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, 1997
_____ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ________ to _______
Commission file number 000-22547
---------
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.)
650 East Elkcam Circle
Marco Island, Florida 34145
---------------------------
(Address of Principal Executive Offices)
(941) 389-1800
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
------------------------------------------------
(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 day s:
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 778,012
- -------------------------------------- ---------------------------------
(class) Outstanding at September 30, 1997
- --------------------------------------------------------------------------------
CONFORMED COPY
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CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets -
September 30, 1997 (unaudited) and December 31, 1996 . . . . . . . . . . 2
Condensed Consolidated Statements of Operations -
Three and Nine Months ended September 30, 1997 and 1996 (unaudited). . . 3
Condensed Consolidated Statement of Stockholders' Equity -
Nine Months ended September 30, 1997 (unaudited) . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1997 and 1996 (unaudited). . . . . . . . 5
Notes to Condensed Consolidated Financial Statements (unaudited). . . . . 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 8-10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1
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<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
September 30, December 31,
Assets 1997 1996
(unaudited)
Cash and cash equivalents:
<S> <C> <C>
Cash and due from banks $ 2,971,578 1,353,777
Federal funds sold 7,732,000 6,688,000
------------ ----------
Total cash and cash equivalents 10,703,578 8,041,777
Securities held to maturity 2,497,499 2,240,290
Loans receivable, net of allowance for loan losses of
$283,000 and $145,000 24,353,954 12,115,911
Premises and equipment 2,842,570 2,293,140
Accrued interest receivable and other assets 248,956 132,406
Deferred tax asset 166,438 204,000
------------ ----------
Total $ 40,812,995 25,027,524
============ ==========
Liabilities and Stockholders' Equity
Deposits:
Demand deposits 1,506,521 2,366,487
Savings and NOW deposits 13,896,702 8,670,357
Money market deposits 2,464,580 417,775
Time deposits 15,997,451 6,430,485
------------ ----------
Total deposits 33,865,254 17,885,104
Official checks 125,821 579,703
Mortgage loan payable -- 525,000
Accrued interest payable and other liabilities 164,219 73,534
------------ ----------
Total liabilities 34,155,294 19,063,341
------------ ----------
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,
778,012 and 707,610 shares issued and outstanding 7,780 7,076
Additional paid-in capital 6,955,900 6,322,086
Accumulated deficit (305,979) (364,979)
------------ ----------
Total stockholders' equity 6,657,701 5,964,183
------------ ----------
Total $ 40,812,995 25,027,524
============ ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
(unaudited) (unaudited)
Interest income:
<S> <C> <C> <C> <C>
Loans $ 554,568 117,090 1,292,646 133,527
Securities 34,307 54,541 103,273 76,094
Other interest-earning assets 106,905 66,924 344,892 226,881
------- ------- ------- -------
Total interest income 695,780 238,555 1,740,811 436,502
------- ------- ------- -------
Interest expense:
Deposits 344,692 85,619 817,069 143,446
Mortgages -- -- 9,573 7,174
------- ------- ------- -------
Total interest expense 344,692 85,619 826,642 150,620
------- ------- ------- -------
Net interest income 351,088 152,936 914,169 285,882
Provision for loan losses 36,000 13,000 138,000 19,500
------- ------- ------- -------
Net interest income after provision for loan losses 315,088 139,936 776,169 266,382
------- ------- ------- -------
Noninterest income:
Other service charges and fees 39,383 9,146 115,276 14,919
Net gain from sale of loans 36,044 -- 36,044 --
Other 21,270 -- 77,924 --
------- ------- ------- -------
Total noninterest income 96,697 9,146 229,244 14,919
------- ------- ------- -------
Noninterest expense:
Salaries and employee benefits 188,115 103,201 427,762 223,504
Occupancy and equipment 75,098 36,894 149,523 71,237
Professional fees 1,279 29,744 25,100 72,164
Office supplies and expense 7,200 25,495 19,884 73,060
Other 83,292 31,570 286,582 103,740
------- ------- ------- -------
Total noninterest expense 354,984 226,904 908,851 543,705
------- ------- ------- -------
Earnings (loss) before income taxes (benefit) 56,801 (77,822) 96,562 (262,404)
Income taxes (benefit) 22,662 (29,200) 37,562 (98,400)
------- ------- ------- -------
Net earnings (loss) $ 34,139 (48,622) 59,000 (164,004)
======= ======= ======= =======
Earnings (loss) per share $ .04 (.07) .08 (.25)
======= ======= ======= =======
