<PAGE> 1
================================================================================
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 June 30, 2000
[ ] 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 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 3,480,745
-------------------------------------- ----------------------------
(class) Outstanding at June 30, 2000
================================================================================
<PAGE> 2
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
----
Condensed Consolidated Balance Sheets -
June 30, 2000 (unaudited) and December 31, 1999.......................2
Condensed Consolidated Statements of Earnings -
Three and Six Months ended June 30, 2000 and 1999 (unaudited).........3
Condensed Consolidated Statement of Stockholders' Equity -
Six Months ended June 30, 2000 (unaudited)............................4
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 2000 and 1999 (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.................................10-14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......15
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS........................16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........16-17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................18
SIGNATURES..................................................................19
1
<PAGE> 3
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
Cash and due from banks .......................................................... $ 5,702,440 6,035,589
Interest-bearing deposits ........................................................ -- 2,000,000
Federal funds sold and securities purchased under agreements to resell ........... 1,066,448 8,892,655
------------- ------------
Cash and cash equivalents .......................................... 6,768,888 16,928,244
Securities available for sale .................................................... 5,526,118 6,022,103
Securities held to maturity ...................................................... 13,000,000 13,000,000
Loans, net of allowance for loan losses of $1,053,485 and $885,617 ............... 108,035,332 79,987,726
Premises and equipment, net ...................................................... 5,379,250 5,039,789
Federal Home Loan Bank stock, at cost ............................................ 355,000 214,800
Deferred tax asset ............................................................... 33,752 32,775
Accrued interest receivable and other assets ..................................... 1,589,161 967,253
------------- ------------
Total assets ....................................................... $ 140,687,501 122,192,690
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand deposits .......................................... 11,000,723 12,208,961
Savings and NOW deposits ..................................................... 37,176,709 34,292,059
Money-market deposits ........................................................ 21,218,818 21,722,006
Time deposits ................................................................ 44,458,545 34,274,902
------------- ------------
Total deposits ..................................................... 113,854,795 102,497,928
Other borrowings ............................................................. 6,228,000 --
Official checks .............................................................. 1,635,100 1,060,366
Accrued interest payable and other liabilities ............................... 692,105 650,769
------------- ------------
Total liabilities .................................................. 122,410,000 104,209,063
------------- ------------
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, 3,480,745
and 3,486,767 shares issued and outstanding ............................. 34,807 34,868
Additional paid-in capital ................................................... 19,264,172 19,310,313
Accumulated deficit .......................................................... (1,037,881) (1,353,625)
Accumulated other comprehensive income (loss) ................................ 16,403 (7,929)
------------- ------------
Total stockholders' equity ......................................... 18,277,501 17,983,627
------------- ------------
Total liabilities and stockholders' equity ......................... $ 140,687,501 122,192,690
============= ============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE> 4
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- ------------------------
2000 1999 2000 1999
---------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Interest income:
Loans ............................................ $2,175,794 1,249,903 3,990,776 2,280,177
Securities ....................................... 271,856 245,374 541,037 426,103
Other interest-earning assets .................... 55,782 134,969 142,605 325,160
---------- --------- --------- ---------
Total interest income .................... 2,503,432 1,630,246 4,674,418 3,031,440
---------- --------- --------- ---------
Interest expense:
Deposits ......................................... 1,052,681 641,733 1,927,974 1,189,125
