- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
For the quarterly period ended September 30, 1996
- --- Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file number 33-98090
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CITIZENS COMMUNITY BANCORP, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 65-0614044
------- ----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1112 1/2 North Collier Boulevard
Marco Island, Florida 33937
---------------------------
(Address of Principal Executive Offices)
(941) 389-1800
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(Issuer's Telephone Number, Including Area Code)
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days:
YES X NO
---
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date;
Common stock, par value $.01 per share 701,242
- -------------------------------------- ----------------------
(class) Outstanding at September 30, 1996
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<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
INDEX
Part I. Financial Information
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheet -
September 30, 1996 (unaudited)..........................................2
Condensed Consolidated Statements of Operations -
Three and Nine Months ended September 30, 1996 (unaudited)..............3
Condensed Consolidated Statement of Cash Flows -
Nine months ended September 30, 1996 (unaudited)........................4
Notes to Condensed Consolidated Financial Statements (unaudited)........5-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..............................................9-11
Part II. Other Information
Item 5. Other Information.................................................12
Item 6. Exhibits and Reports on Form 8-K...................................12
SIGNATURES....................................................................13
1
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<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet
September 30,
-------------
Assets 1996
----
(unaudited)
<S> <C>
Cash and cash equivalents:
Cash and due from banks $ 921,345
Federal funds sold 3,514,000
----------
Total cash and cash equivalents 4,435,345
Investment securities held to maturity 3,486,001
Loans, net 7,750,212
Premises and equipment, net 1,339,603
Accrued income and other assets 240,900
Deferred tax asset 111,800
----------
Total $ 17,363,861
==========
Liabilities and Stockholders' Equity
Deposits:
Demand deposits 1,316,013
NOW deposits 5,844,921
Money-market deposits 523,750
Savings deposits 224,870
Other time deposits 3,306,382
----------
Total deposits 11,215,936
Other liabilities 62,363
----------
Total liabilities 11,278,299
----------
Stockholders' Equity:
Preferred stock, $.01 par value, 2,000,000 shares authorized,
none issued or outstanding -
Common stock, $.01 par value, 8,000,000 shares authorized,
701,242 shares issued and outstanding 7,012
Additional paid-in capital 6,264,838
Accumulated deficit (186,288)
----------
Total stockholders' equity 6,085,562
----------
Total $ 17,363,861
==========
</TABLE>
2
See Accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
1996 1996
---- ----
(unaudited) (unaudited)
Interest income:
<S> <C> <C>
Loans $ 117,090 133,527
Federal funds sold 66,924 183,018
Investment securities 54,541 76,094
Deposits in banks - 43,863
--------- -------
Total interest income 238,555 436,502
------- -------
Interest expense:
Deposits 85,619 143,446
Mortgage - 7,174
--------- -------
Total interest expense 85,619 150,620
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Net interest income 152,936 285,882
Provision for loan losses 13,000 19,500
-------- --------
Net interest income after provision for loan losses 139,936 266,382
------- -------
Other income, customer service charges 9,146 14,919
-------- --------
Other expense:
Compensation and benefits 103,201 223,504
Occupancy and equipment 36,894 71,237
Outside services 20,244 33,263
Office supplies and expense 25,495 73,060
Marketing expenses 2,664 20,370
Professional fees 9,500 38,901
Miscellaneous 28,906 83,370
-------- --------
Total other expense 226,904 543,705
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Loss before income tax benefit (77,822) (262,404)
Income tax benefit (29,200) (98,400)
------- -------
Net loss $(48,622) (164,004)
======= =======
Loss per share $ (.07) (.25)
======== ========
Dividends per share $ - -
========= ========
Weighted-average number of shares outstanding 694,790 654,395
======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Cash Flows
Nine Months
Ended
September 30,
-------------
1996
----
(unaudited)
Cash flows from operating activities:
<S> <C>
Net loss $ (164,004)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 36,485
Provision for loan losses 19,500
Increase in accrued income and other assets (105,660)
Increase in other liabilities 13,332
Deferred tax benefit (98,400)
----------
Net cash used in operating activities (298,747)
