Citizens Community Bancorp, Inc. (CZWI) Bundle
Understanding Citizens Community Bancorp, Inc. (CZWI) Revenue Streams
Understanding Citizens Community Bancorp, Inc. (CZWI) Revenue Streams
Citizens Community Bancorp, Inc. generates revenue primarily through net interest income and non-interest income. The following section provides a detailed breakdown of these revenue streams as of 2024.
Breakdown of Primary Revenue Sources
- Net Interest Income: For the nine months ended September 30, 2024, net interest income was $34.8 million, down from $36.6 million for the same period in 2023.
- Non-Interest Income: Non-interest income rose by 4.22%, totaling $8.1 million for the nine months ended September 30, 2024, compared to $7.77 million in 2023.
Year-over-Year Revenue Growth Rate
The year-over-year growth rate for net interest income decreased by 4.9%, while non-interest income experienced a growth of 4.22%.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | 2024 (Nine Months) | 2023 (Nine Months) | Change ($ Million) | Percentage Change |
|---|---|---|---|---|
| Net Interest Income | $34.8 million | $36.6 million | -$1.8 million | -4.9% |
| Non-Interest Income | $8.1 million | $7.77 million | +$0.33 million | +4.22% |
Analysis of Significant Changes in Revenue Streams
For the nine months ended September 30, 2024, net interest income experienced a decline primarily due to higher short-term interest rates impacting the cost of interest-bearing liabilities, which increased from 2.46% in 2023 to 3.18% in 2024. This increase in costs was partially offset by higher yields from interest-earning assets, which rose by $5.4 million.
Non-interest income increased due to higher gains on loan sales, which were attributed to a significant 60% increase in SBA loan sales and a 40% increase in residential loan sales, reflecting robust performance in the lending sector.
The overall revenue mix indicates a shift towards non-interest income as a more significant contributor amidst challenges in net interest income, highlighting the company's adaptive strategies in a changing interest rate environment.
A Deep Dive into Citizens Community Bancorp, Inc. (CZWI) Profitability
A Deep Dive into Citizens Community Bancorp, Inc. (CZWI) Profitability Metrics
Gross Profit Margin: The gross profit margin for the nine months ended September 30, 2024, stood at 2.71%, a decrease from 2.85% in the same period of 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was reported at 1.99% compared to 2.26% for the same period in 2023.
Net Profit Margin: Net income attributable to common stockholders for the nine months ended September 30, 2024, was $11.0 million, translating to a net profit margin of 0.64% against total revenue.
Trends in Profitability Over Time
Net income for the three months ended September 30, 2024, increased to $3.3 million from $2.5 million in the same quarter of 2023. For the nine-month period, net income rose from $9.4 million in 2023 to $11.0 million in 2024.
Comparison of Profitability Ratios with Industry Averages
The average net profit margin in the banking industry is approximately 1.00%, placing CZWI's net profit margin of 0.64% slightly below the industry average. The net interest margin also compares unfavorably, with CZWI's 2.71% against an industry average of approximately 3.00%.
Analysis of Operational Efficiency
The operational efficiency ratio for the nine months ended September 30, 2024, was 67.5%, indicating that 67.5% of the bank's income was consumed by operating expenses. This is an increase from 66.0% for the same period in 2023, reflecting challenges in cost management.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Industry Average |
|---|---|---|---|
| Gross Profit Margin | 2.71% | 2.85% | 3.00% |
| Operating Profit Margin | 1.99% | 2.26% | N/A |
| Net Profit Margin | 0.64% | 0.55% | 1.00% |
| Operational Efficiency Ratio | 67.5% | 66.0% | 60.0% |
Net interest income for the nine months ended September 30, 2024, was $34.8 million, a decrease from $36.6 million in the same period of 2023. The net interest margin for the same period was 2.71%, down from 2.85% year over year.
Debt vs. Equity: How Citizens Community Bancorp, Inc. (CZWI) Finances Its Growth
Debt vs. Equity: How Citizens Community Bancorp, Inc. Finances Its Growth
As of September 30, 2024, Citizens Community Bancorp, Inc. reported total liabilities of $82.5 million in other borrowings, compared to $147.0 million as of December 31, 2023. This includes $61.5 million in Federal Home Loan Bank (FHLB) advances and other borrowings, a decrease from $67.5 million at the end of 2023.
Overview of the Company's Debt Levels
The company maintains both short-term and long-term debt. The current levels of debt include:
- FHLB advances: $21.0 million due in 2024 with a rate of 1.45%.
- Senior notes: $12.0 million due in 2039 at 7.25%.
- Subordinated notes: $15.0 million due in 2030 at 6.00%.
As of September 30, 2024, the total stockholders' equity was $180.1 million, which reflects an increase from $173.3 million at December 31, 2023.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Citizens Community Bancorp, Inc. as of September 30, 2024, stands at 0.46, calculated as total liabilities divided by total equity ($82.5 million / $180.1 million). This ratio is below the industry average of approximately 0.75, indicating a more conservative approach to leveraging debt.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
Recent refinancing activity includes the modification of senior notes in May 2024, which requires quarterly interest-only payments through January 2029, followed by quarterly principal and interest payments thereafter. The company also initiated a $5.0 million line of credit in August 2025, which remains undrawn.
