- --------------------------------------------------------------------------------
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, 1999
____ 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 3,461,519
- -------------------------------------- -------------------------
(class) Outstanding at March 31, 1999
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets -
March 31, 1999 (unaudited) and December 31, 1998.........................................................2
Condensed Consolidated Statements of Earnings -
Three Months ended March 31, 1999 and 1998 (unaudited)...................................................3
Condensed Consolidated Statement of Stockholders' Equity -
Three Months ended March 31, 1999 (unaudited)............................................................4
Condensed Consolidated Statements of Cash Flows -
Three Months ended March 31, 1999 and 1998 (unaudited)...................................................5
Notes to Condensed Consolidated Financial Statements (unaudited).........................................6-7
Review By Independent Certified Public Accountants.........................................................8
Report on Review by Independent Certified Public Accountants...............................................9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..............................................................................10-13
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........................................14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...................................................................14
SIGNATURES.....................................................................................................15
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, December 31,
Assets 1999 1998
---- ----
(unaudited)
<S> <C> <C>
Cash and due from banks........................................................... $ 3,956,434 5,481,992
Federal funds sold and securities purchased under
agreements to resell.......................................................... 13,210,063 19,181,095
---------- ----------
Cash and cash equivalents............................................. 17,166,497 24,663,087
Securities held to maturity....................................................... 18,042,840 8,499,968
Restricted securities, Federal Home Loan Bank stock, at cost 214,900 127,100
Loans, net of allowance for loan losses of $574,211
and $453,211.................................................................. 55,285,547 44,932,943
Premises and equipment, net....................................................... 3,518,245 3,549,924
Accrued interest receivable and other assets...................................... 538,981 453,104
----------- -----------
Total assets.......................................................... $ 94,767,010 82,226,126
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Demand deposits............................................................... 9,153,362 6,365,180
Savings and NOW deposits...................................................... 37,655,370 33,307,881
Money-market deposits......................................................... 6,517,494 4,010,998
Time deposits................................................................. 22,769,195 20,306,399
---------- ----------
Total deposits........................................................ 76,095,421 63,990,458
Official checks............................................................... 972,658 697,458
Deferred income taxes......................................................... 20,068 19,850
Accrued interest payable and other liabilities................................ 334,207 293,832
----------- -----------
Total liabilities..................................................... 77,422,354 65,001,598
---------- ----------
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,
3,461,519 and 3,455,039 shares issued and outstanding..................... 34,615 34,550
Additional paid-in capital.................................................... 19,192,086 19,158,862
Accumulated deficit........................................................... (1,882,045) (1,968,884)
---------- ----------
Total stockholders' equity............................................ 17,344,656 17,224,528
---------- ----------
Total liabilities and stockholders' equity............................ $ 94,767,010 82,226,126
========== ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Three Months Ended
March 31,
------------------
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Interest income:
Loans.......................................................................... $ 1,030,274 709,981
Securities..................................................................... 180,729 57,806
Other interest income.......................................................... 190,191 163,091
--------- ----------
Total interest income...................................................... 1,401,194 930,878
Interest expense on deposits........................................................ 547,392 463,467
---------- ---------
Net interest income................................................................. 853,802 467,411
Provision for loan losses.................................................. 121,000 56,000
---------- ----------
Net interest income after provision for loan losses 732,802 411,411
---------- ---------
Noninterest income:
Other service charges and fees................................................. 118,042 51,423
Other.......................................................................... 15,617 36,445
---------- ----------
Total noninterest income................................................... 133,659 87,868
--------- ----------
Noninterest expense:
Salaries and employee benefits................................................. 338,210 223,329
Occupancy and equipment........................................................ 105,455 83,621
Advertising.................................................................... 33,086 17,057