----------
Cash flows from investing activities:
Purchase of premises and equipment (686,541)
Purchase of investment securities (4,736,001)
Maturity of investment securities 1,250,000
Loans originated, net of principal collected (7,769,712)
----------
Net cash used in investing activities (11,942,254)
----------
Cash flows from financing activities:
Net increase in deposits 11,215,936
Redemption of preferred stock (21,000)
Repayment of advance due to organizers (239,000)
Proceeds from issuance of common stock 6,311,178
Payment of mortgage payable (593,806)
Payment of offering costs (39,328)
----------
Net cash provided by financing activities 16,633,980
----------
Net increase in cash and cash equivalents 4,392,979
Cash and cash equivalents at beginning of period 42,366
----------
Cash and cash equivalents at end of period $ 4,435,345
==========
Supplemental disclosure of cash flow information-
Cash paid during the period for:
Interest $ 137,222
==========
Income taxes $ -
=========
See Accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
4
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited)
(1) Description of Business and Summary of Significant Accounting Policies
General. Citizens Community Bancorp, Inc. (the "Holding Company") was
incorporated on May 24, 1995. The Holding Company owns 100% of the
outstanding common stock of Citizens Community Bank (the "Bank")
(collectively the "Company"). The Holding Company was organized
simultaneously with the Bank and its only business is the ownership and
operation of the Bank. The Bank is a Florida state chartered commercial
bank and is insured by the Federal Deposit Insurance Corporation. The Bank
opened for business on March 8, 1996 and provides community banking
services to businesses and individuals in Collier County, Florida. The
Company has adopted a fiscal year ending December 31.
Basis of Presentation. The accompanying consolidated financial statements of the
Company include the accounts of the Holding Company and the Bank. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The accounting and reporting practices of the Company
conform to generally accepted accounting principles and to general
practices within the banking industry.
Estimates. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
Cash and Cash Equivalents. For purposes of the statement of cash flows, cash and
cash equivalents are defined as those amounts presented in the accompanying
consolidated balance sheet as cash and due from banks and federal funds
sold.
Loans and Allowance for Loan Losses. Loans are reported at the principal amount
outstanding. The allowance for loan losses has been established through a
provision for loan losses charged to operations. Loans will be charged
against the allowance for loan losses when management believes that the
collectibility of the principal is unlikely. Subsequent recoveries will be
added to the allowance. The allowance is an amount that management believes
will be adequate to absorb possible losses inherent in existing loans and
loan commitments, based on evaluations of collectibility and prior loss
experience. Management will evaluate the adequacy of the allowance
quarterly, or more frequently if considered necessary. The evaluation will
take into consideration such factors as changes in the nature and volume of
the loan portfolio, overall portfolio quality, loan concentrations,
specific problem loans and commitments, and current and anticipated
economic conditions that may affect the borrower's ability to repay.
Uncollected Interest. The Company will place loans on nonaccrual status when
management believes the collection of interest is doubtful. If the ultimate
collectibility of principal and interest due according to the contractual
terms of the loan agreement is in doubt, the loan will be considered
impaired, and interest is credited to income when collected.
(continued)
5
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited), Continued
(1) Description of Business and Summary of Significant Accounting Policies,
Continued
Loan Impairment and Losses. The Company adopted Statements of Financial
Accounting Standards No. 114 and 118 ("SFAS 114 and 118"). These Statements
address the accounting by creditors for impairment of certain loans. The
Statements generally require the Company to identify loans for which the
Company probably will not receive full repayment of principal and interest,
as impaired loans. The Statements require that impaired loans be valued at
the present value of expected future cash flows, discounted at the loan's
effective interest rate, or at the observable market price of the loan, or
the fair value of the underlying collateral if the loan is collateral
dependent. The Company has implemented the Statements by instituting a
quarterly review of the adequacy of the allowance for loan losses to also
identify and value impaired loans in accordance with guidance in the
Statements.
