<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 September 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 3,377,715
-------------------------------------- ---------------------------------
(class) Outstanding at September 30, 2000
================================================================================
<PAGE> 2
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
----
<S> <C>
Condensed Consolidated Balance Sheets -
September 30, 2000 (unaudited) and December 31, 1999.....................................................2
Condensed Consolidated Statements of Earnings -
Three and Nine Months ended September 30, 2000 and 1999 (unaudited)......................................3
Condensed Consolidated Statement of Stockholders' Equity -
Nine Months ended September 30, 2000 (unaudited).........................................................4
Condensed Consolidated Statements of Cash Flows -
Nine Months ended September 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..........................................................15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................................................16
SIGNATURES.....................................................................................................17
</TABLE>
1
<PAGE> 3
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks ...................................................... $ 4,141,755 6,035,589
Interest-bearing deposits .................................................... -- 2,000,000
Federal funds sold and securities purchased under agreements to resell ....... 1,900,852 8,892,655
------------- ------------
Cash and cash equivalents ...................................... 6,042,607 16,928,244
Securities available for sale ................................................ 5,200,729 6,022,103
Securities held to maturity .................................................. 13,000,000 13,000,000
Loans, net of allowance for loan losses of $1,266,412 and $885,617 ........... 122,037,529 79,987,726
Premises and equipment, net .................................................. 5,800,041 5,039,789
Federal Home Loan Bank stock, at cost ........................................ 425,000 214,800
Deferred tax asset ........................................................... 23,803 32,775
Accrued interest receivable and other assets ................................. 1,888,754 967,253
------------- ------------
Total assets ................................................... $ 154,418,463 122,192,690
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand deposits ...................................... 10,571,504 12,208,961
Savings and NOW deposits ................................................. 36,692,880 34,292,059
Money-market deposits .................................................... 23,664,311 21,722,006
Time deposits ............................................................ 52,813,428 34,274,902
------------- ------------
Total deposits ................................................. 123,742,123 102,497,928
Advances from Federal Home Loan Bank ..................................... 11,000,000 --
Official checks .......................................................... 1,306,040 1,060,366
Accrued interest payable and other liabilities ........................... 690,861 650,769
------------- ------------
Total liabilities .............................................. 136,739,024 104,209,063
------------- ------------
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, 3,377,715
and 3,486,767 shares issued and outstanding ......................... 33,777 34,868
Additional paid-in capital ............................................... 18,479,952 19,310,313
Accumulated deficit ...................................................... (853,333) (1,353,625)
Accumulated other comprehensive income (loss) ............................ 19,043 (7,929)
------------- ------------
Total stockholders' equity ..................................... 17,679,439 17,983,627
------------- ------------
Total liabilities and stockholders' equity ..................... $ 154,418,463 122,192,690
============= ============
</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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- ------------------------
2000 1999 2000 1999
---------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Interest income:
Loans .................................... $2,599,587 1,430,116 6,590,363 3,710,293
Securities ............................... 265,837 228,659 806,874 654,762
Other interest-earning assets ............ 38,420 156,066 181,025 481,226
---------- --------- --------- ---------
Total interest income ................ 2,903,844 1,814,841 7,578,262 4,846,281
---------- --------- --------- ---------
Interest expense:
Deposit s ................................ 1,316,860 755,682 3,244,834 1,944,807
Advances from Federal Home Loan Bank ..... 100,166 -- 144,742 --
---------- --------- --------- ---------
Total interest expense ............... 1,417,026 755,682 3,389,576 1,944,807
---------- --------- --------- ---------
Net interest income .......................... 1,486,818 1,059,159 4,188,686 2,901,474
Provision for loan losses ............ 220,000 103,000 465,000 357,000
---------- --------- --------- ---------
Net interest income after provision for
loan losses .............................. 1,266,818 956,159 3,723,686 2,544,474
---------- --------- --------- ---------
Noninterest income:
Service charges and fees ................. 89,538 65,671 262,997 196,449
Mortgage-brokerage fees .................. 230,260 15,947 779,814 49,876
Other .................................... 51,561 57,823 176,184 160,204
---------- --------- --------- ---------
Total noninterest income ............. 371,359 139,441 1,218,995 406,529
---------- --------- --------- ---------
Noninterest expense:
Salaries and employee benefits ........... 748,489 392,778 2,306,843 1,077,389
Occupancy and equipment .................. 178,419 117,384 491,005 347,161
