EAU CLAIRE, Wis., July 30, 2020 (GLOBE NEWSWIRE) -- Citizens Community Bancorp, Inc. (the “Company”) (Nasdaq: CZWI), the parent company of Citizens Community Federal N.A. (the “Bank” or “CCFBank”), today reported earnings of $3.1 million, or $0.28 per diluted share for the quarter ended June 30, 2020, compared to $2.6 million, or $0.23 per diluted share for the previous quarter ended March 31, 2020. Tangible book value per share (non-GAAP)5 was $10.31 at June 30, 2020 compared to $9.80 at March 31, 2020. This increase in tangible book value reflects the second quarter net income of $3.1 million, quarterly increase in accumulated other comprehensive income of $1.6 million and a reduction of intangibles of $0.9 million, including a reduction of $0.5 million from the sale of the Wells Insurance Agency. For the six months ended June 30, 2020, earnings totaled $5.7 million, or $0.51 per share compared to earnings of $5.1 million, or $0.46 per share for the six months ended June 30, 2019.
The Company’s second quarter operating results reflected: (1) improved asset quality, (2) interest income benefiting from fee accretion on SBA Payment Protection Program (“PPP”) originations and accretion from purchase credit impaired (“PCI”) loans, (3) a continued robust refinancing market which lead to all-time high gains on sale of mortgage loans, (4) higher loan loss provisions, primarily due to increasing our COVID-19-related qualitative allowance factor, (5) lower net interest margin related to the addition of low yielding SBA PPP loans and further reductions in short term interest rates, and (6) higher non-interest expenses due to increased impairment of mortgage servicing right assets and variable compensation on all-time high mortgage loan production.
“We were pleased with asset quality improvements evidenced by reductions in special mention and substandard loans and the accretion of interest on PCI loans. Deferments tapered off as the quarter progressed and ended the quarter at 15% of total loans. We found through our client outreach, focused on high risk segments and larger borrowers covering approximately $700 million in loans, that businesses remained optimistic but that more visibility on the reopening of the economy in their markets is needed for them to better assess future prospects.” said Stephen Bianchi, Chairman, President and Chief Executive Officer. “The development of our mortgage banking platform over the last three years and the team’s commitment to long hours allowed us to take advantage of heavy refinance activity and accelerating purchase market to recognize all-time high gains on sale and loan servicing income. During the COVID-19 shutdown, we evaluated our business and began the implementation of a restructuring plan which began with the sale of Wells Insurance Agency,” continued Bianchi.
June 30, 2020 Highlights: (as of or for the 3-month period ended June 30, 2020, compared to March 31, 2020)
- Non-performing assets declined to $17.4 million or 1.08% of total assets at June 30, 2020 from $19.2 million or 1.28% of total assets at March 31, 2020. With the payoff of certain purchased credit impaired loans in the second quarter of 2020, the Company realized loan accretion of approximately $0.3 million, which is reflected in interest income, and positively impacts net interest margin.
- SBA PPP loan production of $137 million increased loans receivable to $1.28 billion at June 30, 2020 compared to $1.18 billion at March 31, 2020. The strong SBA PPP loan growth was partially offset by reductions in the acquired loan portfolio of $33 million. Loan growth was also offset by principal reductions in the community banking portfolio of $7.2 million in residential mortgage loans and $4.4 million of principal repayments on indirect paper.
- The net interest margin, excluding purchase accounting related accretion, was 3.19% for the quarter ended June 30, 2020 compared to 3.27% for the previous quarter. This decrease was largely due to two components. First, the impact of modestly lower yielding SBA PPP loans during the second quarter reduced the net interest margin by 4 bp. Secondly, the reduction in interest income recognized on nonaccrual loan payoffs during the current quarter compared to the previous quarter reduced the net interest margin by 4 bp. Although asset yields decreased due to the swift first quarter reduction in interest rates, this impact was offset by lower liability yields, partially due to the increase in non-interest bearing checking deposit growth. While reducing the overall margin percentage, net interest income grew as the Company recognized $0.8 million interest income on the SBA PPP loans, which included $0.5 million of deferred origination fees on the SBA PPP loans.
- The reported net interest margin (“NIM”) decreased to 3.34% for the quarter ended June 30, 2020, from 3.64% for the quarter ended March 31, 2020. The decrease primarily related to lower realized non-accretable differences included in loan interest income, as payoffs of certain purchased credit impaired loans were higher in the prior quarter and to a lesser extent, the changes discussed above.
- The Bank recorded provision for loan losses of $1.75 million for the quarter ended June 30, 2020. In continued anticipation of a COVID-19 related adverse economic impact, management reserved $1.25 million increasing the allowance for loan losses allocated to COVID-19 to $2.00 million. Various “Stay-at-Home Orders” continued to result in temporary business closures, reduced operating capacity and uncertainty regarding potential future revenue and cash flows for certain businesses, including bank borrowers. Approximately $100 thousand of the provision was related to loan portfolio growth in the quarter. The remaining provision was related to the impact of net loan charge-offs of $212 thousand and necessary increases in specific and unallocated allowance for loan losses. In the first quarter of 2020, approximately $750 thousand of provision for loan losses was due to COVID-19, $600 thousand was due to loan growth with the remaining $650 thousand due to increases in specific and unallocated allowances, and net charge-offs of $485 thousand.
- Hotels and restaurants represent our portfolios’ two industry sectors most directly and adversely affected by the COVID-19 pandemic. These sectors loans totaled approximately $109 million and $42 million, respectively, at June 30, 2020.
- As of June 30, 2020, the Bank had approved $197 million of COVID-19 related modifications under Section 4013 of the CARES Act, primarily consisting of payment deferrals. Hotel industry sectors represent approximately $78 million of the approved deferrals and restaurant industry sectors represent $25 million. Approximately, $39 million of approved deferrals are in the non-owner occupied CRE sector, where many of these are to facilitate landlords providing payment deferrals for their tenants.
- Non-interest income increased to $5.0 million for the quarter ended June 30, 2020 from $3.6 million for the quarter ended March 31, 2020. The increase is largely due to higher gains on sale of mortgage loans, modestly offset by lower levels of deposit charges and loan fees and service charges. Higher customer deposit balances led to lower service charges on deposit accounts and muted loan demand resulted in lower loan fees and service charges. Nonrecurring gains of $252 thousand from the sale of Wells Insurance Agency and $131 thousand related to a private-mortgage backed security claim were recorded during the current quarter. The latter represents a supplement to the proceeds received in March 2017 from this private-mortgage backed security previously owned by the Bank and sold in 2011.
- Total non-interest expense was higher due in part to increased impairment on mortgage servicing rights (“MSR”) due to higher actual and forecasted prepayment rates, higher variable compensation related to higher mortgage loan originations and higher FDIC insurance expense as the final FDIC insurance credit was recognized in the first quarter. These expenses were partially offset by lower professional fees.
Bank and Company capital ratios exceeded regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at June 30, 2020:
| Citizens Community Federal N.A. | Citizens Community Bancorp, Inc. | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||
| Tier 1 leverage ratio (to adjusted total assets) | 9.9% | 7.4% | 5.0% | |||
| Tier 1 capital (to risk weighted assets) | 12.9% | 9.7% | 8.0% | |||
| Common equity tier 1 capital (to risk weighted assets) | 12.9% | 9.7% | 6.5% | |||
| Total capital (to risk weighted assets) | 14.0% | 12.1% | 10.0% |
Balance Sheet and Asset Quality
Total assets increased $101.8 million during the quarter to $1.61 billion at June 30, 2020 from $1.51 billion at March 31, 2020. The increase is due to the loan portfolio growth due to the origination of SBA PPP loans, partially offset by reductions in the acquired loan portfolio.
Total stockholders’ equity increased to $153 million at June 30, 2020 from $148 million one quarter earlier. This increase reflects second quarter net income of $3.1 million and the positive impact of unrealized gains on the available-for-sale securities portfolio reflected in other comprehensive income. Book value per share was $13.70 at June 30, 2020 compared to $13.27 at March 31, 2020. Tangible book value per share (non-GAAP)5 was $10.31 at June 30, 2020 compared to $9.80 at March 31, 2020. Tangible common equity (non-GAAP)5 as a percent of tangible assets (non-GAAP) was 7.33% at June 30, 2020 compared to 7.45% at March 31, 2020. Tangible common equity (non-GAAP)5 as a percent of tangible assets (non-GAAP) excluding SBA PPP loans was 8.03% at June 30, 2020.
The temporary deterioration in the valuation of the Bank’s investment in Trust Preferred Securities and Student Loan Paper realized in March due to market turmoil, moderated in June. At June 30, 2020, accumulated other comprehensive income increased to a $19 thousand unrealized gain compared to an unrealized loss of $1.6 million at March 31, 2020. “As we discussed last quarter, the unrealized loss at March 31, 2020 was considered to be a temporary event and was not related to long-term credit deterioration in the portfolios. Volatility in interest rates and pricing spreads will impact the market values of our available for sale investment portfolio securities,” said Jim Broucek, Executive Vice President and CFO.
