- -------------------------------------------------------------------------------
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 March 31, 1998
- --- Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _______ to _______
Commission file number 33-98090
--------
CITIZENS COMMUNITY BANCORP, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 65-0614044
------- ----------
of Incorporation or Organization) (I.R.S. Employer
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 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 1,613,359
- -------------------------------------- -----------------------------
(class) Outstanding at March 31, 1998
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<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
Condensed Consolidated Balance Sheets -
March 31, 1998 (unaudited) and December 31, 1997........................2
Condensed Consolidated Statements of Earnings -
Three Months ended March 31, 1998 and 1997 (unaudited)..................3
Condensed Consolidated Statement of Stockholders' Equity -
Three Months ended March 31, 1998 (unaudited)...........................4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1998 and 1997 (unaudited)..................5
Notes to Condensed Consolidated Financial Statements (unaudited)..........6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...............................................7-8
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds..........................9
Item 6. Exhibits and Reports on Form 8-K.......... ........................9
SIGNATURES....................................................................10
1
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, December 31,
Assets 1998 1997
---- ----
(unaudited)
Cash and due from banks.......................... $ 4,092,892 3,153,577
Federal funds sold............................... 10,591,000 9,057,000
---------- -----------
Cash and cash equivalents............ 14,683,892 12,210,577
Securities held to maturity...................... 8,998,091 2,498,614
Restricted securities, Federal Home Loan Bank stock 127,100 -
Loans, net of allowance for loan losses of $354,000
and $298,000................................. 31,842,680 26,420,149
Premises and equipment, net...................... 2,937,954 2,845,997
Accrued interest receivable and other assets..... 338,258 308,152
Deferred income taxes............................ 123,043 138,043
------------ ------------
Total assets............................. $59,051,018 44,421,532
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Demand deposits.............................. 3,923,690 3,153,135
Savings and NOW deposits..................... 24,395,387 16,300,813
Money-market deposits........................ 2,738,218 1,302,296
Time deposits................................ 19,478,811 16,182,123
---------- ----------
Total deposits........................... 50,536,106 36,938,367
Official checks.............................. 1,291,033 473,521
Accrued expenses and other liabilities....... 241,114 238,886
----------- ------------
Total liabilities........................ 52,068,253 37,650,774
---------- ----------
Stockholders' Equity:
Preferred stock, $.01 value, 2,000,000 shares authorized,
none issued or outstanding................... - -
Common stock, $.01 par value, 8,000,000 shares
authorized and 1,613,359 and 1,571,624 shares
issued and outstanding...........................16,133 15,716
Additional paid-in capital........................7,197,904 7,010,515
Accumulated deficit...............................(231,272) (255,473)
----------- -----------
Total stockholders' equity................ 6,982,765 6,770,758
---------- ----------
Total liabilities and stockholders' equity $59,051,018 44,421,532
========== ==========
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Earnings
Three Months Ended
March 31,
------------------
1998 1997
---- ----
(unaudited)
Interest income:
Loans ............................................ $ 709,981 289,388
Securities ....................................... 57,806 32,945
Federal funds sold ............................... 163,091 111,883
---------- ----------
Total interest income .................... 930,878 434,216
---------- ----------
Interest expense:
Deposits ......................................... 463,467 208,501
Other ............................................ - 9,573
---------- ----------
Total interest expense ................... 463,467 218,074
---------- ----------
Net interest income .................................. 467,411 216,142
Provision for loan losses ................ 56,000 60,000
---------- ----------
Net interest income after provision for loan losses .. 411,411 156,142
---------- ----------
Noninterest income:
Other service charges and fees ................... 51,423 34,090
Other ............................................ 36,445 34,437
---------- ----------
Total noninterest income ................. 87,868 68,527
---------- ----------
Noninterest expense:
Salaries and employee benefits ................... 223,329 88,539
Occupancy and equipment .......................... 83,621 49,001
