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Citizens Community Bancorp, Inc. Earnings Increased 19% to $3.1 million for Fiscal 2016

EAU CLAIRE, Wis., Oct. 28, 2016 (GLOBE NEWSWIRE) -- Citizens Community Bancorp, Inc. (the "Company") (Nasdaq:CZWI), the parent company of Citizens Community Federal N.A. (the “Bank”), today reported fiscal 2016 GAAP earnings grew 19% to $3.1 million, or $0.59 per diluted share, compared to $2.6 million, or $0.50 per diluted share, one year earlier. Fourth quarter GAAP earnings were $586,000, or $0.12 per share, compared to $691,000, or $0.13 per share, for the fourth quarter a year ago and $967,000, or $0.18, for the preceding quarter. Core earnings (non-GAAP) were $1.2 million, or $0.22 per share, for the fourth quarter, compared to Core earnings (non-GAAP) of $867,000, or $0.16 per share, for the fourth quarter a year ago. Fourth quarter fiscal 2016 Core earnings (non-GAAP) reflect adjustments for numerous one-time expenses associated with the reduction of personnel, cancellation of vendor contracts, one branch closure, one branch relocation and higher data processing fees related to the integration of the Community Bank of Northern Wisconsin (“CBN”) acquisition on May 16, 2016.

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. See the Data Sheets that follow for additional information.

“Fiscal 2016 saw numerous changes throughout the organization with the acquisition and integration of CBN, the announcement to close six branches, the building of a new traditional branch, the authorization of a stock repurchase program for up to 10% of the outstanding shares, and a new management team and new initiatives for our lending and deposit gathering efforts,” said Stephen Bianchi, President and Chief Executive Officer. “We expect the loan mix to change as we underwrite more commercial loans and discontinue the origination of dealer indirect loans. Meanwhile, we are working to improve operating efficiency to boost core earnings (non-GAAP) and enhance franchise and shareholder value.”

Relative to one year earlier, total assets increased to $696.1 million at September 30, 2016, from $580.1 million at September 30, 2015, and decreased from the immediate prior quarter of $723.0 million at June 30, 2016. The decrease in total assets over the preceding quarter is largely related to the recently announced branch closings and withdrawal of funds paid to the prior owners of CBN which were temporarily on deposit. Tangible book value per share was $11.15 per share as of September 30, 2016, compared to $11.20 per share as of June 30, 2016. Nonperforming assets, as a percentage of total assets, were 0.62% at September 30, 2016, compared to 0.71% at June 30, 2016.

Fiscal Fourth Quarter 2016 Financial Highlights: (at or for the periods ended September 30, 2016, compared to September 30, 2015 and /or June 30, 2016.)

  • GAAP Earnings were $586,000, or $0.12 per diluted share, for the fiscal fourth quarter of 2016 versus $967,000, or $0.18 per diluted share, for the third fiscal quarter and $691,000 or $0.13 per diluted share, for the quarter ended September 30, 2015. For the fiscal year ended September 30, 2016, earnings increased 19% to $3.11 million, or $0.59 per diluted share, versus $2.61 million, or $0.50 per diluted share, for fiscal 2015.
  • Core earnings (non-GAAP) were $1.2 million for the fiscal fourth quarter ended September 30, 2016 and the previous quarter ended June 30, 2016. For the fiscal year ended September 30, 2016, core earnings (non-GAAP) were $4.1 million, compared to $3.1 million the previous year. Core earnings (non-GAAP) largely reflect adjustments related to merger related costs and branch closure costs.
  • The net interest margin was 3.32% for the fiscal fourth quarter of 2016 compared to 3.27% for the three months ended June 30, 2016, and 3.31% for the three months ended September 30, 2015.
  • Total assets decreased to $696.1 million at September 30, 2016, from $723.0 million at June 30, 2016, and increased from $580.1 million at September 30, 2015, due largely to the acquisition of CBN, which added $167 million in assets.
  • Total net loans decreased slightly to $568.4 million at September 30, 2016, from $577.8 million at June 30, 2016, and were higher than the September 30, 2015, balance of $444.0 million.
  • Total deposits decreased to $557.7 million from $585.2 million relative to June 30, 2016, and increased 22% from $456.3 million at September 30, 2015.
  • Nonperforming assets ratio improved to 0.62% of total assets at September 30, 2016, compared to 0.71% at June 30, 2016.
  • Loan and lease losses allowance totaled 1.06% of total loans at September 30, 2016, compared to 1.07% one quarter earlier.
  • Bank capital ratios at September 30, 2016, continued to remain well above the regulatory “well-capitalized” minimum levels:
    • Total capital to risk-weighted assets was 14.0% versus 16.5% at September 30, 2015.
    • Tier 1 capital to risk-weighted assets was 12.8% versus 15.3% at September 30, 2015.
    • Common equity tier 1 capital to risk-weighted assets was 12.8% versus 15.3% at September 30, 2015.
    • Tier 1 leverage to adjusted total assets was 9.3% versus 10.4% at September 30, 2015.
  • Tangible book value was $11.15 per share at September 30, 2016, compared to $11.55 per share a year ago.

