Citizens Community Bank Reports 2011 Second Quarter and Year-to-Date Results --Focused emphasis on improving balance sheet helps CCB stay on steady course during challenging period--

SOUTH HILL, Va., July 28, 2011 /PRNewswire/ -- Citizens Community Bank (OTC: CZYB) today reported second quarter results for the quarter ended June 30, 2011.  For the second quarter of 2011, net income available to common shareholders equaled $67,303, a decrease of $19,619 or 22.6% from the second quarter of 2010.  Basic and diluted earnings per share to common shareholders equaled $0.04 for the second quarter of 2011 compared to $0.06 for the second quarter of 2010. For the first six months of 2011, net income available to common shareholders totaled $131,453, down $40,362 or 23.5% from the first six months of 2010. Year-to-date, basic and diluted earnings per share to common shareholders equaled $0.09 for 2011 compared to $0.11 for the same period in 2010.

At June 30, 2011 total assets were $160.7 million, a decline of $3.8 million or 2.3% from December 31, 2010. Gross loans amounted to $128.2 million, a decline of $1.3 million or 1.0% from year end 2010, but up $2.7 million or 2.2% from March 31, 2011. The investment portfolio declined $3.5 million or 19.7% from December 31, 2010 due to securities sales during the second quarter of 2011 and securities paydowns and maturities. Total deposits equaled $134.8 million, a slight decrease of $824,631 or 0.6% since December 31, 2010.

"The second quarter of 2011 was a very challenging but eventful period for CCB.  We continued to position the Bank to move forward while disposing of nonperforming assets and absorbing an underperforming branch," says President and CEO Thomas C. Manson.

"The seamless consolidation of our leased branch facility in Gaston, NC, into our state-of-the-art Bank-Owned branch facility on Old Farm Road in neighboring Roanoke Rapids, NC, incurred some onetime expenses during a challenging earnings period; however, we are confident that the efficiencies gained by this move will be demonstrated in future earnings. The appetite for new loans remains sluggish in our region, and CCB remains committed to ridding the balance sheet of nonperforming assets.  The combination of these factors contributed to the decrease in earnings for the second quarter."  

"Despite the tight interest rate environment, we are happy to report a small gain in net interest margin, moving up 7 basis points over year-end levels, and were well-positioned to receive a $159,929 securities gain during the quarter," Manson added.

For the second quarter of 2011, net interest income totaled $1,561,302, a decrease of $134,959 or 8.0% from the second quarter of 2010. The decline resulted from a lower volume of earning assets and a tighter net interest margin over the comparable period. For the three months ended June 30, 2011, average earning assets declined $9.0 million or 5.7% from the second quarter of 2010. For the second quarter of 2011, the net interest margin was 4.22%, down 10 basis points over the second quarter of 2010.

For the first six months of 2011, net interest income totaled $3,208,155, down $144,257 or 4.3% from the same period in 2010. For the six months ended June 30, 2011, the net interest margin was 4.34%, up 7 basis points over the first six months of 2010.

Noninterest income totaled $380,692 for the second quarter of 2011 compared to $236,942 for the second quarter of 2010. When excluding $160,829 of net gains on the sale of securities and other assets during the second quarter of 2011 and $1,114 of net gains on the sale of other assets during the second quarter of 2010, adjusted noninterest income equaled $219,863, down $15,965 or 6.8% from the comparable period. The decrease primarily resulted from a decline in secondary mortgage income and a slight decline in service charges on deposit accounts.

For the six months ended June 30, 2011, noninterest income equaled $603,478, up $153,105 or 34.0% over the first six months of 2011. When excluding $165,592 of net gains on securities, $5,663 of losses on the sale of other assets for the first six months of 2011 and $2,214 of gains on the sale of other assets in 2010, adjusted noninterest income equaled $443,549, down $4,610 or 1.0% from the same period in 2010. The decline resulted mostly from a decrease in secondary mortgage revenue, which was down $10,167 over the six month comparable periods.

Noninterest expense equaled $1,623,362, an increase of $152,889 or 10.4% over the second quarter of 2010 due primarily to the losses on the sale of other real estate owned. For the second quarter of 2011, losses on the sale of other real estate owned totaled $131,855, which was $130,963 higher than the second quarter of 2010. During the second quarter of 2011, the bank also incurred a one-time occupancy expense of $21,600 associated with terminating the lease of the Gaston branch, as this facility was consolidated into the Roanoke Rapids branch on May 6, 2011. As expected, we have experienced solid customer retention results from the transaction to date.

