Citizens munity Bancorp(CZWI) - 2025 Q1 - Quarterly Results

Citizens Community Bancorp, Inc. Q1 2025 Earnings Release First Quarter 2025 Financial Summary Citizens Community Bancorp reported Q1 2025 net income of $3.2 million, driven by increased non-interest income and reduced expenses Q1 2025 Earnings Summary (in millions) | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Income | 3.2 | 2.7 | 4.1 | | Diluted EPS | 0.32 | 0.27 | 0.39 | Book Value Per Share Growth | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | Book Value Per Share | $18.02 | $17.94 | $16.61 | | Tangible Book Value Per Share (Non-GAAP) | $14.79 | $14.69 | $13.43 | - Key drivers for Q1 2025 results compared to Q4 2024 included a $0.6 million increase in non-interest income (from loan and equity sales) and a $0.3 million decrease in non-interest expense (from lower compensation and losses on repossessed assets)[4] - CEO Stephen Bianchi expressed satisfaction with the quarterly results, highlighting the bank's strong capital and liquidity, stable credit metrics, and a balance sheet well-positioned for the remainder of 2025, anticipating net-interest margin expansion in the second half of 2025 and throughout 2026[5] First Quarter 2025 Highlights Q1 2025 highlights include a slight net interest income decrease offset by margin improvement, a negative provision for credit losses, and deposit growth - Net interest income decreased slightly by $0.1 million to $11.6 million from the prior quarter, mostly offset by a 6 basis point increase in the net interest margin to 2.85%[6] - A negative provision for credit losses of $0.25 million was recorded, driven by a decrease in the on-balance sheet allowance for credit losses (ACL)[6] - Total deposits increased by $35.5 million to $1.524 billion, while loans receivable decreased by $16.3 million due to seasonal activity[6] - The company repaid its last remaining Federal Home Loan Bank advance, reducing the balance to zero from $5.0 million at year-end 2024 and $39.5 million a year prior[6] - Nonperforming assets increased by $0.3 million to $14.5 million, and special mention loans rose by $6.5 million to $15.0 million, largely due to one C&I relationship[6] Financial Condition The company's financial condition reflects growth in total assets, improved liquidity, and stable asset quality metrics with some increases in criticized loans Balance Sheet and Liquidity Total assets increased to $1.780 billion, driven by cash growth from deposits and loan shrinkage, significantly improving liquidity - Total assets increased by $31.4 million during Q1 2025 to $1.780 billion[8] - The on-balance sheet liquidity ratio increased to 14.38% of total assets at March 31, 2025, up from 11.75% at December 31, 2024[11] - Loans receivable decreased by $16.3 million to $1.353 billion due to seasonal impacts on origination and funding[12] Allowance for Credit Losses (ACL) - Loans (in millions) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | ACL - Loans | 20.2 | 20.5 | | ACL as % of Loans | 1.49% | 1.50% | Asset Quality Asset quality metrics showed some deterioration with increases in special mention, substandard, and total criticized loans, alongside a modest rise in nonperforming assets Criticized and Substandard Loans (in thousands) | Loan Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Special mention loans | 14,990 | 8,480 | | Substandard loans | 19,591 | 18,891 | | Total Criticized loans | 34,581 | 27,371 | - The increase in special mention loans was largely attributed to one Commercial & Industrial (C&I) relationship that showed weaker than expected cash flow[17] - Nonperforming assets increased slightly to $14.5 million at March 31, 2025, from $14.2 million at the end of the previous quarter[18] Deposit Portfolio Total deposits increased to $1.524 billion in Q1 2025, maintaining a stable portfolio composition with consumer deposits at 56% and consistent uninsured levels Deposit Portfolio Composition (in thousands) | Deposit Source | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Consumer | 861,746 | 852,083 | | Commercial | 423,654 | 412,355 | | Public | 211,261 | 190,460 | | Wholesale | 26,993 | 33,250 | | Total Deposits | 1,523,654 | 1,488,148 | - Uninsured and uncollateralized deposits were $271.7 million, or 18% of total deposits, at March 31, 2025, remaining stable from the previous quarter[21] - No common stock was repurchased in Q1 2025, with 238,000 shares remaining available for repurchase under the current authorization[22] Results of Operations The company's Q1 2025 operations reflect stable net interest income with margin expansion, increased non-interest income, and reduced non-interest expenses Net Interest Income and Margin Net interest income slightly decreased to $11.6 million in Q1 2025, largely offset by a 6 basis point increase in net interest margin to 2.85% Net Interest Income and Margin Trend (in millions) | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | 11.6 | 11.7 | 11.9 | | Net Interest Margin | 2.85% | 2.79% | 2.77% | - The increase in net interest margin was negatively impacted by 3 basis points due to lower deferred fee accretion from fewer loan payoffs[23] Upcoming Contractual Repricing (Q2 2025, in millions) | Portfolio | Contractual Balance | Contractual Interest Rate | | :--- | :--- | :--- | | Maturing Certificates | 174 | 4.59% | | Maturing/Repricing Loans | 52 | 6.62% | Non-interest Income and Expense Non-interest income increased to $2.6 million in Q1 2025, while non-interest expense decreased to $10.5 million, driven by lower