Professional fees ................................ 11,114 3,000
Office supplies and expense ...................... 16,314 5,661
Other ............................................ 125,700 68,983
---------- ----------
Total noninterest expense ................ 460,078 215,184
---------- ----------
Earnings before income taxes ......................... 39,201 9,485
Income taxes ............................. 15,000 3,556
---------- ----------
Net earnings ......................................... $ 24,201 5,929
========== ==========
Earnings per share, basic and diluted ................ $ .02 .01
========== ==========
Dividends per share .................................. $ - -
========== ==========
Weighted-average number of shares outstanding ........ 1,582,629 730,771
========== ==========
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Stockholders' Equity
Three-Month Period Ended March 31, 1998
<TABLE>
<CAPTION>
Common Stock
------------------- Additional Total
Preferred Number of Paid-In Accumulated Stockholders'
Stock Shares Amount Capital Deficit Equity
----- ------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 ........ $ - 1,571,624 $ 15,716 7,010,515 (255,473) 6,770,758
Issuance of common stock shares at
$4.50 (unaudited) .......... - 41,735 417 187,389 - 187,806
Net earnings for the three months
ended March 31, 1998
(unaudited) ................ - - - - 24,201 24,201
------ --------- --------- --------- --------- ---------
Balance at March 31, 1998 (unaudited) $ - 1,613,359 $ 16,133 7,197,904 (231,272) 6,982,765
====== ========= ========= ========= ========= =========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1998 1997
---- ----
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings ................................................................ $ 24,201 5,929
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation ............................................................. 36,489 15,380
Provision for loan losses ................................................ 56,000 60,000
Provision for deferred income taxes ...................................... 15,000 3,556
Net amortization of loan fees, premiums and discounts .................... 53,449 (11,196)
(Increase) decrease in accrued interest receivable
and other assets ..................................................... (30,106) 16,696
Increase in accrued expenses and other liabilities ....................... 2,228 9,253
Net increase (decrease) in official checks ............................... 817,512 (485,822)
------------ ------------
Net cash provided by (used in) operating activities .............. 974,773 (386,204)
------------ ------------
Cash flows from investing activities:
Purchase of securities held to maturity ..................................... (7,000,000) (250,000)
Maturities of securities held to maturity ................................... 500,000 250,000
Net increase in loans ....................................................... (5,531,457) (4,496,303)
Purchase of premises and equipment .......................................... (128,446) (244,830)
Purchase of restricted securities, Federal Home
Loan Bank stock .......................................................... (127,100) -
------------ ------------
Net cash used in investing activities ............................ (12,287,003) (4,741,133)
------------ ------------
Cash flows from financing activities:
Net increase in noninterest-bearing demand,
savings and NOW deposits ................................................. 10,301,051 6,375,568
Net increase in time deposits ............................................... 3,296,688 2,066,052
Sale of common stock ........................................................ 187,806 586,710
Payment of mortgage payable ................................................. - (525,000)
------------ ------------
Net cash provided by financing activities ........................ 13,785,545 8,503,330
------------ ------------
Net increase in cash and cash equivalents ....................................... 2,473,315 3,375,993
Cash and cash equivalents at beginning of period ................................ 12,210,577 8,041,777
------------ ------------
Cash and cash equivalents at end of period ...................................... $ 14,683,892 11,417,770
============ ============
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Interest ................................................................. $ 440,382 204,724
============ ============
Income taxes.............................................................$ - -
============ ============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
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 (the "Bank") and
Citizens Financial Corp. ("Citizens Financial") (collectively, 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. The Bank opened for business on March 8, 1996, and
provides community banking services to businesses and individuals in
Collier County, Florida. Citizens Financial was incorporated on March
27, 1997 as a mortgage origination company, but is currently inactive.