Other borrowings ................................. 34,877 -- 44,576 --
---------- --------- --------- ---------
Total interest expense ................... 1,087,558 641,733 1,972,550 1,189,125
---------- --------- --------- ---------
Net interest income ...................... 1,415,874 988,513 2,701,868 1,842,315
Provision for loan losses ............................ 160,000 133,000 245,000 254,000
---------- --------- --------- ---------
Net interest income after provision
for loan losses ........................ 1,255,874 855,513 2,456,868 1,588,315
---------- --------- --------- ---------
Noninterest income:
Service charges and fees on deposit accounts ..... 92,035 65,079 173,459 130,778
Mortgage brokerage fees .......................... 270,675 16,954 549,554 33,929
Other ............................................ 74,542 51,396 124,623 102,381
---------- --------- --------- ---------
Total noninterest income ................. 437,252 133,429 847,636 267,088
---------- --------- --------- ---------
Noninterest expense:
Salaries and employee benefits ................... 799,170 346,401 1,513,825 684,611
Occupancy and equipment .......................... 157,690 128,634 312,586 234,089
Advertising ...................................... 48,397 45,624 97,724 78,710
Office supplies and expense ...................... 34,915 51,008 65,761 60,848
Data processing .................................. 22,120 22,440 67,606 58,710
Professional fees ................................ 32,449 43,810 70,978 83,594
Other ............................................ 216,389 117,568 388,470 297,445
---------- --------- --------- ---------
Total noninterest expense ................ 1,311,130 755,485 2,516,950 1,498,007
---------- --------- --------- ---------
Earnings before income taxes ......................... 381,996 233,457 787,554 357,396
Income taxes ............................. 144,798 82,780 297,463 119,880
---------- --------- --------- ---------
Net earnings ......................................... $ 237,198 150,677 490,091 237,516
========== ========= ========= =========
Earnings per share:
Basic ............................................ $ .07 .04 .14 .07
========== ========= ========= =========
Diluted .......................................... $ .07 .04 .14 .07
========== ========= ========= =========
Weighted-average number of shares outstanding:
Basic ............................................ 3,483,738 3,469,051 3,485,671 3,462,608
========== ========= ========= =========
Diluted .......................................... 3,540,608 3,563,893 3,542,823 3,555,843
========== ========= ========= =========
Dividends per share .................................. $ -- -- .05 --
========== ========= ========= =========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 5
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON STOCK COMPRE-
------------------------ ADDITIONAL HENSIVE TOTAL
NUMBER OF PAID-IN ACCUMULATED INCOME STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT (LOSS) EQUITY
--------- -------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999........... 3,486,767 $ 34,868 19,310,313 (1,353,625) (7,929) 17,983,627
----------
Comprehensive income:
Net earnings (unaudited).......... - - - 490,091 - 490,091
Net change in unrealized
gain on securities
available for sale, net
of tax effect of $10,663
(unaudited).................. - - - - 24,332 24,332
----------
Comprehensive income (unaudited)....... - - - - - 514,423
----------
Repurchase of common stock
(unaudited)....................... (6,454) (65) (49,137) - - (49,202)
----------
Shares issued under stock
option plan (unaudited)........... 432 4 2,996 - - 3,000
----------
Dividends (unaudited) ................ - - - (174,347) - (174,347)
--------- -------- ---------- ---------- ------ ----------
Balance at June 30, 2000
(unaudited)....................... 3,480,745 $ 34,807 19,264,172 (1,037,881) 16,403 18,277,501
========= ======== ========== ========== ====== ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 6
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
2000 1999
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings ................................................................... $ 490,091 237,516
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation ............................................................... 152,123 53,917
Provision for loan losses .................................................. 245,000 254,000
Provision (credit) for deferred income taxes ............................... (11,640) 41,521
Net amortization of loan fees, premiums and discounts ...................... 22,216 (145,514)
Increase in accrued interest receivable and other assets ................... (621,908) (276,597)
Increase in accrued interest payable and other liabilities ................. 41,336 59,537
Net increase (decrease) in official checks ................................. 574,734 (125,124)
------------ -----------
Net cash provided by operating activities .......................... 891,952 99,256
------------ -----------
Cash flows from investing activities:
Principal repayment of securities available for sale ........................... 490,776 --