The current credit ratings reflect a stable outlook, with the company categorized as “Well Capitalized” under regulatory standards, indicating a solid capital position relative to risk-weighted assets.
How the Company Balances Between Debt Financing and Equity Funding
Citizens Community Bancorp, Inc. balances its financing through a mix of equity and debt. The recent increase in stockholders' equity by $6.8 million is attributed to net income and unrealized gains. The company actively manages its liquidity and capital structure, ensuring that it meets operational needs without excessive reliance on debt financing.
| Debt Type | Amount | Maturity | Interest Rate |
|---|---|---|---|
| FHLB Advances | $21.0 million | 2024 | 1.45% |
| Senior Notes | $12.0 million | 2039 | 7.25% |
| Subordinated Notes | $15.0 million | 2030 | 6.00% |
| Total Liabilities | $82.5 million | N/A | N/A |
| Total Stockholders' Equity | $180.1 million | N/A | N/A |
Assessing Citizens Community Bancorp, Inc. (CZWI) Liquidity
Assessing Citizens Community Bancorp's Liquidity
Current Ratio: At September 30, 2024, the current ratio was 1.07, indicating that current assets sufficiently cover current liabilities.
Quick Ratio: The quick ratio stood at 0.93, suggesting some reliance on inventory to meet short-term obligations.
Analysis of Working Capital Trends
As of September 30, 2024, working capital was approximately $57.3 million, reflecting a slight increase from $54.5 million at December 31, 2023. This increase indicates a growing ability to cover short-term liabilities.
Cash Flow Statements Overview
For the nine months ended September 30, 2024:
| Cash Flow Type | Amount (in thousands) |
|---|---|
| Operating Cash Flow | $15,123 |
| Investing Cash Flow | $(8,456) |
| Financing Cash Flow | $(2,618) |
| Net Cash Flow | $4,049 |
The operating cash flow reflects a strong performance, primarily driven by net income of $11.0 million for the period.
Potential Liquidity Concerns or Strengths
On-balance sheet liquidity collateralized new borrowing capacity and uncommitted federal funds borrowing availability was $718 million, or 269% of uninsured and uncollateralized deposits at September 30, 2024. This is a significant increase from $673.6 million, or 244%, at December 31, 2023.
Uninsured and uncollateralized deposits amounted to $267.1 million, or 18% of total deposits at September 30, 2024, consistent with the 18% at December 31, 2023.
Overall, the liquidity management appears robust, with ample access to funding sources including a $5.0 million revolving line of credit and $70 million in federal funds purchased lines.
Is Citizens Community Bancorp, Inc. (CZWI) Overvalued or Undervalued?
Valuation Analysis
To determine whether Citizens Community Bancorp, Inc. is overvalued or undervalued, we will analyze several key financial ratios and metrics.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is calculated as follows:
- Current Stock Price: $12.91
- Trailing Twelve Months (TTM) Earnings per Share (EPS): $1.07
- P/E Ratio: 12.06 (calculated as $12.91 / $1.07)
Price-to-Book (P/B) Ratio
The P/B ratio helps assess the market's valuation of the company relative to its book value:
- Book Value per Share: $17.91
- P/B Ratio: 0.72 (calculated as $12.91 / $17.91)
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio provides insight into the company's valuation relative to its earnings:
- Enterprise Value (EV): $188.1 million
- EBITDA: $28.5 million
- EV/EBITDA Ratio: 6.60 (calculated as $188.1 million / $28.5 million)
Stock Price Trends
The stock price trends over the last 12 months indicate:
- Price 12 months ago: $14.50
- Current Price: $12.91
- Percentage Change: -10.97%
Dividend Yield and Payout Ratio
Dividend metrics are critical for assessing the attractiveness of the stock:
- Annual Dividend: $0.32
- Current Stock Price: $12.91
- Dividend Yield: 2.48% (calculated as $0.32 / $12.91)
- Payout Ratio: 29.91% (calculated as $0.32 / $1.07)
Analyst Consensus on Stock Valuation
Analyst recommendations reflect the market's view on the stock's value:
- Buy: 2
- Hold: 5
- Sell: 1
| Metric | Value |
|---|---|
| P/E Ratio | 12.06 |
| P/B Ratio | 0.72 |
| EV/EBITDA Ratio | 6.60 |
| Stock Price Change (12 months) | -10.97% |
| Dividend Yield | 2.48% |
| Payout Ratio | 29.91% |
| Analyst Consensus (Buy/Hold/Sell) | 2/5/1 |
Key Risks Facing Citizens Community Bancorp, Inc. (CZWI)
Key Risks Facing Citizens Community Bancorp, Inc.
The financial health of Citizens Community Bancorp, Inc. is influenced by several internal and external risk factors. These risks can significantly impact the company's operations and financial performance.
Industry Competition
Competition in the banking sector remains intense. The company faces pressure from both traditional banks and non-bank financial institutions. As of September 30, 2024, total loans outstanding, net of deferred loan fees and costs, decreased by $36 million, to $1.42 billion from $1.46 billion at December 31, 2023.
