EX-99.1 2 exhibit991earningsrelczwi2.htm EX-99.1
EXHIBIT 99.1
Citizens Community Bancorp, Inc. Reports 4Q2023 Earnings of $0.35 Per Share;
Common Equity Increases 5%; Deposits Grew $46 million;
Board of Directors Increase Annual Dividend 10% to $0.32 Per Share
EAU CLAIRE, WI, January 29, 2024 - 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 $3.7 million and earnings per diluted share of $0.35 for the quarter ended December 31, 2023, compared to $2.5 million and $0.24 per diluted share for the quarter ended September 30, 2023, and $4.7 million and $0.45 per diluted share for the quarter ended December 31, 2022, respectively. For the fiscal year ended December 31, 2023, earnings were $13.1 million, or $1.25 per diluted share, compared to earnings of $17.8 million, or $1.69 per diluted share for fiscal year ended December 31, 2022.
The Company’s fourth quarter 2023 operating results reflected the following changes from the third quarter of 2023: (1) an increase in negative provision for credit losses largely due to net recoveries, and reductions in commitments to fund construction loans; (2) lower tax expense largely due to the tax rate impact of the recent Wisconsin budget change; (3) net interest income was flat after excluding the recognition of $0.4 million of interest income on the payoff of a nonaccrual loan in the third quarter; and (4) $0.2 million higher non-interest expense, largely due to the write-down of a closed branch in the fourth quarter. During the fourth quarter 2023, accumulated other comprehensive loss on securities available for sale improved 20% relative to the prior quarter largely due to lower interest rates.
Book value per share was $16.60 at December 31, 2023, compared to $15.80 at September 30, 2023, and $16.03 at December 31, 2022. Tangible book value per share (non-GAAP)1 was $13.42 at December 31, 2023, a 6% increase from $12.61 at September 30, 2023, and a 5% increase from $12.77 at December 31, 2022. For the fourth quarter, tangible book value was positively influenced by lower accumulated other comprehensive loss (“AOCI”), net income and intangible amortization. The AOCI loss improvement reflected the benefit of decreases in the ten-year U.S. Treasury rate to 3.88% at December 31, 2023, compared to 4.58% at September 30, 2023, and 3.88% at December 31, 2022.
“The quarter was favorably impacted by stabilization in the net interest margin after removing the nonaccrual interest pick up in the linked quarter, and favorable credit events which included net recoveries in the quarter and for the year and negative provision expense. Deposit growth continued in the quarter reflecting our business priorities while expenses were managed lower in 2023 despite inflationary pressures. Tangible book value per share increased 6% to $13.42 per share and our tangible common equity to tangible asset ratio increased to 7.71% ,” stated Stephen Bianchi, Chairman, President, and Chief Executive Officer.
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December 31, 2023 Highlights: (as of or for the 3-month period ended December 31, 2023 compared to September 30, 2023 and December 31, 2022.)
•Quarterly earnings of $3.7 million, or $0.35 per diluted share for the quarter ended December 31, 2023, increased from the quarter ended September 30, 2023, earnings of $2.5 million or $0.24 per diluted share, and decreased from the quarter ended December 31, 2022, earnings of $4.7 million or $0.45 per diluted share.
•Earnings for the twelve months ended December 31, 2023, were $13.1 million, or $1.25 per diluted share, which is a decrease from $17.8 million, or $1.69 per diluted share, for the same period in the prior year.
•Net interest income decreased $0.4 million to $11.7 million for the fourth quarter of 2023, from $12.1 million the previous quarter and decreased $2.7 million from the fourth quarter of 2022. The decrease in net interest income from the third quarter of 2023 was due to $0.4 million recognized in the third quarter from a nonaccrual loan payoff. Excluding the nonaccrual loan payoff, net interest income was flat in the fourth quarter relative to the third quarter.
•The net interest margin without loan purchase accretion was 2.67% for the quarter ended December 31, 2023, compared to 2.76% for the previous quarter and 3.33% for the comparable quarter one year earlier. The impact of the nonaccrual loan payoff of $0.4 million was approximately 10 basis points.
•In the fourth quarter, a negative provision for credit losses of $0.7 million was recorded due to: (1) net recoveries of $264 thousand; (2) the reduction in commitments to fund construction loans; and (3) improving forecasted future economic conditions, offsetting increases in specific reserves. The provision was negative $0.4 million for the preceding quarter, which also had net recoveries of $161 thousand. Provisions for credit losses totaled $0.7 million during the fourth quarter a year ago.
•Noninterest expenses increased $237 thousand to $10.2 million from $10.0 million for the third quarter and declined $130 thousand from $10.3 million one year earlier. The increase in the fourth quarter was primarily related to branch closure expenses of $0.4 million.
•Gross loans increased by $13.0 million during the fourth quarter ended December 31, 2023, to $1.46 billion from $1.45 billion at September 30, 2023.
•Total deposits increased by $45.9 million, or 3.1%, during the fourth quarter ended December 31, 2023, to $1.52 billion from $1.47 billion at September 30, 2023. The increase was spread across retail, commercial, municipal and brokered deposits.
•Federal Home Loan Bank advances were reduced $35.0 million to $79.5 million at December 31, 2023, from $114.5 million at September 30, 2023. The payoff of the advances was largely funded by deposit growth.
•Stockholders’ equity as a percent of total assets was 9.36% at December 31, 2023, compared to 9.03% at September 30, 2023. Tangible common equity (“TCE”) as a percent of tangible assets (non-GAAP)1 was 7.71% at December 31, 2023, compared to 7.34% at September 30, 2023. The positive impact of decreases in unrealized losses in the available for sale (AFS) investment portfolio, net income and amortization of intangibles was modestly offset by asset growth.
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•The effective tax rate decreased to 20.9% for the fourth quarter from 50.5% in the third quarter and 25.6% one year earlier. The third quarter reflected a reduction in the carrying value of deferred tax assets of $1.8 million, due to the impact of the Wisconsin budget change, which decreased the incremental tax rate at which the deferred tax asset would be recognized in the future. This more than offset the overall benefit of a lower Wisconsin tax rate benefit of $0.6 million in the third quarter, which reflects three quarters of benefit. The fourth quarter reflects $0.2 million of benefit compared to the first and second quarters of 2023.
•Nonperforming assets were $15.4 million at December 31, 2023, compared to $15.5 million at September 30, 2023. Nonperforming loans declined $854 thousand during the fourth quarter while foreclosed and repossessed assets increased $749 thousand due to the addition of a closed branch office.
•Substandard loans increased by $3.4 million to $19.6 million at December 31, 2023, compared to $16.2 million at September 30, 2023. The increase was largely due to the addition of a $3.7 million loan relationship secured by single family rental homes in the Twin Cities.
•The efficiency ratio was 72% for the quarter ended December 31, 2023, compared to 67% for the quarter ended September 30, 2023, with the increase primarily due to the fourth quarter branch closure expenses and lower net interest income due to the $0.4 million nonaccrual interest income payoff interest income in the third quarter.
•On January 25, 2024, the Board of Directors declared a $0.32 per share annual dividend, an increase of 10%, to shareholders of record as of February 9, 2024 and payable February 23, 2024.
Balance Sheet and Asset Quality
Total assets increased modestly by $20.3 million during the quarter to $1.85 billion at December 31, 2023.
Cash and cash equivalents increased $4.6 million during the quarter to $37.1 million at December 31, 2023, largely due to an increase in clearing balances of $8.1 million partially offset by a decrease in interest-bearing deposits of $2.9 million.
Securities available for sale increased $2.3 million during the quarter ended December 31, 2023, to $155.7 million from $153.4 million at September 30, 2023. This increase was due to an increase in the market value of the portfolio, partially offset by principal repayments of $16.6 million.
Securities held to maturity decreased $1.1 million to $91.2 million during the quarter ended December 31, 2023, from $92.3 million at September 30, 2023, due to principal repayments.
On-balance sheet liquidity, collateralized new borrowing capacity and uncommitted federal funds borrowing availability was 244% of uninsured and uncollateralized deposits at December 31, 2023, and 221% at September 30, 2023.
On-balance sheet liquidity, collateralized new borrowing capacity and uncommitted federal funds borrowing availability was $673.6 million at December 31, 2023, and $614.9 million at September 30, 2023.
Gross loans increased by $13.0 million during the fourth quarter of 2023. The Bank grew the multi-family and residential portfolios $8.9 million and $3.1 million, respectively. The addition of residential 10/1 ARM loan originations were added to the portfolio, although at a slower pace than the third quarter and this reduction is expected to continue.
Our office loan portfolio is $40.2 million and consists of 70 loans. There are no criticized loans in this portfolio and there have been no charge-offs in the trailing twelve months.
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The allowance for credit losses on loans decreased slightly by $0.1 million to $22.91 million at December 31, 2023, representing 1.57% of total loans receivable compared to 1.59% of total loans receivable at September 30, 2023. For the quarter ended December 31, 2023, the Bank had net recoveries of $264 thousand.
Allowance for Credit Losses (“ACL”) - Loans Percentage
(in thousands, except ratios)