Professional fees.............................................................. 39,784 11,114
Office supplies and expense.................................................... 9,840 16,314
Data processing................................................................ 36,704 19,854
Other.......................................................................... 179,443 88,789
---------- ----------
Total noninterest expense.................................................. 742,522 460,078
---------- ----------
Earnings before income taxes........................................................ 123,939 39,201
Income taxes............................................................... 37,100 15,000
---------- ----------
Net earnings ....................................................................... $ 86,839 24,201
========== ==========
Earnings per share, basic and diluted............................................... $ .03 .01
========== ==========
Dividends per share................................................................. $ - -
========== =========
Weighted-average number of shares for basic ........................................ 3,455,901 1,709,239
========= =========
Weighted-average number of shares for diluted....................................... 3,547,706 1,709,239
========= =========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' Equity
Three Months Ended March 31, 1999
<TABLE>
<CAPTION>
Common Stock Additional Total
Number of Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998....................... 3,455,039 $ 34,550 19,158,862 (1,968,884) 17,224,528
Issuance of common stock (unaudited) 6,480 65 33,224 - 33,289
Net earnings for the three months ended March
31, 1999 (unaudited)...................... - - - 86,839 86,839
--------- -------- ---------- ---------- ----------
Balance at March 31, 1999 (unaudited) 3,461,519 $ 34,615 19,192,086 (1,882,045) 17,344,656
========= ======== ========== ========== ==========
</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
Three Months Ended
March 31,
------------------
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings................................................................ $ 86,839 24,201
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation............................................................. 46,895 36,489
Provision for loan losses................................................ 121,000 56,000
Provision for deferred income taxes...................................... 218 15,000
Net amortization of loan fees, premiums and discounts (32,008) 53,449
Increase in accrued interest receivable
and other assets..................................................... (85,877) (30,106)
Increase in accrued expenses and other liabilities 40,375 2,228
Net increase in official checks.......................................... 275,200 817,512
----------- -----------
Net cash provided by operating activities 452,642 974,773
----------- -----------
Cash flows from investing activities:
Purchase of securities held to maturity..................................... (15,582,229) (7,000,000)
Maturities of securities held to maturity................................... 6,050,627 500,000
Net increase in loans....................................................... (10,452,866) (5,531,457)
Purchase of premises and equipment.......................................... (15,216) (128,446)
Purchase of restricted securities, Federal Home
Loan Bank stock.......................................................... (87,800) (127,100)
------------ -----------
Net cash used in investing activities (20,087,484) (12,287,003)
---------- ----------
Cash flows from financing activities:
Net increase in noninterest-bearing demand,
savings and NOW deposits................................................. 9,642,167 10,301,051
Net increase in time deposits............................................... 2,462,796 3,296,688
Sale of common stock........................................................ 33,289 187,806
------------ -----------
Net cash provided by financing activities 12,138,252 13,785,545
---------- ----------
Net (decrease) increase in cash and cash equivalents (7,496,590) 2,473,315
Cash and cash equivalents at beginning of period 24,663,087 12,210,577
---------- ----------
Cash and cash equivalents at end of period...................................... $ 17,166,497 14,683,892
========== ==========
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Interest................................................................. $ 546,287 440,382
=========== ============
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. 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 March 31, 1999, and the results of
operations and cash flows for the three-month periods ended March 31,
1999 and 1998. The results of operations for the three months ended
March 31, 1999 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 March 31, 1999 or March 31, 1998. The activity in the
allowance for loan losses was as follows:
For the Three
Months Ended
March 31,
1999 1998
---- ----
Balance at beginning of period $453,211 298,000
Provision charged to earnings 121,000 56,000
-------- --------
Balance at end of period $574,211 354,000
======== ========
(3) Earnings Per Share. Earnings per share ("EPS") of common stock has
been computed on the basis of the weighted-average number of shares
of common stock outstanding. Prior to the public stock offering in
April, 1998, there was no public market for the Company's common
stock. Therefore for the three months ended March 31, 1998, the stock
book value was used for purposes of calculating dilution. For the
three months ended March 31, 1999, outstanding options are considered
dilutive securities for purposes of calculating diluted EPS which is
computed using the treasury stock method. All per share amounts
reflect the 8% stock dividend effective December 31, 1998. The
following table presents the calculations of EPS ($ in thousands,
except per share amounts).
