Citizens Community Bank Reports 2012 Second Quarter Results --Steady progress complements strategic plan--

SOUTH HILL, Va., July 30, 2012 /PRNewswire/ -- Citizens Community Bank (OTC: CZYB) today reported that for the second quarter of 2012, net income available to common shareholders equaled $69,632, an increase of $2,329 or 3.5% over the second quarter of 2011. Basic and diluted earnings per share available to common shareholders equaled $0.05 for the second quarter of 2012, compared to $0.04 for the second quarter of 2011. For the three months ended June 30, 2012 return on average assets equaled 0.18% compared to 0.17% for the second quarter of 2011. Return on average common equity equaled 1.48%, up 4 basis points over the second quarter of 2011. For the six months of 2012, net income available to common shareholders was $154,829, or $0.10 per share on a basic and diluted basis, compared with $131,453 or $0.09 per share, a year ago.

At June 30, 2012, total assets were $159.0 million, a decrease of $2.4 million or 1.5% from December 31, 2011. Gross loans amounted to $128.7 million, an increase of $614,049 or 0.5% from year end 2011. The securities portfolio increased $243,218 or 1.7% from December 31, 2011. Deposits totaled $134.1 million, a decrease of $562,392 or 0.4% since December 31, 2011. Over the same comparable period, noninterest bearing demand deposits increased $224,920 or 1.4%. FHLB borrowings declined $2.0 million as the Bank repaid maturing borrowings during the first quarter of 2012.

"Nationally, net interest margins continue to falter during this difficult economic period.  However, we are pleased to report a significant decrease in our provision expense as compared to last year.  It's important to note that a single $2.5 million commercial credit resulting from a purchased participation loan is both the primary factor for the increase in nonperforming loans and a contributing factor to a drop in earning assets.  Adequate reserves were designated in the fourth quarter of 2011 for this loan relationship. Current negotiations with the borrower indicate an anticipated resolution, within the level of loan loss allocated to it, prior to the end of the calendar year," says President and CEO Thomas C. Manson.

For the second quarter of 2012, net interest income totaled $1,465,677, a decrease of $95,625 or 6.1% from the second quarter of 2011. The decline resulted from a decrease in earning assets and a tighter net interest margin.  For the three months ended June 30, 2012, average earning assets declined $2.4 million or 1.6% from the second quarter of 2011. The yield on earning assets declined to 5.24%, down 37 basis points from the second quarter of 2011. Over the same comparable period, the yield on the loan portfolio equaled 5.69%, down 38 basis points, while the yield on the securities portfolio fell 82 basis points to 3.30%. For the second quarter of 2012, the bank's funding costs was 1.48%, down 19 basis points from a year ago. Despite the reduction in funding costs, the combination of lower earning assets and a declining yield on the earning assets resulted in a net interest margin of 4.04%, down 18 basis points from the second quarter of 2011.

Noninterest income was $203,264, compared with $215,100 in the second quarter of 2011, when excluding $165,592 of securities gains. Service charges on deposit accounts equaled $91,064, a decline of $17,739, or 16.3% from a year ago. Noninterest expense was $1,487,005, a decrease of $136,357, or 8.4% from the second quarter of 2011. The major factor for the reduction in noninterest expense was the result of lower losses on the sale of other real estate owned. For the second quarter of 2012, losses on the sale of other real estate owned totaled $25,628, compared with $131,855 a year ago. The second largest contributor was a reduction in data processing expenses as this declined $32,984 from the second quarter of 2011. Salaries and employee benefits increased $6,469, or 1.0%, to $627,370 from the second quarter of 2011. 

For the three months ended June 30, 2012, provision for loan losses totaled $25,000 compared to $162,000 for the second quarter of 2011. For the second quarter of 2012, the bank had net recoveries of $64,087 compared with net charge-offs of $86,177 for the second quarter of 2011. Accordingly, net loan charge-offs/(recoveries) equaled (0.20%) of average loans on an annualized basis compared to 0.27% of loans for the second quarter of 2011 and 0.65% for full year 2011. Nonperforming loans which include troubled debt restructurings equaled $7,651,966 or 5.94% of outstanding loans compared to $4,728,156 or 3.69% on June 30, 2011, and $4,527,476 or 3.53% at year end 2011. The marked increase in nonperforming loans since December 31, 2011 results primarily from a single $2.5 million commercial construction project. As of June 30, 2012, the Bank has allocated a large portion of loan loss reserves against this particular credit. Of the $7,651,966 in nonperforming loans, $780,512 are troubled debt restructured loans that were not accruing interest as these loans were either in nonaccrual status prior to the restructuring or deemed nonaccrual after the troubled debt classification. There were no loans 90 days past due and still accruing interest on June 30, 2012.