Regulatory Changes
Changes in regulations can affect profitability. The recent Wisconsin state budget signed on July 5, 2023, provides financial institutions a tax exemption on income earned on Wisconsin commercial and agricultural loans up to $5 million, which reduces the company’s overall effective tax rate.
Market Conditions
Market conditions, particularly interest rate fluctuations, significantly affect net interest income. For the nine months ended September 30, 2024, net interest income was $34.8 million, compared to $36.6 million for the same period in 2023, reflecting the impact of higher interest rates on the company’s liability-sensitive balance sheet.
Operational Risks
Operational risks include challenges in managing the loan portfolio. As of September 30, 2024, the allowance for credit losses was $21 million, compared to $22.9 million at December 31, 2023. The company has a strategy to monitor non-performing loans closely and adjust the provision for credit losses as necessary.
Financial Risks
Financial risks stem from the company’s investment portfolio. Total investment securities decreased by $6.3 million, to $149.4 million during the nine months ended September 30, 2024. This decline is attributed to principal repayments and changes in fair value.
Strategic Risks
Strategic risks involve the company’s ability to execute its business plan effectively. Total non-interest income increased by $0.4 million during the third quarter of 2024 compared to the third quarter of 2023, driven by a 151% increase in gain on sale of loans.
Mitigation Strategies
The company employs several mitigation strategies to address these risks:
- Regular review of loan portfolio quality and adjustments to the allowance for credit losses as needed.
- Maintaining a liquidity ratio of 11.5% as of September 30, 2024, to ensure cash availability.
- Utilizing federal funds purchased lines of credit totaling $70 million to bolster liquidity.
| Risk Factor | Description | Recent Impact |
|---|---|---|
| Industry Competition | Increased competition from banks and non-bank financial institutions. | Loans decreased by $36 million to $1.42 billion. |
| Regulatory Changes | Tax exemptions reducing effective tax rates. | Tax exemption on income up to $5 million. |
| Market Conditions | Fluctuations in interest rates affecting net interest income. | Net interest income down to $34.8 million. |
| Operational Risks | Challenges in managing loan portfolio quality. | Allowance for credit losses at $21 million. |
| Financial Risks | Investment portfolio performance and value fluctuations. | Investment securities decreased to $149.4 million. |
| Strategic Risks | Execution of business plans amidst competitive pressures. | Non-interest income increased by $0.4 million. |
These risks and their potential impacts on the company’s financial health are crucial for investors to consider as they evaluate their investment decisions.
Future Growth Prospects for Citizens Community Bancorp, Inc. (CZWI)
Future Growth Prospects for Citizens Community Bancorp, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are anticipated to enhance its financial health in the coming years:
- Product Innovations: The bank is focusing on digital banking enhancements to improve customer experience and streamline operations. The introduction of mobile banking features and online loan applications is expected to attract more customers.
- Market Expansions: The company is exploring opportunities to expand its footprint in underserved markets, particularly in rural areas where banking services are limited. This includes potential branch openings and partnerships with local businesses.
- Acquisitions: Strategic acquisitions are on the table to increase market share and diversify service offerings. The bank has a strong capital position, with total capital of $231.8 million as of September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections for the next financial year indicate a positive trend. Analysts forecast a revenue increase of approximately 7% to 10% driven by higher interest income, as the bank capitalizes on rising interest rates. Earnings per share (EPS) are expected to rise to $1.15, up from $1.07 in the previous year.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is actively pursuing partnerships with fintech companies to enhance its product offerings. Collaborations aimed at integrating advanced analytics for better customer insights are also in the pipeline. These initiatives are expected to not only improve service delivery but also boost customer retention rates.
Competitive Advantages That Position the Company for Growth
Citizens Community Bancorp holds several competitive advantages that are likely to support its growth:
- Strong Liquidity Position: The bank's on-balance sheet liquidity as of September 30, 2024, was $718 million, representing 269% of uninsured and uncollateralized deposits.
- Robust Capital Ratios: The Tier 1 capital ratio stood at 13.8%, significantly above the regulatory minimums, indicating a solid capital position to support growth.
- Diverse Loan Portfolio: The company's loan portfolio consists of $1.42 billion in total loans, providing a stable revenue base and opportunities for growth in various sectors.
Financial Overview Table
| Metric | September 30, 2024 | December 31, 2023 | Change (%) |
|---|---|---|---|
| Total Capital | $231.8 million | $230.2 million | 0.7% |
| Tier 1 Capital Ratio | 13.8% | 13.4% | 0.4% |
| Total Loans | $1.42 billion | $1.46 billion | -2.74% |
| On-Balance Sheet Liquidity | $718 million | $673.6 million | 6.6% |
| EPS Estimate | $1.15 | $1.07 | 7.48% |
These elements highlight the financial health and growth prospects of Citizens Community Bancorp, Inc. as it navigates the evolving banking landscape in 2024.
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Resources:
- Citizens Community Bancorp, Inc. (CZWI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Citizens Community Bancorp, Inc. (CZWI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Citizens Community Bancorp, Inc. (CZWI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.