Gross loans increased to $1.29 billion at June 30, 2020 from $1.19 billion primarily due to the origination of $137.3 million of SBA PPP loans. Both multi-family real estate and construction and land development loans grew during the quarter while all other loan categories reflected net loan reductions during the quarter.
The originated loan portfolio remained flat with the prior quarter at $790 million before the impact of the $137 million growth in SBA PPP loan originations. Acquired loans declined to $366.7 million in the current quarter from $399.6 million in the previous quarter. All acquired loans were marked to fair value as of the acquisition date.
The allowance for loan and lease losses increased to $13.4 million at June 30, 2020 representing 1.04% of loans receivable or 1.16% of loans receivable, excluding the 100% SBA guaranteed PPP loans. A significant portion of the current loan portfolio includes loans purchased through whole bank acquisitions resulting in purchased credit impairments which are not included in the allowance for loan losses. The allowance for loan and lease losses was $11.8 million at March 31, 2020, representing 1.00% of total loans. The increase in the allowance was primarily due to loan loss provisions largely associated with anticipated COVID-19 adverse economic impacts. In addition, the June 2020 provision included modest growth in unallocated and specific reserves and approximately $100 thousand related to loan growth. Net charge-offs decreased in this quarter to $212 thousand compared to $485 thousand for the previous quarter.
One of the Company’s strategic objectives for 2020 was to reduce nonperforming assets and classified assets.
Nonperforming assets decreased to $17.4 million or 1.08% of total assets at June 30, 2020 compared to $19.2 million or 1.28% of total assets at March 31, 2020. Classified assets decreased approximately $3 million during the quarter to $36.7 million. Included in classified assets are agricultural real estate loans of approximately $9.4 million at June 30, 2020 compared to $10.2 million at March 31, 2020. Agricultural operating loans decreased to $1.9 million at June 30, 2020 compared to $2.2 million at March 31, 2020.
The table below shows the decreases in substandard loans by quarter since the first impact of the F&M acquisition on September 30, 2019 levels. While special mention loans increased in the first quarter of 2020, the growth moderated in the second quarter of 2020.
| (in thousands) | ||||||||||||||||
| June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||
| Special mention loan balances | $ | 19,958 | $ | 19,387 | $ | 10,856 | $ | 12,959 | ||||||||
| Substandard loan balances | 35,911 | 38,393 | 39,892 | 38,527 | ||||||||||||
| Balances, end of period | $ | 55,869 | $ | 57,780 | $ | 50,748 | $ | 51,486 | ||||||||
Acquired loans represent much of the reduction in non-performing loans and classified loans. The table below shows the changes in the Bank’s non-accretable difference on purchased credit impaired loans. The second table below shows the changes in the Bank’s accretable loan discounts which were established at acquisition. The Bank has transferred non-accretable differences on purchased credit impaired loans to accretable discounts as collateral coverage improved sufficiently, due to a combination of principal paydowns and/or improving collateral positions. This transferred non-accretable difference to accretable discounts is accreted over the remaining maturity of the loan or until payoff, whichever is shorter.
Non-accretable differences:
| (in thousands) | ||||||||||||||||
| June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||
| Non-accretable difference, beginning of period | $ | 4,327 | $ | 6,290 | $ | 6,737 | $ | 3,889 | ||||||||
| Additions to non-accretable difference for acquired purchased credit impaired loans | — | — | (170 | ) | 2,898 | |||||||||||
| Non-accretable difference realized as interest from payoffs of purchased credit impaired loans | (196 | ) | (1,043 | ) | (271 | ) | (50 | ) | ||||||||
| Transfers from non-accretable difference to accretable discount. | (741 | ) | (669 | ) | — | — | ||||||||||
| Non-accretable difference used to reduce loan principal balance | (35 | ) | — | — | — | |||||||||||
| Non-accretable difference transferred to OREO due to loan foreclosure | — | (251 | ) | (6 | ) | — | ||||||||||
| Non-accretable difference, end of period | $ | 3,355 | $ | 4,327 | $ | 6,290 | $ | 6,737 | ||||||||
The table below provides the changes in accretable discount for acquired loans.
Accretable discounts:
| (in thousands) | ||||||||||||||||
| June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||
| Accretable discounts, beginning of period | $ | 3,637 | $ | 3,201 | $ | 3,435 | $ | 2,855 | ||||||||
| Additions to accretable discount for acquired performing loans | — | — | — | 814 | ||||||||||||
| Accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences | (99 | ) | — | — | — | |||||||||||
| Transfers from non-accretable difference to accretable discount | 741 | 669 | — | — | ||||||||||||
| Scheduled accretion | (247 | ) | (233 | ) | (234 | ) | (234 | ) | ||||||||
| Accretable discounts, end of period | $ | 4,032 | $ | 3,637 | $ | 3,201 | $ | 3,435 | ||||||||
Deposits increased $92 million to $1.27 billion at June 30, 2020 compared to $1.18 billion at March 31, 2020. Retail non-maturity deposits increased $35 million in the quarter and commercial non-maturity deposits increased $91 million in the quarter. Approximately $16 million of the commercial non-maturity deposits related to growth from customers who borrowed under the SBA PPP program and were depositors at the Bank. Approximately $3 million of the commercial non-maturity deposit growth was growth in deposit accounts for SBA PPP loan customers who did not have a lending or deposit relationship with the Bank prior to the pandemic. The strong non-maturity deposit growth allowed the Company to reduce the use of higher-cost brokered and institutional deposits by $23 million to $20 million at June 30, 2020. Additionally, retail certificates of deposit decreased by $11 million as the Company chose not to match higher rate local retail certificate competition.
Total stockholders’ equity increased to $153 million at June 30, 2020 from $148 million one quarter earlier. This increase reflects second quarter net income of $3.1 million and the positive impact of unrealized gains on the available-for-sale securities portfolio reflected in other comprehensive income. Book value per share was $13.70 at June 30, 2020 compared to $13.27 at March 31, 2020. Tangible book value per share (non-GAAP)5 was $10.31 at June 30, 2020 compared to $9.80 at March 31, 2020. Tangible common equity (non-GAAP)5 as a percent of tangible assets (non-GAAP) was 7.33% at June 30, 2020 compared to 7.45% at March 31, 2020.
The temporary deterioration in the valuation of the Bank’s investment in Trust Preferred Securities and Student Loan Paper realized in March due to market turmoil, moderated in June. At June 30, 2020, accumulated other comprehensive income increased to a $19 thousand unrealized gain compared to an unrealized loss of $1.6 million at March 31, 2020. “As we discussed last quarter, the unrealized loss at March 31, 2020 was considered to be a temporary event and was not related to long-term credit deterioration in the portfolios. Volatility in interest rates and pricing spreads will impact the market values of our available for sale investment portfolio securities,” said Jim Broucek, Executive Vice President and CFO.
Effective March 20, 2020, the Company suspended its stock repurchase plan. On July 23, 2020, the Board of Directors of the Company accelerated the time period the buyback authorization ended from September 30, 2020 to July 23, 2020.
Review of Operations
Net interest income was $12.3 million for the second quarter of 2020, compared to $12.7 million for the first quarter of 2020, and $10.1 million for the quarter ended June 30, 2019. The net interest margin decreased to 3.34% for the second quarter of 2020 compared to 3.64% in the preceding quarter and increased from 3.30% for the quarter ended June 30, 2019. For the quarter ended June 30, 2020, the decrease in net interest margin primarily related to lower realized non-accretable differences included in loan interest income, as payoffs of certain purchased credit impaired loans were higher in the prior quarter. Additionally, interest income recognized on nonaccrual loan payoffs from the previous quarter, decreased the interest margin in the current quarter by 0.04% and the impact of modestly lower yielding SBA PPP loans during the second quarter, lowered the net interest margin by an additional 0.04%. While asset yields decreased due to the swift first quarter reduction in interest rates, this impact was partially offset by lower liability yields, influenced by the increase in non-interest bearing checking deposit growth. While reducing the overall margin percentage, net interest income grew as the Company recognized $0.8 million interest income on the SBA PPP loans. This was largely due to the recognition of $0.5 million of deferred origination fees on the SBA PPP loans.