Purchase of securities available for sale ...................................... -- (1,632,430)
Purchase of securities held to maturity ........................................ -- (22,432,064)
Maturities of securities held to maturity ...................................... -- 17,996,627
Purchase of Federal Home Loan Bank stock ....................................... (140,200) (87,800)
Net increase in loans .......................................................... (28,274,618) (19,892,818)
Purchase of premises and equipment ............................................. (491,584) (98,432)
------------ -----------
Net cash used in investing activities .............................. (28,415,626) (26,146,917)
------------ -----------
Cash flows from financing activities:
Net increase in deposits ....................................................... 11,356,867 15,283,030
Increase in other borrowings ................................................... 6,228,000 --
Repurchase of common stock ..................................................... (49,202) --
Sale of common stock ........................................................... 3,000 80,878
Dividends paid ................................................................. (174,347) --
------------ -----------
Net cash provided by financing activities .......................... 17,364,318 15,363,908
------------ -----------
Net increase (decrease) in cash and cash equivalents ............................... (10,159,356) (10,683,753)
Cash and cash equivalents at beginning of period ................................... 16,928,244 24,663,087
------------ -----------
Cash and cash equivalents at end of period ......................................... $ 6,768,888 13,979,334
============ ===========
Supplemental disclosure of cash flow information-
Cash paid during the period for:
Interest ................................................................... $ 1,978,471 1,163,952
============ ===========
Income taxes ............................................................... $ 375,000 65,000
============ ===========
Noncash transaction-
Change in unrealized gain (loss) on securities available for sale .......... $ 24,332 (9,737)
============ ===========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 7
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 June 30, 2000, and the results of operations
for the three-month and six-month periods ended June 30, 2000 and 1999
and the cash flows for the six-month periods ended June 30, 2000 and
1999. The results of operations for the three and six months ended June
30, 2000 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 June 30, 2000 or 1999. The activity in the allowance for loan losses
was as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- ------------------------
2000 1999 2000 1999
----------- ------- ---------- -------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Balance at beginning of period.. $ 970,617 574,211 885,617 453,211
Provision charged to earnings... 160,000 133,000 245,000 254,000
Charge-offs, net of recoveries.. (77,132) -- (77,132) --
----------- ------- ---------- -------
Balance at end of period ....... $ 1,053,485 707,211 1,053,485 707,211
=========== ======= ========== =======
</TABLE>
(3) EARNINGS PER SHARE The following is a reconciliation of the numerators
and denominators of the basic and diluted earnings per share
computations. Options to purchase 170,272 shares of common stock
between $7.75 and $9.50 a share issued in 2000, 1999 and 1998 were not
included in the three months ended June 30, 2000 computation of diluted
EPS because the options exercise price was more than the average market
price of the common shares. Options to purchase 165,072 shares of
common stock between $7.87 and $9.50 a share issued in 2000, 1999 and
1998 were not included in the six months ended June 30, 2000
computation of diluted EPS because the options exercise price was more
than the average market price of the common shares. These options
expire between August 2008 and June 2010. (Dollars are in thousands,
except per share amounts).
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
----------------------------------------------------------------------------------
2000 1999
-------------------------------------- -------------------------------------
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... $ 237 3,483,738 $ .07 $ 151 3,469,051 $ .04
Effect of dilutive securities-
Incremental shares from
assumed conversion
of options............... 56,870 - 94,842 -
--------- ----- --------- ----
Diluted EPS:
Net earnings available
to common stockholders
and assumed conversions.. $ 237 3,540,608 $ .07 $ 151 3,563,893 $ .04
===== ========= ===== ===== ========= =====
(continued)
</TABLE>
6
<PAGE> 8
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(3) EARNINGS PER SHARE, CONTINUED.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
----------------------------------------------------------------------------------
2000 1999
-------------------------------------- -------------------------------------
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.. 490 3,485,671 $ .14 $ 238 3,462,608 $ .07
