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, 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
(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 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 3,197,137
- -------------------------------------- -------------------------------
(class) Outstanding at October 10, 1998
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets -
September 30, 1998 (unaudited) and December 31, 1997 . . . . . . . .2
Condensed Consolidated Statements of Earnings -
Three and Nine Months ended September 30, 1998 and 1997 (unaudited).3
Condensed Consolidated Statement of Stockholders' Equity -
Nine Months ended September 30, 1998 (unaudited) . . . . . . . . . .4
Condensed Consolidated Statements of Cash Flows -
Nine Months ended September 30, 1998 and 1997 (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 . . . . . . . . . . . . . . . . . . . . 8-11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------
Assets 1998 1997
------ ---- ----
(unaudited)
<S> <C> <C>
Cash and due from banks. . . . . . . . . . . . . . . . $ 3,215,944 3,153,577
Federal funds sold . . . . . . . . . . . . . . . . . . 4,097,000 9,057,000
Interest-bearing deposits. . . . . . . . . . . . . . . 7,257,334 -
------------ ----------
Cash and cash equivalents. . . . . . . . . . . . 14,570,278 12,210,577
Securities held to maturity. . . . . . . . . . . . . . 8,000,000 2,498,614
Restricted securities, Federal Home Loan Bank stock. . 127,100 -
Loans, net of allowance for loan losses of $405,500
and $298,000. . . . . . . . . . . . . . . . . . . . . 38,990,322 26,420,149
Premises and equipment, net. . . . . . . . . . . . . . 3,564,939 2,845,997
Accrued interest receivable and other assets . . . . . 436,236 308,152
Deferred income taxes. . . . . . . . . . . . . . . . . 24,462 138,043
------------ ----------
Total assets . . . . . . . . . . . . . . . . . . $ 65,713,337 44,421,532
============ ==========
Liabilities and Stockholders' Equity
Liabilities:
Demand deposits . . . . . . . . . . . . . . . . . . . 2,599,484 3,153,135
Savings and NOW deposits. . . . . . . . . . . . . . . 21,706,610 16,300,813
Money-market deposits . . . . . . . . . . . . . . . . 3,365,474 1,302,296
Time deposits . . . . . . . . . . . . . . . . . . . . 19,344,737 16,182,123
------------ ----------
Total deposits . . . . . . . . . . . . . . . . . 47,016,305 36,938,367
Official checks . . . . . . . . . . . . . . . . . . . 1,194,221 473,521
Accrued expenses and other liabilities. . . . . . . . 296,251 238,886
------------ ----------
Total liabilities. . . . . . . . . . . . . . . . 48,506,777 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 3,197,137 and 1,571,624 shares
issued and outstanding. . . . . . . . . . . . . . . 31,971 15,716
Additional paid-in capital. . . . . . . . . . . . . . 17,232,324 7,010,515
Accumulated deficit . . . . . . . . . . . . . . . . . (57,735) (255,473)
------------ ----------
Total stockholders' equity . . . . . . . . . . . 17,206,500 6,770,758
------------ ----------
Total liabilities and stockholders' equity . . . $ 65,713,337 44,421,532
============ ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans $ 791,158 554,568 2,272,218 1,292,646
Securities 159,568 34,307 376,085 103,273
Other interest-earning assets 190,721 106,905 498,737 344,892
--------- --------- --------- ---------
Total interest income 1,141,447 695,780 3,147,040 1,740,811
--------- --------- --------- ---------
Interest expense:
Deposits 527,604 344,692 1,524,627 817,069
Mortgages -- -- -- 9,573
--------- --------- --------- ---------
Total interest expense 527,604 344,692 1,524,627 826,642
Net interest income 613,843 351,088 1,622,413 914,169
Provision for loan losses 36,500 36,000 107,500 138,000
--------- --------- --------- ---------
Net interest income after provision for
loan losses 577,343 315,088 1,514,913 776,169
--------- --------- --------- ---------
Noninterest income:
Other service charges and fees 74,112 39,383 185,148 115,276
Net gain from sale of loans -- 36,044 -- 36,044
Other 43,346 21,270 119,994 77,924
--------- --------- --------- ---------
Total noninterest income 117,458 96,697 305,142 229,244
--------- --------- --------- ---------
Noninterest expense:
Salaries and employee benefits 283,753 188,115 749,779 427,762
Occupancy and equipment 107,074 75,098 274,021 149,523
Professional fees 14,582 1,279 25,696 25,100
Other 124,516 90,492 461,322 306,466
--------- --------- --------- ---------
Total noninterest expense 529,925 354,984 1,510,818 908,851
--------- --------- --------- ---------
Earnings before income taxes 164,876 56,801 309,237 96,562
Income taxes 61,703 22,662 111,499 37,562
--------- --------- --------- ---------
Net earnings $ 103,173 34,139 197,738 59,000