Management will consider a variety of factors in determining whether a loan
is impaired, including (i) any notice from the borrower that the borrower
will be unable to repay all principal and interest amounts contractually
due under the loan agreement, (ii) any delinquency in the principal and
interest payments other than minimum delays or shortfalls in payments, and
(iii) other information known by management which would indicate that full
repayment of the principal and interest is not probable. In evaluating
loans for impairment, management will generally consider delinquencies of
60 days or less to be minimum delays, and accordingly will not consider
such delinquent loans to be impaired in the absence of other indications of
impairment.
Management will evaluate smaller balance, homogeneous loans for impairment
and adequacy of allowance for loan losses collectively, and will evaluate
other loans for impairment individually, on a loan-by-loan basis. The
Company will evaluate the consumer loan portfolio which are smaller
homogeneous loans for impairment on an aggregate basis, and will utilize
its own historical charge-off experience, as well as the charge-off
experience of its peer group and industry statistics to evaluate the
adequacy of the allowance for loan losses. For all commercial, commercial
real estate and residential mortgage loans, the Company will evaluate loans
for impairment on a loan-by-loan basis.
The Company will evaluate all nonaccrual loans as well as any accruing
loans exhibiting collateral or other credit deficiencies for impairment.
With respect to impaired, collateral- dependent loans, any portion of the
recorded investment in the loan that exceeds the fair value of the
collateral will be charged off. There were no loans identified as impaired
during the nine month period ended September 30, 1996.
For impairment recognized in accordance with these Statements, the entire
change in the present value of expected cash flows, or the entire change in
estimated fair value of collateral for collateral dependent loans will be
reported as a provision for loan losses in the same manner in which
impairment initially was recognized or as a reduction in the amount of the
provision that otherwise would be reported.
Loan Origination Fees and Costs. Loan origination and commitment fees and
certain direct loan origination costs are deferred and the net amount
amortized to interest income as a yield adjustment over the contractual
life of the related loan.
(continued)
6
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited), Continued
(1) Description of Business and Summary of Significant Accounting Policies,
Continued
Premises and Equipment. Premises and equipment are stated at cost less
accumulated amortization and depreciation. It is the policy of the Company
to provide depreciation based on the estimated useful life of individual
assets, calculated using the straight-line method. Estimated useful lives
generally range from three to twenty-five years for Bank building and
improvements, five years for leasehold improvements and five to ten years
for furniture, fixtures and equipment.
Organizational Costs. All pre-opening expenses have been charged to expense as
incurred. All organizational costs have been deferred and amortized using
the straight-line method over five years.
Advances from Organizers. Certain of the Company's organizers made
noninterest-bearing advances of $239,000 to the Company. These amounts were
used to fund organizational and other costs incurred by the Holding Company
and the Bank. The advances were repaid to the organizers on February 7,
1996 from the proceeds of the Company's common stock offering.
Income Taxes. Provisions for income taxes are based on taxes payable or
refundable for the current year and deferred taxes on temporary differences
between the amount of taxable income and pretax financial income and
between the tax bases of assets and liabilities and their reported amounts
in the consolidated financial statements. Deferred tax assets and
liabilities are included in the consolidated financial statements at
currently enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or settled
as prescribed in FASB Statement No. 109, Accounting for Income Taxes. As
changes in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes.
Per Share Amounts. Loss per common share was computed by dividing the net loss
for the period by the weighted average number of shares outstanding during
the period from February 7, 1996 (the date escrow was broken) to September
30, 1996. The effect of the outstanding warrants was not material.
(continued)
7
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited), Continued
(2) Regulatory Matters
Banking laws and regulations limit the amount of dividends that may be paid
by the Bank. The FDIC requires insured banks to maintain certain
specified levels of capital.
Leverage-Capital Ratio. The FDIC requires banks to maintain a
minimum leverage- capital ratio of Tier I (as defined) to total
assets. The leverage-capital ratio generally ranges from 3% to 5%
based on the bank's rating under the regulatory rating system. The
Bank's required leverage-capital ratio at September 30, 1996 was 4%.