Net interest income and net interest margin with and without loan purchase accounting:
(in thousands, except yields and rates)
| Three months ended | |||||||||||||||||||||||||||
| June 30, 2020 | March 31, 2020 | December 31, 2019 | June 30, 2019 | ||||||||||||||||||||||||
| Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | ||||||||||||||||||||
| With loan purchase accretion | $ | 12,303 | 3.34 | % | $ | 12,671 | 3.64 | % | $ | 11,775 | 3.41 | % | $ | 10,083 | 3.30 | % | |||||||||||
| Less non-accretable difference realized as interest from payoff of purchased credit impaired loans | (196 | ) | (0.05 | )% | (1,043 | ) | (0.30 | )% | (271 | ) | (0.08 | )% | (56 | ) | (0.02 | )% | |||||||||||
| Less accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences | (99 | ) | (0.03 | )% | — | — | % | — | — | % | — | — | % | ||||||||||||||
| Less scheduled accretion interest | (247 | ) | (0.07 | )% | (233 | ) | (0.07 | )% | (233 | ) | (0.07 | )% | (194 | ) | (0.07 | )% | |||||||||||
| Without loan purchase accretion | $ | 11,761 | 3.19 | % | $ | 11,395 | 3.27 | % | $ | 11,271 | 3.26 | % | $ | 9,833 | 3.21 | % | |||||||||||
The yield on interest earning assets was 4.32% for the second quarter of 2020, compared to 4.85% the prior quarter, and 4.68% for the second quarter one year earlier. The decrease in the most recent quarter was largely due to a reduction in loan accretion from the payoff of purchased credit impaired loans. Furthermore, the addition of low yielding SBA PPP loans along with loans and investments repricing to lower rates, decreased the yields on interest earning assets. In the first quarter, the yield was elevated by the accretion of discounts associated with the payoff of purchased credit impaired loans. The cost of interest-bearing liabilities decreased to 1.16 % for the second quarter from 1.46% one quarter earlier and 1.63% one year earlier. The primary decrease in the second quarter funding costs was due to lower deposit costs as the Bank repriced various deposit products. For the six months ended June 30, 2020, the net interest margin was 3.48% compared to 3.36% for the same time period one year earlier largely due to the increase in loan accretion from the payoff of purchased credit impaired loans.
Loan loss provisions were $1.75 million for the quarter ended June 30, 2020 compared to $2.0 million for the quarter ended March 31, 2020 and $325 thousand one year earlier. Various businesses, as determined through our outreach, remained optimistic, but these businesses acknowledged more visibility on the reopening of the economy in their markets is needed for them to better assess their future prospects. This uncertainty, and until the full effect of the COVID-19 pandemic becomes clearer, will continue to impact future loan loss provisions. For the six months ended June 30, 2020, provisions for loan losses were $3.75 million compared to $1.55 million for the six months ended June 30, 2019.
Non-interest income was $5.0 million for the second quarter compared to $3.6 million the preceding quarter and $5.2 million the second quarter one year ago when a gain on branch sale of $2.3 million was recognized. The current quarter reflects $1.8 million in gains on the sale of loans versus $780 thousand the prior quarter and $573 thousand for the second quarter ended June 30, 2019. Loan servicing income also increased in the current quarter to $1.3 million from $685 thousand the prior quarter and $634 thousand one year earlier. Service charges on deposit accounts declined to $345 thousand during the current quarter from $560 thousand as more customers had larger deposit balances, due in part to SBA PPP funds deposited into their accounts. Loan fee and service charge income declined to $244 thousand for the quarter ended June 30, 2020 from $477 thousand the prior quarter due primarily to lower commercial customer activity. The Company sold the Wells Insurance Agency at the end of the quarter ended June 30, 2020, realizing a net gain of $252 thousand. With the sale of the Agency, the Company reduced intangible assets assigned to the customer list by $470 thousand. During the quarter ended June 30, 2020, the Company recognized $131 thousand of non-interest income related to a private-mortgage backed security claim. This distribution represents a supplement to the proceeds received in March 2017 from this private-mortgage backed security previously owned by the Bank and sold in 2011. For the six months ended June 30, 2020, total non-interest income was $8.6 million compared to $7.6 million for the same period one year earlier.
Total non-interest expense increased to $11.4 million for the second quarter of 2020, compared to $10.7 million in the prior quarter and $9.4 million for the quarter ended June 30, 2019. The increase in total non-interest expense for the current quarter relative to the previous quarter is primarily due to higher variable mortgage production compensation related to all-time high mortgage loan origination activity during the quarter. Additionally, data processing expenses increased modestly due to loan origination activity and larger deposit balances. Mortgage servicing expenses increased to $991 thousand for the quarter ended June 30, 2020 from $736 thousand the prior quarter due to MSR impairment of $650 thousand recognized in the second quarter compared to $480 thousand recognized in the first quarter, largely due to the impact of higher actual and forecasted prepayment rates. The increase in non-interest expenses also reflected increased FDIC insurance costs, offset by lower professional fees. For the six months ended June 30, 2020, total non-interest expenses were $22.1 million compared to $19.3 million for the six months ended June 30, 2019. The impact of the F&M acquisition on July 1, 2019 increased non-interest expense in 2020 in addition to the items discussed above.
Provisions for income taxes were $1.1 million for the second quarter ended June 30, 2020 compared to $937 thousand during the preceding quarter. For the six months ended June 30, 2020, provisions for income taxes were $2.0 million compared to $1.8 million for the six months ended June 30, 2019. The effective tax rate for all periods discussed was 26.5%.
These financial results are preliminary until the Form 10-Q is filed in August 2020.
About the Company
Citizens Community Bancorp, Inc. (NASDAQ: “CZWI”) is the holding company of the Bank, a national bank based in Altoona, Wisconsin, currently serving customers primarily in Wisconsin and Minnesota through 28 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas. The Bank offers traditional community banking services to businesses, Ag operators and consumers, including residential mortgage loans.
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 using forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “estimates,” “intend,” “may,” “preliminary,” “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 operations and business environment of the Company and the Bank. These uncertainties include the conditions in the financial markets and economic conditions generally; adverse impacts to the Company or Bank arising from the COVID-19 pandemic; 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 maintain our reputation; 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 Company or Bank; increases in FDIC insurance premiums or special assessments by the FDIC; disintermediation risk; our inability to obtain needed liquidity; risks related to the ongoing integration of F. & M. Bancorp. of Tomah, Inc. into the Company’s operations; our ability to successfully execute our acquisition growth strategy; risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits; 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; changes in federal or state tax laws; 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. Stockholders, 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 December 31, 2019 filed with the Securities and Exchange Commission (“SEC”) on March 10, 2020 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 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 non-GAAP financial measures, such as net income as adjusted, tangible book value per share and tangible common equity as a percent of tangible assets, which management believes may be helpful in understanding the Company’s results of operations or financial position and comparing results over different periods.
Net income as adjusted is a non-GAAP measure that eliminates the impact of certain 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, the gain on sale of branch deposits and fixed assets and the net impact of the Tax Cuts and Jobs Act of 2017, which management believes enhances investors’ ability to better understand the underlying business performance and trends related to core business activities. 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. Tangible book value per share and tangible common equity as a percent of tangible assets are non-GAAP measures that eliminate the impact of preferred stock equity, goodwill and intangible assets on our financial position. Management believes these measures are useful in assessing the strength of our financial position.
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.
Contact: Steve Bianchi, CEO
(715)-836-9994
CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
(in thousands, except shares and per share data)
| June 30, 2020 (unaudited) | March 31, 2020 (unaudited) | December 31, 2019 (audited) | June 30, 2019 (unaudited) | |||||||||||||
| Assets | ||||||||||||||||
| Cash and cash equivalents | $ | 39,581 | $ | 41,347 | $ | 55,840 | $ | 47,008 | ||||||||
| Other interest-bearing deposits | 3,752 | 4,006 | 4,744 | 5,980 | ||||||||||||
| Securities available for sale “AFS” | 162,716 | 163,435 | 180,119 | 154,760 | ||||||||||||
| Securities held to maturity “HTM” | 10,541 | 10,767 | 2,851 | 3,828 | ||||||||||||
| Equity securities with readily determinable fair value | 188 | 163 | 246 | 177 | ||||||||||||
| Other investments | 15,193 | 14,999 | 15,005 | 12,543 | ||||||||||||
| Loans receivable | 1,281,175 | 1,180,951 | 1,177,380 | 1,019,957 | ||||||||||||
| Allowance for loan losses | (13,373 | ) | (11,835 | ) | (10,320 | ) | (8,759 | ) | ||||||||
| Loans receivable, net | 1,267,802 | 1,169,116 | 1,167,060 | 1,011,198 | ||||||||||||
| Loans held for sale | 8,876 | 3,281 | 5,893 | 2,475 | ||||||||||||
| Mortgage servicing rights | 3,509 | 3,728 | 4,282 | 4,319 | ||||||||||||
| Office properties and equipment, net | 21,318 | 21,066 | 21,106 | 15,287 | ||||||||||||
| Accrued interest receivable | 5,855 | 4,822 | 4,738 | 4,452 | ||||||||||||
| Intangible assets | 6,293 | 7,175 | 7,587 | 6,828 | ||||||||||||
| Goodwill | 31,498 | 31,498 | 31,498 | 31,474 | ||||||||||||
| Foreclosed and repossessed assets, net | 734 | 1,432 | 1,460 | 1,387 | ||||||||||||
| Bank owned life insurance (“BOLI”) | 23,357 | 23,205 | 23,063 | 18,022 | ||||||||||||
| Escrow merger settlement proceeds | — | — | — | 20,555 | ||||||||||||
| Other assets | 5,787 | 5,124 | 5,757 | 8,127 | ||||||||||||
| TOTAL ASSETS | $ | 1,607,000 | $ | 1,505,164 | $ | 1,531,249 | $ | 1,348,420 | ||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Deposits | $ | 1,272,197 | $ | 1,180,055 | $ | 1,195,702 | $ | 1,015,459 | ||||||||
| Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) advances | 124,484 | 123,477 | 130,971 | 135,844 | ||||||||||||
| Other borrowings | 43,595 | 43,576 | 43,560 | 44,551 | ||||||||||||
| Other liabilities | 13,934 | 10,123 | 10,463 | 9,324 | ||||||||||||
| Total liabilities | 1,454,210 | 1,357,231 | 1,380,696 | 1,205,178 | ||||||||||||
| Stockholders’ equity: | ||||||||||||||||
| Common stock— $0.01 par value, authorized 30,000,000; 11,150,695; 11,151,009; 11,266,954 and 10,982,008 shares issued and outstanding, respectively | 112 | 112 | 113 | 110 | ||||||||||||
| Additional paid-in capital | 127,734 | 127,732 | 128,856 | 125,822 | ||||||||||||
| Retained earnings | 25,759 | 22,690 | 22,517 | 18,114 | ||||||||||||
| Unearned deferred compensation | (834 | ) | (992 | ) | (462 | ) | (757 | ) | ||||||||
| Accumulated other comprehensive income (loss) | 19 | (1,609 | ) | (471 | ) | (47 | ) | |||||||||
| Total stockholders’ equity | 152,790 | 147,933 | 150,553 | 143,242 | ||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,607,000 | $ | 1,505,164 | $ | 1,531,249 | $ | 1,348,420 | ||||||||
Note: Certain items previously reported were reclassified for consistency with the current presentation.
CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2020 (unaudited) | March 31, 2020 (unaudited) | June 30, 2019 (unaudited) | June 30, 2020 (unaudited) | June 30, 2019 (unaudited) | ||||||||||||||||
| Interest and dividend income: | ||||||||||||||||||||
| Interest and fees on loans | $ | 14,687 | $ | 15,459 | $ | 12,976 | $ | 30,146 | $ | 25,390 | ||||||||||
| Interest on investments | 1,199 | 1,449 | 1,360 | 2,648 | 2,664 | |||||||||||||||
| Total interest and dividend income | 15,886 | 16,908 | 14,336 | 32,794 | 28,054 | |||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Interest on deposits | 2,607 | 3,180 | 2,926 | 5,787 | 5,519 | |||||||||||||||
| Interest on FHLB and FRB borrowed funds | 448 | 508 | 913 | 956 | 1,574 | |||||||||||||||
| Interest on other borrowed funds | 528 | 549 | 414 | 1,077 | 816 | |||||||||||||||
| Total interest expense | 3,583 | 4,237 | 4,253 | 7,820 | 7,909 | |||||||||||||||
| Net interest income before provision for loan losses | 12,303 | 12,671 | 10,083 | 24,974 | 20,145 | |||||||||||||||
| Provision for loan losses | 1,750 | 2,000 | 325 | 3,750 | 1,550 | |||||||||||||||
| Net interest income after provision for loan losses | 10,553 | 10,671 | 9,758 | 21,224 | 18,595 | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Service charges on deposit accounts | 345 | 560 | 581 | 905 | 1,131 | |||||||||||||||
| Interchange income | 489 | 464 | 453 | 953 | 791 | |||||||||||||||
| Loan servicing income | 1,315 | 685 | 634 | 2,000 | 1,188 | |||||||||||||||
| Gain on sale of loans | 1,818 | 780 | 573 | 2,598 | 881 | |||||||||||||||
| Loan fees and service charges | 244 | 477 | 261 | 721 | 389 | |||||||||||||||
| Insurance commission income | 195 | 279 | 192 | 474 | 376 | |||||||||||||||
| Net gains on investment securities | 25 | 73 | 21 | 98 | 55 | |||||||||||||||
| Net gain on sale of branch | — | — | 2,295 | — | 2,295 | |||||||||||||||
| Net gain on sale of insurance agency | 252 | — | — | 252 | — | |||||||||||||||
| Settlement proceeds | 131 | — | — | 131 | — | |||||||||||||||
| Other | 199 | 285 | 228 | 484 | 464 | |||||||||||||||
| Total non-interest income | 5,013 | 3,603 | 5,238 | 8,616 | 7,570 | |||||||||||||||
| Non-interest expense: | ||||||||||||||||||||
| Compensation and related benefits | 5,908 | 5,435 | 4,604 | 11,343 | 9,310 | |||||||||||||||
| Occupancy | 899 | 1,006 | 866 | 1,905 | 1,820 | |||||||||||||||
| Office | 575 | 543 | 528 | 1,118 | 1,050 | |||||||||||||||
| Data processing | 1,024 | 996 | 868 | 2,020 | 1,855 | |||||||||||||||
| Amortization of intangible assets | 412 | 412 | 346 | 824 | 673 | |||||||||||||||
| Mortgage servicing rights expense | 991 | 736 | 306 | 1,727 | 497 | |||||||||||||||
| Advertising, marketing and public relations | 303 | 239 | 456 | 542 | 659 | |||||||||||||||
| FDIC premium assessment | 180 | 68 | 146 | 248 | 240 | |||||||||||||||
| Professional services | 353 | 604 | 575 | 957 | 1,400 | |||||||||||||||
| Gains on repossessed assets, net | (22 | ) | (68 | ) | (90 | ) | (90 | ) | (127 | ) | ||||||||||
| Other | 769 | 760 | 784 | 1,529 | 1,906 | |||||||||||||||
| Total non-interest expense | 11,392 | 10,731 | 9,389 | 22,123 | 19,283 | |||||||||||||||
| Income before provision for income taxes | 4,174 | 3,543 | 5,607 | 7,717 | 6,882 | |||||||||||||||
| Provision for income taxes | 1,105 | 937 | 1,500 | 2,042 | 1,822 | |||||||||||||||
| Net income attributable to common stockholders | $ | 3,069 | $ | 2,606 | $ | 4,107 | $ | 5,675 | $ | 5,060 | ||||||||||
| Per share information: | ||||||||||||||||||||
| Basic earnings | $ | 0.28 | $ | 0.23 | $ | 0.37 | $ | 0.51 | $ | 0.46 | ||||||||||
| Diluted earnings | $ | 0.28 | $ | 0.23 | $ | 0.37 | $ | 0.51 | $ | 0.46 | ||||||||||
| Cash dividends paid | $ | — | $ | 0.21 | $ | — | $ | 0.21 | $ | 0.20 | ||||||||||
| Book value per share at end of period | $ | 13.70 | $ | 13.27 | $ | 13.04 | $ | 13.70 | $ | 13.04 | ||||||||||
| Tangible book value per share at end of period (non-GAAP) | $ | 10.31 | $ | 9.80 | $ | 9.56 | $ | 10.31 | $ | 9.56 | ||||||||||
Note: Certain items previously reported were reclassified for consistency with the current presentation.
Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
(in thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||
| GAAP earnings before income taxes | $ | 4,174 | $ | 3,543 | $ | 5,607 | $ | 7,717 | $ | 6,882 | ||||||||||
| Merger related costs | — | — | 206 | — | 865 | |||||||||||||||
| Branch closure costs (1) | — | — | — | — | 15 | |||||||||||||||
| Audit and Financial Reporting (2) | — | — | — | — | 358 | |||||||||||||||
| Net gain on sale of branch (3) | — | — | (2,295 | ) | — | (2,295 | ) | |||||||||||||
| Net gain on sale of insurance agency (4) | (252 | ) | — | — | (252 | ) | — | |||||||||||||
| Settlement proceeds (5) | (131 | ) | — | — | (131 | ) | — | |||||||||||||
| Net income as adjusted before income taxes (6) | 3,791 | 3,543 | 3,518 | 7,334 | 5,825 | |||||||||||||||
| Provision for income tax on net income as adjusted (7) | 1,005 | 937 | 943 | 1,944 | 1,544 | |||||||||||||||
| Net income as adjusted after income taxes (non-GAAP) (6) | $ | 2,786 | $ | 2,606 | $ | 2,575 | $ | 5,390 | $ | 4,281 | ||||||||||
| GAAP diluted earnings per share, net of tax | $ | 0.28 | $ | 0.23 | $ | 0.37 | $ | 0.51 | $ | 0.46 | ||||||||||
| Merger related costs, net of tax | — | — | 0.01 | — | 0.06 | |||||||||||||||
| Branch closure costs, net of tax | — | — | — | — | — | |||||||||||||||
| Audit and Financial Reporting | — | — | — | — | 0.02 | |||||||||||||||
| Net gain on sale of branch | — | — | (0.15 | ) | — | (0.15 | ) | |||||||||||||
| Net gain on sale of insurance agency | (0.02 | ) | — | — | (0.02 | ) | — | |||||||||||||
| Settlement proceeds | (0.01 | ) | — | — | (0.01 | ) | — | |||||||||||||
| Diluted earnings per share, as adjusted, net of tax (non-GAAP) | $ | 0.25 | $ | 0.23 | $ | 0.23 | $ | 0.48 | $ | 0.39 | ||||||||||
| Average diluted shares outstanding | 11,150,785 | 11,219,660 | 10,994,470 | 11,183,216 | 10,988,990 | |||||||||||||||
(1) 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.
