||||||||||||||||
Residential real estate | 30 | $ | 3,214 | 32 | $ | 3,413 | 32 | $ | 3,305 | |||||||||||
Commercial/Agricultural real estate | — | — | — | — | — | — | ||||||||||||||
Consumer non-real estate | 22 | 315 | 21 | 320 | 33 | 489 | ||||||||||||||
Commercial/Agricultural non-real estate | — | — | — | — | — | — | ||||||||||||||
Total originated loans | 52 | $ | 3,529 | 53 | $ | 3,733 | 65 | $ | 3,794 | |||||||||||
Loan Composition:
December 31, 2016 | September 30, 2016 | |||||||
Originated Loans: | ||||||||
Residential real estate: | ||||||||
One to four family | $ | 151,180 | $ | 160,961 | ||||
Commercial/Agricultural real estate: | ||||||||
Commercial real estate | 62,724 | 58,768 | ||||||
Agricultural real estate | 4,803 | 3,418 | ||||||
Multi-family real estate | 15,550 | 18,935 | ||||||
Construction and land development | 12,812 | 12,977 | ||||||
Consumer non-real estate: | ||||||||
Originated indirect paper | 111,507 | 119,073 | ||||||
Purchased indirect paper | 44,006 | 49,221 | ||||||
Other Consumer | 17,851 | 18,926 | ||||||
Commercial/Agricultural non-real estate: | ||||||||
Commercial non-real estate | 20,803 | 17,969 | ||||||
Agricultural non-real estate | 9,621 | 9,994 | ||||||
Total originated loans | $ | 450,857 | $ | 470,242 | ||||
Acquired Loans: | ||||||||
Residential real estate: | ||||||||
One to four family | $ | 24,884 | $ | 26,777 | ||||
Commercial/Agricultural real estate: | ||||||||
Commercial real estate | 28,444 | 30,172 | ||||||
Agricultural real estate | 24,133 | 24,780 | ||||||
Multi-family real estate | — | 200 | ||||||
Construction and land development | 2,710 | 3,603 | ||||||
Consumer non-real estate: | ||||||||
Other Consumer | 604 | 789 | ||||||
Commercial/Agricultural non-real estate: | ||||||||
Commercial non-real estate | 12,650 | 13,032 | ||||||
Agricultural non-real estate | 4,466 | 4,653 | ||||||
Total acquired loans | $ | 97,891 | $ | 104,006 | ||||
Total Loans: | ||||||||
Residential real estate: | ||||||||
One to four family | $ | 176,064 | $ | 187,738 | ||||
Commercial/Agricultural real estate: | ||||||||
Commercial real estate | 91,168 | 88,940 | ||||||
Agricultural real estate | 28,936 | 28,198 | ||||||
Multi-family real estate | 15,550 | 19,135 | ||||||
Construction and land development | 15,522 | 16,580 | ||||||
Consumer non-real estate: | ||||||||
Originated indirect paper | 111,507 | 119,073 | ||||||
Purchased indirect paper | 44,006 | 49,221 | ||||||
Other Consumer | 18,455 | 19,715 | ||||||
Commercial/Agricultural non-real estate: | ||||||||
Commercial non-real estate | 33,453 | 31,001 | ||||||
Agricultural non-real estate | 14,087 | 14,647 | ||||||
Gross loans | $ | 548,748 | $ | 574,248 | ||||
Net deferred loan costs (fees) | 156 | $ | 191 | |||||
Total loans receivable | $ | 548,904 | $ | 574,439 | ||||
Deposit Composition:
December 31, 2016 | September 30, 2016 | ||||||
Non-interest bearing demand deposits | $ | 47,463 | 45,408 | ||||
Interest bearing demand deposits | 50,779 | 48,934 | |||||
Savings accounts | 51,826 | 52,153 | |||||
Money market accounts | 125,923 | 137,234 | |||||
Certificate accounts | 259,121 | 273,948 | |||||
Total deposits | $ | 535,112 | 557,677 | ||||
Average balances, Interest Yields and Rates:
Three months ended December 31, 2016 | Three months ended September 30, 2016 | Three months ended December 31, 2015 | |||||||||||||||||||||||||||||||
