Citizens Community Bancorp, Inc. (CZWI): SWOT Analysis [11-2024 Updated]
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Citizens Community Bancorp, Inc. (CZWI) Bundle
In the dynamic landscape of community banking, Citizens Community Bancorp, Inc. (CZWI) stands out with its established market presence and commitment to customer service. As we delve into the SWOT analysis of CZWI, we'll uncover the company's strengths that bolster its competitive position, the weaknesses that challenge its growth, the opportunities ripe for exploration, and the threats that could impact its future. Join us as we explore the factors shaping the strategic planning of this resilient financial institution.
Citizens Community Bancorp, Inc. (CZWI) - SWOT Analysis: Strengths
Established market presence with a solid reputation in community banking.
Citizens Community Bancorp, Inc. (CZWI) has established a strong market presence within its operational regions, particularly in Wisconsin. The bank's focus on community-oriented services enhances its reputation, fostering customer loyalty and trust.
Strong capital ratios, exceeding regulatory requirements for 'Well Capitalized' status.
As of September 30, 2024, Citizens Community Bancorp reported a Tier 1 Capital Ratio of 12.56%, significantly above the regulatory requirement of 4.0% for 'Well Capitalized' institutions. The Total Risk-Based Capital Ratio stood at 14.78%, also exceeding the minimum requirement of 8.0%.
Diverse range of financial products catering to both personal and business banking needs.
Citizens Community Bancorp offers a comprehensive suite of financial products including:
- Personal loans
- Mortgage products
- Commercial loans
- Deposit accounts such as savings, checking, and certificates of deposit
This diversity allows the bank to cater to a wide range of customer needs, enhancing its market competitiveness.
Positive net income growth, showing resilience in a challenging economic environment.
For the nine months ended September 30, 2024, Citizens Community Bancorp reported a net income of $11.049 million, an increase from $9.366 million during the same period in 2023, reflecting a robust growth of 17.92% year-over-year.
Increasing non-interest income, particularly from loan sales, indicating effective revenue diversification.
Non-interest income for the nine months ended September 30, 2024, increased to $8.098 million, up from $7.770 million in the prior year, marking a growth of 4.22%. This growth is largely attributed to:
- Gains on loan sales: $1.998 million, a 33.11% increase year-over-year
- Loan fees and service charges: $704,000, up 128.57% from the previous year
The bank's strategy to diversify revenue sources has proven effective, contributing to its financial stability.
| Financial Metric | 2024 (9 months) | 2023 (9 months) | % Change |
|---|---|---|---|
| Net Income | $11.049 million | $9.366 million | +17.92% |
| Total Non-Interest Income | $8.098 million | $7.770 million | +4.22% |
| Gain on Sale of Loans | $1.998 million | $1.501 million | +33.11% |
| Loan Fees and Service Charges | $704,000 | $308,000 | +128.57% |
Citizens Community Bancorp, Inc. (CZWI) - SWOT Analysis: Weaknesses
Declining net interest income due to increased deposit costs and competition for deposits
For the nine months ended September 30, 2024, net interest income decreased by $1.8 million compared to the same period in 2023, primarily due to higher deposit costs. The average interest-bearing liabilities rose from 2.46% in 2023 to 3.18% in 2024. This increase in costs was partially offset by higher yields on assets, which contributed an increase of $5.4 million in interest income.
Higher provisioning for credit losses, reflecting potential risks in the loan portfolio
The total benefit for credit losses (negative provision) was $2.725 million for the nine months ended September 30, 2024, a significant increase compared to a provision for credit losses of $0.175 million in the same period of 2023. The increase indicates potential risks associated with the loan portfolio, despite some improvements in credit quality.
Increased non-interest expenses driven by higher compensation and operational costs
Non-interest expenses increased by $1.6 million for the nine months ended September 30, 2024, largely due to a $0.9 million rise in compensation expenses. This increase was attributed to higher incentive costs and annual merit increases. Additionally, operational costs rose due to the establishment of a $0.4 million SBA recourse reserve.
| Expense Category | Q3 2024 ($ thousands) | Q3 2023 ($ thousands) | % Change |
|---|---|---|---|
| Compensation and related benefits | 5,743 | 5,293 | 8.50% |
| Occupancy | 1,242 | 1,335 | (6.97%) |
| Data processing | 1,665 | 1,536 | 8.40% |
| Advertising, marketing and public relations | 225 | 185 | 21.62% |
| Total non-interest expense | 10,421 | 9,969 | 4.52% |
Limited geographic diversification, primarily focused on the Wisconsin market, which may constrain growth
Citizens Community Bancorp, Inc. operates primarily within the Wisconsin market, which limits its geographic diversification and potential for growth. As of September 30, 2024, the deposit portfolio was composed of 56% consumer, 28% commercial, 12% public, and 4% brokered deposits.
Citizens Community Bancorp, Inc. (CZWI) - SWOT Analysis: Opportunities
Expanding digital banking services to attract tech-savvy customers and improve operational efficiency.