Advertising .............................. 64,468 32,848 162,192 97,883
Professional fees ........................ 45,022 34,812 110,783 118,406
Office supplies .......................... 37,160 26,316 104,766 87,164
Data processing .......................... 33,422 35,798 101,028 94,508
Other .................................... 232,605 120,276 579,918 435,708
---------- --------- --------- ---------
Total noninterest expense ............ 1,339,585 760,212 3,856,535 2,258,219
---------- --------- --------- ---------
Earnings before income taxes ................. 298,592 335,388 1,086,146 692,784
Income taxes ......................... 114,044 126,198 411,507 246,078
---------- --------- --------- ---------
Net earnings ................................. $ 184,548 209,190 674,639 446,706
========== ========= ========= =========
Earnings per share:
Basic .................................... $ .05 .06 .19 .13
========== ========= ========= =========
Diluted .................................. $ .05 .06 .19 .13
========== ========= ========= =========
Weighted-average number of shares outstanding:
Basic .................................... 3,454,782 3,472,327 3,481,448 3,465,974
========== ========= ========= =========
Diluted .................................. 3,508,855 3,549,897 3,537,584 3,545,901
========== ========= ========= =========
Cash 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
NINE MONTHS ENDED SEPTEMBER 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) .... -- -- -- 674,639 -- 674,639
Net change in unrealized
gain on securities
available for sale, net
of tax effect of $16,263
(unaudited) ............ -- -- -- -- 26,972 26,972
-----------
Comprehensive income (unaudited) . -- -- -- -- -- 701,611
-----------
Repurchase of common stock
(unaudited) ................. (109,484) (1,095) (833,357) -- -- (834,452)
-----------
Shares issued under stock
option plan (unaudited) ..... 432 4 2,996 -- -- 3,000
-----------
Cash dividends (unaudited) ....... -- -- -- (174,347) -- (174,347)
---------- -------- ----------- ---------- ------- -----------
Balance at September 30, 2000
(unaudited) ................. 3,377,715 $ 33,777 18,479,952 (853,333) 19,043 17,679,439
========== ======== =========== ========== ======= ===========
</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>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------------
2000 1999
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings ............................................................ $ 674,639 446,706
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation ........................................................ 212,990 161,074
Provision for loan losses ........................................... 465,000 357,000
(Credit) provision for deferred income taxes ........................ (7,291) 37,718
Net amortization of fees, premiums and discounts .................... 13,290 (156,471)
Increase in accrued interest receivable and other assets ............ (921,501) (229,222)
Increase in accrued interest payable and
other liabilities ............................................... 40,092 139,449
Net increase in official checks ..................................... 245,674 359,867
------------ -----------
Net cash provided by operating activities ................... 722,893 1,116,121
------------ -----------
Cash flows from investing activities:
Purchases of securities available for sale .............................. -- (2,879,927)
Purchase of securities held to maturity ................................. -- (22,432,064)
Maturities of securities held to maturity ............................... -- 17,996,627
Principal paydowns of securities available for sale ..................... 798,470 95,220
Purchase of Federal Home Loan Bank stock ................................ (210,200) (87,800)
Net increase in loans ................................................... (42,461,954) (26,599,689)
Purchase of premises and equipment ...................................... (973,242) (1,330,846)
------------ -----------
Net cash used in investing activities ....................... (42,846,926) (35,238,479)
------------ -----------
Cash flows from financing activities:
Net increase in deposits ................................................ 21,244,195 23,755,311
Increase in advances from Federal Home Loan Bank ........................ 11,000,000 --
Repurchase of common stock .............................................. (834,452) --
Sale of common stock .................................................... 3,000 83,879
Cash dividends paid ..................................................... (174,347) --
------------ -----------
Net cash provided by financing activities ................... 31,238,396 23,839,190
------------ -----------
Net decrease in cash and cash equivalents ................................... (10,885,637) (10,283,168)
Cash and cash equivalents at beginning of period ............................ 16,928,244 24,663,087
------------ -----------
Cash and cash equivalents at end of period .................................. $ 6,042,607 14,379,919
============ ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ............................................................ $ 3,352,465 1,819,563
============ ===========
Income taxes ........................................................ $ 545,937 195,000
============ ===========
Noncash transaction-
Change in unrealized gain on securities available
for sale ........................................................ $ 26,972 --
============ ===========
</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 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, 2000, and the results of
operations for the three-month and nine-month periods ended September
30, 2000 and 1999 and the cash flows for the nine-month periods ended
September 30, 2000 and 1999. The results of operations for the three and
nine months ended September 30, 2000 are not necessarily indicative of
the results to be expected for the full year.
