8-K: Citizens Community Bancorp Reports Q1 2025 Earnings: Book Value and Tangible Book Value Per Share Increase

Citizens Community Bancorp, Inc. announced first quarter 2025 earnings of $0.32 per share, with book value per share up 8% and tangible book value per share up 10% since March 31, 2024.

Summary

• Citizens Community Bancorp, Inc. reported earnings of $3.2 million, or $0.32 per diluted share, for the first quarter ended March 31, 2025.
• This compares to $2.7 million, or $0.27 per diluted share, for the fourth quarter ended December 31, 2024, and $4.1 million, or $0.39 per diluted share, for the quarter ended March 31, 2024.
• Net interest income decreased by $0.1 million from the previous quarter to $11.6 million, primarily due to two fewer days in the quarter, offset by a 6 basis point increase in net interest margin.
• Book value per share improved to $18.02 at March 31, 2025, from $17.94 at December 31, 2024, and $16.61 at March 31, 2024.
• Tangible book value per share increased to $14.79 at March 31, 2025, from $14.69 at December 31, 2024, and $13.43 at March 31, 2024.
• Total deposits increased by $35.5 million during the quarter to $1.524 billion, driven by seasonal growth in municipal deposits.
• Loans receivable decreased by $16.3 million during the quarter to $1.353 billion, largely due to seasonal factors.
• The company repaid the last remaining Federal Home Loan Bank advance, resulting in no advances outstanding at March 31, 2025.
• Nonperforming assets increased slightly to $14.5 million at March 31, 2025, from $14.2 million at December 31, 2024.
• Special mention loans increased by $6.5 million to $15.0 million at March 31, 2025, primarily due to one C&I relationship.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company highlights positive aspects like book value growth and deposit increases, there are also concerns about decreased net interest income and increased special mention loans. The management's comments are cautiously optimistic.

Positives

• Book value and tangible book value per share increased year-over-year.
• Net interest margin improved due to lower deposit costs.
• Total deposits increased, reflecting growth in retail and commercial areas.
• The company eliminated all Federal Home Loan Bank advances.
• 30-89 day loan delinquencies decreased to 0.15% of total loans at March 31, 2025, compared to a 0.33% delinquency ratio at December 31, 2024.

Negatives

• Net interest income decreased slightly compared to the previous quarter and the same quarter last year.
• Loans receivable decreased due to seasonal factors.
• Nonperforming assets increased modestly.
• Special mention loans increased due to one C&I relationship.
• Quarterly earnings were $3.2 million, or $0.32 per diluted share for the quarter ended March 31, 2025, a decrease from $4.1 million, or $0.39 per diluted share for the quarter ended March 31, 2024.

Risks

• The company faces risks related to financial market conditions, economic conditions, and inflation.
• There are risks associated with commercial and agricultural banking activities.
• The company is exposed to interest rate risk and lending risk.
• Cybersecurity risks and potential impacts on the regional banking industry are concerns.
• The company's performance could be affected by legislative or regulatory changes, litigation, and changes in accounting principles.

Future Outlook

Management believes loan repricing and originations will benefit net-interest margin expansion, especially in the second half of 2025, and throughout 2026, as well as will the impact of deposit repricing.

Management Comments

• I am pleased with results in a quarter that is seasonally the slowest for us because of winter.
• The balance sheet is well positioned for the remainder of 2025 with strong capital and liquidity positions, strong ACL reserves and credit metrics in our historical range.
• Our TCE at 8.5% provides a cushion for uncertainty like we have seen thus far in 2025 and for share repurchases.
• Our liquidity position, including the loan to deposit ratio below 90% is expected to support quality, well priced loan growth in the low to mid-single digit percentages with strategic, relationship borrowers.
• Our markets remain stable with unemployment below national averages and tariff exposure appears to be indirect should this risk persist.

Industry Context

The announcement reflects the challenges and opportunities facing regional banks in the current environment, including managing net interest margins, deposit growth, and asset quality in the face of economic uncertainty and competitive pressures.

Comparison to Industry Standards

• The company's efficiency ratio of 73% is comparable to other regional banks, but there is room for improvement to reach best-in-class levels.
• The net interest margin of 2.85% is within the range of industry averages, but the company aims to improve this metric through loan repricing and deposit management.
• Citizens Community Bancorp's TCE ratio of 8.5% is a good benchmark for regional banks.

Stakeholder Impact

• Shareholders may be impacted by the company's earnings performance and capital management decisions.
• Employees are affected by compensation and benefits, as well as the company's overall financial health.
• Customers benefit from the bank's traditional community banking services.
• The company's performance impacts the communities it serves through its branch locations and lending activities.

Next Steps

• The company will file its Form 10-Q in May 2025.
• Management expects loan repricing and originations to benefit net-interest margin expansion in the second half of 2025 and throughout 2026.

Key Dates

Keywords

earnings, financial results, net interest margin, deposits, loans, asset quality, bank, bancorp, CZWI