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| 8-K - 8-K - Citizens Community Bancorp Inc. | a8kannualmtgslidepresentat.htm |
CITIZENS
COMMUNITY
BANCORP INC
Annual Meeting | March 27, 2018
This presentation includes forward-looking statements about the financial condition, results of operations and business of
Citizens Community Bancorp, Inc. (“Citizens”) and its wholly owned subsidiary, Citizens Community Federal N.A. (“CCFBank”).
Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. These
statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,”
“intend,” “may,” “planned,” “potential,” “should,” “will,” “would” or the negative of those terms or other words of similar meaning.
These forward-looking statements are intended to be covered by the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements in this presentation are inherently subject to many uncertainties arising in
CCFBank’s operations and business environment. These uncertainties include conditions in the financial markets and economic
conditions generally; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; the
sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among
depository and other financial institutions; our ability to realize the benefits of net deferred tax assets; our ability to maintain or
increase our market share; acts of terrorism and political or military actions by the United States or other governments;
legislative or regulatory changes or actions, or significant litigation, adversely affecting the CCFBank; increases in FDIC
insurance premiums or special assessments by the FDIC; disintermediation risk; our inability to obtain needed liquidity; our
ability to raise capital needed to fund growth or meet regulatory requirements; the possibility that our internal controls and
procedures could fail or be circumvented; our ability to attract and retain key personnel; our ability to keep pace with
technological change; cybersecurity risks; risks posed by acquisitions and other expansion opportunities; changes in accounting
principles, policies or guidelines and their impact on financial performance; restrictions on our ability to pay dividends; and the
potential volatility of our stock price. Shareholders, potential investors and other readers are urged to consider these factors
carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking
statements. Such uncertainties and other risks that may affect the Company’s performance are discussed further in Part I, Item
1A, “Risk Factors,” in the Company’s Form 10-K, for the year ended September 30, 2017 filed with the Securities and Exchange
Commission ("SEC") on December 13, 2017 and the Company's subsequent filings with the SEC. The Company undertakes no
obligation to make any revisions to the forward-looking statements contained in this presentation or to update them to reflect
events or circumstances occurring after the date hereof.
CAUTIONARY NOTE REGARDING
FORWARD LOOKING STATEMENTS
This presentation contains non-GAAP financial measures, which management believes may be helpful in
understanding the Company's results of operations or financial position and comparing results over different
periods. Non-GAAP measures eliminate the impact of certain one-time expenses such as acquisition and branch
closure costs and related data processing termination fees, legal costs, severance pay, accelerated depreciation
expense and lease termination fees. Merger related charges represent expenses to either satisfy contractual
obligations of acquired entities without any useful benefit to the Company or to convert and consolidate customer
records onto the Company platforms. These costs are unique to each transaction based on the contracts in
existence at the merger date. In addition, non-GAAP financial measures exclude settlement proceeds and the
FHLB prepayment fee. Where non-GAAP financial measures are used, the comparable GAAP financial measure,
as well as the reconciliation to the comparable GAAP financial measure, can be found in this presentation. These
disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor
are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and
financial institutions.
CAUTIONARY NOTE REGARDING
Non-GAAP Financial Measures
Our Leadership Team OUR LEADERSHIP TEAM
President / CEO SVP Chief Technology Officer EVP / CFO SVP Corporate Development
SVP West Region President
Commercial / Ag Banking
SVP Chief Credit Officer VP Human Resources SVP East Region President
Commercial / Ag Banking
Current CZWI Branch Locations
One additional office in
suburban Detroit.