Balance Sheet and Asset Quality Review

Total assets were $696.1 million at September 30, 2016, compared to $723.0 million at June 30, 2016 and $580.1 million at September 30, 2015. The decline in total assets in the most recent quarter primarily reflects lower deposit levels and a lower level of cash and investments. Total net loans decreased slightly to $568.4 million at September 30, 2016, from $577.8 million at June 30, 2016, but were higher than the $444.0 million balance one year earlier. The slight decline in the loan balance was primarily due to decreased levels of one-to-four family loans and a decreased investment in indirect consumer loans. Meanwhile, commercial and multi-family loan balances increased over the past quarter reflecting increased emphasis on internally underwritten commercial and agricultural loans.

At September 30, 2016, commercial, agricultural, multi-family, construction and land development loans totaled 34.6% of the total loan portfolio. One-to-four family loans represented 32.7% of the total loan portfolio while consumer related loans also totaled 32.7% of the total loan portfolio. Cash and investment balances decreased in the most recent quarter as the Company has used available cash to fund deposit withdrawals related to branch closings. Similarly, investment securities declined slightly relative to the previous quarter. Goodwill increased slightly in the most recent quarter related to purchase accounting adjustments for the acquisition of CBN.

Total deposits were $557.7 million at September 30, 2016, and $585.2 million at June 30, 2016. Despite the decline in total deposits on a linked quarter basis, non-interest bearing demand deposits and savings deposits increased over the past quarter while interest bearing demand deposits, money market accounts and certificate accounts declined. Non-certificate accounts increased to 50.9% of total deposits at September 30, 2016, from 49.3% the previous quarter. The change in composition of deposits reflects a combination of deposit run-off related to the CBN acquisition and the announced closure of the Fox Valley branches.

Federal Home Loan Bank ("FHLB") advances and other borrowings totaled $70.3 million at September 30, 2016, compared to $69.9 million in the previous quarter. To facilitate the purchase of CBN, the Company obtained an adjustable-rate, $11.0 million loan with a maturity date of May 15, 2021.

Nonperforming assets ("NPAs") declined to $4.3 million at September 30, 2016, compared to $5.1 million the previous quarter. At September 30, 2016, NPAs represented 0.62% of total assets and included only $777,000 in foreclosed and repossessed assets.

The allowance for loan and lease losses at September 30, 2016, totaled $6.1 million and represented 1.06% of total loans and leases. Net charge offs to average loans was 0.10% in fiscal 2016 versus 0.14% one year earlier.

Tangible common stockholders' equity was 8.49% of tangible assets at September 30, 2016, compared to 8.17% at June 30, 2016. Tangible book value per common share was $11.15 at September 30, 2015.