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
1999 1998
-------------------------------------------------------------------------------
Earnings Shares Per Share Earnings Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Net earnings available
to common stockholders $ 87 3,455,901 $ .03 $ 24 1,709,239 $ .01
=== ===
Effect of dilutive securities-
Incremental shares from
assumed conversion
of options 91,805 -
---------- --------
Diluted EPS:
Net earnings available
to common stockholders
and assumed conversions $ 87 3,547,706 $ .03 $ 24 1,709,239 $ .01
==== ========= ===== ==== ========= =====
</TABLE>
(continued)
6
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
(4) Regulatory Capital. The Citizens Community Bank of Florida (the
Company's Banking Subsidiary) ("Citizens") is required to maintain
certain minimum regulatory capital requirements. The following is a
summary at March 31, 1999 of the regulatory capital requirements and
the Bank's capital on a percentage basis:
<TABLE>
<CAPTION>
Ratios of Regulatory
the Bank Requirement
-------- -----------
<S> <C> <C>
Total capital to risk-weighted assets 12.83% 8.00%
Tier I capital to risk-weighted assets 11.82% 4.00%
Tier I capital to total assets - leverage ratio 7.56% 4.00%
</TABLE>
7
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Review by Independent Certified Public Accountants
Hacker, Johnson, Cohen & Grieb PA, the Company's independent certified public
accountants, have made a limited review of the financial data as of March 31,
1999, and for the three-month periods ended March 31, 1999 and 1998 presented in
this document, in accordance with standards established by the American
Institute of Certified Public Accountants.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
8
<PAGE>
Report on Review by Independent Certified Public Accountants
The Board of Directors
Citizens Community Bancorp, Inc.
Marco Island, Florida:
We have reviewed the accompanying condensed consolidated balance sheet of
Citizens Community Bancorp, Inc. and Subsidiaries (the "Company") as of March
31, 1999, and the related condensed consolidated statements of earnings and cash
flows for the three-month periods ended March 31, 1999 and 1998, and the
condensed consolidated statement of stockholders' equity for the three-month
period ended March 31, 1999. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1998, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the year then ended (not presented herein); and in our report dated
January 29, 1999 we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 1998, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
April 16, 1999
9
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Comparison of March 31, 1999 and December 31, 1998
Liquidity and Capital Resources
The Company's primary source of cash during the three months ended March 31,
1999 was from net deposit inflows and maturities of securities held to
maturity. Cash was used primarily for loan originations and for the purchase
of securities. At March 31, 1999, the Company had outstanding commitments to
fund existing and new loans of $15.1 million. It is expected that these
requirements will be funded from the sources described above. At March 31,
1999, the Bank exceeded its regulatory liquidity requirements.
The following table shows selected ratios for the periods ended or at the
dates indicated:
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
March 31, December 31,
1999 1998
-------------- ---------
<S> <C> <C>
Average equity as a percentage
of average assets............................................... 19.89% 18.91%
Equity to total assets at end of period 18.30% 20.95%
Return on average assets (1)....................................... 0.40% 0.32 %
Return on average equity (1)....................................... 2.00% 1.71 %
Noninterest expense to average assets (1) 3.41% 3.04%
Nonperforming loans and foreclosed real estate to
total assets at end of period................................... NIL NIL
</TABLE>
- --------------------------------
(1) Annualized for the three months ended March 31, 1999.
10
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest income; (iv) interest-rate spread; and (v) net
interest margin.
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
------------------------------------------------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ---- ------- --------- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $ 48,771,880 1,030,274 8.45% $ 29,628,718 709,981 9.59%
Securities 13,057,776 180,729 5.54 3,657,369 57,806 6.32
Other interest-earning assets (1) 16,431,504 190,191 4.63 12,043,700 163,091 5.42
---------- ---------- ---------- -------
Total interest-earning assets 78,261,160 1,401,194 7.16 45,329,787 930,878 8.21
--------- -------
Noninterest-earning assets 8,846,255 6,694,176
---------- -----------
Total assets $ 87,107,415 $ 52,023,963
========== ==========
Interest-bearing liabilities:
Savings, NOW and money-market deposit
accounts 38,786,667 262,754 2.71% 22,026,799 198,117 3.60
Time deposits 21,213,028 284,638 5.37 18,575,957 265,350 5.71
---------- --------- ---------- -------
Total interest-bearing liabilities 59,999,695 547,392 3.65 40,602,756 463,467 4.57
--------- -------
Noninterest-bearing liabilities 9,777,768 4,581,441
Stockholders' equity 17,329,952 6,839,766
---------- ----------
Total liabilities and stockholders' $ 87,107,415 $ 52,023,963
========== ==========
equity
Net interest income $ 853,802 $ 467,441
========= =======
Interest-rate spread (2) 3.51% 3.65%
==== ====
Net interest margin (3) 4.36% 4.12%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.30 1.12
==== ====
</TABLE>
(1) Includes federal funds sold, Federal Home Loan Bank stock and
securities purchased under agreements to resell.
