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Citizens Community Bank Reports Third Quarter 2012 Financial Results

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SOUTH HILL, Va., Nov. 2, 2012 /PRNewswire/ -- Citizens Community Bank (OTC: CZYB) reported today its financial results for the Third quarter of 2012.

Earnings

For the three month period ended September 30, 2012, the Bank had a net loss of $112,751 before preferred stock dividends compared to net income of $204,298 before preferred stock dividends for the third quarter of 2011. For the same three month period, the Bank posted a net loss to common shareholders of $162,755 or ($0.11) per share (basic and diluted) compared to net income available to common shareholders of $61,811 or $0.04 per share (basic and diluted) one year earlier. The shortfall resulted predominately from a $434,147 provision expense for the quarter. For the same three month period, return on average assets was (0.40%) compared to 0.15% for the third quarter of 2011. Return on average common equity equaled (3.42%), down from 1.31% one year ago.

For the nine months ended September 30, 2012, the Bank had net income of $141,901, compared to $432,502 for the nine months ended September 30, 2011. After preferred dividends of $149,827 and $239,237, respectively, there was a net loss to common shareholders of $7,926 or ($0.01) per share (basic and diluted), compared to net income available to common shareholders of $193,265, or $0.13 per share (basic and diluted) for the nine months ended September 30, 2011.

In the third quarter of 2012, the net interest margin was 3.96%, versus 4.26% for the third quarter of 2011. The tightening of the net interest margin resulted primarily from the continual repricing of loans and securities in this extremely low rate environment. Although funding costs were lowered, this was not enough to offset the reduction in interest income. Earning assets yielded 5.10% for the third quarter of 2012, down 55 basis points from the third quarter of 2011. For the same period, funding costs were 1.40% compared to 1.67% one year ago.

For the quarter ended September 30, 2012, noninterest income totaled $223,809, up $33,174 or 17.4% over the third quarter of 2011, when excluding $1,900 of gains on sales of securities in 2011. The improvement resulted from a robust secondary mortgage market where low rates have spurred activity. Consequently, secondary mortgage fee revenue was $48,867 for the third quarter of 2012 versus $3,855 for the third quarter of 2011.

For the three months ended September 30, 2012, noninterest expense was $1,452,471, an increase of $19,351 or 1.4% over the third quarter of 2011. Operating expenses continued to be elevated due mostly to the heightened level of nonperforming assets. For the third quarter of 2012, the Bank incurred losses of $26,254 on the sale of other real estate owned compared to $43,091 of losses for the third quarter of 2011.

Growth

At September 30, 2012 total assets were $163.8 million, up $2.3 million, or 1.5% from December 31, 2011. Gross loans were $131.1 million, an increase of $3.0 million or 2.3% from December 31, 2011. The securities portfolio decreased by $389,912 or 2.7% from December 31, 2011. Deposits totaled $138.9 million, an increase of $4.3 million or 3.2% since December 31, 2011. Over the same comparable period, noninterest bearing demand deposits increased $2.3 million or 14.5%. FHLB borrowings declined $2.0 million as the Bank repaid maturing borrowings during the first quarter of 2012.

Asset Quality

President/CEO Tom Manson stated that, "Management and the Board of Directors remain committed to emerge from all of the problems associated with the economic downturn of 2008 that have continued to place pressure on earnings and hamper growth strategies. While we are very disappointed that the additional loss provision is placing us in a net loss position for both the third quarter and year to date, we are hopeful that we can quickly complete the process of shedding any remaining problems that would hinder our efforts to improve the quality of the assets on our balance sheet and focus on the strategies that will move us forward and give our shareholders the type of return on investment that they deserve."

During the quarter ended September 30, 2012, provision for loan losses totaled $434,137 compared to $60,000 for the third quarter of 2011. The sharp increase in the provision was due to higher impairment values on stressed credits, which required higher specific reserves. Net charge-offs equaled $786,552 or 2.41% of average loans on an annualized basis for the third quarter of 2012, compared to $28,571 or 0.09% of charge-offs for the quarter ended September 30, 2011. Nonperforming loans, which include troubled debt restructurings, equaled $6,846,160 or 5.22% of outstanding loans compared to $5,627,807 or 4.40% on September 30, 2011, and $4,527,476 or 3.53% at year end 2011. Of the $6,846,160 in nonperforming loans, $777,296 were comprised of troubled debt restructured loans that were accruing interest and paying as agreed. There were no loans 90 days past due and still accruing interest on September 30, 2012.

At September 30, 2012, the Bank held $2,378,400 of other real estate owned compared with $2,379,558 at year end 2011 and $2,579,558 one year ago. In aggregate, nonperforming assets equaled $9,224,560 or 5.63% of total assets, up from $8,207,365 or 4.95% on September 30, 2011 and $6,907,034 or 4.28% on December 31, 2011. The allowance for loan losses represented 1.90% of loans as of September 30, 2012 compared to 2.08% on December 31, 2011 and September 30, 2011, respectively.