Effect of dilutive securities-
Incremental shares from
assumed conversion
of options............ 57,152 - 93,235 -
--------- ----- --------- -----
Diluted EPS:
Net earnings available
to common stockholders
and assumed conversions... $ 490 3,542,823 $ .14 $ 238 3,555,843 $ .07
===== ========= ===== ===== ========= =====
</TABLE>
(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 June 30, 2000 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........................... 11.11% 8.00%
Tier I capital to risk-weighted assets.......................... 10.15% 4.00%
Tier I capital to total assets - leverage ratio................. 8.28% 4.00%
</TABLE>
7
<PAGE> 9
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 June 30,
2000, and for the three- and six-month periods ended June 30, 2000 and 1999
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> 10
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 June
30, 2000, and the related condensed consolidated statements of earnings for the
three- and six-month periods ended June 30, 2000 and 1999, the condensed
consolidated statement of stockholders' equity for the six-month period ended
June 30, 2000 and the condensed consolidated statements of cash flows for the
six-month periods ended June 30, 2000 and 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, 1999, 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 14, 2000 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, 1999, 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
July 12, 2000
9
<PAGE> 11
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF JUNE 30, 2000 AND DECEMBER 31, 1999
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of cash during the six months ended June 30, 2000
was from net deposit inflows and other borrowings. Cash was used primarily for
loan originations. At June 30, 2000, the Company had outstanding commitments to
fund existing and new loans of $24.7 million. It is expected that these
requirements will be funded from the sources described above. At June 30, 2000,
the Bank exceeded its regulatory liquidity requirements.
The following table shows selected ratios for the periods ended or at the dates
indicated:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
2000 1999
-------------- -------------
<S> <C> <C>
Average equity as a percentage
of average assets........................................ 14.19% 17.51%
Equity to total assets at end of period..................... 12.99% 14.72%
Return on average assets (1)................................ 0.77% 0.61%
Return on average equity (1)................................ 5.43% 3.50%
Noninterest expense to average assets (1)................... 3.96% 3.22%
Nonperforming loans and foreclosed real estate to
total assets at end of period............................ NIL NIL
</TABLE>
---------------
(1) Annualized for the six months ended June 30, 2000.
10
<PAGE> 12
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
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 (dollar amounts in thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
2000 1999
----------------------------------- ---------------------------------
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.................................... $ 100,159 2,176 8.74% $ 60,690 1,250 8.26%
Securities............................... 18,630 272 5.84 17,694 245 5.55
Other interest-earning assets (1)........ 3,701 55 5.98 11,391 135 4.75
--------- ------- --------- -------
Total interest-earning assets........ 122,490 2,503 8.22 89,775 1,630 7.28
------- -------
Noninterest-earning assets.................. 10,386 7,769
--------- ---------
Total assets......................... $ 132,876 $ 97,544
========= =========
Interest-bearing liabilities:
Savings, NOW and money-market deposit
accounts............................. 59,680 496 3.34 44,902 309 2.76
Time deposits............................ 38,010 556 5.88 24,687 332 5.39
Other borrowings (2)..................... 2,027 35 6.94 -- -- --
--------- ------- --------- -------
Total interest-bearing liabilities... 99,717 1,087 4.38 69,589 641 3.69
------- -------
Noninterest-bearing liabilities............. 15,024 10,538
Stockholders' equity........................ 18,135 17,417
--------- ---------
Total liabilities and stockholders'
equity $ 132,876 $ 97,544
========= =========
Net interest income......................... $ 1,416 $ 989
======= =======
Interest-rate spread (3).................... 3.84% 3.59%
==== ====
Net interest margin (4)..................... 4.65% 4.41%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities..... 1.23 1.29
========= =========
</TABLE>
---------------
(1) Includes federal funds sold, Federal Home Loan Bank stock and securities
purchased under agreements to resell.
(2) Includes Federal Home Loan Bank borrowings and federal funds purchased.
(3) Interest-rate spread represents the difference between the average yield
on interest-earning assets and the average rate of interest-bearing
liabilities.
(4) Net interest margin is net interest income divided by average
interest-earning assets.
11
<PAGE> 13
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 (dollar amounts in thousands).