(2) Audit and financial reporting costs include additional audit and professional fees related to the change in our year end from September 30 to December 31, effective December 31, 2018.
(3) Gain on sale of branch resulted from the sale of our sole Michigan office in Rochester Hills.
(4) Gain on sale of insurance agency resulted from the sale of Wells Insurance Agency.
(5) Settlement proceeds includes litigation income from a JP Morgan Residential Mortgage Backed Security (RMBS) claim. This distribution represents a supplement to the proceeds received in March 2017 from a JP Morgan RMBS previously owned by the Bank and sold in 2011.
(6) Net income as adjusted is a non-GAAP measure that management believes enhances the market’s ability to assess the underlying business performance and trends related to core business activities.
(7) Provision for income tax on net income as adjusted is calculated at our effective tax rate for each respective period presented.
Nonperforming Assets
(in thousands, except ratios)
| June 30, 2020 and Three Months Ended | March 31, 2020 and Three Months Ended | December 31, 2019 and Three Months Ended | June 30, 2019 and Three Months Ended | |||||||||||||
| Nonperforming assets: | ||||||||||||||||
| Nonaccrual loans | ||||||||||||||||
| Commercial real estate | $ | 3,221 | $ | 3,505 | $ | 5,705 | $ | 1,732 | ||||||||
| Agricultural real estate | 5,979 | 7,162 | 7,568 | 5,717 | ||||||||||||
| Commercial and industrial (“C&I”) | 1,306 | 1,360 | 1,850 | 1,785 | ||||||||||||
| Agricultural operating | 1,496 | 1,739 | 1,702 | 1,915 | ||||||||||||
| Residential mortgage | 2,666 | 2,139 | 2,063 | 2,298 | ||||||||||||
| Consumer installment | 119 | 185 | 168 | 165 | ||||||||||||
| Total nonaccrual loans | $ | 14,787 | $ | 16,090 | $ | 19,056 | $ | 13,612 | ||||||||
| Accruing loans past due 90 days or more | 1,880 | 1,670 | 1,104 | 880 | ||||||||||||
| Total nonperforming loans (“NPLs”) | 16,667 | 17,760 | 20,160 | 14,492 | ||||||||||||
| Other real estate owned (“OREO”) | 692 | 1,412 | 1,429 | 1,354 | ||||||||||||
| Other collateral owned | 42 | 20 | 31 | 33 | ||||||||||||
| Total nonperforming assets (“NPAs”) | $ | 17,401 | $ | 19,192 | $ | 21,620 | $ | 15,879 | ||||||||
| Troubled Debt Restructurings (“TDRs”) | $ | 13,119 | $ | 12,088 | $ | 12,594 | $ | 10,000 | ||||||||
| Nonaccrual TDRs | $ | 6,992 | $ | 7,711 | $ | 7,198 | $ | 4,101 | ||||||||
| Average outstanding loan balance | $ | 1,266,273 | $ | 1,172,246 | $ | 1,136,330 | $ | 1,023,447 | ||||||||
| Loans, end of period | $ | 1,281,175 | $ | 1,180,951 | $ | 1,177,380 | $ | 1,019,957 | ||||||||
| Total assets, end of period | $ | 1,607,000 | $ | 1,505,164 | $ | 1,531,249 | $ | 1,348,420 | ||||||||
| Allowance for loan losses (“ALL”), at beginning of period | $ | 11,835 | $ | 10,320 | $ | 9,177 | $ | 8,707 | ||||||||
| Loans charged off: | ||||||||||||||||
| Commercial/Agricultural real estate | — | — | (156 | ) | (225 | ) | ||||||||||
| C&I/Agricultural operating | (246 | ) | (442 | ) | — | — | ||||||||||
| Residential mortgage | — | (27 | ) | (16 | ) | (23 | ) | |||||||||
| Consumer installment | (65 | ) | (51 | ) | (119 | ) | (48 | ) | ||||||||
| Total loans charged off | (311 | ) | (520 | ) | (291 | ) | (296 | ) | ||||||||
| Recoveries of loans previously charged off: | ||||||||||||||||
| Commercial/Agricultural real estate | 76 | — | — | 3 | ||||||||||||
| C&I/Agricultural operating | — | — | — | — | ||||||||||||
| Residential mortgage | 6 | 13 | 3 | — | ||||||||||||
| Consumer installment | 17 | 22 | 31 | 20 | ||||||||||||
| Total recoveries of loans previously charged off: | 99 | 35 | 34 | 23 | ||||||||||||
| Net loans charged off (“NCOs”) | (212 | ) | (485 | ) | (257 | ) | (273 | ) | ||||||||
| Additions to ALL via provision for loan losses charged to operations | 1,750 | 2,000 | 1,400 | 325 | ||||||||||||
| ALL, at end of period | $ | 13,373 | $ | 11,835 | $ | 10,320 | $ | 8,759 | ||||||||
| Ratios: | ||||||||||||||||
| ALL to NCOs (annualized) | 1,577.00 | % | 610.05 | % | 1,003.89 | % | 802.11 | % | ||||||||
| NCOs (annualized) to average loans | 0.07 | % | 0.17 | % | 0.09 | % | 0.11 | % | ||||||||
| ALL to total loans | 1.04 | % | 1.00 | % | 0.88 | % | 0.86 | % | ||||||||
| NPLs to total loans | 1.30 | % | 1.50 | % | 1.71 | % | 1.42 | % | ||||||||
| NPAs to total assets | 1.08 | % | 1.28 | % | 1.41 | % | 1.18 | % | ||||||||
Nonperforming Originated / Acquired Assets
(in thousands, except ratios)
| June 30, 2020 and Three Months Ended | March 31, 2020 and Three Months Ended | December 31, 2019 and Three Months Ended | June 30, 2019 and Three Months Ended | |||||||||||||
| Nonperforming assets: | ||||||||||||||||
| Originated nonperforming assets: | ||||||||||||||||
| Nonaccrual loans | $ | 3,951 | $ | 4,017 | $ | 4,285 | $ | 4,220 | ||||||||
| Accruing loans past due 90 days or more | 1,455 | 1,174 | 946 | 617 | ||||||||||||
| Total originated nonperforming loans (“NPL”) | 5,406 | 5,191 | 5,231 | 4,837 | ||||||||||||
| Other real estate owned (“OREO”) | 270 | 337 | 441 | 70 | ||||||||||||
| Other collateral owned | 42 | 20 | 28 | 33 | ||||||||||||
| Total originated nonperforming assets (“NPAs”) | $ | 5,718 | $ | 5,548 | $ | 5,700 | $ | 4,940 | ||||||||
| Acquired nonperforming assets: | ||||||||||||||||
| Nonaccrual loans | $ | 10,836 | $ | 12,073 | $ | 14,771 | $ | 9,392 | ||||||||
| Accruing loans past due 90 days or more | 425 | 496 | 158 | 263 | ||||||||||||
| Total acquired nonperforming loans (“NPL”) | 11,261 | 12,569 | 14,929 | 9,655 | ||||||||||||
| Other real estate owned (“OREO”) | 422 | 1,075 | 988 | 1,284 | ||||||||||||
| Other collateral owned | — | — | 3 | — | ||||||||||||
| Total acquired nonperforming assets (“NPAs”) | $ | 11,683 | $ | 13,644 | $ | 15,920 | $ | 10,939 | ||||||||
| Total nonperforming assets (“NPAs”) | $ | 17,401 | $ | 19,192 | $ | 21,620 | $ | 15,879 | ||||||||
| Loans, end of period | $ | 1,281,175 | $ | 1,180,951 | $ | 1,177,380 | $ | 1,019,957 | ||||||||
| Total assets, end of period | $ | 1,607,000 | $ | 1,505,164 | $ | 1,531,249 | $ | 1,348,420 | ||||||||
| Ratios: | ||||||||||||||||
| Originated NPLs to total loans | 0.42 | % | 0.44 | % | 0.44 | % | 0.47 | % | ||||||||
| Acquired NPLs to total loans | 0.88 | % | 1.06 | % | 1.27 | % | 0.95 | % | ||||||||
| Originated NPAs to total assets | 0.36 | % | 0.37 | % | 0.37 | % | 0.37 | % | ||||||||
| Acquired NPAs to total assets | 0.73 | % | 0.91 | % | 1.04 | % | 0.81 | % | ||||||||
Allowance for Loan Losses Percentages
(in thousands, except ratios)
| June 30, 2020 | March 31, 2020 | December 31, 2019 | June 30, 2019 | |||||||||||||
| Originated loans, net of deferred fees and costs | $ | 789,075 | $ | 789,346 | $ | 762,127 | $ | 684,217 | ||||||||
| C&I SBA PPP loans, net of deferred fees | 132,800 | — | — | — | ||||||||||||