|  | December 31, 2023 |  | September 30, 2023 |  | June 30, 2023 |  | December 31, 2022
Loans, end of period |  | $ | 1,460,792 |  |  | $ | 1,447,529 |  |  | $ | 1,424,988 |  |  | $ | 1,411,784 |
Allowance for credit losses - Loans |  | $ | 22,908 |  |  | $ | 22,973 |  |  | $ | 23,164 |  |  |
Allowance for loan losses “ALL” |  |  |  |  |  |  |  | $ | 17,939 |
ACL - Loans as a percentage of loans, end of period |  | 1.57 | % |  | 1.59 | % |  | 1.63 | % |  |
ALL as a percentage of loans, end of period |  |  |  |  |  |  |  | 1.27 | %

Allowance for Credit Losses - Unfunded Commitments:
(in thousands)
In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $1.250 million at December 31, 2023 and $1.571 million at September 30, 2023, classified in other liabilities on the consolidated balance sheets.

|  | December 31, 2023 and Three Months Ended |  | December 31, 2022 and Three Months Ended |  | December 31, 2023 and Twelve Months Ended |  | December 31, 2022 and Twelve Months Ended
ACL - Unfunded commitments - beginning of period |  | $ | 1,571 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Cumulative effect of ASU 2016-13 adoption |  | — |  |  | — |  |  | 1,537 |  |  | — |
Additions (reductions) to ACL - Unfunded commitments via provision for credit losses charged to operations |  | (321) |  |  | — |  |  | (287) |  |  | — |
ACL - Unfunded commitments - end of period |  | $ | 1,250 |  |  | $ | — |  |  | $ | 1,250 |  |  | $ | — |

Nonperforming assets decreased $0.1 million to $15.4 million, or 0.83% of total assets at December 31, 2023, compared to $15.5 million or 0.85% at September 30, 2023. The transfer of a closed branch to REO was offset by the reduction in 90+ delinquent and accruing residential loans.

|  | (in thousands)
|  | December 31, 2023 |  | September 30, 2023 |  | June 30, 2023 |  | March 31, 2023 |  | December 31, 2022
Special mention loan balances |  | $ | 18,392 |  |  | $ | 20,043 |  |  | $ | 20,507 |  |  | $ | 6,636 |  |  | $ | 12,170 |
Substandard loan balances |  | 19,596 |  |  | 16,171 |  |  | 19,203 |  |  | 15,439 |  |  | 17,319 |
Criticized loans, end of period |  | $ | 37,988 |  |  | $ | 36,214 |  |  | $ | 39,710 |  |  | $ | 22,075 |  |  | $ | 29,489 |