COMPANY PROFILE
FOUNDED IN 1939
Business model changing to Commercial/Ag/Consumer from credit union, thrift legacy
GROWTH ORIENTED
Acquisitions and organic growth driving robust loan and deposit growth since 2016
INCREASED PROFITABILITY
Quality and quantity of earnings improving via balance sheet remixing and efficiency
measures
EMERGING BRAND, MARKET LEVERAGE
Momentum growing from new business model execution, acquisition of key talent and
consolidation of branch network
CZWI FOCUS ITEMS
ENHANCING THE QUANTITY AND QUALITY OF EARNINGS
We are committed to enhancing shareholder value by improving the loan and deposit mix,
deepening customer relationships and strengthening other sources of revenue.
EXPERTISE IN COMMERCIAL & AG BANKING
We take pride in serving small and mid-sized business and Ag operators in our communities
with the best professionals, products and process.
EXPERIENCED & PROVEN STRATEGIC LEADERSHIP TEAM
Our team has over 174 years of banking experience to draw upon with national, regional
and community banks.
ENTERPRISE PRODUCTIVITY & RISK MANAGEMENT
We have embraced technology and workflow improvements to increase profitability as
revenue grows. Our emphasis on prudent risk taking, knowing the client and proactive risk
management has resulted in top quartile asset quality performance.
KEY MARKET DIFFERENTIATORS
BUSINESS
MODEL
• Serving small to mid-sized
entrepreneurs & Ag producers
• Responsive professionals
• Easy to do business with
• Products to compete vs. big
banks, superior to smaller
community banks
CULTURE
CREDIT STRATEGIC
GROWTH
• Experienced, energetic
leadership team
• Accountability for doing the
right thing and getting results
• Entrepreneurial spirit, winning
attitude
• Prudent risk taking
• Process driven , transparent
• Nimble , centralized approval
process
• Proactive risk management
• Loan and deposit growth
through prudent M&A
• Robust
• Quality and quantity of
earnings improving
LOAN PORTFOLIO DETAIL
• Well diversified portfolio
• Portfolio mix has
changed dramatically
• Commercial loan growth
offset by the planned
runoff of 1-4 family and
indirect loan portfolios
Commercial/Ag
RE
39.40%
Commercial/Ag
Non RE
11.20%
Originated
Indirect
10.80%
Purchased
Indirect
3.60%
Other
Consumer Non
RE
2.60%
Residential RE
32.40%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016 1017 Q1 2018
Growth portfolios as %
of portfolio
Runoff portfolios as % of
portfolio
COMMERCIAL LOAN DETAIL
• Commercial loan
portfolio well diversified
• Strong growth in all
commercial loan
categories
• Average note size is
under $225 thousand
Ag
23.9%
Multi-family
real estate
8.8%
Owner
Occupied
16.8%
Non-owner
Occupied
15.1%
Other CRE
19.6%
Commercial
non-real estate
15.8%
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
2014 2015 2016 2017 Q1 2018
CRE
C&I
AG
ASSET QUALITY
• Good asset quality
• CCFBank asset quality
improved in all periods
presented
• Proactive risk
management
• Acquired NPA marked at
time of acquisition
• Low loan charge-off
percentages
NPAs/Total Loans
0.00%
0.10%
0.20%
0.30%
0.40%
9/30/2014 9/30/2015 9/30/2016 9/30/2017 12/31/2017
Sum of Loan NCOs
to Gross Loans
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
Acquired REO %
Acquired Loan %
CCF REO %
CCF Loan %
DEPOSIT MIX
Deposit
Mix/COFs
At December 31,2017
• Planned remix of
deposits to lower cost
non-maturity deposits
from certificates
ongoing
• Consistent growth in
checking and money
market/savings
• This deposit remix
will decrease our cost
of funds and enhance
future profitability
Money
Market
Demand
17.00%
Certificate
Accounts
38.90%
Noninterest
Bearing
Demand
10.60%
Interest
Bearing
Demand
20.10%
Savings
Accounts
13.40%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
0%
20%
40%
60%
80%
100%
2014 2015 2016 2017 Q1 2018
Sum of Checking Sum of Savings/MMDA Sum of CD Sum of COF
NET INCOME AND DILUTED EPS
(In $000’s) (In $)
Core Income and Core EPS are non-GAAP financial measures, which management believes may be helpful in understanding the
Company's results of operations or financial position and comparing results over different periods. Reconciliation of Core Income and
Core EPS to the comparable GAAP financial measure can be found in the final slide to this presentation. These measures should not
be viewed as a substitute for operating results determined in accordance with GAAP.