| Acquired loans, net of unamortized discount | 359,300 | 391,605 | 415,253 | 335,740 | ||||||||||||
| Loans, end of period | $ | 1,281,175 | $ | 1,180,951 | $ | 1,177,380 | $ | 1,019,957 | ||||||||
| C&I SBA PPP loans, net of deferred fees | (132,800 | ) | — | — | — | |||||||||||
| Loans, net of C&I SBA PPP loans and deferred fees | $ | 1,148,375 | $ | 1,180,951 | $ | 1,177,380 | $ | 1,019,957 | ||||||||
| Allowance for loans losses allocated to originated loans | $ | 12,109 | $ | 10,850 | $ | 9,551 | $ | 8,284 | ||||||||
| Allowance for loan losses allocated to other loans | 1,264 | 985 | 769 | 475 | ||||||||||||
| Allowance for loan losses | $ | 13,373 | $ | 11,835 | $ | 10,320 | $ | 8,759 | ||||||||
| ALL as a percentage of loans, end of period | 1.04 | % | 1.00 | % | 0.88 | % | 0.86 | % | ||||||||
| ALL as a percentage of loans, net of C&I SBA PPP loans and deferred fees | 1.16 | % | 1.00 | % | 0.88 | % | 0.86 | % | ||||||||
| ALL allocated to originated loans as a percentage of originated loans, net of deferred fees and costs | 1.53 | % | 1.37 | % | 1.25 | % | 1.21 | % | ||||||||
Nonaccrual Loans Rollforward
(in thousands)
| Quarter Ended | ||||||||||||||||
| June 30, 2020 | March 31, 2020 | December 31, 2019 | June 30, 2019 | |||||||||||||
| Balance, beginning of period | $ | 16,090 | $ | 19,056 | $ | 19,022 | $ | 9,871 | ||||||||
| Additions | 1,907 | 1,811 | 2,641 | 7,405 | ||||||||||||
| Acquired nonaccrual loans | — | — | — | — | ||||||||||||
| Charge offs | (175 | ) | (452 | ) | (198 | ) | (262 | ) | ||||||||
| Transfers to OREO | — | (1,100 | ) | (425 | ) | (236 | ) | |||||||||
| Return to accrual status | (1,702 | ) | (120 | ) | (14 | ) | (149 | ) | ||||||||
| Payments received | (760 | ) | (2,824 | ) | (1,957 | ) | (2,612 | ) | ||||||||
| Other, net | (573 | ) | (281 | ) | (13 | ) | (405 | ) | ||||||||
| Balance, end of period | $ | 14,787 | $ | 16,090 | $ | 19,056 | $ | 13,612 | ||||||||
Other Real Estate Owned Rollforward
(in thousands)
| Quarter Ended | ||||||||||||||||
| June 30, 2020 | March 31, 2020 | December 31, 2019 | June 30, 2019 | |||||||||||||
| Balance, beginning of period | $ | 1,412 | $ | 1,429 | $ | 1,348 | $ | 2,071 | ||||||||
| Loans transferred in | — | 988 | 495 | 236 | ||||||||||||
| Sales | (681 | ) | (965 | ) | (378 | ) | (958 | ) | ||||||||
| Write-downs | (151 | ) | (49 | ) | (64 | ) | (23 | ) | ||||||||
| Other, net | 112 | 9 | 28 | 28 | ||||||||||||
| Balance, end of period | $ | 692 | $ | 1,412 | $ | 1,429 | $ | 1,354 | ||||||||
Troubled Debt Restructurings in Accrual Status
(in thousands, except number of modifications)
| June 30, 2020 | March 31, 2020 | December 31, 2019 | June 30, 2019 | |||||||||||||||||||||||||
| Number of Modifications | Recorded Investment | Number of Modifications | Recorded Investment | Number of Modifications | Recorded Investment | Number of Modifications | Recorded Investment | |||||||||||||||||||||
| Troubled debt restructurings: Accrual Status | ||||||||||||||||||||||||||||
| Commercial/Agricultural real estate | 19 | $ | 1,885 | 13 | $ | 1,125 | 14 | $ | 1,730 | 14 | $ | 2,202 | ||||||||||||||||
| C&I/Agricultural Operating | 5 | 1,199 | 1 | 9 | 2 | 366 | 4 | 478 | ||||||||||||||||||||
| Residential mortgage | 39 | 2,981 | 38 | 3,174 | 40 | 3,233 | 39 | 3,137 | ||||||||||||||||||||
| Consumer installment | 8 | 62 | 8 | 69 | 7 | 67 | 11 | 82 | ||||||||||||||||||||
| Total loans | 71 | $ | 6,127 | 60 | $ | 4,377 | 63 | $ | 5,396 | 68 | $ | 5,899 | ||||||||||||||||
| Loan Composition (in thousands) | June 30, 2020 | March 31, 2020 | December 31, 2019 | June 30, 2019 | ||||||||||||
| Originated Loans: | ||||||||||||||||
| Commercial/Agricultural real estate: | ||||||||||||||||
| Commercial real estate | $ | 314,390 | $ | 313,147 | $ | 302,546 | $ | 239,051 | ||||||||
| Agricultural real estate | 35,138 | 35,652 | 34,026 | 34,927 | ||||||||||||
| Multi-family real estate | 90,617 | 89,474 | 71,877 | 75,664 | ||||||||||||
| Construction and land development | 94,856 | 81,685 | 71,467 | 35,030 | ||||||||||||
| C&I/Agricultural operating: | ||||||||||||||||
| Commercial and industrial | 80,369 | 85,249 | 89,730 | 75,186 | ||||||||||||
| Agricultural operating | 25,813 | 22,700 | 20,717 | 21,776 | ||||||||||||
| Residential mortgage: | ||||||||||||||||
| Residential mortgage | 95,664 | 102,854 | 108,619 | 117,585 | ||||||||||||
| Purchased HELOC loans | 6,861 | 7,601 | 8,407 | 11,125 | ||||||||||||
| Consumer installment: | ||||||||||||||||
| Originated indirect paper | 32,031 | 36,414 | 39,585 | 47,391 | ||||||||||||
| Purchased indirect paper | — | — | — | 11,155 | ||||||||||||
| Other consumer | 14,175 | 15,080 | 15,546 | 15,229 | ||||||||||||
| Originated loans before C&I SBA PPP loans | 789,914 | 789,856 | 762,520 | 684,119 | ||||||||||||
| C&I SBA PPP loans | 137,330 | — | $ | — | — | |||||||||||
| Total originated loans | $ | 927,244 | $ | 789,856 | $ | 762,520 | $ | 684,119 | ||||||||
| Acquired Loans: | ||||||||||||||||
| Commercial/Agricultural real estate: | ||||||||||||||||
| Commercial real estate | $ | 195,335 | $ | 207,003 | $ | 211,913 | $ | 135,390 | ||||||||
| Agricultural real estate | 43,054 | 47,766 | 51,337 | 57,210 | ||||||||||||
| Multi-family real estate | 13,022 | 13,509 | 15,131 | 7,759 | ||||||||||||
| Construction and land development | 15,276 | 14,233 | 14,943 | 17,041 | ||||||||||||
| C&I/Agricultural operating: | ||||||||||||||||
| Commercial and industrial | 29,477 | 36,757 | 44,004 | 32,568 | ||||||||||||
| Agricultural operating | 12,124 | 15,240 | 17,063 | 15,051 | ||||||||||||
| Residential mortgage: | ||||||||||||||||
| Residential mortgage | 56,760 | 62,957 | 67,713 | 74,305 | ||||||||||||
| Consumer installment: | ||||||||||||||||
| Other consumer | 1,639 | 2,104 | 2,640 | 3,160 | ||||||||||||
| Total acquired loans | $ | 366,687 | $ | 399,569 | $ | 424,744 | $ | 342,484 | ||||||||
| Total Loans: | ||||||||||||||||
| Commercial/Agricultural real estate: | ||||||||||||||||
| Commercial real estate | $ | 509,725 | $ | 520,150 | $ | 514,459 | $ | 374,441 | ||||||||
| Agricultural real estate | 78,192 | 83,418 | 85,363 | 92,137 | ||||||||||||
| Multi-family real estate | 103,639 | 102,983 | 87,008 | 83,423 | ||||||||||||
| Construction and land development | 110,132 | 95,918 | 86,410 | 52,071 | ||||||||||||
| C&I/Agricultural operating: | ||||||||||||||||
| Commercial and industrial | 109,846 | 122,006 | 133,734 | 107,754 | ||||||||||||
| Agricultural operating | 37,937 | 37,940 | 37,780 | 36,827 | ||||||||||||
| Residential mortgage: | ||||||||||||||||
| Residential mortgage | 152,424 | 165,811 | 176,332 | 191,890 | ||||||||||||
| Purchased HELOC loans | 6,861 | 7,601 | 8,407 | 11,125 | ||||||||||||
| Consumer installment: | ||||||||||||||||
| Originated indirect paper | 32,031 | 36,414 | 39,585 | 47,391 | ||||||||||||
| Purchased indirect paper | — | — | — | 11,155 | ||||||||||||