(2) Loan Impairment and Credit Losses. No loans were identified as impaired at
March 31, 1997 or March 31, 1998. The activity in the allowance for
loan losses was as follows:
For the Three
Months Ended
March 31,
----------------------
1998 1997
---- ----
Balance at beginning of period $298,000 145,000
Provision charged to earnings 56,000 60,000
Charge-offs, net of recoveries - -
-------- --------
Balance at end of period ..... $354,000 205,000
======== ========
(3) Earnings Per Common Share. Earnings per share ("EPS") of common stock
has been computed on the basis of the weighted-average number of shares
of common stock outstanding. For purposes of calculating diluted EPS,
the average book value per share was used because there is no active
trading market for the Company's common stock. For 1997 and 1996,
outstanding warrants and stock options were not dilutive.
(4) Regulatory Capital. The Bank is required to maintain certain minimum
regulatory capital requirements. The following is a summary at March
31, 1998 of the regulatory capital requirements and the Bank's capital
on a percentage basis:
Ratios of Regulatory
the Bank Requirement
-------- -----------
Total capital to risk-weighted assets ......... 14.38% 8.00%
Tier I capital to risk-weighted assets ........ 13.32% 4.00%
Tier I capital to total assets - leverage ratio 7.66% 4.00%
(5) Impact of New Accounting Principle. On January 1, 1998, the Bank adopted
Statement ofFinancial Accounting Standards 130 - Reporting
Comprehensive Income which establishes standards for reporting
comprehensive income. The Standard defines comprehensive income as the
change in equity of an enterprise except those resulting from
stockholder transactions. All components of comprehensive income are
required to be reported in a new financial statement that is displayed
with equal prominence as existing financial statements. The Bank has no
items of other comprehensive income, therefore a statement of
comprehensive income is not presented.
6
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Comparison of March 31, 1998 and December 31, 1997
Liquidity and Capital Resources
The Company's primary source of cash during the three months ended March 31,
1998 was from net deposit inflows of $13,597,739. Cash was used primarily
for loan originations and for the purchase of securities. At March 31, 1998,
the Company had outstanding commitments to fund existing and new loans of
$9.2 million. It is expected that these requirements will be funded from the
sources described above. At March 31, 1998, the Bank exceeded its regulatory
liquidity requirements.
The following table shows selected ratios for the periods ended or at the
dates indicated:
Three Months
Ended Year Ended
March 31, December 31,
1998 1997
----------- ---------
Average equity as a percentage
of average assets ............................ 12.89% 17.47%
Equity to total assets at end of period ...... 11.82% 15.24%
Return on average assets (1) ................. .19% .30%
Return on average equity (1) ................. 1.44% 1.72%
Noninterest expense to average assets (1) .... 3.53% 3.45%
Nonperforming loans and foreclosed real estate
to total assets at end of period ............. NIL NIL
- ---------------------------------------
(1) Annualized for the three months ended March 31, 1998.
7
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
Comparison of the Three-Month Periods Ended March 31, 1998 and 1997
Results of Operations:
General. Net earnings for the three months ended March 31, 1998 were $24,201,
or $.02 per basic and diluted share, compared to net earnings for the
three months ended March 31, 1997 of $5,929, or $.01 per basic and diluted
share. Earnings increased primarily because of growth of the Company
between March 31, 1997 and March 31, 1998.
Interest Income and Expense. Interest income was $930,878 for the three
months ended March 31, 1998 compared to $434,216 for the comparable 1997
period. Interest income earned on loans for the 1998 period was $709,981
compared to $289,388 for the 1997 period. The average loan balance
outstanding for the three months ended March 31, 1998 was $29,628,718 with
a weighted-average yield of 9.51%. Interest earned on securities for 1998
was $57,806 compared to $32,945 for the 1997 period. For the 1998 period,
the average securities portfolio was $3,657,369 with a weighted-average
yield of 6.03%. Interest on federal funds sold for the 1998 period totaled
$163,091 compared to $111,883 for the 1997 period. The average balance of
federal funds sold was $12,043,700 during the 1998 period, with a weighted
average yield of 5.42%.