For the six months ended June 30, 2011, noninterest expense totaled $3,090,885, an increase of $265,153 or 9.4% due primarily to losses on the sale of other real estate owned coupled with additional expenses for the consolidation of the Gaston branch into the Roanoke Rapids branch and additional data processing and other operational expenses associated with our core conversion project. On July 18, 2011, we began operating with an upgraded core processing system.    

For the three months ended June 30, 2011, provision for loan losses totaled $162,000 compared to $282,000 for the second quarter of 2010.

For the second quarter of 2011, net loan charge-offs equaled $86,177 or .27% of average loans on an annualized basis compared to $164,678 or 0.50% of loans for the second quarter of 2010 and 0.64% for full year 2010. Nonperforming loans equaled $4,728,156 or 3.69% of outstanding loans compared to $3,487,287 or 2.67% on June 30, 2010 and $4,166,913 or 3.22% at year end 2010. Of the $4,728,156 in nonperforming loans, $792,753 is related to a troubled debt restructured loan that was not accruing interest as this loan was in nonaccrual status prior to the restructuring.

At June 30, 2011, there were $757,240 of troubled debt restructurings that were accruing interest and included with nonperforming loans. All of the restructured loans, which include accrual and nonaccrual troubled debt restructurings were complying with their modified terms.  There were no loans 90 days past due and still accruing interest on June 30, 2011.

As of June 30, 2011, the Bank held $2,646,237 of other real estate owned compared with $2,687,237 at year end 2010 and $1,396,527 one year ago. In aggregate, nonperforming assets equaled $7,374,393 or 4.59% of total assets, up from $4,883,814 or 2.83% on June 30, 2010. The allowance for loan losses equaled 2.05% of loans as of June 30, 2011 compared to 2.08% on December 31, 2010 and 1.79% on June 30, 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 June 30,


Six months ended June 30,

Selected Operating Data:

2011


2010


2011


2010









Net interest income

$   1,561,302


$    1,696,261


$   3,208,155


$    3,352,412

Provision for loan losses

162,000


282,000


407,461


605,724

Noninterest income

380,692


236,942


603,478


450,373

Noninterest expense

1,623,362


1,470,473


3,090,885


2,825,732

Income before income tax

156,632


180,730


313,287


371,329

Income tax expense

40,954


45,433


85,084


102,764

Net income

$      115,678


$       135,297


$      228,203


$       268,565

Less: Preferred dividends

$        48,375


$         48,375


$        96,750


$         96,750

Net income available to common








shareholders

$        67,303


$         86,922


$      131,453


$       171,815









Income per share available to








common shareholders: (1)








Basic

$0.04


$0.06


$0.09


$0.11

Diluted

$0.04


$0.06


$0.09


$0.11









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)

June 30,


December 31,





Balance Sheet Data:

2011


2010













Total assets

$ 160,694,865


$  164,514,388





Loans, net

125,554,473


126,762,672





Deposits

134,815,671


135,640,302





Borrowings

4,000,000


7,000,000





Preferred stock

3,075,667


3,060,667





Stockholders' equity

21,667,348


21,601,688





Book value per share (1) (2)

$            12.39


$             12.35





Total shares outstanding (2)

1,501,137


1,501,137














Three months ended June 30,


Six months ended June 30,

Selected Data:

2011


2010


2011


2010

Allowance for loan loss

$     2,632,823


$      2,336,878


n/a


n/a

Nonperforming assets

7,374,393


4,883,814


n/a


n/a

Nonperforming loans

4,728,156


3,487,287


n/a


n/a

Other real estate owned

2,646,237


1,396,527


n/a


n/a

Net charge-offs

86,177


164,678


472,760


387,561

Return on average assets

0.17%


0.20%


0.16%


0.20%

Return on average common equity

1.44%


1.87%


1.43%


1.83%

Net interest margin

4.22%


4.32%


4.34%


4.27%

Overhead efficiency

83.59%


76.06%


81.09%


74.30%










June 30,


June 30,


December 31,



Asset Quality Ratios:

2011


2010


2010



Allowance for loan loss to total loans

2.05%


1.79%


2.08%



Nonperforming loans to total loans

3.69%


2.67%


3.22%



Nonperforming assets to total assets

4.59%


2.83%


4.17%



Net charge-offs to average loans (3)

0.27%


0.50%


0.64%





Note: (1) Book value excludes $3,075,167 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.

         (3) Annualized rates for the quarter ended June 30, 2011 and 2010, respectively.



SOURCE Citizens Community Bank



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