Special mention loans decreased $1.7 million from September 30, 2023, due to reductions of $2.2 million and new additions of $0.5 million.
Substandard loans increased by $3.4 million to $19.6 million at December 31, 2023, compared to $16.2 million at September 30, 2023. The increase was largely due to a $3.7 million loan relationship secured by single family rental homes in the Twin Cities.
Total deposits increased $45.9 million during the quarter ended December 31, 2023, to $1.52 billion. Consumer and commercial deposits grew $14.3 million while public deposits grew $18.4 million. Brokered deposits increased $13.1 million, with $40 million of brokered money market deposits replacing a maturing brokered CD of $25 million.
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Deposit Portfolio Composition
(in thousands)

|  | December 31, 2023 |  |  |  |  |  | September 30, 2023 |  |  |  |  |  | June 30, 2023 |  | March 31, 2023 |  | December 31, 2022
Consumer deposits |  | $ | 814,899 |  |  |  |  |  |  | $ | 794,970 |  |  |  |  |  |  | $ | 790,404 |  |  | $ | 786,614 |  |  | $ | 805,598 |
Commercial deposits |  | 423,762 |  |  |  |  |  |  | 429,358 |  |  |  |  |  |  | 401,079 |  |  | 391,534 |  |  | 405,733 |
Public deposits |  | 182,172 |  |  |  |  |  |  | 163,734 |  |  |  |  |  |  | 175,869 |  |  | 194,683 |  |  | 173,548 |
Brokered deposits |  | 98,259 |  |  |  |  |  |  | 85,173 |  |  |  |  |  |  | 97,330 |  |  | 63,962 |  |  | 39,841 |
Total deposits |  | $ | 1,519,092 |  |  |  |  |  |  | $ | 1,473,235 |  |  |  |  |  |  | $ | 1,464,682 |  |  | $ | 1,436,793 |  |  | $ | 1,424,720 |

Deposit Composition
(in thousands)

|  | December 31, 2023 |  | September 30, 2023 |  | June 30, 2023 |  | March 31, 2023 |  | December 31, 2022
Non-interest bearing demand deposits |  | $ | 265,704 |  |  | $ | 275,790 |  |  | $ | 261,876 |  |  | $ | 247,735 |  |  | $ | 284,722 |
Interest bearing demand deposits |  | 343,276 |  |  | 336,962 |  |  | 358,226 |  |  | 390,730 |  |  | 371,210 |
Savings accounts |  | 176,548 |  |  | 183,702 |  |  | 206,380 |  |  | 214,537 |  |  | 220,019 |
Money market accounts |  | 374,055 |  |  | 312,689 |  |  | 288,934 |  |  | 309,005 |  |  | 323,435 |
Certificate accounts |  | 359,509 |  |  | 364,092 |  |  | 349,266 |  |  | 274,786 |  |  | 225,334 |
Total deposits |  | $ | 1,519,092 |  |  | $ | 1,473,235 |  |  | $ | 1,464,682 |  |  | $ | 1,436,793 |  |  | $ | 1,424,720 |

At December 31, 2023, our deposit portfolio composition was 54% consumer, 28% commercial, 12% public and 6% brokered deposits compared to 54% consumer, 29% commercial, 11% public and 6% brokered deposits at September 30, 2023.
Uninsured and uncollateralized deposits were $275.8 million, or 18% of total deposits, at December 31, 2023, and $277.9 million, or 19% of total deposits, at September 30, 2023. Uninsured deposits alone at December 31, 2023, were $427.5 million, or 28% of total deposits, and $412.9 million, or 28% of total deposits at September 30, 2023.
Federal Home Loan Bank advances decreased $35.0 million to $79.5 million at December 31, 2023, from $114.5 million one quarter earlier, as deposit growth more than funded loan growth, allowing advances to be repaid.
The Company repurchased 27,500 shares of the Company’s common stock in the fourth quarter of 2023. As of December 31, 2023, approximately 202 thousand shares remain available for repurchase under the current share repurchase authorization.
Review of Operations
Net interest income decreased to $11.7 million for the fourth quarter ended December 31, 2023, from $12.1 million for the quarter ended September 30, 2023, and decreased from $14.5 million for the quarter ended December 31, 2022. The decrease in net interest income from the third quarter of 2023 was primarily due to $0.4 million recognized in the third quarter from a nonaccrual loan payoff. From the fourth quarter of 2022, the decrease in net interest income was primarily due to liability costs increasing more than asset yields.
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Net interest income and net interest margin analysis:
(in thousands, except yields and rates)

|  | Three months ended |  |  |  |  |
|  | December 31, 2023 |  | September 30, 2023 |  | June 30, 2023 |  | March 31, 2023 |  | December 31, 2022 |  |  |
|  | Net Interest Income |  | Net Interest Margin |  | Net Interest Income |  | Net Interest Margin |  | Net Interest Income |  | Net Interest Margin |  | Net Interest Income |  | Net Interest Margin |  | Net Interest Income |  | Net Interest Margin |  |  |  |  |  |  |
As reported |  | $ | 11,747 |  |  | 2.69 | % |  | $ | 12,121 |  |  | 2.79 | % |  | $ | 11,686 |  |  | 2.72 | % |  | $ | 12,795 |  |  | 3.02 | % |  | $ | 14,478 |  |  | 3.40 | % |  |  |  |  |  |  |
Less non-accretable difference realized as interest from payoff of purchased credit impaired (“PCI”) loans |  | — |  |  | — | % |  | — |  |  | — | % |  | — |  |  | — | % |  | — |  |  | — | % |  | (109) |  |  | (0.02) | % |  |  |  |  |  |  |
Less accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences |  | — |  |  | — | % |  | — |  |  | — | % |  | — |  |  | — | % |  | — |  |  | — | % |  | (32) |  |  | (0.01) | % |  |  |  |  |  |  |
Less accretion for PCD loans |  | (37) |  |  | (0.01) | % |  | (39) |  |  | (0.01) | % |  | (39) |  |  | (0.01) | % |  | (37) |  |  | (0.01) | % |  | — |  |  | — | % |  |  |  |  |  |  |
Less scheduled accretion interest |  | (33) |  |  | (0.01) | % |  | (77) |  |  | (0.02) | % |  | (85) |  |  | (0.02) | % |  | (84) |  |  | (0.02) | % |  | (169) |  |  | (0.04) | % |  |  |  |  |  |  |
Without loan purchase accretion |  | $ | 11,677 |  |  | 2.67 | % |  | $ | 12,005 |  |  | 2.76 | % |  | $ | 11,562 |  |  | 2.69 | % |  | $ | 12,674 |  |  | 2.99 | % |  | $ | 14,168 |  |  | 3.33 | % |  |  |  |  |  |  |