Risk-Weighted Assets Capital Ratios. The FDIC has also adopted a
risk-based capital statement of policy which imposes an additional
capital standard on insured banks. Under this regulation, a bank
must classify its assets and certain off-balance sheet activities
into categories, and maintain specified levels of capital for each
category. The amount of capital that is required is dependent upon
the amount of risk attributed to each category by the FDIC. A bank
must have a total risk-based capital ratio of no less than 8% and a
Tier I capital to risk-weighted assets ratio of no less than 4%.
Under the statement of policy, certain assets are required to be
deducted from risk-based capital. Such assets include certain
nonqualifying intangible assets, unconsolidated banking and finance
subsidiaries, investments in securities subsidiaries and reciprocal
holdings of capital instruments with other banks. In addition, the
FDIC may consider deducting other assets on a case-by-case basis or
investments in other subsidiaries on a case-by-case basis or based
on the general characteristics or functional nature of the
subsidiaries.
At September 30, 1996, the Bank was in compliance with all
regulatory capital requirements.
8
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Nine Months Ended September 30, 1996
General
Citizens Community Bancorp, Inc. (the "Holding Company") was incorporated on
May 24, 1995. The Holding Company owns 100% of the outstanding common stock
of Citizens Community Bank (the "Bank") (collectively the "Company"). The
Holding Company was organized simultaneously with the Bank and its only
business is the ownership and operation of the Bank. The Bank is a Florida
state chartered commercial bank and is insured by the Federal Deposit
Insurance Corporation. The Bank opened for business on March 8, 1996 and
provides community banking services to businesses and individuals in Collier
County, Florida. The Company has adopted a fiscal year ending December 31.
Liquidity and Capital Resources
The Company's primary source of cash during the nine months ended September
30, 1996 was from the proceeds from the sale of common stock of $6.3
million, net deposit inflows of $11.2 million and the maturity of investment
securities of $1.3 million. Cash was used primarily to repay a mortgage loan
on land purchased during the organizational stage, to purchase investment
securities, to originate loans, to fund construction of a permanent building
and repayment of advances to organizers. At September 30, 1996, the Company
had outstanding commitments to originate loans totaling $2.3 million. At
September 30, 1996, the Bank exceeded its regulatory liquidity requirements.
Common Stock Offering
As of September 30, 1996, the Company has sold 701,242 shares of common
stock for an aggregate of $6,311,178. The Company incurred $39,328 in
offering expenses relating to their public offering of the Company's common
stock and warrants. Offering expenses were deducted from the proceeds
received from the sale of common stock and warrants.
Common Stock Warrants
During the initial offering period shares were offered in units with a unit
consisting of one share of common stock and one warrant. Each warrant
entitles the holder thereof to purchase 1/2 of one share of additional
common stock for $9.00 per share during the 24 month period following the
effective date of registration of the shares. As of September 30, 1996 there
were 670,000 warrants outstanding entitling the holders to purchase 335,000
shares of the Company's stock. No warrants have been exercised.
Depositors' Stock Purchase Plan
The Company is offering common stock to depositors of the Bank. Each
depositor who opens a deposit account with a balance of $1,000 or more may
purchase up to 500 shares of common stock at $9.00 per share. This offer
expires March 8, 1997.
9
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Results of Operations
Three-Month Period Ended September 30, 1996
General. Net loss for the three months ended September 30, 1996 was $(48,622) or
$(.07) per share. At September 30, 1996 the Bank had not achieved the asset
size necessary to operate profitably.
Interest Income and Expense. Interest income totalled $238,600 for the three
months ended September 30, 1996. Interest income earned on loans was
$117,000. The average loan portfolio balance for the three months ended
September 30 was $4.9 million with a weighted average yield of 9.6%.
Interest earned on investment securities was $54,500. The average
investment securities portfolio was $3.7 million with a weighted average
yield of 5.9%. Interest on federal funds sold and deposits in banks
totalled $66,900. The average balance of these assets was $4.9 million
earning a weighted average yield of 5.5%.