Capital ratios continued to remain well above regulatory requirements with Tier 1 capital to risk-weighted assets of 12.8% at September 30, 2016, while the ratio of Tier 1 capital to total adjusted assets was 9.3%. These regulatory ratios were higher than the required minimum levels of 6.00% for Tier 1 capital to risk-weighted assets and 4.00% for Tier 1 capital to total adjusted assets.

Review of Operations

For the fiscal fourth quarter ending September 30, 2016, the Company's operations reflected $936,000 in one-time costs associated with the CBN acquisition and the announced branch closures. Reported GAAP earnings were $586,000 for the quarter ended September 30, 2016, compared to $967,000 for the immediate prior quarter. Core earnings (non-GAAP), which adjusts for non-recurring one-time costs, were $1.2 million, or $0.22 per diluted share for the fiscal fourth quarter ended September 30, 2016, compared to $1.2 million, or $0.23 per diluted share one quarter earlier. Net interest income increased to $5.7 million for the fiscal fourth quarter of 2016, compared to $5.2 million for the previous quarter and $4.6 million in the fiscal fourth quarter ended September 30, 2015. The net interest margin was 3.32% for the fiscal fourth quarter of 2016, compared to 3.27% for the preceding quarter and 3.31% for the quarter ended September 30, 2015.

Provision for loan losses reflect prudent reserves established for the loan portfolio, economic conditions and historical charge-off activity. No provisions were booked for the fiscal second, third or fourth quarters of 2016, compared to $121,000 for the fiscal fourth quarter of 2015. Net charge-offs were $503,000 for the fiscal 2016, versus $666,000 in fiscal 2015.

Noninterest income totaled $1.1 million for the fiscal fourth quarter of 2016, compared to $1.0 million in the fiscal third quarter of 2016. Fees on deposits totaled $463,000 for the fiscal fourth quarter of 2016 versus $410,000 for the third quarter of fiscal 2016. Total noninterest expense was $6.0 million in the fiscal fourth quarter of 2016 compared to $4.7 million for the quarter ended June 30, 2016. The current quarter reflects the addition of new employees related to the CBN acquisition, one-time merger related costs and branch closure costs. Compensation and employee benefits totaled $3.0 million for the fiscal fourth quarter of 2016, versus $2.4 million in the previous quarter.
These financial results are preliminary until the Form 10-K is filed in December 2016.

About the Company

Citizens Community Federal N.A., a wholly owned subsidiary of Citizens Community Bancorp, Inc., is a full-service national bank based in Altoona, Wisconsin, serving more than 50,000 customers in Wisconsin, Minnesota and Michigan through 20 branch locations. The Company’s stock trades on the NASDAQ Global Market under the symbol “CZWI.”

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this release are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the Company’s operations and business environment. These uncertainties include general economic conditions, in particular, relating to consumer demand for the Bank’s products and services; the Bank’s ability to maintain current deposit and loan levels at current interest rates; competitive and technological developments; deteriorating credit quality, including changes in the interest rate environment reducing interest margins; prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; the Bank’s ability to maintain required capital levels and adequate sources of funding and liquidity; maintaining capital requirements may limit the Bank’s operations and potential growth; changes and trends in capital markets; competitive pressures among depository institutions; effects of critical accounting estimates and judgments; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies overseeing the Bank; the Bank’s ability to implement its cost-savings and revenue enhancement initiatives, including costs associated with its branch consolidation and new market branch growth initiatives; legislative or regulatory changes or actions or significant litigation adversely affecting the Bank; fluctuation of the Company’s stock price; the Bank's ability to attract and retain key personnel; the Bank's ability to secure confidential information through the use of computer systems and telecommunications networks; and the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity. 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, 2015 filed with the Securities and Exchange Commission on December 7, 2015. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release.

Non-GAAP Financial Measures

This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding the Company's results of operations or financial position and in comparing the Company's results of operations and financial position over different periods. Management believes that one-time expenses related to acquisition and branch closure costs, such as data processing termination fees, legal costs, severance pay, accelerated depreciation expense, lease termination fees and other costs are not organic costs to run our operations and facilities. 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. 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 press release. 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.

CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets (unaudited)
(in thousands)
September 30, 2016 June 30, 2016 September 30, 2015
Assets
Cash and cash equivalents $10,046 $21,345 $23,872
Other interest bearing deposits 745 745 2,992
Securities available for sale "AFS" 80,123 84,508 79,921
Securities held to maturity "HTM" 6,669 7,163 8,012
Non-marketable equity securities, at cost 5,034 5,034 4,626
Loans receivable 574,439 584,046 450,510
Allowance for loan losses (6,068) (6,236) (6,496)
Loans receivable, net 568,371 577,810 444,014
Office properties and equipment, net 5,338 5,576 2,669
Accrued interest receivable 2,032 1,971 1,574
Intangible assets 872 917 104
Goodwill 4,663 4,003
Foreclosed and repossessed assets, net 776 911 902
Other assets 11,461 13,026 11,462
TOTAL ASSETS $696,130 $723,009 $580,148
Liabilities and Stockholders’ Equity
Liabilities:
Deposits $557,677 $585,224 $456,298
Federal Home Loan Bank advances 59,291 58,874 58,891
Other borrowings 11,000 11,000
Other liabilities 3,995 4,316 4,424
Total liabilities 631,963 659,414 519,613
Stockholders’ equity:
Common stock—$0.01 par value, authorized 30,000,000; 5,260,098 and 5,232,579 shares issued and outstanding, respectively 53 52 52
Additional paid-in capital 54,963 54,793 54,740
Retained earnings 8,730 8,144 6,245
Unearned deferred compensation (193) (179) (288)
Accumulated other comprehensive gain (loss) 614 785 (214)
Total stockholders’ equity 64,167 63,595 60,535
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $696,130 $723,009 $580,148


CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
September 30,
2016
June 30,
2016
September 30,
2015
September 30,
2016
September 30,
2015
Interest and dividend income:
Interest and fees on loans $6,784 $6,072 $5,366 $23,407 $21,641
Interest on investments 410 402 365 1,677 1,363
Total interest and dividend income 7,194 6,474 5,731 25,084 23,004
Interest expense:
Interest on deposits 1,212 1,081 963 4,200 3,808
Interest on FHLB borrowed funds 168 167 154 664 630
Interest on other borrowed funds 96 47 143
Total interest expense 1,476 1,295 1,117 5,007 4,438
Net interest income 5,718 5,179 4,614 20,077 18,566
Provision for loan losses 121 75 656
Net interest income after provision for loan losses 5,718 5,179 4,493 20,002 17,910
Non-interest income:
Net gains on available for sale securities 16 43 63 60
Service charges on deposit accounts 463 410 442 1,627 1,715
Loan fees and service charges 410 302 368 1,296 1,291
Other 253 258 214 929 847
Total non-interest income 1,142 1,013 1,024 3,915 3,913
Non-interest expense:
Salaries and related benefits 3,023 2,378 2,095 9,807 8,643
Occupancy 991 554 799 2,826 2,872
Office 361 350 280 1,225 1,105
Data processing 528 445 413 1,802 1,590
Amortization of core deposit intangible 46 31 14 112 57
Advertising, marketing and public relations 153 174 160 609 570
FDIC premium assessment 139 86 84 394 390
Professional services 138 182 248 712 1,088
Other 682 453 355 1,688 1,404
Total non-interest expense 6,061 4,653 4,448 19,175 17,719
Income before provision for income taxes 799 1,539 1,069 4,742 4,104
Provision for income taxes 213 572 378 1,628 1,490
Net income attributable to common stockholders $586 $967 $691 $3,114 $2,614
Per share information:
Basic earnings $0.12 $0.18 $0.13 $0.59 $0.50
Diluted earnings $0.12 $0.18 $0.13 $0.59 $0.50
Cash dividends paid $ $ $ $0.12 $0.08
Book value per share at end of period $12.20 $12.14 $11.57 $12.20 $11.57
Tangible book value per share at end of period $11.15 $11.20 $11.55 $11.15 $11.55