Average Balance | Interest Income/ Expense | Average Yield/ Rate | Average Balance | Interest Income/ Expense | Average Yield/ Rate | Average Balance | Interest Income/ Expense | Average Yield/ Rate | |||||||||||||||||||||||||
Average interest earning assets: | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 10,238 | $ | 12 | 0.47 | % | $ | 19,088 | $ | 19 | 0.40 | % | $ | 19,575 | $ | 15 | 0.30 | % | |||||||||||||||
Loans receivable | 561,519 | 6,530 | 4.61 | % | 580,151 | 6,784 | 4.65 | % | 451,809 | 5,250 | 4.61 | % | |||||||||||||||||||||
Interest bearing deposits | 745 | 3 | 1.60 | % | 745 | 4 | 2.14 | % | 3,055 | 17 | 2.21 | % | |||||||||||||||||||||
Investment securities (1) | 86,617 | 430 | 1.97 | % | 88,705 | 405 | 1.82 | % | 88,938 | 424 | 1.89 | % | |||||||||||||||||||||
Non-marketable equity securities, at cost | 5,200 | 45 | 3.43 | % | 5,034 | 54 | 4.27 | % | 4,626 | 28 | 2.40 | % | |||||||||||||||||||||
Total interest earning assets | $ | 664,319 | $ | 7,020 | 4.19 | % | $ | 693,723 | $ | 7,266 | 4.17 | % | $ | 568,003 | $ | 5,734 | 4.01 | % | |||||||||||||||
Average interest bearing liabilities: | |||||||||||||||||||||||||||||||||
Savings accounts | $ | 43,743 | $ | 17 | 0.15 | % | $ | 42,368 | $ | 17 | 0.16 | % | $ | 27,019 | $ | 8 | 0.12 | % | |||||||||||||||
Demand deposits | 48,989 | 74 | 0.60 | % | 52,868 | 85 | 0.64 | % | 23,952 | 44 | 0.73 | % | |||||||||||||||||||||
Money market accounts | 130,057 | 134 | 0.41 | % | 143,493 | 149 | 0.41 | % | 144,284 | 154 | 0.42 | % | |||||||||||||||||||||
CD’s | 245,646 | 814 | 1.31 | % | 265,357 | 878 | 1.32 | % | 219,873 | 683 | 1.23 | % | |||||||||||||||||||||
IRA’s | 29,000 | 80 | 1.09 | % | 30,237 | 83 | 1.09 | % | 22,528 | 67 | 1.18 | % | |||||||||||||||||||||
Total deposits | $ | 497,435 | $ | 1,119 | 0.89 | % | $ | 534,323 | $ | 1,212 | 0.90 | % | $ | 437,656 | $ | 956 | 0.87 | % | |||||||||||||||
FHLB advances and other borrowings | 78,841 | 273 | 1.37 | % | 73,426 | 264 | 1.43 | % | 58,891 | 165 | 1.11 | % | |||||||||||||||||||||
Total interest bearing liabilities | $ | 576,276 | $ | 1,392 | 0.96 | % | $ | 607,749 | $ | 1,476 | 0.97 | % | $ | 496,547 | $ | 1,121 | 0.90 | % | |||||||||||||||
Net interest income | $ | 5,628 | $ | 5,790 | $ | 4,613 | |||||||||||||||||||||||||||
Interest rate spread | 3.23 | % | 3.20 | % | 3.11 | % | |||||||||||||||||||||||||||
Net interest margin | 3.36 | % | 3.32 | % | 3.22 | % | |||||||||||||||||||||||||||
Average interest earning assets to average interest bearing liabilities | 115.28 | % | 114.15 | % | 114.39 | % | |||||||||||||||||||||||||||
(1) For the 3 months ended December 31, 2016, September 30, 2016 and December 31, 2015, the average balance of the tax exempt investment securities, included in investment securities, were $31,986, $31,819 and $26,572 respectively. The interest income on tax exempt securities is computed on a tax-equivalent basis using a tax rate of 34% for all periods presented.
CITIZENS COMMUNITY FEDERAL N.A.
Selected Capital Composition Highlights (unaudited)
December 31, 2016 | September 30, 2016 | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||
Total capital (to risk weighted assets) | 14.7% | 14.1% | 10.0% | |||
Tier 1 capital (to risk weighted assets) | 13.5% | 12.9% | 8.0% | |||
Common equity tier 1 capital (to risk weighted assets) | 13.5% | 12.9% | 6.5% | |||
Tier 1 leverage ratio (to adjusted total assets) | 9.8% | 9.3% | 5.0% | |||