compensation and repossessed asset losses - Non-interest income increased to $2.6 million in Q1 2025 from $2.0 million in Q4 2024[25] - Non-interest expense decreased by $0.3 million to $10.5 million from the previous quarter, largely due to lower incentive costs and lower losses on repossessed assets[26] Provision for Income Taxes The provision for income taxes was $0.8 million in Q1 2025, with an effective tax rate of 19.6%, reflecting higher pre-tax income Effective Tax Rate | Period | Effective Tax Rate | | :--- | :--- | | Q1 2025 | 19.6% | | Q4 2024 | 19.5% | | Q1 2024 | 21.3% | Consolidated Financial Statements The consolidated financial statements provide a detailed overview of the company's balance sheet and operational results for the quarter Consolidated Balance Sheets The consolidated balance sheet as of March 31, 2025, shows total assets of $1.780 billion, with key changes including increased cash, decreased loans, and eliminated FHLB advances Selected Balance Sheet Items (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | 1,779,963 | 1,748,519 | | Loans receivable, net | 1,332,523 | 1,348,432 | | Total Deposits | 1,523,654 | 1,488,148 | | FHLB advances | 0 | 5,000 | | Total Stockholders' Equity | 180,051 | 179,084 | Consolidated Statements of Operations For Q1 2025, the company reported net interest income of $11.6 million and a net income of $3.2 million, after a negative provision for credit losses Statement of Operations Summary (in thousands) | Account | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net interest income | 11,594 | 11,708 | 11,905 | | (Negative) provision for credit losses | (250) | (450) | (800) | | Total non-interest income | 2,593 | 2,009 | 3,264 | | Total non-interest expense | 10,463 | 10,809 | 10,777 | | Net income | 3,197 | 2,702 | 4,088 | Supplementary Financial Data and Non-GAAP Reconciliations This section provides detailed supplementary financial data, including loan and asset quality analysis, key performance ratios, and non-GAAP reconciliations Loan and Asset Quality Analysis The loan portfolio is primarily commercial real estate, with nonperforming loans at 1.01% and nonperforming assets at 0.82% of total assets Loan Composition Highlights (March 31, 2025, in thousands) | Loan Type | Balance | | :--- | :--- | | Commercial real estate | 709,975 | | Multi-family real estate | 237,872 | | Commercial and industrial | 109,620 | | Residential mortgage | 129,070 | Nonperforming Asset Ratios | Ratio | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | NPLs to total loans | 1.01% | 0.98% | | NPAs to total assets | 0.82% | 0.82% | Key Financial Ratios and Performance Metrics Key Q1 2025 performance metrics include a 0.74% ROA, 7.26% ROE, improved 73% efficiency ratio, and a 2.85% net interest margin Key Financial Ratios (Annualized) | Ratio | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Return on average assets (ROA) | 0.74% | 0.61% | 0.90% | | Return on average equity (ROE) | 7.26% | 6.00% | 9.57% | | Return on avg. tangible common equity (non-GAAP) | 9.28% | 7.72% | 12.26% | | Efficiency ratio | 73% | 76% | 71% | Average Balances and Yields (Q1 2025, in thousands) | Category | Average Balance | Average Yield/Rate | | :--- | :--- | :--- | | Total interest earning assets | 1,652,199 | 5.18% | | Total interest-bearing liabilities | 1,323,270 | 2.91% | | Interest rate spread | | 2.27% | Non-GAAP Reconciliations This section provides reconciliations for non-GAAP measures like tangible book value and return on average tangible common equity, used to assess core business performance - Management uses non-GAAP financial measures like tangible book value per share and return on average tangible common equity to provide a clearer assessment of the company's core financial position and performance[30][31] Reconciliation of Tangible Book Value Per Share (non-GAAP) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total stockholders' equity | 180,051 | 179,084 | | Less: Goodwill & Intangibles | (32,298) | (32,477) | | Tangible common equity | 147,753 | 146,607 | | Tangible book value per share | $14.79 | $14.69 | Reconciliation of Tangible Common Equity to Tangible Assets (non-GAAP) | Ratio | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Tangible common equity | 147,753 | 146,607 | | Tangible Assets | 1,747,665 | 1,716,042 | | TCE / TA Ratio | 8.45% | 8.54% | Company Information and Disclosures This section provides an overview of Citizens Community Bancorp, Inc. and important cautionary statements regarding forward-looking information Company Overview Citizens Community Bancorp, Inc. (NASDAQ: CZWI) is a Wisconsin-based holding company operating 21 branches in Wisconsin and Minnesota, offering traditional community banking services - The company is the holding company of the Bank, a national bank based in Altoona, Wisconsin[28] - It serves customers primarily in Wisconsin and Minnesota through 21 branch locations, offering traditional community banking services[28] Cautionary Statement Regarding Forward-Looking Statements This section warns that forward-looking statements are subject to risks including economic conditions, geopolitical tensions, interest rate fluctuations, and regulatory changes - The report contains forward-looking statements that are subject to inherent uncertainties arising from the company's operations and business environment[29] - Key risks include financial market conditions, inflation, geopolitical conflicts, interest rate risk, cybersecurity risks, and changes in regulations or accounting principles[29]