The fourth quarter provision for credit losses was a negative $0.7 million primarily due to (1) net recoveries; (2) net reductions in ACL and ACL unfunded commitments due to reductions in outstanding construction commitments; and (3) improved forecasted general economic conditions, partially offset by increases in specific reserves. The provision was a negative $0.3 million for the preceding quarter and $0.7 million was recorded during the fourth quarter a year ago.
Non-interest income decreased to $2.5 million in the quarter ended December 31, 2023, compared to $2.6 million in the quarter ended September 30, 2023, and decreased from $2.9 million in the quarter ended December 31, 2022. The decrease from the third quarter of 2023 was largely due to lower gains on sale of loans and lower loan servicing income due to semiannual payments received in the first and third quarters, partially offset by higher net gains on investment securities due to increased valuations of equity securities.
Total non-interest expense increased $0.2 million in the fourth quarter of 2023 to $10.2 million, compared to $10.0 million for the quarter ended September 30, 2023, and decreased from $10.3 million for the quarter ended December 31, 2022. The increase in the fourth quarter of 2023 compared to the third quarter of 2023 was primarily due to branch closure expenses recorded in other expenses. Non-interest expense decreased $1.6 million for the twelve-months ended December 31, 2023, compared to the comparable prior year period, largely due to (1) lower incentive compensation resulting in $1.0 million lower compensation expense; (2) reduction in amortization of intangible assets of $0.7 million; and (3) new market tax credit depletion.
Provision for income taxes decreased to $1.0 million in the fourth quarter of 2023 from $2.5 million in the third quarter of 2023. In the third quarter, the Company recognized the year-to-date 2023 impact of the Wisconsin budget change, making income on commercial loans under $5 million non-taxable. The third and fourth quarters both reflect the impact of the resulting lower incremental tax rate. The lower incremental tax rate resulted in a one-time $1.8 million tax expense related to a reduction in the carrying value of the deferred tax asset, recorded in the third quarter of 2023. The related tax benefit recorded in the third quarter was $0.6 million. The effective tax rate was 20.9% for the quarter ended December 31, 2023, 50.5% for the quarter ended September 30, 2023, and 25.6% for the quarter ended December 31, 2022. Effective January 1, 2023, the Company early adopted ASU 2023-02. This guidance results in new market tax credit depletion being reclassified from non-interest expense to tax expense and changes the amortization method to be proportional to the tax credit realized. As a result, retained earnings increased $130
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thousand, effective January 1, 2023, and non-interest expense decreased by $162 thousand from the prior year fourth quarter results.
These financial results are preliminary until Form 10-K is filed in March 2024.
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 23 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,” “on pace,” “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 conditions in the financial markets and economic conditions generally; adverse impacts to the Company or Bank arising from the COVID-19 pandemic; acts of terrorism and political or military actions by the United States or other governments; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; higher lending risks associated with our commercial and agricultural banking activities; the sufficiency of accumulated credit loss allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; disintermediation risk; our ability to maintain our reputation; our ability to maintain or increase our market share; our ability to realize the benefits of net deferred tax assets; our inability to obtain needed liquidity; our ability to raise capital needed to fund growth or meet regulatory requirements; our ability to attract and retain key personnel; our ability to keep pace with technological change; prevalence of fraud and other financial crimes; cybersecurity risks; the possibility that our internal controls and procedures could fail or be circumvented; 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; restrictions on our ability to pay dividends; the potential volatility of our stock price; accounting standards for credit losses; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or Bank; public company reporting obligations; changes in federal or state tax laws; and changes in accounting principles, policies or guidelines and their impact on financial performance. 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, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 7, 2023 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.
1 Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as net income as adjusted, net income as adjusted per share, tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity, 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 and net income as adjusted per share are non-GAAP measures that eliminate the impact of certain expenses such as branch closure costs and related severance pay, accelerated depreciation expense and lease
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termination fees, and the gain on sale of branch deposits and fixed assets. Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity are non-GAAP measures that eliminate the impact of 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
(CZWI-ER)
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CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
(in thousands, except shares and per share data)