Interest expense on deposits amounted to $463,467 for the three months
ended March 31, 1998 compared to $208,501 for the 1997 period. The average
balance for the three months ended March 31, 1998 was $45,083,822 and the
weighted average rate was 4.11%.
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 March
31, 1998 was $56,000 and the allowance was $354,000 at March 31, 1998.
Management believes the allowance at March 31, 1998 is adequate.
Noninterest Expense. Noninterest expense totaled $460,078 for the three
months ended March 31, 1998 compared to $215,184 for the 1997 period.
Compensation and benefits was the largest noninterest expense amounting to
$223,329 for 1998 compared to $88,539 for 1997. All expenses increased
primarily because of the growth of the Company.
Provision for Income Taxes. The income tax provision for the three months
ended March 31, 1998 was $15,000 (an effective rate of 38%) compared to
$3,556 for 1997 (an effective rate of 37%).
8
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
The following sales of shares of Citizens Community Bancorp, Inc. common stock,
par value $.01 per share were registered pursuant to the Securities Act of 1933
as amended:
During the quarter ended March 31, 1998, 41,735 shares were issued to holders
of warrants at a purchase price of $4.50 per share. Proceeds were used for
general corporate purposes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed with or incorporated by
reference into this report. The exhibits which are denominated by an
asterisk (*) were previously filed as a part of, and are hereby
incorporated by reference from the Company's Registration Statement on
Form SB-2 under the Securities Act of 1933 for the Company, as effective
with the Securities and Exchange Commission on December 7, 1995,
Registration No. 33-98090 (referred to as "Registration Statement"). The
exhibit numbers correspond to the exhibit numbers in the referenced
documents.
Exhibit No. Description of Exhibit
----------- ----------------------
*3.1 Amended and Restated Articles of Incorporation of the Company
(Registration Statement)
*3.2 By-laws of the Company (Registration Statement)
*4.1 Specimen Common Stock Certificate (Registration Statement)
*4.2 Specimen Warrant Certificate (Registration Statement)
*4.4 Company's Warrant Plan (Registration Statement)
22.1 The Company's 1998 Annual Meeting Proxy Statement
22.2 The Company's 1997 Annual Report for the year ended December
31, 1997
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. There were no Form 8-K's filed during the three
months ended March 31, 1998.
9
<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: May 12, 1998 By: /s/ Richard Storm, Jr.
------------------ ----------------------------------------------
Richard Storm, Jr., Chairman of the Board
and Chief Executive Officer
Date: May 12, 1998 By: /s/ Stephen A. McLaughlin
------------------ ----------------------------------------------
Stephen A. McLaughlin, Secretary and Treasurer
(Chief Accounting Officer)
10
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Form 10-QSB
for the period ended March 31, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,093
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 10,591
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 8,998
<INVESTMENTS-MARKET> 8,987
<LOANS> 32,197
<ALLOWANCE> 354
<TOTAL-ASSETS> 59,051
<DEPOSITS> 50,536
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,532
<LONG-TERM> 0
0
0
<COMMON> 16
<OTHER-SE> 6,967
<TOTAL-LIABILITIES-AND-EQUITY> 59,051
<INTEREST-LOAN> 710
<INTEREST-INVEST> 58
<INTEREST-OTHER> 163
<INTEREST-TOTAL> 931
<INTEREST-DEPOSIT> 463
<INTEREST-EXPENSE> 463
<INTEREST-INCOME-NET> 468
<LOAN-LOSSES> 56
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 460<F1>
<INCOME-PRETAX> 39
<INCOME-PRE-EXTRAORDINARY> 39
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
<YIELD-ACTUAL> 4.2
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 298
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 354
<ALLOWANCE-DOMESTIC> 354
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Other expense includes: salaries and employee benefits of $223, occupancy of
$84, professional fees of $11, office supplies of $16 and other expenses which
totaled $126.
</FN>
</TABLE>
