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Citizens Community Bank Reports 2011 Fourth Quarter and Year-to-Date Results

--Sharpened focus on asset quality aims to improve performance--

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SOUTH HILL, Va., Feb. 14, 2012 /PRNewswire/ -- Citizens Community Bank (OTC: CZYB) today reported fourth quarter and year-to-date results for 2011.  For the fourth quarter of 2011, net income available to common shareholders equaled $41,963, compared to $50,492 for the fourth quarter of 2010.  Basic and diluted earnings per share to common shareholders equaled $0.03 for the fourth quarter of 2011 and 2010, on 1,500,948 shares, respectively.

President and CEO Thomas C. Manson stated, "We are buoyed by the decline in banking performance challenges we experienced this past year. While our loan loss reserves, non performing loans and loan losses in 2011 [compared to 2010] appear to have stabilized for the current period, we are optimistic that the coming year will result in further reductions in these areas."

"Having recently completed a core system conversion to Fiserv, we are pleased with the resulting increased efficiency and opportunity to deliver additional product offerings in the near future. Progress in the North Carolina market also remains promising following a period of significant growth despite streamlining our operations from two branch facilities to one," added Manson.

For the year ended December 31, 2011, which includes $168,793 of securities gains, net income available to common shareholders totaled $235,229, compared to net income to common shareholders of $260,555 for the year ended December 31, 2010.  For full year 2011, basic and diluted earnings per share to common shareholders equaled $0.16 compared to $0.17 for 2010 on 1,500,948 shares, respectively. For 2011, return on average assets equaled 0.14% compared to 0.15% the prior year, while return on average common equity equaled 1.26% compared to 1.39% for 2010.

At December 31, 2011, total assets were $161.5 million, a decline of $3.1 million or 1.9% from December 31, 2010. Gross loans equaled $128.1 million, down $1.3 million or 1.0% from year end 2010. The securities portfolio declined $2.9 million or 16.6% from December 31, 2010 due to securities sales during the second quarter of 2011 and securities paydowns and maturities during the year. Total deposits equaled $134.7 million, a slight decrease of $985,179 or 0.7% since December 31, 2010. The Bank's borrowings were reduced by $3.0 million to $4.0 million at year end 2011.

For the fourth quarter of 2011, net interest income totaled $1,531,711 a decrease of $131,320 or 7.9% from the fourth quarter of 2010. While interest expense declined $83,463 over this period, interest income declined $214,783. The reduction of interest income resulted from a decline in the volume of loans and securities, as well as the yield earned on these earning assets. For the three months ended December 31, 2011, average earning assets declined $5.2 million, or 3.3% to $151.9 million.

The net interest margin equaled 4.02% for the fourth quarter of 2011, down 19 basis points from the fourth quarter of 2010. The yield on earning assets declined 36 basis points to 5.34%, which offset the 17 basis point decline in funding costs. The Bank's funding costs equaled 1.61% for the fourth quarter of 2011, compared to 1.78% for the fourth quarter of 2010.  

For the year ended 2011, net interest income totaled $6,331,440, a decrease of $335,140 or 5.0% from 2010 despite a stable net interest margin. Interest income declined $803,754 or 8.7% to $8,407,715 as average earning assets declined $8.3 million or 5.2% to $150.5 million. For the same period, interest expense was reduced by $468,614 or 1.4% to $2,076,275.

The net interest margin was up 1 basis point to 4.23% as the reduction in funding costs offset declining yields on earning assets. The yield on average earning assets was 5.61% for 2011, down 21 basis points from 5.82% one year ago. For 2011, the cost of funds equaled 1.66%, a reduction of 24 basis points from one year ago.

For the fourth quarter of 2011, noninterest income totaled $270,004, up $15,999 or 6.3% over the fourth quarter of 2010 as the Bank benefited from a $43,747 gain on a split dollar life insurance death benefit and experienced a solid quarter for secondary mortgage income. When excluding the $43,747 gain, noninterest income was $226,257, down $27,748 or 10.9% from the fourth quarter of 2011.

When including securities gains of $168,793 and a $43,747 gain on a split dollar life insurance benefit for 2011, noninterest income totaled $1,066,019, an increase of $118,349 or 12.5%. Exclusive of the $212,540 in nonrecurring gains, adjusted noninterest income equaled $853,479, down $94,191 or 9.9%. The decline in noninterest income primarily reflects a reduction in deposit service charges and secondary mortgage brokerage revenue.

Noninterest expense equaled $1,367,837 for the fourth quarter of 2011, a slight decrease of $1,359 or 0.1% from the fourth quarter of 2010. For full year 2011, noninterest expense amounted to $5,891,842, an increase of $305,108 or 5.5% over 2010. Salaries and benefits, which represent the largest component of noninterest expense at $2.4 million was down $49,413 from 2010. Despite this, overhead costs were higher due to expenses related to other real estate owned and other operating expenses. For 2011, the Bank had losses on the sale of other real estate owned of $213,229 compared to losses of $10,024 in 2010. Additionally, the Bank had valuation write-downs of $50,000 for 2011 compared with none for 2010. Other operating expenses were up $156,664 or 17.0% due to loan related expenses on troubled credits along with generally higher operating expenses for information technology related items and general operations.  The Bank benefited from a $73,068 or 13.4% reduction in data and item processing expenses.