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
2000 1999
----------------------------------- ---------------------------------
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 ................................. $ 92,928 3,991 8.64% $ 54,764 2,280 8.40%
Securities............................... 18,709 541 5.78 15,389 426 5.58
Other interest-earning assets (1)........ 4,902 142 5.83 13,897 325 4.72
--------- ------- --------- -------
Total interest-earning assets........ 116,539 4,674 8.07 84,050 3,031 7.27
------- -------
Noninterest-earning assets.................. 10,671 8,305
--------- ---------
Total assets......................... $ 127,210 $ 92,355
========= =========
Interest-bearing liabilities:
Savings, NOW and money-market deposit
accounts............................. 57,951 947 3.29 41,678 573 2.77
Time deposits............................ 34,640 980 5.69 23,143 616 5.37
Other borrowings (2)..................... 1,332 45 6.79 -- -- --
--------- ------- --------- -------
Total interest-bearing liabilities... 93,923 1,972 4.22 64,821 1,189 3.70
------- -------
Noninterest-bearing liabilities............. 15,239 10,160
Stockholders' equity........................ 18,048 17,374
--------- ---------
Total liabilities and stockholders'
equity........................... $ 127,210 $ 92,355
========= =========
Net interest income......................... $ 2,702 $ 1,842
======= =======
Interest-rate spread (3).................... 3.85% 3.57%
==== ====
Net interest margin (4)..................... 4.66% 4.42%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities..... 1.24 1.30
========= =========
</TABLE>
---------------
(1) Includes federal funds sold, Federal Home Loan Bank stock and securities
purchased under agreements to resell.
(2) Includes Federal Home Loan Bank borrowings and federal funds purchased.
(3) Interest-rate spread represents the difference between the average yield
on interest-earning assets and the average rate of interest-bearing
liabilities.
(4) Net interest margin is net interest income divided by average
interest-earning assets.
12
<PAGE> 14
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
COMPARISON OF THE THREE-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
GENERAL. Net earnings for the three months ended June 30, 2000 were $237,200 or
$.07 basic and diluted earnings per share compared to net earnings of
$150,700 or $.04 basic and diluted earnings per share for the three months
ended June 30, 1999. This increase in the Company's net earnings was
primarily due to an increase in net interest income and noninterest income
and was partially offset by an increase in noninterest expense all due to
the overall growth of the Company.
INTEREST INCOME AND EXPENSE. Interest income increased by $873,200 from
$1,630,200 for the three months ended June 30, 1999 to $2,503,400 for the
three months ended June 30, 2000. Interest income on loans increased
$925,900 to $2,175,800 due primarily to an increase in the average loan
portfolio balance and an increase in average yield for the three-month
period ended June 30, 2000. Interest on securities increased to $271,900
due primarily to an increase in the average yield on securities during the
three months ended June 30, 2000. Interest on other interest-earning
assets decreased to $55,800 due primarily to a decrease in the average
balance of such assets from 1999 to 2000.
Interest expense increased to $1,087,600 for the three months ended June
30, 2000 from $641,700 for the three months ended June 30, 1999. Interest
on deposit accounts increased to $1,052,700 for the three months ending
June 30, 2000 from $641,700 for the three months ending June 30, 1999.
Interest and deposits increased due to an increase in the average balance
and an increase in the average cost of deposits.
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 estimated
collectibility of the Company's loan portfolio. The provision for the
three months ended June 30, 2000 and 1999 was $160,000 and $133,000,
respectively. The increase in the provision for loan losses in 2000 is
primarily due to the higher level of loan originations. Management
believes the balance in the allowance for loan losses of $1,053,500 at
June 30, 2000 is adequate.
NONINTEREST INCOME. Total noninterest income increased to $437,300 in 2000 from
$133,400 in the same period in 1999. The primary reason for the
improvement was increased fees and service charges and the growth in
deposit accounts and an increase in mortgage brokerage fees.
NONINTEREST EXPENSE. Total noninterest expense increased $555,600 to $1,311,100
for the three months ended June 30, 2000 from $755,500 for the three
months ended June 30, 1999, primarily due to an increase in employee
compensation and benefits of $452,800, increased occupancy and equipment
expenses of $29,100 all due to the growth of the Company.