As of June 30, 2012, the Bank held $2,604,616 of other real estate owned compared with $2,379,558 at year end 2011 and $2,646,237 one year ago. In aggregate, nonperforming assets equaled $10,256,582 or 6.45% of total assets, up from $7,374,393 or 4.59% on June 30, 2011 and $6,907,034 or 4.28% at December 31, 2011. The allowance for loan losses equaled 2.21% of loans as of June 30, 2012 compared to 2.08% on December 31, 2011 and 2.05% on June 30, 2011. With the increase in nonperforming loans, the Bank increased specific reserves against certain nonperforming loans, thus a higher loan loss reserve ratio.

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 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.  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:


2012


2011


2012


2011










Net interest income


$   1,465,677


$        1,561,302


$   2,934,570


$    3,208,155

Provision for loan losses


25,000


162,000


165,000


407,461

Noninterest income


203,264


380,692


410,321


603,478

Noninterest expense


1,487,005


1,623,362


2,848,248


3,090,885

Income before income tax


156,936


156,632


331,643


313,287

Income tax expense 


37,481


40,954


76,991


85,084

Net income 


$      119,455


$           115,678


$      254,652


$       228,203

Less: Preferred dividends


$        49,823


$             48,375


$        99,823


$         96,750

Net income available to common








shareholders


$        69,632


$             67,303


$      154,829


$       131,453










Income per share available to









common shareholders:(1)









Basic 


$0.05


$0.04


$0.10


$0.09

Diluted


$0.05


$0.04


$0.10


$0.09










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,


June 30,



Balance Sheet Data:


2012


2011


2011












Total assets


$ 159,040,564


$ 161,463,457


$ 160,694,865



Loans, net


125,888,776


125,457,700


125,554,473



Deposits


134,092,731


134,655,123


134,815,671



Borrowings


2,000,000


4,000,000


4,000,000



Preferred stock


4,000,000


4,000,000


3,075,667



Stockholders' equity


22,721,768


22,594,950


21,667,348



Book value per share (1) (2)


$            12.47


$            12.39


$            12.39



Total shares outstanding (2)


1,500,948


1,500,948


1,500,948














 

Three months ended June 30,


 

Six months ended June 30,

Performance Ratios:


2012


2011


2012


2011

Return on average assets


0.18%


0.17%


0.20%


0.16%

Return on average common equity


1.48%


1.44%


1.64%


1.43%

Net interest margin 


4.04%


4.22%


4.07%


4.34%

Overhead efficiency


89.10%


83.59%


83.59%


81.09%










Asset Quality Data:









Allowance for loan loss


$     2,847,773


$     2,632,823


 n/a 


 n/a 

Nonperforming assets


10,256,582


7,374,393


 n/a 


 n/a 

Nonaccrual loans


6,238,005


3,970,916


 n/a 


 n/a 

Nonperforming loans (3)


7,651,966


4,728,156


 n/a 


 n/a 

Other real estate owned


2,604,616


2,646,237


 n/a 


 n/a 

Net charge-offs (recoveries)


(64,087)


86,177


(17,974)


472,760












June 30,


June 30,


December 31,



Asset Quality Ratios:


2012


2011


2011



Allowance for loan loss to total loans


2.21%


2.05%


2.08%



Nonperforming loans to total loans


5.94%


3.69%


3.53%



Nonperforming assets to total assets


6.45%


4.59%


4.28%



Net charge-offs (recoveries) to average loans (4)


(0.20%)


0.27%


0.65%












Capital Ratios:









Total risk-based capital


18.11%


17.11%


18.05%



Tier 1 risk-based capital


16.85%


15.85%


16.79%



Tier 1 leverage capital


14.03%


13.09%


13.47%












Note: (1) Book value excludes $4,000,0000 of preferred stock for June 30, 2012 and December 31, 2011 and 3,075,667 for June

               30, 2011.

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

          (3) Includes troubled debt restructurings of $1,413,961 and $757,240, for June 30, 2012 and 2011, respectively. 

          (4) Annualized rates for the quarter ended June 30, 2012 and 2011, respectively. 




























 

SOURCE Citizens Community Bank



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