| Other consumer | 15,814 | 17,184 | 18,186 | 18,389 | ||||||||||||
| Gross loans before C&I SBA PPP loans | 1,156,601 | 1,189,425 | 1,187,264 | 1,026,603 | ||||||||||||
| C&I SBA PPP loans | 137,330 | — | — | — | ||||||||||||
| Gross loans | $ | 1,293,931 | $ | 1,189,425 | $ | 1,187,264 | $ | 1,026,603 | ||||||||
| Unearned net deferred fees and costs and loans in process | (5,369 | ) | (510 | ) | (393 | ) | 98 | |||||||||
| Unamortized discount on acquired loans | (7,387 | ) | (7,964 | ) | (9,491 | ) | (6,744 | ) | ||||||||
| Total loans receivable | $ | 1,281,175 | $ | 1,180,951 | $ | 1,177,380 | $ | 1,019,957 | ||||||||
Deposit Composition
(in thousands)
| June 30, 2020 | March 31, 2020 | December 31, 2019 | June 30, 2019 | |||||||||||||
| Non-interest bearing demand deposits | $ | 223,536 | $ | 150,139 | $ | 168,157 | $ | 140,130 | ||||||||
| Interest bearing demand deposits | 270,116 | 242,824 | 223,102 | 180,001 | ||||||||||||
| Savings accounts | 185,816 | 161,038 | 156,599 | 148,005 | ||||||||||||
| Money market accounts | 242,536 | 243,715 | 246,430 | 155,964 | ||||||||||||
| Certificate accounts | 350,193 | 382,339 | 401,414 | 391,359 | ||||||||||||
| Total deposits | $ | 1,272,197 | $ | 1,180,055 | $ | 1,195,702 | $ | 1,015,459 | ||||||||
Average balances, Interest Yields and Rates
(in thousands, except yields and rates)
| Three months June 30, 2020 | Three months ended March 31, 2020 | Three months June 30, 2019 | |||||||||||||||||||||||||||||||
| Average Balance | Interest Income/ Expense | Average Yield/ Rate (1) | Average Balance | Interest Income/ Expense | Average Yield/ Rate (1) | Average Balance | Interest Income/ Expense | Average Yield/ Rate (1) | |||||||||||||||||||||||||
| Average interest earning assets: | |||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 19,995 | $ | 5 | 0.10 | % | $ | 31,069 | $ | 118 | 1.53 | % | $ | 30,076 | $ | 171 | 2.28 | % | |||||||||||||||
| Loans receivable | 1,266,273 | 14,687 | 4.66 | % | 1,172,246 | 15,459 | 5.30 | % | 1,023,447 | 12,976 | 5.09 | % | |||||||||||||||||||||
| Interest bearing deposits | 3,788 | 23 | 2.44 | % | 4,362 | 27 | 2.49 | % | 5,967 | 35 | 2.35 | % | |||||||||||||||||||||
| Investment securities (1) | 174,875 | 988 | 2.27 | % | 179,287 | 1,131 | 2.54 | % | 158,991 | 996 | 2.60 | % | |||||||||||||||||||||
| Other investments | 15,160 | 183 | 4.86 | % | 15,006 | 173 | 4.64 | % | 12,114 | 158 | 5.23 | % | |||||||||||||||||||||
| Total interest earning assets (1) | $ | 1,480,091 | $ | 15,886 | 4.32 | % | $ | 1,401,970 | $ | 16,908 | 4.85 | % | $ | 1,230,595 | $ | 14,336 | 4.68 | % | |||||||||||||||
| Average interest bearing liabilities: | |||||||||||||||||||||||||||||||||
| Savings accounts | $ | 171,285 | $ | 99 | 0.23 | % | $ | 154,596 | $ | 151 | 0.39 | % | $ | 147,456 | $ | 149 | 0.41 | % | |||||||||||||||
| Demand deposits | 267,429 | 260 | 0.39 | % | 234,822 | 375 | 0.64 | % | 191,858 | 383 | 0.80 | % | |||||||||||||||||||||
| Money market accounts | 243,264 | 350 | 0.58 | % | 236,470 | 609 | 1.04 | % | 164,402 | 448 | 1.09 | % | |||||||||||||||||||||
| CD’s | 328,543 | 1,706 | 2.09 | % | 354,095 | 1,846 | 2.10 | % | 336,253 | 1,765 | 2.11 | % | |||||||||||||||||||||
| IRA’s | 42,117 | 192 | 1.83 | % | 42,695 | 199 | 1.87 | % | 40,688 | 181 | 1.78 | % | |||||||||||||||||||||
| Total deposits | $ | 1,052,638 | $ | 2,607 | 1.00 | % | $ | 1,022,678 | $ | 3,180 | 1.25 | % | $ | 880,657 | $ | 2,926 | 1.33 | % | |||||||||||||||
| FHLB advances and other borrowings | 186,191 | 976 | 2.11 | % | 146,810 | 1,057 | 2.90 | % | 165,733 | 1,327 | 3.21 | % | |||||||||||||||||||||
| Total interest bearing liabilities | $ | 1,238,829 | $ | 3,583 | 1.16 | % | $ | 1,169,488 | $ | 4,237 | 1.46 | % | $ | 1,046,390 | $ | 4,253 | 1.63 | % | |||||||||||||||
| Net interest income | $ | 12,303 | $ | 12,671 | $ | 10,083 | |||||||||||||||||||||||||||
| Interest rate spread | 3.15 | % | 3.39 | % | 3.05 | % | |||||||||||||||||||||||||||
| Net interest margin (1) | 3.34 | % | 3.64 | % | 3.30 | % | |||||||||||||||||||||||||||
| Average interest earning assets to average interest bearing liabilities | 1.19 | 1.20 | 1.18 | ||||||||||||||||||||||||||||||
(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019. The FTE adjustment to net interest income included in the rate calculations totaled $0, $0 and $35 thousand for the three months ended June 30, 2020, March 31, 2020, and June 30, 2019, respectively.
| Six months ended June 30, 2020 | Six months ended June 30, 2019 | |||||||||||||||||||||
| Average Balance | Interest Income/ Expense | Average Yield/ Rate (1) | Average Balance | Interest Income/ Expense | Average Yield/ Rate (1) | |||||||||||||||||
| Average interest earning assets: | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 25,532 | $ | 123 | 0.97 | % | $ | 28,045 | $ | 339 | 2.44 | % | ||||||||||
| Loans receivable | 1,219,905 | 30,146 | 4.97 | % | 1,010,113 | 25,390 | 5.07 | % | ||||||||||||||
| Interest bearing deposits | 4,075 | 50 | 2.47 | % | 6,440 | 74 | 2.32 | % | ||||||||||||||
| Investment securities (1) | 177,081 | 2,119 | 2.41 | % | 157,574 | 1,943 | 2.59 | % | ||||||||||||||
| Other investments | 15,083 | 356 | 4.75 | % | 11,244 | 308 | 5.52 | % | ||||||||||||||
| Total interest earning assets (1) | $ | 1,441,676 | $ | 32,794 | 4.57 | % | $ | 1,213,416 | $ | 28,054 | 4.68 | % | ||||||||||
| Average interest bearing liabilities: | ||||||||||||||||||||||
| Savings accounts | $ | 162,941 | $ | 250 | 0.31 | % | $ | 155,792 | $ | 324 | 0.42 | % | ||||||||||
| Demand deposits | 251,125 | 635 | 0.51 | % | 190,603 | 737 | 0.78 | % | ||||||||||||||
| Money market accounts | 239,867 | 959 | 0.80 | % | 158,683 | 831 | 1.06 | % | ||||||||||||||
| CD’s | 341,319 | 3,552 | 2.09 | % | 331,543 | 3,293 | 2.00 | % | ||||||||||||||
| IRA’s | 42,406 | 391 | 1.85 | % | 40,272 | 334 | 1.67 | % | ||||||||||||||
| Total deposits | $ | 1,037,658 | $ | 5,787 | 1.12 | % | $ | 876,893 | $ | 5,519 | 1.27 | % | ||||||||||
| FHLB advances and other borrowings | 180,927 | 2,033 | 2.26 | % | 145,986 | 2,390 | 3.30 | % | ||||||||||||||
| Total interest bearing liabilities | $ | 1,218,585 | $ | 7,820 | 1.29 | % | $ | 1,022,879 | $ | 7,909 | 1.56 | % | ||||||||||
| Net interest income | $ | 24,974 | $ | 20,145 | ||||||||||||||||||
| Interest rate spread | 3.28 | % | 3.12 | % | ||||||||||||||||||
| Net interest margin (1) | 3.48 | % | 3.36 | % | ||||||||||||||||||
| Average interest earning assets to average interest bearing liabilities | 1.18 | 1.19 | ||||||||||||||||||||
(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the six months ended June 30, 2020 and June 30, 2019. The FTE adjustment to net interest income included in the rate calculations totaled $1 thousand and $77 thousand for the six months ended June 30, 2020 and June 30, 2019, respectively.