========= ========= ========= =========
Earnings per share:
Basic $ .03 .02 .07 .04
========= ========= ========= =========
Diluted $ .03 .02 .07 .04
========= ========= ========= =========
Weighted-average number of shares outstanding:
Basic 2,952,784 1,547,502 2,775,334 1,529,678
========= ========= ========= =========
Diluted 2,992,460 1,547,502 2,833,941 1,529,678
========= ========= ========= =========
Dividends per share $ -- -- -- --
========= ========= ========= =========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' Equity
Nine-Month Period Ended September 30, 1998
<TABLE>
<CAPTION>
Common Stock
---------------------- Additional Total
Number of Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
<S> <C> <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 to holders of
warrants at $4.50 (unaudited)................... 625,513 6,255 2,808,553 -- 2,814,808
Issuance of common stock shares at $7.50,
net of stock offering costs(unaudited) ......... 1,000,000 10,000 7,413,256 -- 7,423,256
Net earnings for the nine months ended September
30, 1998 (unaudited) ........................... -- -- -- 197,738 197,738
--------- ---------- ---------- ------- ----------
Balance at September 30, 1998 (unaudited) ....... 3,197,137 $ 31,971 17,232,324 (57,735) 17,206,560
========= ========== ========== ======= ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Nine Months Ended
September 30,
-------------
1998 1997
---- ----
(unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net earnings $ 197,738 59,000
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 107,950 69,327
Provision for loan losses 107,500 138,000
Provision for deferred income taxes 113,581 37,562
Net amortization of loan fees, premiums and discounts 85,665 46,482
Increase in accrued interest receivable and other assets (128,084) (116,550)
Increase in accrued interest payable and
other liabilities 57,365 90,685
------------ ----------
Net cash provided by operating activities 541,715 324,506
============ ==========
Cash flows from investing activities:
Purchase of securities held to maturity (8,500,000) (1,000,000)
Maturities of securities held to maturity 2,999,806 756,065
Purchase of restricted securities, Federal Home Loan
Bank stock (127,100) --
Net increase in loans (12,764,530) (12,435,799)
Purchase of premises and equipment (826,892) (618,757)
------------ ----------
Net cash used in investing activities (19,218,716) (13,298,491)
------------ ----------
Cash flows from financing activities:
Net increase in noninterest-bearing demand,
savings and NOW deposits 6,915,324 6,413,184
Net increase in time deposits 3,162,614 9,566,966
Net increase (decrease) in official checks 720,700 (453,882)
Payment of stock offering costs (76,745) --
Sale of common stock 10,314,809 634,518
Payment of mortgage payable -- (525,000)
============ ==========
Net cash provided by financing activities 21,036,702 15,635,786
============ ==========
Net increase in cash and cash equivalents 2,359,701 2,661,801
Cash and cash equivalents at beginning of period 12,210,577 8,041,777
------------ ----------
Cash and cash equivalents at end of period $ 14,570,278 10,703,578
============ ==========
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Interest $ 1,466,382 740,458
============ ==========
Income taxes $ -- --
============ ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
(1) General. In the opinion of the management, the accompanying condensed
consolidated financial statements of Citizens Community Bancorp, Inc.
and Subsidiaries (the "Company") contain all adjustments (consisting
principally of normal recurring accruals) necessary to present fairly
the financial position at September 30, 1998, and the results of
operations for the three-month and nine-month periods ended September
30, 1998 and 1997 and the cash flows for the nine-month periods ended
September 30, 1998 and 1997. The results of operations for the three
and nine months ended September 30, 1998 are not necessarily indicative
of the results to be expected for the full year.
(2) Loan Impairment and Credit Losses. No loans were identified as impaired
at September 30, 1998 or September 30, 1997. The activity in the
allowance for loan losses was as follows:
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Balance at beginning of period $369,000 247,000 298,000 145,000
Provision charged to earnings 36,500 36,000 107,500 138,000
Charge-offs, net of recoveries -- -- -- --
-------- ------- ------- -------
Balance at end of period $405,500 283,000 405,500 283,000
======== ======= ======= =======
</TABLE>
(3) Earnings Per 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. Prior to the public stock offering in April,
1998, there was no public market for the Company's common stock.