The banking sector is witnessing a significant shift towards digitalization. Citizens Community Bancorp, Inc. (CZWI) has the opportunity to enhance its digital banking services. As of September 30, 2024, the bank reported a total of $1.52 billion in deposits, with a notable increase in consumer deposits by $22.1 million, indicating a growing customer base potentially open to digital solutions.
Potential for growth through strategic acquisitions or partnerships within the regional banking sector.
Strategic acquisitions can bolster CZWI's market presence. The bank's stockholders' equity was $180.1 million as of September 30, 2024, up from $173.3 million at the end of 2023. This increase provides a solid foundation for potential acquisitions or partnerships, enabling CZWI to expand its footprint in the regional banking sector.
Rising interest rates may lead to improved margins on new loans, enhancing profitability.
The current interest rate environment presents an opportunity for CZWI to improve its profit margins. The average interest rate on interest-bearing liabilities increased from 2.46% in 2023 to 3.18% in 2024, while interest income from loans rose to $60.2 million for the nine months ended September 30, 2024, compared to $54.2 million in the same period of 2023. This trend indicates that higher rates can significantly enhance profitability through improved loan yields.
Increasing demand for small business loans and agricultural financing presents growth avenues.
There is a rising demand for small business loans and agricultural financing, which represents a substantial growth opportunity for CZWI. The bank's commercial and industrial loans stood at $119.6 million, comprising 8.4% of its total loan portfolio. With a strategic focus on these sectors, CZWI can leverage this demand to increase its lending activities and market share.
| Loan Type | Amount ($ million) | Percentage of Total Loans |
|---|---|---|
| Commercial Real Estate | 730.5 | 51.3% |
| Agricultural Real Estate | 76.0 | 5.3% |
| Multi-family Real Estate | 239.2 | 16.8% |
| Construction and Land Development | 87.9 | 6.2% |
| Residential Mortgage | 134.9 | 9.5% |
| Commercial and Industrial Loans | 119.6 | 8.4% |
| Total Loans | 1,428.5 | 100% |
Citizens Community Bancorp, Inc. (CZWI) - SWOT Analysis: Threats
Economic uncertainty and inflation could adversely impact loan performance and customer borrowing capacity.
The economic landscape as of 2024 is characterized by ongoing inflationary pressures. For instance, inflation rates in the U.S. were approximately 3.7% in September 2024, which could affect consumers' borrowing capacity and overall financial stability. As a result, Citizens Community Bancorp, Inc. (CZWI) may experience a decline in loan performance. The total loans outstanding decreased by $36 million to $1.42 billion as of September 30, 2024, from $1.46 billion at the end of 2023.
Heightened competition from both traditional banks and fintech companies may pressure market share.
The financial services industry is increasingly competitive, with both traditional banks and fintech companies vying for market share. CZWI faces competition from larger banks that can offer lower rates and advanced technology solutions. As of September 30, 2024, the average interest rate on loans was recorded at 5.60%, while the average rate for deposits rose to 3.14%. This competitive pressure could lead to a reduction in margins and profitability for CZWI.
Regulatory changes and compliance costs could increase operational burdens.
Regulatory compliance remains a significant challenge for financial institutions. As of 2024, CZWI is subject to various federal and state regulations that can lead to increased operational costs. The total non-interest expense for the nine months ended September 30, 2024, was $31.5 million, up from $29.9 million in the same period in 2023. These rising costs can strain resources and affect the bank's overall profitability.
Cybersecurity risks pose a significant threat to the integrity of banking operations and customer data.
With the rise of digital banking, the threat of cybersecurity breaches has intensified. In 2024, financial institutions, including CZWI, must invest significantly in cybersecurity measures to protect sensitive customer data. The costs associated with cybersecurity measures have been rising, with CZWI reporting a 7.82% increase in data processing expenses for the nine months ended September 30, 2024, compared to the previous year. Failure to adequately address these risks could result in severe reputational damage and financial losses.
| Threat Category | Impact on CZWI | Current Statistics |
|---|---|---|
| Economic Uncertainty | Adverse impact on loan performance | Loan outstanding: $1.42 billion (down from $1.46 billion) |
| Competition | Pressure on market share and margins | Average loan interest rate: 5.60% |
| Regulatory Changes | Increased operational costs | Total non-interest expense: $31.5 million |
| Cybersecurity Risks | Threat to data integrity and operations | Data processing expense increase: 7.82% |
In conclusion, the SWOT analysis of Citizens Community Bancorp, Inc. (CZWI) highlights a robust foundation with its established market presence and strong capital ratios, yet it faces challenges such as declining net interest income and increased competition. The company has significant opportunities to leverage, particularly through digital banking expansion and strategic partnerships, while remaining vigilant against threats like economic uncertainty and cybersecurity risks. By capitalizing on its strengths and addressing its weaknesses, CZWI can position itself for sustainable growth in the evolving banking landscape.
Updated on 16 Nov 2024
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.