The following table reports key financial metric ratios based on a net income and net income as adjusted basis:
| Three Months Ended | Twelve Months Ended | |||||||||||
| June 30, 2020 | March 31, 2020 | June 30, 2019 | December 31, 2019 | |||||||||
| Ratios based on net income: | ||||||||||||
| Return on average assets (annualized) | 0.78 | % | 0.69 | % | 1.23 | % | 0.68 | % | ||||
| Return on average equity (annualized) | 8.23 | % | 7.01 | % | 11.72 | % | 6.59 | % | ||||
| Efficiency ratio (non-GAAP) | 66 | % | 66 | % | 61 | % | 73 | % | ||||
| Net interest margin with loan purchase accretion | 3.36 | % | 3.64 | % | 3.30 | % | 3.37 | % | ||||
| Net interest margin without loan purchase accretion | 3.21 | % | 3.27 | % | 3.21 | % | 3.26 | % | ||||
| Ratios based on net income as adjusted (non-GAAP): | ||||||||||||
| Return on average assets as adjusted2 (annualized) | 0.71 | % | 0.69 | % | 0.77 | % | 0.76 | % | ||||
| Return on average equity as adjusted3 (annualized) | 7.47 | % | 7.01 | % | 7.35 | % | 7.44 | % | ||||
| Efficiency ratio4 (non-GAAP) | 67 | % | 66 | % | 70 | % | 68 | % | ||||
CITIZENS COMMUNITY FEDERAL N.A.
Selected Capital Composition Highlights
| June 30, 2020 (unaudited) | March 31, 2020 (unaudited) | December 31, 2019 (audited) | June 30, 2019 (unaudited) | To Be Well Capitalized Under Prompt Corrective Action Provisions | |||||||
| Tier 1 leverage ratio (to adjusted total assets) | 9.9% | 10.3% | 10.4% | 9.7% | 5.0% | ||||||
| Tier 1 capital (to risk weighted assets) | 12.9% | 12.6% | 12.2% | 12.2% | 8.0% | ||||||
| Common equity tier 1 capital (to risk weighted assets) | 12.9% | 12.6% | 12.2% | 12.2% | 6.5% | ||||||
| Total capital (to risk weighted assets) | 14.0% | 13.6% | 13.1% | 13.1% | 10.0% | ||||||
Reconciliation of Return on Average Assets as Adjusted (non-GAAP)
(in thousands, except ratios)
| Three Months Ended | ||||||||||||
| June 30, 2020 | March 31, 2020 | June 30, 2019 | ||||||||||
| GAAP earnings after income taxes | $ | 3,069 | $ | 2,606 | $ | 4,107 | ||||||
| Net income as adjusted after income taxes (non-GAAP) (1) | $ | 2,786 | $ | 2,606 | $ | 2,575 | ||||||
| Average assets | $ | 1,585,421 | $ | 1,516,957 | $ | 1,334,860 | ||||||
| Return on average assets (annualized) | 0.78 | % | 0.69 | % | 1.23 | % | ||||||
| Return on average assets as adjusted (non-GAAP) (annualized) | 0.71 | % | 0.69 | % | 0.77 | % | ||||||
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of Return on Average Equity as Adjusted (non-GAAP)
(in thousands, except ratios)
| Three Months Ended | ||||||||||||
| June 30, 2020 | March 31, 2020 | June 30, 2019 | ||||||||||
| GAAP earnings after income taxes | $ | 3,069 | $ | 2,606 | $ | 4,107 | ||||||
| Net income as adjusted after income taxes (non-GAAP) (1) | $ | 2,786 | $ | 2,606 | $ | 2,575 | ||||||
| Average equity | $ | 149,973 | $ | 149,441 | $ | 140,561 | ||||||
| Return on average equity (annualized) | 8.23 | % | 7.01 | % | 11.72 | % | ||||||
| Return on average equity as adjusted (non-GAAP) (annualized) | 7.47 | % | 7.01 | % | 7.35 | % | ||||||
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of Efficiency Ratio as Adjusted (non-GAAP)
(in thousands, except ratios)
| Three Months Ended | ||||||||||||
| June 30, 2020 | March 31, 2020 | June 30, 2019 | ||||||||||
| Non-interest expense (GAAP) | $ | 11,392 | $ | 10,731 | $ | 9,389 | ||||||
| Merger related Costs (1) | — | — | (206 | ) | ||||||||
| Branch Closure Costs (1) | — | — | — | |||||||||
| Audit and financial reporting (1) | — | — | — | |||||||||
| Non-interest expense as adjusted (non-GAAP) | 11,392 | 10,731 | 9,183 | |||||||||
| Non-interest income | 5,013 | 3,603 | 5,238 | |||||||||
| Net interest margin | 12,303 | 12,671 | 10,083 | |||||||||
| Efficiency ratio denominator (GAAP) | 17,316 | 16,274 | 15,321 | |||||||||
| Net gain on sale of branch (1) | — | — | (2,295 | ) | ||||||||
| Net gain on sale of insurance agency (1) | (252 | ) | — | — | ||||||||
| Settlement proceeds (1) | (131 | ) | — | — | ||||||||
| Efficiency ratio denominator (non-GAAP) | 16,933 | 16,274 | 13,026 | |||||||||
| Efficiency ratio (GAAP) | 66 | % | 66 | % | 61 | % | ||||||
| Efficiency ratio (non-GAAP) | 67 | % | 66 | % | 70 | % | ||||||
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of tangible book value per share (non-GAAP)
(in thousands, except per share data)
| Tangible book value per share at end of period | June 30, 2020 | March 31, 2020 | June 30, 2019 | |||||||||
| Total stockholders’ equity | $ | 152,790 | $ | 147,933 | $ | 143,242 | ||||||
| Less: Goodwill | (31,498 | ) | (31,498 | ) | (31,474 | ) | ||||||
| Less: Intangible assets | (6,293 | ) | (7,175 | ) | (6,828 | ) | ||||||
| Tangible common equity (non-GAAP) | $ | 114,999 | $ | 109,260 | $ | 104,940 | ||||||
| Ending common shares outstanding | 11,150,695 | 11,151,009 | 10,982,008 | |||||||||
| Book value per share | $ | 13.70 | $ | 13.27 | $ | 13.04 | ||||||
| Tangible book value per share (non-GAAP) | $ | 10.31 | $ | 9.80 | $ | 9.56 | ||||||
Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)
(in thousands, except ratios)
| Tangible common equity as a percent of tangible assets at end of period | June 30, 2020 | March 31, 2020 | June 30, 2019 | |||||||||
| Total stockholders’ equity | $ | 152,790 | $ | 147,933 | $ | 143,242 | ||||||
| Less: Goodwill | (31,498 | ) | (31,498 | ) | (31,474 | ) | ||||||
| Less: Intangible assets | (6,293 | ) | (7,175 | ) | (6,828 | ) | ||||||
| Tangible common equity (non-GAAP) | $ | 114,999 | $ | 109,260 | $ | 104,940 | ||||||
| Total Assets | $ | 1,607,000 | $ | 1,505,164 | $ | 1,348,420 | ||||||
| Less: Goodwill | (31,498 | ) | (31,498 | ) | (31,474 | ) | ||||||
| Less: Intangible assets | (6,293 | ) | (7,175 | ) | (6,828 | ) | ||||||
| Tangible Assets (non-GAAP) | $ | 1,569,209 | $ | 1,466,491 | $ | 1,310,118 | ||||||
| Less C&I SBA PPP Loans | (137,330 | ) | — | — | ||||||||
| Tangible Assets, excluding C&I SBA PPP Loans (non-GAAP) | $ | 1,431,879 | $ | 1,466,491 | $ | 1,310,118 | ||||||
| Total stockholders’ equity to total assets ratio | 9.51 | % | 9.83 | % | 10.62 | % | ||||||
| Tangible common equity as a percent of tangible assets (non-GAAP) | 7.33 | % | 7.45 | % | 8.01 | % | ||||||
| Tangible common equity as a percent of tangible assets, excluding C&I SBA PPP Loans (non-GAAP) | 8.03 | % | 7.45 | % | 8.01 | % | ||||||
1Net income as adjusted 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. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)”.
2Return on average assets as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends relative to average assets. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Return on Average Assets as Adjusted (non-GAAP)”.
3Return on average equity as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends relative to average equity. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Return on Average Equity as Adjusted (non-GAAP)”.
4The efficiency ratio as adjusted (non-GAAP) is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and the Company’s ability to use what it has to generate the most profit possible for shareholders relative to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Efficiency Ratio as Adjusted (non-GAAP)”.
5Tangible book value per share and tangible common equity as a percent of tangible assets are non-GAAP measure that management believes enhances investors’ ability to better understand the Company’s financial position. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of tangible book value per share (non-GAAP)” and “Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)”.