(2) Interest-rate spread represents the difference between the average
yield on interest-earning assets and the average rate of
interest-bearing liabilities.
(3) Net interest margin is net interest income divided by average
interest-earning assets.
11
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Comparison of the Three-Month Periods Ended March 31, 1999 and 1998
Results of Operations:
General. Net earnings for the three months ended March 31, 1999 were $86,839,
or $.03 per basic and diluted share, compared to net earnings for the
three months ended March 31, 1998 of $24,201, or $.01 per basic and
diluted share. Earnings increased primarily because of asset growth of the
Company between March 31, 1998 and March 31, 1999.
Interest Income and Expense. Interest income was $1.4 million for the three
months ended March 31, 1999 compared to $.9 million for the comparable
1998 period. Interest income earned on loans for the 1999 period was $1.0
million compared to $.7 million for the 1998 period. The average loan
balance outstanding for the three months ended March 31, 1999 was $48.8
million with a weighted-average yield of 8.45% compared to $29.6 million
with a weighted-average yield of 9.59% for the 1998 period. Interest
earned on securities for 1999 was $181,000 compared to $58,000 for the
1998 period. For the 1999 period, the average securities portfolio was
$13.1 million with a weighted-average yield of 5.54% compared to a $3.7
million with a weighted-average yield of 6.32% for the 1998 period. Other
interest income for the 1999 period totaled $.2 million compared to $.2
million for the 1998 period. The average balance of other interest-earning
assets was $16.4 million during the 1999 period, with a weighted-average
yield of 4.63%.
Interest expense on deposits amounted to $547,000 for the three months
ended March 31, 1999 compared to $463,000 for the 1998 period. The average
balance for the three months ended March 31, 1999 was $60.0 million and
the weighted-average rate was 3.65% compared to $40.6 million with a
weighted-average cost of 4.57% for the 1998 period.
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, 1999 was $121,000 and the allowance was $574,000 at March 31, 1999.
Management believes the allowance at March 31, 1999 is adequate.
Noninterest Expense. Noninterest expense totaled $743,000 for the three
months ended March 31, 1999 compared to $460,000 for the 1998 period.
Compensation and benefits was the largest noninterest expense amounting to
$338,000 for 1999 compared to $223,000 for 1998. All expenses increased
primarily because of the asset growth of the Company including the opening
of a third banking office.
Provision for Income Taxes. The income tax provision for the three months
ended March 31, 1999 was $37,000 compared to $15,000 for 1998.
12
<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 and has formed a Year 2000 committee that is charged with
oversight of completing the Year 2000 project on a timely basis. Citizens also
has a Year 2000 committee which is actively involved in managing the Year 2000
computer challenges, following the guidance provided by its regulatory bodies
and documented in the interagency statements issued by the Federal Financial
Institutions Examination Council ("FFIEC"). Citizens has a Year 2000 Technology
Plan, 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.
Citizens routinely upgrades and purchases technology advanced software and
hardware on a continual basis. All future purchases and upgrades will be Year
2000 compliant. Citizens has determined that the cost of making modifications to
correct any Year 2000 issues will not substantially affect reported operating
results.
Citizens's main service provider considers the awareness phase of its Year 2000
Project to be substantially complete from an internal standpoint. Their
assessment phase of its Year 2000 Project is substantially complete for internal
mission critical systems.
The testing phase of Citizens's main service provider involves the testing of
various internal and external mission critical systems. The service provider is
into its testing phase of testing its internal and external mission critical
systems and services with Year 2000 date information. The service provider plans
to substantially complete testing of mission critical systems and services by
June 30, 1999.