Dividends per share $ -- -- -- --
======= ======= ======= =======
Weighted-average number of shares outstanding 773,751 694,790 764,839 654,395
======= ======= ======= =======
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' Equity
For the Nine-Month Period Ended September 30, 1997
Additional Total
Preferred Common Paid-In Accumulated Stockholders'
Stock Stock Capital Deficit Equity
----- ----- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ -- 7,076 6,322,086 (364,979) 5,964,183
Common stock issuance (unaudited) -- 704 633,814 -- 634,518
Net earnings for the nine months
ended September 30, 1997 (unaudited) -- -- -- 59,000 59,000
------ ----- --------- -------- ---------
Balance at September 30, 1997 (unaudited) $ -- 7,780 6,955,900 (305,979) 6,657,701
====== ===== ========= ======== =========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Nine Months Ended
September 30,
-------------
1997 1996
---- ----
(unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net earnings (loss) $ 59,000 (164,004)
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Depreciation 69,327 36,485
Provision for loan losses 138,000 19,500
Provision (credit) for deferred income taxes 37,562 (98,400)
Net amortization of loan fees, premiums and discounts 46,482 --
Increase in accrued interest receivable and other assets (116,550) (105,660)
Increase in accrued interest payable and
other liabilities 90,685 13,332
----------- -----------
Net cash provided by (used in) operating activities 324,506 (298,747)
----------- -----------
Cash flows from investing activities:
Purchase of securities held to maturity (1,000,000) (4,736,001)
Maturities of securities held to maturity 756,065 1,250,000
Net increase in loans (12,435,799) (7,769,712)
Purchase of premises and equipment (618,757) (686,541)
----------- -----------
Net cash used in investing activities (13,298,491) (11,942,254)
----------- -----------
Cash flows from financing activities:
Net increase in noninterest-bearing demand,
savings and NOW deposits 6,413,184 7,909,554
Net increase in time deposits 9,566,966 3,306,382
Net decrease in official checks (453,882) --
Repayment of advances from organizers -- (239,000)
Payment of stock offering costs -- (39,328)
Redemption of preferred stock -- (21,000)
Sale of common stock 634,518 6,311,178
Payment of mortgage payable (525,000) (593,806)
----------- -----------
Net cash provided by financing activities 15,635,786 16,633,980
----------- -----------
Net increase in cash and cash equivalents 2,661,801 4,392,979
Cash and cash equivalents at beginning of period 8,041,777 42,366
----------- -----------
Cash and cash equivalents at end of period $ 10,703,578 4,435,345
=========== ===========
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Interest $ 740,458 137,222
=========== ===========
Income taxes $ -- --
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
(1) 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 of Florida (the "Bank") and 100% of
Citizens Financial Corp. ("Citizens Financial") (colle ctively the
"Company"). The Holding Company was organized simultaneously with the Bank
and its primary business is the ownership and operation of the Bank and
Citizens Financial. The Bank is a Florida state-chartered commercial bank
and is insured by the Federal Deposit Insurance Corporation. Th e Bank
opened for business on March 8, 1996 and provides community banking
services to businesses and individuals in Collier County, Florida.
Citizens Financial was formed and commenced business as a mortgage broker
in 1997. The Company's fiscal year ends December 31.
(2) Loan Impairment and Loan Losses.
No loans were identified as impaired at September 30, 1997 or 1996. The
activity in the allowance for loan losses is as follows:
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
(unaudited) (unaudited)
Balance at beginning of period $247,000 6,500 145,000 --
Provision charged to earnings 36,000 13,000 138,000 19,500
-------- ------ ------- ------
Balance at end of period $283,000 19,500 283,000 19,500
======== ====== ======= ======
(3) Earnings (Loss) Per Common Share.
Earnings (loss) per common share were computed by dividing the net
earnings (loss) for the period by the weighted-average number of shares
outstanding. The effect of the outstanding warrants was not material.
(4) Regulatory Capital.
The Bank is required to maintain certain minimum regulatory capital
requirements. The following is a summary at September 30, 1997 of the
regulatory capital requirements and the Bank's capital on a percentage
basis:
Ratios of Regulatory
the Bank Requirement
-------- -----------
(unaudited)
Total capital to risk-weighted assets 18.95% 8.00%
Tier I capital to risk-weighted assets 17.81% 4.00%
Tier I capital to total assets - leverage ratio 11.93% 4.00%
6
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited), Continued
(5) Impact of New Accounting Principle.