(2) LOAN IMPAIRMENT AND CREDIT LOSSES. On September 30, 2000, there was one
impaired loan with a remaining balance of $206,864 after $70,000 had
been charged-off during the nine months ended September 30, 2000. During
the nine months ending September 30, 2000, $9,797 in interest income was
recognized and received. In addition an allowance of $50,000 has been
established for this loan. No loans were identified as impaired at
September 30, 1999. The activity in the allowance for loan losses was as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ -----------------------
2000 1999 2000 1999
----------- ------- --------- -------
<S> <C> <C> <C> <C>
Balance at beginning of period............. $ 1,053,485 707,211 885,617 453,211
Provision charged to earnings.............. 220,000 103,000 465,000 357,000
Charge-offs, net of recoveries............. (7,073) (2,749) (84,205) (2,749)
----------- ------- --------- -------
Balance at end of period................... $ 1,266,412 807,462 1,266,412 807,462
=========== ======= ========= =======
</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 204,477 shares of common stock between
$7.75 and $9.50 a share issued in 2000, 1999 and 1998 were not included
in the three and nine months ended September 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>
FOR THE THREE MONTHS ENDED SEPTEMBER 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... $ 185 3,454,782 $ .05 $ 209 3,472,327 $ .06
Effect of dilutive securities-
Incremental shares from
assumed conversion
of options............... -- 54,073 -- -- 77,570 --
----- --------- ----- ----- ---------- -----
Diluted EPS:
Net earnings available
to common stockholders
and assumed conversions.. $ 185 3,508,855 $ .05 $ 209 3,549,897 $ .06
===== ========= ===== ===== ========= =====
(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>
FOR THE NINE MONTHS ENDED SEPTEMBER 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... $ 675 3,481,448 $ .19 $ 447 3,465,974 $ .13
Effect of dilutive securities-
Incremental shares from
assumed conversion
of options............... -- 56,136 -- -- 79,927 --
------ --------- ---- ------ ---------- -----
Diluted EPS:
Net earnings available
to common stockholders
and assumed conversions.. $ 675 3,537,584 $ .19 $ 447 3,545,901 $ .13
===== ========= ===== ===== ========= =====
</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 September 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........................... 10.48% 8.00%
Tier I capital to risk-weighted assets.......................... 9.48% 4.00%
Tier I capital to total assets - leverage ratio................. 8.07% 4.00%
</TABLE>
7
<PAGE> 9
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Hacker, Johnson & Smith PA, the Company's independent certified public
accountants, have made a limited review of the financial data as of September
30, 2000, and for the three- and nine-month periods ended September 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
September 30, 2000, and the related condensed consolidated statements of
earnings for the three- and nine-month periods ended September 30, 2000 and
1999, and the condensed consolidated statement of stockholders' equity for the
nine month period ended September 30, 2000 and cash flows for the nine-month
periods ended September 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 & SMITH PA
Tampa, Florida
October 13, 2000
9
<PAGE> 11
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
COMPARISON OF SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
The Company's primary source of cash during the nine months ended September 30,
2000 was from net deposit inflows and advances from Federal Home Loan Bank. Cash
was used primarily for loan originations. At September 30, 2000, the Company had
outstanding commitments to fund existing and new loans of $33.7 million. It is
expected that these requirements will be funded from the sources described
above. At September 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>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
Average equity as a percentage
of average assets............................................... 13.54% 17.51%
Equity to total assets at end of period............................ 11.45% 14.72%
Return on average assets (1)....................................... 0.67% 0.61%
Return on average equity (1)....................................... 4.95% 3.50%
Noninterest expense to average assets (1).......................... 3.85% 3.22%
Nonperforming loans and foreclosed real estate to
total assets at end of period................................... 0.13% NIL
</TABLE>
-----------------
(1) Annualized for the nine months ended September 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 SEPTEMBER 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 ................................. $ 115,636 2,600 8.94% $ 68,456 1,430 8.29%