|  | December 31, 2023 (unaudited) |  | September 30, 2023 (unaudited) |  | June 30, 2023 (unaudited) |  | December 31, 2022 (audited) |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 37,138 |  |  | $ | 32,532 |  |  | $ | 42,969 |  |  | $ | 35,363 |  |  |  |  |
Other interest bearing deposits |  | — |  |  | — |  |  | — |  |  | 249 |  |  |  |  |
Securities available for sale “AFS” |  | 155,743 |  |  | 153,414 |  |  | 161,135 |  |  | 165,991 |  |  |  |  |
Securities held to maturity “HTM” |  | 91,229 |  |  | 92,336 |  |  | 93,800 |  |  | 96,379 |  |  |  |  |
Equity investments |  | 3,284 |  |  | 2,433 |  |  | 2,299 |  |  | 1,794 |  |  |  |  |
Other investments |  | 15,725 |  |  | 15,109 |  |  | 16,347 |  |  | 15,834 |  |  |  |  |
Loans receivable |  | 1,460,792 |  |  | 1,447,529 |  |  | 1,424,988 |  |  | 1,411,784 |  |  |  |  |
Allowance for credit losses |  | (22,908) |  |  | (22,973) |  |  | (23,164) |  |  | (17,939) |  |  |  |  |
Loans receivable, net |  | 1,437,884 |  |  | 1,424,556 |  |  | 1,401,824 |  |  | 1,393,845 |  |  |  |  |
Loans held for sale |  | 5,773 |  |  | 2,737 |  |  | 2,394 |  |  | — |  |  |  |  |
Mortgage servicing rights, net |  | 3,865 |  |  | 3,944 |  |  | 4,008 |  |  | 4,262 |  |  |  |  |
Office properties and equipment, net |  | 18,373 |  |  | 19,465 |  |  | 19,827 |  |  | 20,493 |  |  |  |  |
Accrued interest receivable |  | 5,409 |  |  | 5,936 |  |  | 5,702 |  |  | 5,285 |  |  |  |  |
Intangible assets |  | 1,694 |  |  | 1,873 |  |  | 2,052 |  |  | 2,449 |  |  |  |  |
Goodwill |  | 31,498 |  |  | 31,498 |  |  | 31,498 |  |  | 31,498 |  |  |  |  |
Foreclosed and repossessed assets, net |  | 1,795 |  |  | 1,046 |  |  | 1,199 |  |  | 1,271 |  |  |  |  |
Bank owned life insurance (“BOLI”) |  | 25,647 |  |  | 25,467 |  |  | 25,290 |  |  | 24,954 |  |  |  |  |
Other assets |  | 16,334 |  |  | 18,741 |  |  | 19,493 |  |  | 16,719 |  |  |  |  |
TOTAL ASSETS |  | $ | 1,851,391 |  |  | $ | 1,831,087 |  |  | $ | 1,829,837 |  |  | $ | 1,816,386 |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 1,519,092 |  |  | $ | 1,473,235 |  |  | $ | 1,464,682 |  |  | $ | 1,424,720 |  |  |  |  |
Federal Home Loan Bank (“FHLB”) advances |  | 79,530 |  |  | 114,530 |  |  | 122,530 |  |  | 142,530 |  |  |  |  |
Other borrowings |  | 67,465 |  |  | 67,407 |  |  | 67,357 |  |  | 72,409 |  |  |  |  |
Other liabilities |  | 11,970 |  |  | 10,513 |  |  | 9,710 |  |  | 9,639 |  |  |  |  |
Total liabilities |  | 1,678,057 |  |  | 1,665,685 |  |  | 1,664,279 |  |  | 1,649,298 |  |  |  |  |
Stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |
Common stock— $0.01 par value, authorized 30,000,000; 10,440,591, 10,468,091, 10,470,175 and 10,425,119 shares issued and outstanding, respectively |  | 104 |  |  | 105 |  |  | 105 |  |  | 104 |  |  |  |  |
Additional paid-in capital |  | 119,441 |  |  | 119,612 |  |  | 119,404 |  |  | 119,240 |  |  |  |  |
Retained earnings |  | 71,117 |  |  | 67,424 |  |  | 64,926 |  |  | 65,400 |  |  |  |  |
Accumulated other comprehensive loss |  | (17,328) |  |  | (21,739) |  |  | (18,877) |  |  | (17,656) |  |  |  |  |
Total stockholders’ equity |  | 173,334 |  |  | 165,402 |  |  | 165,558 |  |  | 167,088 |  |  |  |  |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |  | $ | 1,851,391 |  |  | $ | 1,831,087 |  |  | $ | 1,829,837 |  |  | $ | 1,816,386 |  |  |  |  |

Note: Certain items previously reported were reclassified for consistency with the current presentation.
9

CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations
(in thousands, except per share data)