On January 1, 1997, the Company adopted Statement of Financial Accounting
Standards No. 125 "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities" ("SFAS 125") which provides
accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities. This Statement also
provides consistent standards for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. SFAS 125
is effective for transfers and servicing of financ ial assets and
extinguishments of liabilities occurring after December 31, 1996. The
adoption of SFAS 125 has no effect on the Company's financial statements
during the nine-month period ended September 30, 1997.
(6) Future Accounting Requirements.
The FASB has issued Statement of Financial Accounting Standards No. 128
("SFAS 128"). This Statement specifies the computation, presentation and
disclosure requirements for earnings per share (EPS) for entities with
publicly-held common stock. SFAS 128 is e ffective for both interim and
annual periods ending after December 15, 1997 and upon adoption, all
periods will be presented to conform with SFAS 128. Management believes
the effect of adopting this Statement will not have a material effect on
earnings per share.
7
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Comparison of September 30, 1997 and December 31, 1996
Liquidity and Capital Resources
The Company's primary source of cash during the nine months ended
September 30, 1997 was from net deposit inflows of $16.0 million. Cash was
used primarily for loan originations. At September 30, 1997, the Company
had outstanding commitments to originate loans of $3.0 million. It is
expec ted that these requirements will be funded from the source described
above. At September 30, 1997, the Bank exceeded its regulatory liquidity
requirements.
The following table shows selected ratios for the periods ended or at the
dates indicated:
Nine Months
Ended Year Ended
September 30, December 31,
1997 1996
---- ----
Average equity as a percentage
of average assets 18.31% 26.16%
Equity to total assets at end of period 16.31% 23.83%
Return on average assets (1) .23% (2.71)%
Return on average equity (1) 1.25% (10.35)%
Noninterest expense to average assets (1) 3.52% 7.24%
Nonperforming loans and foreclosed
real estate to total assets at end
of period -- % -- %
- ----------
(1) Annualized for the nine months ended September 30, 1997.
8
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Comparison of the Three-Month Periods Ended September 30, 1997 and 1996
Results of Operations:
General.
Net earnings for the three months ended September 30, 1997 were $34,139 or
$.04 per share compared to a net loss of $(48,622) or $(.07) per share for
the three months ended September 30, 1996. This increase in the Company's
net earnings was primarily due to an increase in net interes t income and
noninterest income, partially offset by an increase in the provision for
loan loss and an increase in noninterest expense due to the overall growth
of the Bank.
Interest Income and Expense.
Interest income increased by $457,225 from $238,555 for the three months
ended September 30, 1996 to $695,780 for the three months ended September
30, 1997. Interest income on loans increased $437,478 due to an increase
in the average loan portfolio balance for th e three months ended
September 30, 1997 to $23.4 million compared to $4.9 million during the
1996 period partially offset by a decrease in the weighted-average yield
from 9.6% in 1996 to 9.1% in 1997. Interest on securities decreased
$20,234 due to a decrease in the average securities portfolio d uring the
three months ended September 30, 1997 to $2.3 million from $3.7 million
during 1996. Interest on other interest-earning assets increased $39,981
due to an increase in the average balance of such assets from $4.9 million
in 1996 to $7.4 million in 1997 as well as an increase in the weigh
ted-average yield from 5.5% in 1996 to 5.6% in 1997.
Interest expense on deposit accounts increased to $344,692 for the three
months ended September 30, 1997 from $85,619 for the three months ended
September 30, 1996. Interest expense increased primarily because of an
increase in the average balance from 1996 to 1997. The average balance f
or the three months ended September 30, 1997 was $31.8 million compared to
$9.8 million during 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
historical experience, the volume and type of lending conducted by the
Company, industry standards, the amount of nonperfor ming loans, 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,
1997 and 1996 was $36,000 and $13,000, respectively. Managemen t believes
the balance in the allowance for loan losses of $283,000 at September 30,
1997 is adequate.
Other Income.
Other income increased to $96,697 in 1997 from $9,146 in 1996 primarily
because of increases in service charges on deposit accounts in 1997 and
the gain from the sale of loans in 1997.
Noninterest Expense.
Total noninterest expense increased $128,080 to $354,984 for the three
months ended September 30, 1997 from $226,904 for the three months ended
September 30, 1996, primarily due to an increase in employee compensation
and benefits of $84,914 as well as an increase in other noninterest
expense and occupancy and equipment expense due to overall growth of the
Company.
Provision for Income Taxes.
The income tax provision for the three months ended September 30, 1997 was
$22,662, an effective rate of 39.9% compared to a tax benefit of $29,200,
an effective rate of (37.5%) for the comparable 1996 period.