PROVISION FOR INCOME TAXES. The income tax provision for the three months ended
June 30, 2000 was $144,800 (an effective rate of 38.7%) compared to
$82,800 (an effective rate of 35.5%) for the comparable 1999 period.
13
<PAGE> 15
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
COMPARISON OF THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
GENERAL. Net earnings for the six months ended June 30, 1999 were $490,000 or
$.14 basic and diluted earnings per share compared to $237,500 or $.07
basic and diluted earnings per share for the six months ended June 30,
1999. This increase in the Company's net earnings was primarily due to the
year-over-year growth in the Company which resulted in an increase in net
interest income and noninterest income which were only partially offset by
an increase in noninterest expenses.
INTEREST INCOME AND EXPENSE. Interest income increased by $1,643,000 from
$3,031,400 for the six months ended June 30, 1999 to $4,674,400 for the
six months ended June 30, 2000. Interest income on loans increased
$1,710,600 to $3,990,800 due primarily to an increase in the average loan
portfolio balance for the six months ended June 30, 2000. Interest on
securities increased $114,900 to $541,000 due primarily to an increase in
the average securities portfolio during the six months ended June 30,
2000. Interest on other interest-earning assets decreased $182,600 to
$142,600 primarily due to a decrease in the average balance of securities
purchased under agreements to resell and partially offset by an increase
in the average rate on other interest-earning assets.
Interest expense increased to $1,972,600 for the six months ended June 30,
2000 from $1,189,100 for the six months ended June 30, 1999. Interest on
deposit accounts increased to $1,928,000 for the six months ending June
30, 2000 from $1,189,100 for the six months ending June 30, 1999. Interest
expense on deposits increased due to the growth in the average balance and
the higher average cost of deposits. The increase in both the yield on
earning assets and the cost of interest bearing liabilities was primarily
due to the action by the Federal Reserve Bank which increased rates six
times between June 1999 and June 2000.
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 estimated
collectibility of the Company's loan portfolio. The provision decreased to
$245,000 for the six months ended June 30, 2000 from $254,000 for the six
months ended June 30, 1999. Management believes the balance in the
allowance for loan losses of $1,053,500 at June 30, 2000 is adequate.
NONINTEREST INCOME. Total noninterest income increased to $847,600 in 2000 from
$267,100 in the 1999 period. The primary reason for the increase was an
increase in mortgage brokerage fees and increased fees and service charges
on deposit accounts.
NONINTEREST EXPENSE. Total noninterest expense increased $1,019,000 to
$2,517,000 for the six months ended June 30, 2000 from $1,498,000 for the
six months ended June 30, 1999, primarily due to an increase in employee
compensation and benefits of $829,200 and an increase in occupancy and
equipment expense of $78,600, all due to the overall growth of the Company
during 2000 compared to 1999.
PROVISION FOR INCOME TAXES. The income tax provision for the six months ended
June 30, 2000 was $297,500 (an effective rate of 37.8%) compared to
$119,900 (an effective rate of 33.6%) for the comparable 1999 period.
14
<PAGE> 16
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 not
engaged in and therefore has no risk related to investment trading account
activity, 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,
1999.
15
<PAGE> 17
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The following sales of shares of Citizens Community Bancorp common stock, par
value $0.01 per share ("Citizens Community Bancorp"), were not registered
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), but
were issued pursuant to the exemptions indicated below:
During the six months ended June 30, 2000, one former employee of Citizens
Community Bancorp, pursuant to the exercise of options, purchased an aggregate
of 432 shares of Citizens Community Bancorp stock, for an aggregate price of
$3,000. This transaction was made in reliance on the exemption set forth in
Section 4(2) of the Securities Act.