Citizens Community Bank is a Virginia state chartered bank headquartered in South Hill, Va.  Opened in December 1999, it operates four branches, three in south central Virginia and one in northern North Carolina as well as a loan production office in Oxford, North Carolina. For more information and additional financial data, please visit www.ccbsite.com.

This press release contains "forward-looking statements" that concern future events which are subject to risks and uncertainties.  Any such statements are based on certain assumptions and analyses by the Bank and other factors it believes are appropriate in the circumstances.  The Bank's actual results, events and developments may differ materially from those contemplated by any forward-looking statement. 



Citizens Community Bank


Financial Highlights





































(Unaudited)

















(Actual dollars, except per share data)


 Three months ended September 30,




Nine months ended September 30,

Selected Operating Data:



2012



2011



2012



2011



















Net interest income



$   1,474,203



$    1,591,574



$   4,408,772



$    4,799,729

Provision for loan losses



434,137



60,000



599,137



467,461

Noninterest income



223,809



192,535



634,130



796,015

Noninterest expense



1,452,471



1,433,120



4,300,718



4,524,006

Income (loss) before income tax 

(188,596)



290,989



143,047



604,277

Income tax expense (benefit)



(75,845)



86,691



1,146



171,775

Net income (loss)



$    (112,751)



$       204,298



$      141,901



$       432,502

Less: Preferred dividends



$        50,004



$       142,487



$      149,827



$       239,237

Net income (loss) available to common













shareholders



$    (162,755)



$         61,811



$        (7,926)



$       193,265



















Income (loss) per share available to













common shareholders:(1)

















Basic 



($0.11)



$0.04



($0.01)



$0.13

Diluted



($0.11)



$0.04



($0.01)



$0.13



















Average shares outstanding, basic

1,500,948



1,500,948



1,500,948



1,500,948

Average shares outstanding, diluted

1,500,948



1,500,948



1,500,948



1,500,948



















Note: (1) All per share amounts have been adjusted to reflect a 10% stock dividend paid by the Bank in July 2011.





   




Citizens Community Bank


Financial Highlights





































(Actual dollars, except per share data)



September 30,



December 31,



September 30,





Balance Sheet Data:



2012



2011



2011























Total assets



$ 163,798,851



$ 161,463,457



$ 165,753,456





Loans, net



128,627,836



125,457,700



125,241,309





Deposits



138,986,623



134,655,123



138,690,497





Borrowings



2,000,000



4,000,000



4,000,000





Preferred stock



4,000,000



4,000,000



4,000,000





Stockholders' equity



22,562,410



22,594,950



22,641,043





Book value per share (1) (2)



$            12.37



$            12.39



$            12.39





Total shares outstanding (2)



1,500,948



1,500,948



1,500,948



























 

Three months ended September 30,



 

Nine months ended September 30,

Performance Ratios:



2012



2011



2012



2011

Return on average assets



(0.40%)



0.15%



0.19%



0.16%

Return on average common equity



(3.42%)



1.31%



1.57%



1.38%

Net interest margin 



3.96%



4.26%



4.02%



4.32%

Overhead efficiency



85.54%



80.33%



85.28%



85.89%



















Asset Quality Data:

















Allowance for loan loss



$     2,495,358



$     2,664,252



 n/a 



 n/a 

Nonperforming assets



9,224,560



8,207,365



 n/a 



 n/a 

Nonaccrual loans



6,068,864



4,876,731



 n/a 



 n/a 

Troubled debt restructurings



777,296



751,076



 n/a 



 n/a 

Nonperforming loans (3)



6,846,160



5,627,807



 n/a 



 n/a 

Other real estate owned



2,378,400



2,579,558



 n/a 



 n/a 

Net (charge-offs) recoveries



(786,552)



(28,571)



(768,579)



(501,331)























September 30,



December 31,



September 30,





Asset Quality Ratios:



2012



2011



2011





Allowance for loan loss to total loans



1.90%



2.08%



2.08%





Nonperforming loans to total loans



5.22%



3.53%



4.40%





Nonperforming assets to total assets



5.63%



4.28%



4.95%





Net charge-offs (recoveries) to average loans (4)



2.41%



0.65%



0.09%























Capital Ratios:

















Total risk-based capital



17.80%



18.05%



18.00%





Tier 1 risk-based capital



16.54%



16.79%



16.74%





Tier 1 leverage capital



13.69%



13.47%



13.62%























Note: (1) Book value excludes $4,000,0000 of preferred stock for September 30, 2012, December 31, 2011, and September 30, 2011.

          (2) All per share amounts have been adjusted to reflect a 10% stock dividend paid by the Bank in July 2011.

          (3) Includes troubled debt restructurings of $777,296 and $751,076, for September 30, 2012 and 2011, respectively. 

          (4) Annualized rates for the quarter ended September 30, 2012 and 2011, respectively. 























































 

SOURCE Citizens Community Bank

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