Securities............................... 18,343 266 5.80 15,205 229 6.02
Other interest-earning assets (1)........ 2,385 38 6.34 12,991 156 4.76
--------- ------- ---------- -------
Total interest-earning assets........ 136,364 2,904 8.47 96,652 1,815 7.45
------- -------
Noninterest-earning assets.................. 9,934 9,420
--------- ---------
Total assets......................... $ 146,298 $ 106,072
========= =========
Interest-bearing liabilities:
Savings, NOW and money-market deposit
accounts............................. 58,722 520 3.52 46,839 354 3.00
Time deposits............................ 50,617 797 6.27 30,952 402 5.15
Other borrowings (2)..................... 5,825 100 6.84 -- --
--------- ------- ---------- -------
Total interest-bearing liabilities... 115,164 1,417 4.89 77,791 756 3.86
------- -------
Noninterest-bearing liabilities............. 12,972 10,644
Stockholders' equity........................ 18,162 17,637
--------- ---------
Total liabilities and stockholders'
equity........................... $ 146,298 $ 106,072
========= =========
Net interest income......................... $ 1,487 $ 1,059
======= =======
Interest-rate spread (3).................... 3.58% 3.59%
==== ====
Net interest margin (4)..................... 4.34% 4.35%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities..... 1.18 1.24
========= ========
</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. CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
11
<PAGE> 13
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>
NINE MONTHS ENDED SEPTEMBER 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 ................................ $ 100,552 6,590 8.75% $ 59,378 3,710 8.35%
Securities............................... 18,586 807 5.79 15,327 655 5.71
Other interest-earning assets (1)........ 4,057 181 5.96 13,592 481 4.73
--------- ------- --------- ------
Total interest-earning assets........ 123,195 7,578 8.22 88,297 4,846 7.34
------- ------
Noninterest-earning assets.................. 10,424 8,680
--------- --------
Total assets......................... $ 133,619 $ 96,977
========= ========
Interest-bearing liabilities:
Savings, NOW and money-market deposit
accounts............................. 58,210 1,468 3.37 43,417 926 2.85
Time deposits............................ 40,004 1,777 5.93 25,775 1,019 5.29
Other borrowings (2)..................... 2,841 145 6.82 -- -- --
--------- ------- -------- ------
Total interest-bearing liabilities... 101,055 3,390 4.48 69,192 1,945 3.76
------- ------
Noninterest-bearing liabilities............. 14,478 10,323
Stockholders' equity........................ 18,086 17,462
--------- --------
Total liabilities and stockholders'
equity........................... $ 133,619 $ 96,977
========= ========
Net interest income......................... $ 4,188 $ 2,901
======= =======
Interest-rate spread (3).................... 3.74% 3.58%
==== ====
Net interest margin (4)..................... 4.54% 4.39%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities..... 1.22 1.28
========= ========
</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 SEPTEMBER 30, 2000 AND 1999
GENERAL. Net earnings for the three months ended September 30, 2000 were
$185,000 or $.05 per basic and diluted share compared to net earnings of
$209,000 or $.06 per basic and diluted share for the three months ended
September 30, 1999. 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 all due to
the overall growth of the Company.
INTEREST INCOME AND EXPENSE. Interest income increased to $2,904,000 for the
three months ended September 30, 2000 from $1,815,000 for the three months
ended September 30, 1999. Interest income on loans increased to $2,600,000
in 2000 due to an increase in the average loan portfolio balance for the
three months ended September 30, 2000 to $115.6 million compared to $68.5
million during the 1999 period and by an increase in the weighted-average
yield from 8.29% in 1999 to 8.94% in 2000. Interest on securities
increased to $266,000 in 2000 due to a increase in the average securities
portfolio during the three months ended September 30, 2000 to $18.3
million from $15.2 million during 1999. Interest on other interest-earning
assets decreased to $38,000 in 2000 due to a decrease in the average
balance of such assets from 1999 to 2000.
Interest expense on deposit accounts increased to $1,317,000 for the three
months ended September 30, 2000 from $756,000 for the three months ended
September 30, 1999. Interest expense increased primarily because of an
increase in the average balance from 1999 to 2000 and an increase in the
average rate paid on deposits. The average balance for the three months
ended September 30, 2000 was $109.3 million compared to $77.8 million
during 1999.