|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, 2023 (unaudited) |  | September 30, 2023 (unaudited) |  |  |  | December 31, 2022 (unaudited) |  | December 31, 2023 (unaudited) |  | December 31, 2022 (audited)
Interest and dividend income: |  |  |  |  |  |  |  |  |  |  |  |
Interest and fees on loans |  | $ | 19,408 |  |  | $ | 19,083 |  |  |  |  | $ | 17,042 |  |  | $ | 73,577 |  |  | $ | 61,639 |
Interest on investments |  | 2,618 |  |  | 2,689 |  |  |  |  | 2,317 |  |  | 10,671 |  |  | 7,758 |
Total interest and dividend income |  | 22,026 |  |  | 21,772 |  |  |  |  | 19,359 |  |  | 84,248 |  |  | 69,397 |
Interest expense: |  |  |  |  |  |  |  |  |  |  |  |
Interest on deposits |  | 7,851 |  |  | 7,388 |  |  |  |  | 2,695 |  |  | 25,749 |  |  | 6,429 |
Interest on FHLB borrowed funds |  | 1,371 |  |  | 1,210 |  |  |  |  | 1,127 |  |  | 5,966 |  |  | 2,303 |
Interest on other borrowed funds |  | 1,057 |  |  | 1,053 |  |  |  |  | 1,059 |  |  | 4,184 |  |  | 4,296 |
Total interest expense |  | 10,279 |  |  | 9,651 |  |  |  |  | 4,881 |  |  | 35,899 |  |  | 13,028 |
Net interest income before provision for credit losses |  | 11,747 |  |  | 12,121 |  |  |  |  | 14,478 |  |  | 48,349 |  |  | 56,369 |
Provision for credit losses |  | (650) |  |  | (325) |  |  |  |  | 700 |  |  | (475) |  |  | 1,475 |
Net interest income after provision for credit losses |  | 12,397 |  |  | 12,446 |  |  |  |  | 13,778 |  |  | 48,824 |  |  | 54,894 |
Non-interest income: |  |  |  |  |  |  |  |  |  |  |  |
Service charges on deposit accounts |  | 485 |  |  | 491 |  |  |  |  | 513 |  |  | 1,949 |  |  | 2,018 |
Interchange income |  | 581 |  |  | 601 |  |  |  |  | 583 |  |  | 2,324 |  |  | 2,343 |
Loan servicing income |  | 539 |  |  | 611 |  |  |  |  | 527 |  |  | 2,218 |  |  | 2,439 |
Gain on sale of loans |  | 191 |  |  | 299 |  |  |  |  | 144 |  |  | 1,692 |  |  | 1,474 |
Loan fees and service charges |  | 124 |  |  | 140 |  |  |  |  | 179 |  |  | 432 |  |  | 679 |
Net gains on investment securities |  | 277 |  |  | 116 |  |  |  |  | 708 |  |  | 459 |  |  | 541 |
Other |  | 283 |  |  | 307 |  |  |  |  | 219 |  |  | 1,176 |  |  | 936 |
Total non-interest income |  | 2,480 |  |  | 2,565 |  |  |  |  | 2,873 |  |  | 10,250 |  |  | 10,430 |
Non-interest expense: |  |  |  |  |  |  |  |  |  |  |  |
Compensation and related benefits |  | 5,139 |  |  | 5,293 |  |  |  |  | 5,241 |  |  | 21,106 |  |  | 22,128 |
Occupancy |  | 1,314 |  |  | 1,335 |  |  |  |  | 1,353 |  |  | 5,431 |  |  | 5,490 |
Data processing |  | 1,511 |  |  | 1,536 |  |  |  |  | 1,355 |  |  | 5,951 |  |  | 5,453 |
Amortization of intangible assets |  | 179 |  |  | 179 |  |  |  |  | 252 |  |  | 755 |  |  | 1,449 |
Mortgage servicing rights expense, net |  | 159 |  |  | 150 |  |  |  |  | 157 |  |  | 615 |  |  | 222 |
Advertising, marketing and public relations |  | 262 |  |  | 185 |  |  |  |  | 255 |  |  | 734 |  |  | 1,017 |
FDIC premium assessment |  | 204 |  |  | 204 |  |  |  |  | 118 |  |  | 812 |  |  | 470 |
Professional services |  | 371 |  |  | 342 |  |  |  |  | 555 |  |  | 1,524 |  |  | 1,707 |
Losses (gains) on repossessed assets, net |  | — |  |  | 100 |  |  |  |  | (378) |  |  | 62 |  |  | (395) |
New market tax credit depletion |  | — |  |  | — |  |  |  |  | 162 |  |  | — |  |  | 650 |
Other |  | 1,067 |  |  | 645 |  |  |  |  | 1,266 |  |  | 3,152 |  |  | 3,552 |
Total non-interest expense |  | 10,206 |  |  | 9,969 |  |  |  |  | 10,336 |  |  | 40,142 |  |  | 41,743 |
Income before provision for income taxes |  | 4,671 |  |  | 5,042 |  |  |  |  | 6,315 |  |  | 18,932 |  |  | 23,581 |
Provision for income taxes |  | 978 |  |  | 2,544 |  |  |  |  | 1,619 |  |  | 5,873 |  |  | 5,820 |
Net income attributable to common stockholders |  | $ | 3,693 |  |  | $ | 2,498 |  |  |  |  | $ | 4,696 |  |  | $ | 13,059 |  |  | $ | 17,761 |
Per share information: |  |  |  |  |  |  |  |  |  |  |  |
Basic earnings |  | $ | 0.35 |  |  | $ | 0.24 |  |  |  |  | $ | 0.45 |  |  | $ | 1.25 |  |  | $ | 1.69 |
Diluted earnings |  | $ | 0.35 |  |  | $ | 0.24 |  |  |  |  | $ | 0.45 |  |  | $ | 1.25 |  |  | $ | 1.69 |
Cash dividends paid |  | $ | — |  |  | $ | — |  |  |  |  | $ | — |  |  | $ | 0.29 |  |  | $ | 0.26 |
Book value per share at end of period |  | $ | 16.60 |  |  | $ | 15.80 |  |  |  |  | $ | 16.03 |  |  | $ | 16.60 |  |  | $ | 16.03 |
Tangible book value per share at end of period (non-GAAP) |  | $ | 13.42 |  |  | $ | 12.61 |  |  |  |  | $ | 12.77 |  |  | $ | 13.42 |  |  | $ | 12.77 |

10

Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
(in thousands, except per share data)

|  | Three Months Ended |  | Twelve Months Ended |  |
|  | December 31, 2023 |  | September 30, 2023 |  | December 31, 2022 |  | December 31, 2023 |  | December 31, 2022 |  |
GAAP pretax income |  | $ | 4,671 |  |  | $ | 5,042 |  |  | $ | 6,315 |  |  | $ | 18,932 |  |  | $ | 23,581 |  |  |
Branch closure costs (1) |  | 380 |  |  | — |  |  | 646 |  |  | 380 |  |  | 981 |  |  |
Pretax income as adjusted (2) |  | $ | 5,051 |  |  | $ | 5,042 |  |  | $ | 6,961 |  |  | $ | 19,312 |  |  | $ | 24,562 |  |  |
Provision for income tax on net income as adjusted (3) |  | 1,058 |  |  | 2,544 |  |  | 1,785 |  |  | 5,991 |  |  | 6,062 |  |  |
Net income as adjusted (non-GAAP) (2) |  | $ | 3,993 |  |  | $ | 2,498 |  |  | $ | 5,176 |  |  | $ | 13,321 |  |  | $ | 18,500 |  |  |
GAAP diluted earnings per share, net of tax |  | $ | 0.35 |  |  | $ | 0.24 |  |  | $ | 0.45 |  |  | $ | 1.25 |  |  | $ | 1.69 |  |  |
Branch closure costs, net of tax |  | 0.03 |  |  | — |  |  | 0.04 |  |  | 0.03 |  |  | 0.07 |  |  |
Diluted earnings per share, as adjusted, net of tax (non-GAAP) |  | $ | 0.38 |  |  | $ | 0.24 |  |  | $ | 0.49 |  |  | $ | 1.28 |  |  | $ | 1.76 |  |  |
Average diluted shares outstanding |  | 10,457,184 |  |  | 10,470,098 |  |  | 10,460,025 |  |  | 10,470,298 |  |  | 10,513,773 |  |  |