9
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Comparison of the Nine-Month Periods Ended September 30, 1997 and 1996
Results of Operations:
General.
Net earnings for the nine months ended September 30, 1997 were $59,000 or
$.08 per share compared to a net loss of $(164,004) or $(.25) per share
for the nine months ended September 30, 1996. This increase in the
Company's net earnings was primarily due to an increase in net interest
income and noninterest income, partially offset by an increase in
noninterest expenses and an increase in the provision for loan losses.
Interest Income and Expense.
Interest income increased by $1,304,309 from $436,502 for the nine months
ended September 30, 1996 to $1,740,811 for the nine months ended September
30, 1997. Interest income on loans increased $1,159,119 due to an increase
in the average loan portfolio balance fo r the nine months ended September
30, 1997 to $18.5 million compared to $1.8 million during the 1996 period
partially offset by a decrease in the weighted-average yield from 9.9% in
1996 to 9.4% in 1997. Interest on securities increased $27,179 due to an
increase in the average securities portfoli o during the nine months ended
September 30, 1997 to $2.3 million from $1.8 million during 1996 and an
increase in the weighted-average yield from 5.6% in 1996 to 6.0% in 1997.
Interest on other interest-earning assets increased $118,011 primarily due
to an increase in the average balance of thes e assets from $4.9 million
in 1996 to $8.3 million in 1997 partially offset by a decrease in the
weighted-average yield from 6.2% in 1996 to 5.5% in 1997.
Interest expense on deposit accounts increased to $817,069 for the nine
months ended September 30, 1997 from $143,446 for the nine months ended
September 30, 1996. Interest expense increased primarily because of an
increase in the average balance from 1996 to 1997. The average balance fo
r the nine months ended September 30, 1997 was $27.8 million compared to
$5.6 million during 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
historical experience, the volume and type of lending conducted by the
Company, industry standards, the amount of nonperfor ming loans, 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 increased from $19,500 for the nine months
ended September 30, 1996 to $138,000 for the nine months end ed September
30, 1997. The increase was deemed appropriate by management due to the
growth in the loan portfolio in 1997.
Other Income.
Other income increased to $229,244 in 1997 from $14,919 in 1996 primarily
because of increases in service charges on deposit accounts in 1997 and
the gain from the sale of loans in 1997.
Noninterest Expense.
Total noninterest expense increased $365,146 to $908,851 for the nine
months ended September 30, 1997 from $543,705 for the nine months ended
September 30, 1996, primarily due to an increase in employee compensation
and benefits of $204,258, and an increase in other nonint erest expense of
$182,842 as well as an increase in occupancy and equipment expenses due to
the overall growth of the Company.
Provision for Income Taxes.
The income tax provision for the nine months ended September 30, 1997 was
$37,562, an effective rate of 38.9% compared to benefit of $98,400, an
effective rate of (37.5%) for the comparable 1996 period.
10
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit (numbered in accordance with Item 601 of Regulation S-B)
27. Financial Data Schedule
(b) There were no reports on Form 8-K filed for the three months ended September
30, 1997.
11
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
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 12, 1997 By: /s/ Richard Storm, Jr.
----------------- -----------------------------------------------
Richard Storm, Jr., Chairman of the Board
and Chief Executive Officer
Date: November 12, 1997 By: /s/ Stephen A. McLaughlin
----------------- -----------------------------------------------
Stephen A. McLaughlin,
Secretary and Treasurer
(Chief Accounting Officer)
12
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,972
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,732
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 2,498
<INVESTMENTS-MARKET> 2,498
<LOANS> 224,637
<ALLOWANCE> 283
<TOTAL-ASSETS> 40,813
<DEPOSITS> 33,865
<SHORT-TERM> 0
<LIABILITIES-OTHER> 290
<LONG-TERM> 0
0
0
<COMMON> 8
<OTHER-SE> 6,650
<TOTAL-LIABILITIES-AND-EQUITY> 40,813
<INTEREST-LOAN> 1,293
<INTEREST-INVEST> 103
<INTEREST-OTHER> 345
<INTEREST-TOTAL> 1,741
<INTEREST-DEPOSIT> 817
<INTEREST-EXPENSE> 827
<INTEREST-INCOME-NET> 914
<LOAN-LOSSES> 138
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 909
<INCOME-PRETAX> 97
<INCOME-PRE-EXTRAORDINARY> 97
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 59
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
<YIELD-ACTUAL> 8
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 145
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 283
<ALLOWANCE-DOMESTIC> 283
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