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, 2000 and 1999 was $220,000 and $103,000,
respectively. Management believes the balance in the allowance for loan
losses of $1,266,000 at September 30, 2000 is adequate.
NONINTEREST INCOME. Noninterest income increased to $371,000 in 2000 from
$139,441 in 1999 primarily due to the increase in mortgage brokerage fees
from CCB Mortgage Company and increases in service charges on deposit
accounts in 2000.
NONINTEREST EXPENSE. Total noninterest expense increased to $1,340,000 for
the three months ended September 30, 2000 from $760,000 for the three
months ended September 30, 1999, primarily due to an increase in employee
compensation and benefits of $356,000 as well as an increase in other
noninterest expense and occupancy and equipment expense. The primary
reasons for the increased expenses were the inpart of CCB Mortgage
Corporation and the additional expenses relating to opening our fourth
branch office in August 2000.
INCOME TAXES. The income tax provision for the three months ended September
30, 2000 was $114,000, an effective rate of 38.2% compared to $126,100, an
effective rate of 37.6% for the comparable 1999 period.
13
<PAGE> 15
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
COMPARISON OF THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
GENERAL. Net earnings for the nine months ended September 30, 2000 were
$675,000 or $.19 per basic and diluted share compared to net earnings of
$447,000 or $.13 per basic and diluted share for the nine months ended
September 30, 1999. This increase in the Company's net earnings was
primarily due to an increase in net interest income, partially offset by
an increase in noninterest expenses.
INTEREST INCOME AND EXPENSE. Interest income increased to $7,578,000 for the
nine months ended September 30, 2000 from $4,846,000 for the nine months
ended September 30, 1999. Interest income on loans increased to $6,590,000
in 2000 due to an increase in the average loan portfolio balance for the
nine months ended September 30, 2000 to $100.6 million compared to $59.4
million during 1999 as well as an increase in the rate earned on the
portfolio. Interest on securities increased to $807,000 in 2000 due to an
increase in the average securities portfolio during the nine months ended
September 30, 2000 to $18.6 million from $15.3 million during 1999.
Interest on other interest-earning assets decreased to $181,000 in 2000
primarily due to a decrease in the average balance of these assets from
1999 to 2000 as the lower yielding assets were decreased to fund the
growth in the higher-yielding loan portfolio.
Interest expense on deposit accounts increased to $3,245,000 for the nine
months ended September 30, 2000 from $1,945,000 for the nine months ended
September 30, 1999. Interest expense on deposits increased primarily
because of an increase in the average balance of deposits from 1999 to
2000 as well as an increase in the rates paid on deposits. The average
balance for the nine months ended September 30, 2000 was $98.2 million
compared to $69.2 million during 1999.
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 increased to
$465,000 for the nine months ended September 30, 2000 from $357,000 for
the nine months ended September 30, 1999.
NONINTEREST INCOME. Noninterest income increased to $1,219,000 in 2000 from
$407,000 in 1999 primarily because of an increase in mortgage brokerage
fees from CCB Mortgage Corporation and increases in service charges on
deposit accounts in 2000.
NONINTEREST EXPENSE. Total noninterest expense increased to $3,857,000 for
the nine months ended September 30, 2000 from $2,258,000 for the nine
months ended September 30, 1999, primarily due to an increase in employee
compensation and benefits of $1,229,000. The year-over-year increases in
operating expenses were due to the effect of CCB Mortgage Corporation and
the additional costs related to opening our fourth branch office in August
2000.
INCOME TAXES. The income tax provision for the nine months ended September
30, 2000 was $412,000, an effective rate of 37.9% compared to $246,000, an
effective rate of 35.5% 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.
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 nine months ended September 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
purposes.
15
<PAGE> 17
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 September 30, 2000. It was filed September 8, 2000 and announced the
repurchase of 100,000 (or approximately 2.7%) of the outstanding shares of
common stock.
16
<PAGE> 18
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: November 8, 2000 By: /s/ Richard Storm, Jr.
------------------ -----------------------------------
Richard Storm, Jr., Chairman of the Board
and Chief Executive Officer
Date: November 8, 2000 By: /s/ Gregory E. Smith
------------------ -----------------------------------------
Gregory E. Smith, President and
Chief Financial Officer
17