Reconciliation of GAAP Earnings and Core Earnings (non-GAAP):

Three Months Ended Twelve Months Ended
December
31, 2015
March 31,
2016
June 30,
2016
September
30, 2016
September
30, 2015
September
30, 2016
September
30, 2015
(Dollars in Thousands, except share data)
GAAP earnings before income taxes $1,334 $1,070 $1,539 $799 $1,069 $4,742 $4,104
Merger related costs (1) 45 222 486 753
Branch closure costs (2) 59 187 450 245 696 614
Core earnings before income taxes 1,393 1,302 1,761 1,735 1,314 6,191 4,718
Provision for income tax on core earnings at 34% 474 441 584 584 447 2,083 1,584
Core earnings after income taxes $919 $861 $1,177 $1,151 $867 $4,108 $3,134
GAAP diluted earnings per share, net of tax $0.16 $0.13 $0.18 $0.12 $0.13 $0.59 $0.50
Merger related costs, net of tax 0.01 0.03 0.06 0.10
Branch closure costs, net of tax 0.01 0.02 0.06 0.03 0.09 0.08
Tax reconciliation adjustment 0.02 (0.02)
Core diluted earnings per share, net of tax $0.17 $0.16 $0.23 $0.22 $0.16 $0.78 $0.58
Average diluted shares outstanding 5,262,718 5,263,246 5,262,188 5,274,505 5,264,039 5,257,304 5,239,943

(1) Costs incurred are included as data processing, advertising, marketing and public relations, professional fees and other non-interest expense on the income statement.
(2) Branch closure costs include severance pay recorded in salaries and other benefits, accelerated depreciation expense and lease termination fees included in occupancy and other non-interest expense on the income statement.

Non-performing Assets:

September
30, 2016
and Twelve
Months
Ended
June 30,
2016
and Nine
Months
Ended
September
30, 2015
and Twelve
Months
Ended
Nonperforming assets:
Nonaccrual loans $3,191 $3,226 $748
Accruing loans past due 90 days or more 380 979 473
Total nonperforming loans (“NPLs”) 3,571 4,205 1,221
Other real estate owned 725 835 838
Other collateral owned 52 76 64
Total nonperforming assets (“NPAs”) $4,348 $5,116 $2,123
Troubled Debt Restructurings (“TDRs”) $8,705 $5,446 $4,010
Nonaccrual TDRs $1,606 $1,026 $332
Average outstanding loan balance $512,475 $517,278 $460,438
Loans, end of period (1) 574,439 584,046 450,510
Total assets, end of period 696,130 723,009 580,148
ALL, at beginning of period 6,496 6,496 6,506
Loans charged off:
Residential real estate (140) (111) (405)
Commercial/agriculture real estate
Consumer non-real estate (460) (394) (601)
Commercial agriculture non-real estate (118)
Total loans charged off (718) (505) (1,006)
Recoveries of loans previously charged off:
Residential real estate 11 7 69
Commercial/agriculture real estate
Consumer non-real estate 204 163 271
Commercial agriculture non-real estate
Total recoveries of loans previously charged off: 215 170 340
Net loans charged off (“NCOs”) (503) (335) (666)
Additions to ALL via provision for loan losses charged to operations 75 75 656
ALL, at end of period $6,068 $6,236 $6,496
Ratios:
ALL to NCOs (annualized) 1,206.36% 1,396.12% 975.38%
NCOs (annualized) to average loans 0.10% 0.09% 0.14%
ALL to total loans 1.06% 1.07% 1.44%
NPLs to total loans 0.62% 0.72% 0.27%
NPAs to total assets 0.62% 0.71% 0.37%

Troubled Debt Restructurings:

September 30, 2016 June 30, 2016 September 30, 2015
Number of
Modifications
Recorded
Investment
Number of
Modifications
Recorded
Investment
Number of
Modifications
Recorded
Investment
Troubled debt restructurings:
Originated loans:
Residential real estate32 $3,413 32 $3,414 34 $3,479
Commercial/Agricultural real estate
Consumer non-real estate21 320 25 384 39 531
Commercial/Agricultural non-real estate
Total originated loans53 $3,733 57 $3,798 73 $4,010
Acquired loans:
Residential real estate17 $1,058 2 $75 $
Commercial/Agricultural real estate5 1,811 6 1,560
Consumer non-real estate2 11
Commercial/Agricultural non-real estate16 2,092 1 13
Total acquired loans40 $4,972 9 $1,648 $
Total loans:
Residential real estate49 $4,471 34 $3,489 34 $3,479
Commercial/Agricultural real estate5 1,811 6 1,560
Consumer non-real estate23 331 25 384 39 531
Commercial/Agricultural non-real estate16 2,092 1 13
Total loans93 $8,705 66 $5,446 73 $4,010

Loan Composition:

September 30, 2016 June 30, 2016 September 30, 2015
Originated Loans:
Residential real estate:
One to four family $160,961 $169,727 $181,206
Commercial/Agricultural real estate:
Commercial real estate 67,382 62,328 39,883
Agricultural real estate 3,304 4,696 2,415
Multi-family real estate 18,935 16,694 14,869
Construction and land development 11,702 11,940 6,099
Consumer non-real estate:
Originated indirect paper 119,073 123,544 130,993
Purchased indirect paper 49,221 47,865 39,705
Other Consumer 18,926 17,171 22,900
Commercial/Agricultural non-real estate:
Commercial non-real estate 10,744 10,289 6,292
Agricultural non-real estate 9,994 9,268 3,718
Total originated loans $470,242 $473,522 $448,080
Acquired Loans:
Residential real estate:
One to four family (1) $26,777 $25,824 $
Commercial/Agricultural real estate:
Commercial real estate (1) 34,267 31,624
Agricultural real estate (1) 22,504 23,756
Multi-family real estate 200 301
Construction and land development 3,107 5,282
Consumer non-real estate:
Other Consumer 789 1,915
Commercial/Agricultural non-real estate:
Commercial non-real estate 11,709 15,175
Agricultural non-real estate 4,653 5,956
Total acquired loans $104,006 $109,833 $
Total Loans:
Residential real estate:
One to four family $187,738 $195,551 $181,206
Commercial/Agricultural real estate:
Commercial real estate 101,649 93,952 39,883
Agricultural real estate 25,808 28,452 2,415
Multi-family real estate 19,135 16,995 14,869
Construction and land development 14,809 17,222 6,099
Consumer non-real estate:
Originated indirect paper 119,073 123,544 130,993
Purchased indirect paper 49,221 47,865 39,705
Other Consumer 19,715 19,086 22,900
Commercial/Agricultural non-real estate:
Commercial non-real estate 22,453 25,464 6,292
Agricultural non-real estate 14,647 15,224 3,718
Gross loans $574,248 $583,355 $448,080
Net deferred loan costs (fees) 191 $691 2,430
Total loans receivable $574,439 $584,046 $450,510

(1) Some acquired real estate loans were reclassified into the proper loan segment as a result of the operational conversion in August 2016.

Deposit Composition:

September 30,
2016
June 30,
2016
September 30,
2015
Non-interest bearing demand deposits $45,408 $37,555 $19,354
Interest bearing demand deposits 48,934 52,138 22,547
Savings accounts 52,153 49,906 29,395
Money market accounts 137,234 148,810 146,201
Certificate accounts 273,948 296,815 238,801
Total deposits $557,677 $585,224 $456,298

Average balances, Interest Yields and Rates:

Three months ended September 30,
2016
Three months ended September 30,
2015
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average interest earning assets:
Cash and cash equivalents $19,088 $19 0.40% $17,665 $10 0.22%
Loans receivable 580,151 6,784 4.65% 454,089 5,366 4.69%
Interest bearing deposits 745 4 2.14% 2,244 12 2.12%
Investment securities (1) 88,705 405 1.82% 81,088 369 1.80%
Non-marketable equity securities, at cost 5,034 54 4.27% 4,626 26 2.23%
Total interest earning assets $693,723 $7,266 4.17% $559,712 $5,783 4.10%
Average interest bearing liabilities:
Savings accounts $42,368 $17 0.16% $26,901 $8 0.12%
Demand deposits 52,868 85 0.64% 22,295 42 0.75%
Money market accounts 143,493 149 0.41% 147,146 165 0.44%
CD’s 265,357 878 1.32% 218,756 682 1.24%
IRA’s 30,237 83 1.09% 22,252 66 1.18%
Total deposits $534,323 $1,212 0.90% $437,350 $963 0.88%
FHLB advances and other borrowings 73,426 264 1.43% 51,891 154 1.18%
Total interest bearing liabilities $607,749 $1,476 0.97% $489,241 $1,117 0.91%
Net interest income $5,790 $4,666
Interest rate spread 3.20% 3.19%
Net interest margin 3.32% 3.31%
Average interest earning assets to average interest bearing liabilities 114.15% 114.40%

(1) For the 3 months ended September 30, 2016 and 2015, the average balance of the tax exempt investment securities, included in investment securities, were $31,819 and $22,648 respectively. The interest income on tax exempt securities is computed on a tax-equivalent basis using a tax rate of 34% for all periods presented.

Year ended September 30, 2016 Year ended September 30, 2015
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average interest earning assets:
Cash and cash equivalents $18,873 $70 0.37% $19,456 $47 0.24%
Loans receivable 504,972 23,407 4.64% 457,707 21,641 4.73%
Interest bearing deposits 2,378 47 1.98% 1,495 30 2.01%
Investment securities (1) 90,565 1,655 1.83% 73,282 1,307 1.78%
Non-marketable equity securities, at cost 4,783 172 3.60% 4,997 111 2.22%
Total interest earning assets $621,571 $25,351 4.08% $556,937 $23,136 4.15%
Average interest bearing liabilities:
Savings accounts $33,538 $43 0.13% $27,608 $30 0.11%
Demand deposits 36,878 240 0.65% 20,797 156 0.75%
Money market accounts 141,938 585 0.41% 143,194 632 0.44%
CD’s 239,363 3,037 1.27% 221,827 2,727 1.23%
IRA’s 25,854 295 1.14% 22,275 263 1.18%
Total deposits $477,571 $4,200 0.88% $435,701 $3,808 0.87%
FHLB advances and other borrowings 65,857 807 1.23% 52,199 630 1.21%
Total interest bearing liabilities $543,428 $5,007 0.92% $487,900 $4,438 0.91%
Net interest income $20,344 $18,698
Interest rate spread 3.16% 3.24%
Net interest margin 3.27% 3.36%
Average interest earning assets to average interest bearing liabilities 114.38% 114.15%

(1) For the 12 months ended September 30, 2016 and 2015, the average balance of the tax exempt investment securities, included in investment securities, were $29,232 and $15,019 respectively. The interest income on tax exempt securities is computed on a tax-equivalent basis using a tax rate of 34% for all periods presented.

CITIZENS COMMUNITY FEDERAL N.A.
Selected Capital Composition Highlights (unaudited)
September 30,
2016
June 30,
2016
September 30,
2015
To Be Well Capitalized Under
Prompt Corrective Action
Provisions
Total capital (to risk weighted assets) 14.0% 14.2% 16.5% 10.0%
Tier 1 capital (to risk weighted assets) 12.8% 13.0% 15.3% 8.0%
Common equity tier 1 capital (to risk weighted assets) 12.8% 13.0% 15.3% 6.5%
Tier 1 leverage ratio (to adjusted total assets) 9.3% 9.2% 10.4% 5.0%


Contact: Steve Bianchi, CEO (715)-836-9994

Source:Citizens Community Bancorp, Inc.