For the three months ended December 31, 2011, provision for loan losses equaled $325,700 a decrease of $98,376 from the fourth quarter of 2010. Net charge-offs equaled $325,152 for the fourth quarter of 2011, up from $159,814 one year ago. For the year ended December 31, 2011, provision for loan losses totaled $793,161 against $826,483 in net charge-offs and down from $1,420,800 of provisions in 2010.

For full year 2011, net charge-offs equaled $826,483 or 0.65% of average loans, a decrease of $14,910 when compared to 0.64% of average loans in 2010.

At December 31, 2011, nonperforming loans equaled $4,527,476 or 3.53% of outstanding loans compared to $4,166,913 or 3.22% on December 31, 2010. Of the $4,527,476 in nonperforming loans, there was $3,782,599 of nonaccrual loans. Within the nonaccrual category, this includes a $2,736,313 of troubled debt restructured loans that were not accruing interest. As of December 31, 2011, there were $744,877 of troubled debt restructurings that were accruing interest and included with nonperforming loans. All of the restructured loans were complying with their modified terms with the exception of a $10,586 troubled debt restructuring which was 63 days past due and accruing interest. There were no loans 90 days past due and still accruing interest as of December 31, 2011. At year end December 31 2011, the Bank held $2,379,558 of other real estate owned, compared to $2,687,237 one year ago. For the year ended December 31, 2011, nonperforming assets totaled $6,907,034, or 4.28% of total assets compared to $6,854,150 or 4.17% at December 31, 2010. On December 31, 2011, the Bank held $2,664,800 in loan loss reserves, or 2.08% of loans, which was the same loan loss reserve ratio at year end 2010.

Citizens Community Bank is a Virginia state chartered bank headquartered in South Hill, Va.  Opened in December 1999, it operates four branches, three in south central Virginia and one in northern 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.  The Bank's actual results, events and developments may differ materially from those contemplated by any forward-looking statement.  

Citizens Community Bank

Financial Highlights



















(Unaudited)









(Actual dollars, except per share data)


Three months ended December 31,


For the years ended December 31,

Selected Operating Data:


2011


2010


2011


2010










Net interest income


$ 1,531,711


$ 1,663,031


$ 6,331,440


$ 6,666,580

Provision for loan losses


325,700


424,076


793,161


1,420,800

Noninterest income


270,004


254,005


1,066,019


947,670

Noninterest expense


1,367,837


1,369,196


5,891,842


5,586,734

Income before income tax


108,178


123,764


712,456


606,716

Income tax expense


28,970


24,897


200,745


152,661

Net income


$      79,208


$      98,867


$    511,711


$    454,055

Less: Preferred dividends


$      37,245


$      48,375


$    276,482


$    193,500

Net income available to common









shareholders


$      41,963


$      50,492


$    235,229


$    260,555










Income per share available to









common shareholders: (1)









Basic


$0.03


$0.03


$0.16


$0.17

Diluted


$0.03


$0.03


$0.16


$0.17










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:


2011


2010














Total assets


$  161,463,457


$  164,514,389





Loans, net


125,457,700


126,762,672





Deposits


134,655,123


135,640,302





Borrowings


4,000,000


7,000,000





Preferred stock


4,000,000


3,060,667





Stockholders' equity


22,594,950


21,601,688





Book value per share (1) (2)


$             12.39


$             12.35





Total shares outstanding (2)


1,500,948


1,500,948
















Three months ended December 31,


Years ended December 31,

Selected Data:


2011


2010


2011


2010

Allowance for loan loss


$      2,664,800


$      2,698,122


$ 2,664,800


$ 2,698,122

Nonperforming assets


6,907,034


6,854,150


$ 6,907,034


6,854,150

Nonperforming loans


4,527,476


4,166,913


$ 4,527,476


4,166,913

Other real estate owned


2,379,558


2,687,237


$ 2,379,558


2,687,237

Net charge-offs


325,152


159,814


826,483


841,393

Return on average assets


0.10%


0.12%


0.14%


0.15%

Return on average common equity


0.89%


1.06%


1.26%


1.39%

Net interest margin


4.02%


4.22%


4.23%


4.22%

Overhead efficiency


75.92%


71.30%


79.65%


73.37%





















Three months ended December 31,


Years ended December 31,

Asset Quality Ratios:


2011


2010


2011


2010

Allowance for loan loss to total loans


2.08%


2.08%


2.08%


2.08%

Nonperforming loans to total loans


3.53%


3.22%


3.53%


3.22%

Nonperforming assets to total assets


4.28%


4.17%


4.28%


4.17%

Net charge-offs to average loans


1.02%


0.49%


0.65%


0.64%










Note: (1) Book value excludes $4,000,000 and $3,060,667 of preferred stock for 2011 and 2010, 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



RELATED LINKS
http://www.ccbsite.com

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