Therefore in 1997 the stock book value was used for purposes of
calculating dilution. There was not active trading market for the
Company's common stock during 1998, therefore, for purposes of
calculating diluted EPS the $7.50 stock offering price is assumed to be
the market price for the three and nine months ended September 30,
1998. For the three and nine months ended September 30, 1998
outstanding options are considered dilutive securities for purposes of
calculating diluted EPS which is computed using the treasury stock
method. All per share amounts reflect the 2 for 1 stock split effective
December 15, 1997. The following table presents the calculations of EPS
($ in thousands, except per share amounts).
<TABLE>
<CAPTION>
For the Three Months Ended September 30,
----------------------------------------------------------------------------------
1998 1997
---------------------------------------- ----------------------------------------
Earnings Shares Per Share Earnings Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C>
Basic EPS:
Net earnings available
to common stockholders $ 103 2,952,784 $ .03 $ 34 1,547,502 $ .02
======= =====
Effect of dilutive securities-
Incremental shares from
assumed conversion
of options 39,676 --
------ ------------
Diluted EPS:
Net earnings available
to common stockholders
and assumed conversions $ 103 2,992,460 $ .03 $ 341,547,502 $ .02
========= ========= ======= ============= =====
</TABLE>
(continued)
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
(3) Earnings Per Share, Continued.
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
----------------------------------------------------------------------------------
1998 1997
---------------------------------------- ----------------------------------------
Earnings Shares Per Share Earnings Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C>
Basic EPS:
Net earnings available
to common stockholders $ 198 2,775,334 $ .07 $ 59 1,529,678 $ .04
======= =====
Effect of dilutive securities-
Incremental shares from
assumed conversion
of options 58,607 --
------ ------------
Diluted EPS:
Net earnings available
to common stockholders
and assumed conversions $ 198 2,833,941 $ .07 $59 $ 1,529,678 $ .04
========= ========= ======= ============= =====
</TABLE>
(4) Regulatory Capital. The Bank is required to maintain certain minimum
regulatory capital requirements. The following is a summary at
September 30, 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 16.15% 8.00%
Tier I capital to risk-weighted assets 14.11% 4.00%
Tier I capital to total assets - leverage ratio 7.89% 4.00%
(5) Impact of New Accounting Principle. On January 1, 1998, the Company
adopted Statement of Financial 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 Company has
no items of other comprehensive income, therefore a statement of
comprehensive income is not presented.
<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, 1998 and December 31, 1997
Liquidity and Capital Resources
The Company's primary source of cash during the nine months ended
September 30, 1998 was from net deposit inflows and proceeds from the
sale of its common stock. Cash was used primarily for loan originations
and for the purchase of securities. At September 30, 1998, the Company
had outstanding commitments to fund existing and new loans of $8,171,000.
It is expected that these requirements will be funded from the sources
described above. At September 30, 1998, 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,
1998 1997
------------- ------------
Average equity as a percentage
of average assets . . . . . . . . . . . . . . . . . 22.01% 17.47%
Equity to total assets at end of period . . . . . . 26.18% 15.24%
Return on average assets (1) . . . . . . . . . . . .48% .30%
Return on average equity (1) . . . . . . . . . . . 2.20% 1.72%
Noninterest expense to average assets (1) . . . . . 3.69% 3.45%
Nonperforming loans and foreclosed real estate to
total assets at end of period . . . . . . . . . . NIL NIL
- ------------------------------
(1) Annualized for the nine months ended September 30, 1998.
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Comparison of the Three-Month Periods Ended September 30, 1998 and 1997
Results of Operations:
General. Net earnings for the three months ended September 30, 1998 were
$103,173 or $.03 per basic and diluted share compared to net earnings
of $34,139 or $.02 per basic and diluted share for the three months
ended September 30, 1997. 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 expense due to
the overall growth of the Company. Per share amounts reflect 2 for 1
stock split effective December 15, 1997.
