Citizens Community Bank Announces Fourth Quarter And Full-Year 2012 Results

SOUTH HILL, Va., Feb. 28, 2013 /PRNewswire/ -- Citizens Community Bank (OTCQB: CZYB) today announced its unaudited results of operations for the fourth quarter and full-year ended December 31, 2012.

Earnings
For the fourth quarter of 2012, the Bank had a net loss of $945,044 before preferred stock dividends compared to net income of $79,208 before preferred stock dividends for the fourth quarter of 2011. After preferred dividends of $27,605 and $37,245, respectively, there was a net loss to common shareholders of $972,649 or ($0.65) per share (basic and diluted) for the fourth quarter of 2012 compared to net income available to common shareholders of $41,963 or $0.03 per share (basic and diluted) for the fourth quarter of 2011.

For the year ended December 31, 2012, the Bank reported a net loss to common shareholders of $980,576 or ($0.65) per share on both a basic and diluted basis, compared to net income to common shareholders of $235,229 or $0.16 per share, respectively for 2011. For 2012, preferred dividend payments totaled $177,432, down from $276,482 in the prior year as growth in small business lending offered lower dividend rates.

President and CEO James R. Black stated, "As a result of us being able to subsequently resolve a $1.2 million nonperforming loan that paid off in February of 2013, this caused a delay in our financial results. We provided additional reserves subsequent to year end 2012 to reflect the anticipated first quarter 2013 charge-off related to disposing this nonperforming loan. This action is a reflection of the significant progress that has and is being made with our asset resolution strategy. In the fourth quarter alone, we had charge-offs of $1.4 million, absorbed $327,339 in charges for other real estate owned, and provisioned $1,042,713 for the loan loss reserve. With the exceptional work from the CCB team we reduced nonperforming assets by 25% from the third quarter of 2012 and reduced total classified assets 34% for the same three month period, exclusive of the nonperforming loan mentioned above. Management continues to evaluate the process of reducing the Bank's credit risk.  If further credit markdowns are necessary, stakeholders should expect a significant negative impact to earnings and capital for the first half of 2013. At the conclusion of our asset resolution strategy, CCB expects to remain well capitalized and be better postured for the future. For 2012, we experienced 3% plus growth in both loans and deposits, almost doubled secondary mortgage fee income and enhanced our checking account product base. We have gained a tremendous amount of positive momentum recently, and we are excited about our future despite the credit hurdles that we are addressing."

In comparing the fourth quarter of 2012 to the same quarter in 2011, net interest income decreased by $48,488 or 3.2%. This resulted from a tighter net interest margin, which equaled 3.95%, down 7 basis points from the fourth quarter of 2011. When excluding a one-time gain of $43,747 on a split dollar life insurance death benefit in 2011, noninterest income declined $9,018 or 4.0%, compared to the unadjusted decline of $52,765 or 19.6%. Provision for loan losses totaled $812,000, which was an increase of $486,300 over the fourth quarter of 2011. Noninterest expense of $2,120,905 was higher by $753,068 or 55.1% due primarily to write-downs and losses on other real estate owned, severance benefits and higher professional and legal expenses. During the fourth quarter of 2012, valuation write-downs and losses on the sale of other real estate owned totaled $327,339.

For the year ended December 31, 2012, net interest income decreased $439,445 or 6.9% due to a tighter net interest margin. The net interest margin decreased 22 basis points to 4.01% as earning assets yields dropped 42 basis points, which was only partially offset by a 21 basis point reduction in funding cost. Lower earning assets yields resulted from the elevated level of nonperforming assets and the reinvestment of loans and securities during this abnormally low rate environment. For 2012, funding costs were lowered to 1.45%, down from 1.66% one year ago as result of the low rate environment.

When excluding one-time gains from the sale of securities of $168,793 and a $43,747 gain on a split dollar life insurance benefit in 2011, adjusted noninterest income decreased $2,110 to $851,369. A decrease in fee income from service charges on deposit accounts and rental income from other real owned was mostly offset by an increase in secondary market mortgages and ATM fee revenue. Noninterest expense was $6,421,624, a $529,782 or 9.0% increase over 2011 as result of severance costs, write-downs and losses on the sale of other real estate owned along with higher professional and legal expenses.

Growth
At December 31, 2012, total assets were $162.5 million, up $1.1 million, or 0.7% from December 31, 2011. Gross loans were $132.4 million, an increase of $4.2 million or 3.3% from December 31, 2011. The securities portfolio balance decreased by $766,689 or 5.6% from December 31, 2011. Deposits totaled $138.6 million, an increase of $4.0 million or 3.0% since December 31, 2011. Over the same comparable period, noninterest bearing demand deposits increased $2.0 million or 11.3%. FHLB borrowings declined $2.0 million as the Bank repaid borrowings during the first quarter of 2012.

Asset Quality
During the fourth quarter of 2012, provision for loan losses totaled $1,042,713 compared to $325,700 for the fourth quarter of 2011. For the year ended December 31, 2012, provision for loan losses totaled $1,641,850, which was $848,689 higher than 2011. The sharp increase in the provision was due to higher charge-offs during the period as well as an increase in required reserves on certain impaired credits. The allowance for loan losses represented 1.64% of loans as of December 31, 2012 compared to 2.08% on December 31, 2011 and 1.90% as of September 30, 2012. For 2012, net charge-offs equaled $2,130,585 or 1.65% of loans compared to $826,483 or 0.65% one year ago. Nonperforming loans, which exclude performing troubled debt restructurings, equaled $3,859,123 or 2.92% of loans compared to $3,782,599 or 2.95% at December 31, 2011. Nonperforming loans were down $2,209,741 or 36.4% from September 30, 2012. There were no loans 90 days past due and still accruing interest on December 31, 2012.