Proceeds from the sale of the above securities were used for general corporate
purpose.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders (the "Annual Meeting") of the Company, was
held on April 18, 2000, to consider the election of eight directors with terms
expiring in 2001, the Year 2000 Advisory Board Members' Stock Option and
Limited Rights Plan, to consider the amendment to the 1996 Incentive Stock
Option Plan, the ratification of the appointment of the Company's independent
auditors for the year ending December 31, 2000 and to approve adjournment of
the annual meeting to solicit additional proxies.
At the Annual Meeting, 2,694,994 shares were present in person or by proxy. The
following is a summary and tabulation of the matters that were voted upon at
the Annual Meeting:
PROPOSAL I.
The election of directors:
FOR % ABSTAIN %
--------- ----- ------- ----
Diane M. Beyer 2,683,006 99.56 11,988 0.44
John V. Cofer 2,680,846 99.48 14,148 0.52
Joel M. Cox, Sr. 2,683,006 99.56 11,988 0.44
Thomas B. Garrison 2,683,006 99.56 11,988 0.44
Dennis J. Lynch 2,683,006 99.56 11,988 0.44
Robert A. Marks 2,681,386 99.50 13,608 0.50
Louis J. Smith 2,679,226 99.41 15,768 0.59
James S. Hagedorn 2,683,006 99.56 11,988 0.44
Directors with terms not expiring in 2000:
Steven A. McLaughlin
Richard Storm, Jr.
John G. Wolf
16
<PAGE> 18
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS, CONTINUED
PROPOSAL II:
To consider and vote upon Citizens Community Bancorp, Inc. Year 2000 Advisory
Board Members' Stock Option and Limited Rights Plan.
FOR % AGAINST % ABSTAIN % NON-VOTE %
--------- ----- ------- ---- ------- ---- -------- ----
2,370,541 87.96 89,307 3.31 17,513 0.65 217,633 8.08
PROPOSAL III:
To consider and vote upon an amendment to the Citizens Community Bancorp,
Inc.'s, 1996 Incentive Stock Option Plan, to increase the number of shares of
common stock available to be granted to 351,000.
FOR % AGAINST % ABSTAIN % NON-VOTE %
--------- ----- ------- ---- ------- ---- -------- ----
2,332,427 86.55 126,459 4.69 18,475 0.68 217,633 8.08
PROPOSAL IV:
Ratification of the appointment of Hacker, Johnson, Cohen & Grieb PA as
independent auditors of Citizens for fiscal year ending December 31, 2000.
FOR % AGAINST % ABSTAIN %
--------- ----- ------- ---- ------- ----
2,669,830 99.07 12,528 0.46 12,636 0.47
PROPOSAL V:
To approve the adjournment of the Annual Meeting to solicit additional proxies
in the event that there are not sufficient votes to approve one or more of the
foregoing proposals.
FOR % AGAINST % ABSTAIN %
--------- ----- ------- ---- ------- ----
2,630,274 97.60 49,544 1.84 15,176 0.56
17
<PAGE> 19
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
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 exhibits marked with four asterisk
(****) were filed as exhibits with the Company's 10-KSB for 1999. 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.
**** 10.4 Employment Contract with Richard Storm, Jr.
**** 10.5 Employment Contract with Gregory E. Smith
**** 22.1 Citizens' 1999 Annual Report
**** 22.2 Proxy Statement for 2000 Annual Meeting
of Shareholders
27.0 Financial Data Schedule (for SEC use only)
(b) REPORTS ON FORM 8-K. There was one Form 8-K filed during the three
months ended June 30, 2000. It was filed on May 2, 2000 and disclosed
that the Company's stock was approved for trading on the NASDAQ Small
Market Cap Market System on April 12, 2000 and began trading on April
26, 2000.
18
<PAGE> 20
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
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: , 2000 By: /s/ Richard Storm, Jr.
--------------------------- -------------------------------------
Richard Storm, Jr.,
Chairman of the Board and
Chief Executive Officer
Date: , 2000 By: /s/ Gregory E. Smith
--------------------------- -------------------------------------
Gregory E. Smith,
Senior Vice President and
Chief Financial Officer
19