Interest Income and Expense. Interest income increased by $445,667 from
$695,780 for the three months ended September 30, 1997 to $1,141,447
for the three months ended September 30, 1998. Interest income on loans
increased $236,590 to $791,158 in 1998 due to an increase in the
average loan portfolio balance for the three months ended September 30,
1998 to $35.1 million compared to $23.4 million during the 1997 period
partially offset by a decrease in the weighted-average yield from 9.1%
in 1997 to 9.0% in 1998. Interest on securities increased $125,261 to
$159,568 in 1998 due to a increase in the average securities portfolio
during the three months ended September 30, 1998 to $10.1 million from
$2.3 million during 1997. Interest on other interest-earning assets
increased $83,816 to $190,271 in 1998 due to an increase in the average
balance of such assets from 1997 to 1998.
Interest expense on deposit accounts increased to $527,604 for the
three months ended September 30, 1998 from $344,692 for the three
months ended September 30, 1997. Interest expense increased primarily
because of an increase in the average balance from 1997 to 1998. The
average balance for the three months ended September 30, 1998 was $51.5
million compared to $31.8 million during 1997.
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
nonperforming 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, 1998 and 1997 was $36,500 and $36,000,
respectively. Management believes the balance in the allowance for loan
losses of $405,500 at September 30, 1998 is adequate.
OtherIncome. Other income increased to $117,458 in 1998 from $96,697 in
1997 primarily because of increases in service charges on deposit
accounts in 1998.
Noninterest Expense. Total noninterest expense increased $174,941 to
$529,925 for the three months ended September 30, 1998 from $354,984
for the three months ended September 30, 1997, primarily due to an
increase in employee compensation and benefits of $95,638 as well as an
increase in other noninterest expense and occupancy and equipment
expense all due to the overall growth of the Company.
Provision for Income Taxes. The income tax provision for the three months
ended September 30, 1998 was $61,703, an effective rate of 37% compared
to $22,662, an effective rate of 39.9% for the comparable 1997 period.
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Comparison of the Nine-Month Periods Ended September 30, 1998 and 1997
Results of Operations:
General. Net earnings for the nine months ended September 30, 1998 were
$197,738 or $.07 per basic and diluted share compared to net earnings
of $59,000 or $.04 per basic and diluted share for the nine months
ended September 30, 1997. 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. Per
share amounts reflect 2 for 1 stock split effective December 15, 1997.
Interest Income and Expense. Interest income increased by $1,406,229 from
$1,740,811 for the nine months ended September 30, 1997 to $3,147,040
for the nine months ended September 30, 1998. Interest income on loans
increased $979,572 to $2,272,218 in 1998 due to an increase in the
average loan portfolio balance for the nine months ended September 30,
1998 to $32.1 million compared to $18.5 million during 1997. Interest
on securities increased $272,812 to $376,085 in 1998 due to an increase
in the average securities portfolio during the nine months ended
September 30, 1998 to $8.1 million from $2.3 million during 1997 and an
increase in the weighted-average yield from 6.0% in 1997 to 6.2% in
1998. Interest on other interest-earning assets increased $153,845 to
$498,737 in 1998 primarily due to an increase in the average balance of
these assets from 1997 to 1998.
Interest expense on deposit accounts increased to $1,524,627 for the
nine months ended September 30, 1998 from $817,069 for the nine months
ended September 30, 1997. Interest expense increased primarily because
of an increase in the average balance from 1997 to 1998. The average
balance for the nine months ended September 30, 1998 was $49.7 million
compared to $27.8 million during 1997.
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
nonperforming 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 decreased
from $138,000 for the nine months ended September 30, 1997 to $107,500
for the nine months ended September 30, 1998.
OtherIncome. Other income increased to $305,142 in 1998 from $229,244 in
1997 primarily because of increases in service charges on deposit
accounts in 1998.
Noninterest Expense. Total noninterest expense increased $601,967 to
$1,510,818 for the nine months ended September 30, 1998 from $908,851
for the nine months ended September 30, 1997, primarily due to an
increase in employee compensation and benefits of $322,017, and an
increase in other noninterest expense of $154,856 as well as an
increase in occupancy and equipment expenses all due to the overall
growth of the Company.
Provision for Income Taxes. The income tax provision for the nine months
ended September 30, 1998 was $111,499, an effective rate of 36.1%
compared to $37,562, an effective rate of 38.9% for the comparable 1997
period.
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Year 2000 Issues
The Company is acutely aware of the many areas affected by the Year 2000
computer issue, as addressed by the Federal Financial Institutions Examination
Council ("FFIEC") in its interagency statement which provided an outline for
institutions to effectively manage the Year 2000 challenges. A Year 2000 plan
has been approved by the Board of Directors which includes multiple phases,
tasks to be completed, and target dates for completion. Issues addressed therein
include awareness, assessment, renovation, validation, implementation, testing,
and contingency planning.