• Positive earnings trends
• First quarter 2018 shows impact of Wells acquisition
First Qtr. First Qtr. $0.62
$0.54
$0.49
$0.67
$0.46
$0.79
$0.23
$0.30
SHAREHOLDER HIGHLIGHTS
COMMERCIAL/AG BANKING EXPERTISE
PROVEN EXECUTIVES AND SENIOR MANAGERS
SUCCESSFUL M&A ACTIVITY
MICROPOLITAN, METROPOLITAN & RURAL DEMOGRAPHICS
CULTURE OF ACCOUNTABILITY
STRONG CREDIT QUALITY
PROACTIVE RISK MANAGEMENT
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
EXPERTISE IN COMMERCIAL & AG
BANKING
FY2015 FY2016 FY2017 FQ1-18
(Dollars in Thousands, except share data)
GAAP pre-tax earnings $ 4,420 $ 3,859 $ 3,822 $ 2,223
Merger related costs (1) 0 701 1,860 94
Branch closure costs (2) 614 839 951 7
Settlement proceeds (3) 0 0 (283) 0
FHLB borrowings prepayment fee (4) 0 0 104 0
Core earnings before income taxes (5) 5,034 5,399 6,454 2,324
Provision for income tax on core earnings (6) 1,712 1,836 2,194 569
Core earnings after income taxes (5) $ 3,322 $ 3,563 $ 4,260 $ 1,755
GAAP diluted earnings per share, net of tax $ 0.54 $ 0.49 $ 0.46 $ 0.23
Merger related costs, net of tax - 0.09 0.23 0.02
Branch related costs, net of tax 0.08 0.09 0.12 -
Settlement proceeds - - (0.03) -
FHLB borrowings prepayment fee - - 0.01 -
Tax Cuts and Jobs Act of 2017 tax provision (7) - - - 0.05
Core diluted earnings per share, net of tax $ 0.62 $ 0.67 $ 0.79 $ 0.30
Average diluted shares outstanding 5,239,943 5,257,304 5,378,548 5,920,899
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
EXPERTISE IN COMMERCIAL & AG
BANKING
(1) Costs incurred are included as data processing, advertising, marketing and public relations, professional fees and other noninterest
expense in the consolidated statement of operations.
(2) Branch closure costs include severance pay recorded in compensation and benefits, accelerated depreciation expense and
lease termination fees included in occupancy and other costs included in other non-interest expense in the consolidated
statement of operations. In addition, other non-interest expense includes costs related to the reduction in valuation of the
Ridgeland branch office in the fourth quarter of fiscal 2017.
(3) Settlement proceeds includes litigation income from a JP Morgan Residential Mortgage Backed Security (RMBS) claim.
This JP Morgan RMBS was previously owned by the Bank and sold in 2011.
(4) The prepayment fee to restructure our FHLB borrowings is included in other non-interest expense in
the consolidated statement of operations.
(5) Core earnings is a non-GAAP measure that management believes enhances investors' ability to better understand the
underlying business performance and trends related to core business activities.
(6) Provision for income tax on core earnings is calculated at 24.5% for the three months ended December 31, 2017 and at 34%
for all quarters in the prior fiscal year, which represents our federal statutory tax rate for each respective period presented.
(7) As a result of the Tax Cuts and Jobs Act of 2017, we recorded a one-time net tax provision of $275 in the first quarter of 2018,
which is included in provision for income taxes expense in the consolidated statement of operations.
EXPERTISE IN COMMERCIAL & AG
BANKING
Thank you !