(1) Branch closure costs include severance pay recorded in compensation and benefits and accelerated depreciation expense included in other non-interest expense in the consolidated statement of operations.
(2) Pretax income as adjusted and 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.
(3) Provision for income tax on net income as adjusted is calculated at our effective tax rate for each respective period presented.
11

Loan Composition
(in thousands)

|  | December 31, 2023 |  | September 30, 2023 |  | June 30, 2023 |  | December 31, 2022
Total Loans: |  |  |  |  |  |  |  |
Commercial/Agricultural real estate: |  |  |  |  |  |  |  |
Commercial real estate |  | $ | 750,531 |  |  | $ | 750,282 |  |  | $ | 732,435 |  |  | $ | 725,971 |
Agricultural real estate |  | 83,350 |  |  | 84,558 |  |  | 87,198 |  |  | 87,908 |
Multi-family real estate |  | 228,095 |  |  | 219,193 |  |  | 208,211 |  |  | 208,908 |
Construction and land development |  | 110,941 |  |  | 109,799 |  |  | 105,625 |  |  | 102,492 |
C&I/Agricultural operating: |  |  |  |  |  |  |  |
Commercial and industrial |  | 121,666 |  |  | 121,033 |  |  | 133,763 |  |  | 136,013 |
Agricultural operating |  | 25,691 |  |  | 24,552 |  |  | 24,358 |  |  | 28,806 |
Residential mortgage: |  |  |  |  |  |  |  |
Residential mortgage |  | 129,021 |  |  | 125,939 |  |  | 119,724 |  |  | 105,389 |
Purchased HELOC loans |  | 2,880 |  |  | 2,881 |  |  | 3,216 |  |  | 3,262 |
Consumer installment: |  |  |  |  |  |  |  |
Originated indirect paper |  | 6,535 |  |  | 7,175 |  |  | 8,189 |  |  | 10,236 |
Other consumer |  | 6,187 |  |  | 6,440 |  |  | 6,487 |  |  | 7,150 |
Gross loans |  | $ | 1,464,897 |  |  | $ | 1,451,852 |  |  | $ | 1,429,206 |  |  | $ | 1,416,135 |
Unearned net deferred fees and costs and loans in process |  | (2,900) |  |  | (3,048) |  |  | (2,827) |  |  | (2,585) |
Unamortized discount on acquired loans |  | (1,205) |  |  | (1,275) |  |  | (1,391) |  |  | (1,766) |
Total loans receivable |  | $ | 1,460,792 |  |  | $ | 1,447,529 |  |  | $ | 1,424,988 |  |  | $ | 1,411,784 |

Nonperforming Assets
(in thousands, except ratios)

|  | December 31, 2023 (1) |  | September 30, 2023 (1) |  | June 30, 2023 (1) |  | December 31, 2022 |  |  |  |
Nonperforming assets: |  |  |  |  |  |  |  |  |  |  |  |
Nonaccrual loans |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | $ | 10,359 |  |  | $ | 10,570 |  |  | $ | 11,359 |  |  | $ | 5,736 |  |  |  |  |
Agricultural real estate |  | 391 |  |  | 469 |  |  | 1,712 |  |  | 2,742 |  |  |  |  |
Construction and land development |  | 54 |  |  | 94 |  |  | 94 |  |  | — |  |  |  |  |
Commercial and industrial (“C&I”) |  | — |  |  | — |  |  | 4 |  |  | 552 |  |  |  |  |
Agricultural operating |  | 1,180 |  |  | 1,373 |  |  | 1,436 |  |  | 890 |  |  |  |  |
Residential mortgage |  | 1,167 |  |  | 923 |  |  | 1,029 |  |  | 1,253 |  |  |  |  |
Consumer installment |  | 33 |  |  | 27 |  |  | 29 |  |  | 31 |  |  |  |  |
Total nonaccrual loans |  | $ | 13,184 |  |  | $ | 13,456 |  |  | $ | 15,663 |  |  | $ | 11,204 |  |  |  |  |
Accruing loans past due 90 days or more |  | 389 |  |  | 971 |  |  | 492 |  |  | 246 |  |  |  |  |
Total nonperforming loans (“NPLs”) |  | 13,573 |  |  | 14,427 |  |  | 16,155 |  |  | 11,450 |  |  |  |  |
Foreclosed and repossessed assets, net |  | 1,795 |  |  | 1,046 |  |  | 1,199 |  |  | 1,271 |  |  |  |  |
Total nonperforming assets (“NPAs”) |  | $ | 15,368 |  |  | $ | 15,473 |  |  | $ | 17,354 |  |  | $ | 12,721 |  |  |  |  |
Loans, end of period |  | $ | 1,460,792 |  |  | $ | 1,447,529 |  |  | $ | 1,424,988 |  |  | $ | 1,411,784 |  |  |  |  |
Total assets, end of period |  | $ | 1,851,391 |  |  | $ | 1,831,087 |  |  | $ | 1,829,837 |  |  | $ | 1,816,386 |  |  |  |  |
Ratios: |  |  |  |  |  |  |  |  |  |  |  |
NPLs to total loans |  | 0.93 | % |  | 1.00 | % |  | 1.13 | % |  | 0.81 | % |  |  |  |
NPAs to total assets |  | 0.83 | % |  | 0.85 | % |  | 0.95 | % |  | 0.70 | % |  |  |  |