The Company has formed a Year 2000 committee that is charged with the oversight
of completing the Year 2000 project on a timely basis. The Company has completed
its awareness, assessment and renovation phases and is actively involved in
validating and implementing its plan. At the present time, the Company is into
its testing phase and anticipates that this phase will be substantially
completed by December 31, 1998. Since it routinely upgrades and purchases
technologically advanced software and hardware on a continual basis, the Company
has determined that the cost of making modifications to correct any Year 2000
issues will not substantially affect reported operating results.
The Company's main service provider has completed testing of its mission
critical application software and item processing software. The test results
have been documented and validated.
The Company also recognizes the importance of determining that its borrowers are
facing the Year 2000 problem in a timely manner to avoid deterioration of the
loan portfolio solely due to this issue. Significant relationships have been
identified and questionnaires have been completed to assess the inherent risks.
Deposit customers have received statement stuffers and informational material in
this regard. The Company plans to be prepared on a one-on-one basis with
significant borrowers who has been identified as having high Year 2000 risk
exposure.
Accordingly, management does not believe that the Company has incurred or will
incur substantial costs associated with the Year 2000 issue. Yet, there can be
no assurances that all hardware and software that the Company will use will be
Year 2000 compliant. Management cannot predict the amount of financial
difficulties it may incur due to customers and vendors inability to perform
according to their agreements with the Company or the effects that other third
parties may cause as a result of this issue. Therefore, there can be no
assurance that the failure or delay of others to address the issue or that the
costs involved in such process will not have a significant adverse effect on the
Company's business, financial condition, and results of operations.
The Company's contingency plans relative to Year 2000 issues have not been
finalized - these plans are evolving as the testing of systems proceeds.
Management will develop a "worst case scenario" contingency plan. With regards
to nonmission critical internal systems, the Company's contingency plans are to
replace and/or upgrade those systems that test as being noncompliant.
Alternatively, some systems could be handled manually on an interim basis.
Should outside service providers not be able to provide compliant systems, the
Company will terminate those relationships and transfer to other vendors. It is
anticipated that the Company's deposit customers will have increased demands for
cash in the latter part of 1999 and correspondingly the Company will maintain
higher liquidity levels.
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
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 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)
**10.1 1996 Incentive Stock Option Plan
**10.2 Company's 1998 Directors Stock Option Plan
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 September 30, 1998.
- -------------------------
* 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.
** Previously filed as an exhibit to the Form 10-QSB for the quarter ended June
30, 1998.
<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: , 1998 By: /s/ Richard Storm, Jr.
--------------- -----------------------------------
Richard Storm, Jr.,
Chairman of the Board
and Chief Executive Officer
Date: , 1998 By: /s/ Stephen A. McLaughlin
--------------- -----------------------------------
Stephen A. McLaughlin,
Secretary and Treasurer
(Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Form 10-QSB
for the period ended September 30, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 3,216
<INT-BEARING-DEPOSITS> 7,257
<FED-FUNDS-SOLD> 4,097
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 8,000
<INVESTMENTS-MARKET> 7,999
<LOANS> 39,996
<ALLOWANCE> 406
<TOTAL-ASSETS> 65,713
<DEPOSITS> 47,016
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,490
<LONG-TERM> 0
0
0
<COMMON> 32
<OTHER-SE> 17,174
<TOTAL-LIABILITIES-AND-EQUITY> 65,713
<INTEREST-LOAN> 2,272
<INTEREST-INVEST> 376
<INTEREST-OTHER> 499
<INTEREST-TOTAL> 3,147
<INTEREST-DEPOSIT> 1,525
<INTEREST-EXPENSE> 1,525
<INTEREST-INCOME-NET> 1,622
<LOAN-LOSSES> 108
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,511<F1>
<INCOME-PRETAX> 309
<INCOME-PRE-EXTRAORDINARY> 309
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 198
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
<YIELD-ACTUAL> 0<F2>
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 298
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 406
<ALLOWANCE-DOMESTIC> 406
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Other expense includes: salaries and employee benefits of $750, occupancy of
$274, professional fees of $26 and other expenses which totaled $461.
<F2>Calculated at year-end.
</FN>
</TABLE>