Interest expense on deposit accounts amounted to $85,600 for the three
months ended September 30, 1996.
Provision for Loan Losses. The provision for loan losses is charged to earnings
to bring the total allowance to a level deemed appropriate by management
and is based upon the volume and type of lending conducted by the Company,
industry standards, the amount of nonperforming loans and general economic
conditions, particularly as they relate to the Company's market areas, and
other factors related to the collectibility of the Company's loan
portfolio. The provision for the three months ended September 30, 1996 was
$13,000.
OtherExpense. Other expense totalled $226,900 for the three months ended
September 30, 1996. Compensation and benefits was the largest, amounting to
$103,200.
10
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Results of Operations
Nine-Month Period Ended September 30, 1996
General. Net loss for the nine months ended September 30, 1996 was $(164,004) or
$(.25) per share. At September 30, 1996 the Bank had not achieved the asset
size necessary to operate profitably.
Interest Income and Expense. Interest income totalled $436,500 for the nine
months ended September 30, 1996. Interest income earned on loans was
$133,500. The average loan portfolio balance for the nine months ended
September 30, 1996 was $1.8 million and the weighted average yield was
9.9%.
Interest on investment securities was $76,100. The average investment
securities portfolio was $1.8 million with a weighted average yield of
5.6%. Interest on federal funds sold and deposits in banks totalled
$226,900. The average balance of these assets was $4.9 million with a
weighted average yield of 6.2%.
Interest expense on deposit accounts amounted to $143,400 for the nine
months ended September 30, 1996. The weighted average cost of deposits was
3.0%.
Provision for Loan Losses. The provision for loan losses is charged to earnings
to bring the total allowance to a level deemed appropriate by management
and is based upon the volume and type of lending conducted by the Company,
industry standards, the amount of nonperforming loans and general economic
conditions, particularly as they relate to the Company's market areas, and
other factors related to the collectibility of the Company's loan
portfolio. The provision for the nine months ended September 30, 1996 was
$19,500.
OtherExpense. Other expense totalled $543,700 for the nine months ended
September 30, 1996. Compensation and benefits was the largest, amounting to
$223,500.
11
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 5. Other Information
The Company has accepted subscriptions totalling $27,612 for Depositor's Shares
of common stock, as provided for in the Company's SB-2 Registration Statement
which was effective December 7, 1995, and which is incorporated herein by
reference. The 3,068 shares represented by these subscriptions are expected to
be issued by the Company during the fourth quarter of this year.
Item 6. Exhibits and Reports on Form 8-K
There were no reports on Form 8-K filed during the three months September 30,
1996.
12
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CITIZENS COMMUNITY BANCORP, INC.
(Registrant)
Date: November 6, 1996 By: /s/ Richard Storm, Jr.
----------------- ---------------------------
Richard Storm, Jr.,
Chairman of the Board
and Chief Executive Officer
Date: November 6, 1996 By: /s/ Stephen A. McLaughlin
----------------- ---------------------------
Stephen A. McLaughlin,
Secretary and Treasurer
(Chief Accounting Officer)
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 921
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,514
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 3,486
<INVESTMENTS-MARKET> 3,485
<LOANS> 7,770
<ALLOWANCE> 20
<TOTAL-ASSETS> 17,364
<DEPOSITS> 11,216
<SHORT-TERM> 0
<LIABILITIES-OTHER> 62
<LONG-TERM> 0
0
0
<COMMON> 7
<OTHER-SE> 6,079
<TOTAL-LIABILITIES-AND-EQUITY> 17,364
<INTEREST-LOAN> 134
<INTEREST-INVEST> 76
<INTEREST-OTHER> 227
<INTEREST-TOTAL> 437
<INTEREST-DEPOSIT> 144
<INTEREST-EXPENSE> 7
<INTEREST-INCOME-NET> 286
<LOAN-LOSSES> 20
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 544
<INCOME-PRETAX> (262)
<INCOME-PRE-EXTRAORDINARY> (262)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (164)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
<YIELD-ACTUAL> 6.8
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 20
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