At December 31, 2012, other real estate owned was $2,517,634 compared with $2,379,558 at year end 2011 and $2,378,400 at the end of the third quarter of 2012. For 2012, there were $228,141 of valuation write-downs and $159,464 of losses on the sale of other real estate owned. The Bank is considering an auction in the second quarter of 2013 to further reduce its holdings of other real estate owned. In aggregate, nonperforming assets equaled $6,376,757 or 3.9% of total assets, down 24.5% from $8,447,264, or 5.18% of total assets on September 30, 2012, but slightly higher than 3.82% of total assets at December 31, 2011. As of December 31, 2012, total adversely classified assets totaled $10.9 million, down $5.5 million or 33.5% from December 31, 2011.

Capital
As of December 31, 2012, total risk-based capital was 16.7% compared to 18.1% one year ago, and significantly higher than the 10.0% minimum regulatory requirement for well capitalized institutions. Tier 1 leverage was 12.6%, down from 13.5% at December 31, 2011.

Citizens Community Bank is a Virginia state chartered bank headquartered in South Hill, Virginia.  Opened in December 1999, it operates four branches, three in south central Virginia and one in northern North Carolina as well as a loan production office in Oxford, North Carolina. For more information and additional financial data, please visit www.ccbsite.com.

This press release contains "forward-looking statements" that concern future events which are subject to risks and uncertainties.  Any such statements are based on certain assumptions and analyses by the Bank and other factors it believes are appropriate in the circumstances and at the time at which such statements are made.  The Bank's actual results, events and developments may differ materially from those contemplated by any forward-looking statement.  The Bank has no responsibility to update such forward-looking statements.

 

Citizens Community Bank

 

Financial Highlights



(Unaudited)









(Actual dollars, except per share data)

 

 Three months ended

December 31,


 

  Years ended

December 31,

Selected Operating Data:


2012


2011


2012


2011










Net interest income


$      1,483,223


$    1,531,711


$   5,891,995


$      6,331,440

Provision for loan losses


1,042,713


325,700


1,641,850


793,161

Noninterest income


217,239


270,004


851,369


1,066,019

Noninterest expense


2,120,905


1,367,837


6,421,624


5,891,842

Income (loss) before income tax 

(1,463,156)


108,178


(1,320,110)


712,456

Income tax expense (benefit)


(518,112)


28,970


(516,966)


200,745

Net income (loss)


$        (945,044)


$         79,208


$    (803,144)


$         511,711

Less: Preferred dividends


$            27,605


$         37,245


$      177,432


$         276,482

Net income (loss) available to common








shareholders


$        (972,649)


$         41,963


$    (980,576)


$         235,229










Income (loss) per share available to








common shareholders:(1)









Basic 


($0.65)


$0.03


($0.65)


$0.16

Diluted


($0.65)


$0.03


($0.65)


$0.16










Average shares outstanding, basic

1,500,948


1,500,948


1,500,948


1,500,948

Average shares outstanding, diluted

1,500,948


1,500,948


1,500,948


1,500,948










Note: (1) All per share amounts have been adjusted to reflect a 10% stock dividend paid by the Bank in July 2011.



 

Citizens Community Bank

Financial Highlights



















(Actual dollars, except per share data)


 December 31,


 December 31,





Balance Sheet Data:


2012


2011














Total assets


$    162,545,826


$  161,463,457





Loans, net


130,418,523


125,457,700





Deposits


138,637,742


134,655,123





Borrowings


2,000,000


4,000,000





Preferred stock


4,000,000


4,000,000





Total stockholders' equity


21,533,801


22,594,950





Tangible stockholders' equity


17,533,801


18,594,950





Tangible book value per share (1) (2)


$               11.68


$             12.39





Total shares outstanding (2)


1,500,948


1,500,948
















 

Three months ended

December 31,


 

  Years ended

December 31,

Performance Ratios:


2012


2011


2012


2011

Return on average assets


(2.37%)


0.10%


(0.61%)


0.14%

Return on average common equity


(20.73%)


0.89%


(5.20%)


1.26%

Net interest margin 


3.95%


4.02%


4.01%


4.23%

Overhead efficiency


124.73%


75.92%


95.23%


79.65%










Asset Quality Data:









Allowance for loan loss


$        2,176,065


$      2,664,800


 n/a 


 n/a 

Nonperforming loans


3,859,123


3,782,599


 n/a 


 n/a 

Other real estate owned


2,517,634


2,379,558


 n/a 


 n/a 

Nonperforming assets


6,376,757


6,162,157


 n/a 


 n/a 

Performing troubled debt restructurings

722,663


744,877


 n/a 


 n/a 

Net charge-offs (recoveries)


1,362,006


325,152


2,130,585


826,483

Classified loans


8,425,795


14,077,524


 n/a 


 n/a 

Total adversely classified assets


10,943,429


16,457,082
















 December 31,


 December 31,





Asset Quality Ratios:


2012


2011





Allowance for loan loss to total loans

1.64%


2.08%





Nonperforming loans to total loans


2.92%


2.95%





Nonperforming assets to total assets


3.92%


3.82%





Net charge-offs (recoveries) to average loans 

1.65%


0.65%
















 December 31,


 December 31,





Capital Ratios:


2012


2011





Total risk-based capital


16.67%


18.05%





Tier 1 risk-based capital


15.42%


16.79%





Tier 1 leverage capital


12.60%


13.47%














Note: (1) Book value excludes $4,000,0000 of preferred stock for December 31, 2012 and 2011, respectively.

         (2) All per share amounts have been adjusted to reflect a 10% stock dividend paid by the Bank in July 2011.

 

SOURCE Citizens Community Bank



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