Citizens also recognizes the importance of determining if its borrowers are
preparing for 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. Citizens plans to be prepared on a one-on-one basis with
significant borrowers who have been identified as having high Year 2000 risk
exposure. Citizens stresses the importance of determining that its major
depositors and borrowers are ready to face the Year 2000 problem in order to
avoid difficulties surrounding the issue. Citizens plans to continue in its
efforts to be active in informing its customers of the Year 2000 issue.
Citizens has developed a contingency plan relative to the Year 2000 issues which
addresses a "worst case scenario." The plan covers various options for handling
interruptions of the internal and external mission critical systems and
services. Citizens, for example, has developed plans for meeting unusually high
demands for cash generated by the publicity surrounding the Year 2000 issue. The
Contingency Plan will be continuously monitored to incorporate and address
various operational elements as needed. Furthermore, Citizens's contingency plan
covers systems which can be handled manually on an interim basis. Should outside
service providers not be able to provide compliant systems, Citizens will
terminate those relationships and transfer to other vendors.
13
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss from adverse changes in market prices and rates.
The Company's market risk arises primarily from interest rate risk inherent in
its lending and deposit taking activities. The Company has little or no risk
related to trading accounts, commodities or foreign exchange.
Management actively monitors and manages its interest rate risk exposure. The
primary objective in managing interest-rate risk is to limit, within established
guidelines, the adverse impact of changes in interest rates on the Company's net
interest income and capital, while adjusting the Company's asset-liability
structure to obtain the maximum yield-cost spread on that structure. Management
relies primarily on its asset-liability structure to control interest rate risk.
However, a sudden and substantial increase in interest rates could adversely
impact the Company's earnings, to the extent that the interest rates borne by
assets and liabilities do not change at the same speed, to the same extent, or
on the same basis. There have been no significant changes in the Company's
market risk exposure since December 31, 1998.
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 exhibits which are marked by a single
asterisk (*) were previously filed as a part, and are hereby
incorporated by reference from the Company's Registration Statement on
Form SB-2, as effective with the Securities and Exchange Commission on
December 7, 1995, Registration No. 33-98090. The exhibits which are
marked by a double asterisk (**) were previously filed as part of, and
are hereby incorporated by reference from the Company's Registration
Statement on Form SB-2 as filed with the Securities and Exchange
Commission on March 12, 1998, Registration No. 333- 47813. The exhibit
marked by a triple asterisk (***) was filed as an exhibit to the
Company's for 10-KSB for 1998. 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
**10.3 Employment Contract with Michael A. Micallef, Jr.
***22.1 Citizens' 1998 Annual Report
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, 1999.
14
<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: , 1999 By: /s/ Richard Storm, Jr.
--------------- -----------------------
Richard Storm, Jr.,
Chairman of the Board
and Chief Executive Officer
Date: , 1999 By: /s/ Gregory E. Smith
--------------- ---------------------
Gregory E. Smith,
Senior Vice President and
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Form 10-QSB
for the period ended March 31, 1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 3,956
<INT-BEARING-DEPOSITS> 2,131
<FED-FUNDS-SOLD> 13,210
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 18,043
<INVESTMENTS-MARKET> 18,020
<LOANS> 55,860
<ALLOWANCE> 574
<TOTAL-ASSETS> 94,767
<DEPOSITS> 76,095
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,327
<LONG-TERM> 0
0
0
<COMMON> 35
<OTHER-SE> 17,310
<TOTAL-LIABILITIES-AND-EQUITY> 94,767
<INTEREST-LOAN> 1,030
<INTEREST-INVEST> 181
<INTEREST-OTHER> 190
<INTEREST-TOTAL> 1,401
<INTEREST-DEPOSIT> 547
<INTEREST-EXPENSE> 547
<INTEREST-INCOME-NET> 854
<LOAN-LOSSES> 121
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 743<F1>
<INCOME-PRETAX> 124
<INCOME-PRE-EXTRAORDINARY> 124
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
<YIELD-ACTUAL> 4.36
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 453
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 574
<ALLOWANCE-DOMESTIC> 574
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Other expense includes: salaries and employee benefits of $338, occupancy of
$106, advertising of $33, professional fees of $40 office supplies and expenses
of $10, data processing of $37, and other expenses which totaled $179.
</FN>
</TABLE>