(1) Loan balances are at amortized cost.
12

Average Balances, Interest Yields and Rates
(in thousands, except yields and rates)

|  | Three Months Ended December 31, 2023 |  | Three Months Ended September 30, 2023 |  | Three Months Ended December 31, 2022
|  | 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 |  | $ | 16,699 |  |  | $ | 241 |  |  | 5.73 | % |  | $ | 21,298 |  |  | $ | 302 |  |  | 5.63 | % |  | $ | 8,134 |  |  | $ | 87 |  |  | 4.24 | %
Loans receivable |  | 1,458,558 |  |  | 19,408 |  |  | 5.28 | % |  | 1,435,284 |  |  | 19,083 |  |  | 5.27 | % |  | 1,399,244 |  |  | 17,042 |  |  | 4.83 | %
Interest bearing deposits |  | — |  |  | — |  |  | — | % |  | — |  |  | — |  |  | — | % |  | 337 |  |  | 2 |  |  | 2.35 | %
Investment securities (1) |  | 243,705 |  |  | 2,102 |  |  | 3.42 | % |  | 252,226 |  |  | 2,119 |  |  | 3.33 | % |  | 264,064 |  |  | 1,990 |  |  | 3.01 | %
Other investments |  | 15,760 |  |  | 275 |  |  | 6.92 | % |  | 15,511 |  |  | 268 |  |  | 6.85 | % |  | 15,783 |  |  | 238 |  |  | 5.98 | %
Total interest earning assets (1) |  | $ | 1,734,722 |  |  | $ | 22,026 |  |  | 5.04 | % |  | $ | 1,724,319 |  |  | $ | 21,772 |  |  | 5.01 | % |  | $ | 1,687,562 |  |  | $ | 19,359 |  |  | 4.55 | %
Average interest bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Savings accounts |  | $ | 175,281 |  |  | $ | 323 |  |  | 0.73 | % |  | $ | 199,279 |  |  | $ | 328 |  |  | 0.65 | % |  | $ | 226,082 |  |  | $ | 312 |  |  | 0.55 | %
Demand deposits |  | 329,096 |  |  | 1,680 |  |  | 2.03 | % |  | 354,073 |  |  | 1,863 |  |  | 2.09 | % |  | 379,011 |  |  | 836 |  |  | 0.88 | %
Money market accounts |  | 326,981 |  |  | 2,217 |  |  | 2.69 | % |  | 298,098 |  |  | 1,889 |  |  | 2.51 | % |  | 316,791 |  |  | 710 |  |  | 0.89 | %
CD’s |  | 368,110 |  |  | 3,631 |  |  | 3.91 | % |  | 358,238 |  |  | 3,308 |  |  | 3.66 | % |  | 205,201 |  |  | 837 |  |  | 1.62 | %
Total deposits |  | $ | 1,199,468 |  |  | $ | 7,851 |  |  | 2.60 | % |  | $ | 1,209,688 |  |  | $ | 7,388 |  |  | 2.42 | % |  | $ | 1,127,085 |  |  | $ | 2,695 |  |  | 0.95 | %
FHLB advances and other borrowings |  | 191,575 |  |  | 2,428 |  |  | 5.03 | % |  | 182,967 |  |  | 2,263 |  |  | 4.91 | % |  | 212,051 |  |  | 2,186 |  |  | 4.09 | %
Total interest bearing liabilities |  | $ | 1,391,043 |  |  | $ | 10,279 |  |  | 2.93 | % |  | $ | 1,392,655 |  |  | $ | 9,651 |  |  | 2.75 | % |  | $ | 1,339,136 |  |  | $ | 4,881 |  |  | 1.45 | %
Net interest income |  |  |  | $ | 11,747 |  |  |  |  |  |  | $ | 12,121 |  |  |  |  |  |  | $ | 14,478 |  |  |
Interest rate spread |  |  |  |  |  | 2.11 | % |  |  |  |  |  | 2.26 | % |  |  |  |  |  | 3.10 | %
Net interest margin (1) |  |  |  |  |  | 2.69 | % |  |  |  |  |  | 2.79 | % |  |  |  |  |  | 3.40 | %
Average interest earning assets to average interest bearing liabilities |  |  |  |  |  | 1.25 |  |  |  |  |  |  | 1.24 |  |  |  |  |  |  | 1.26 |

(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 December 31, 2023, September 30, 2023 and December 31, 2022. The FTE adjustment to net interest income included in the rate calculations totaled $0 thousand for each of the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively.

13

|  | Twelve Months Ended December 31, 2023 |  | Twelve Months Ended December 31, 2022
|  | 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 |  | $ | 18,469 |  |  | $ | 1,010 |  |  | 5.47 | % |  | $ | 19,796 |  |  | $ | 203 |  |  | 1.03 | %
Loans receivable |  | 1,430,035 |  |  | 73,577 |  |  | 5.15 | % |  | 1,351,052 |  |  | 61,639 |  |  | 4.56 | %
Interest bearing deposits |  | 63 |  |  | 1 |  |  | 1.59 | % |  | 1,106 |  |  | 24 |  |  | 2.17 | %
Investment securities (1) |  | 257,020 |  |  | 8,606 |  |  | 3.35 | % |  | 278,056 |  |  | 6,767 |  |  | 2.43 | %
Other investments |  | 16,274 |  |  | 1,054 |  |  | 6.48 | % |  | 15,230 |  |  | 764 |  |  | 5.02 | %
Total interest earning assets (1) |  | $ | 1,721,861 |  |  | $ | 84,248 |  |  | 4.89 | % |  | $ | 1,665,240 |  |  | $ | 69,397 |  |  | 4.17 | %
Average interest bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Savings accounts |  | $ | 200,087 |  |  | $ | 1,427 |  |  | 0.71 | % |  | $ | 234,755 |  |  | $ | 753 |  |  | 0.32 | %
Demand deposits |  | 359,866 |  |  | 6,727 |  |  | 1.87 | % |  | 403,289 |  |  | 1,881 |  |  | 0.47 | %
Money market accounts |  | 306,020 |  |  | 6,976 |  |  | 2.28 | % |  | 317,879 |  |  | 1,721 |  |  | 0.54 | %
CD’s |  | 317,376 |  |  | 10,619 |  |  | 3.35 | % |  | 178,726 |  |  | 2,074 |  |  | 1.16 | %
Total deposits |  | $ | 1,183,349 |  |  | $ | 25,749 |  |  | 2.18 | % |  | $ | 1,134,649 |  |  | $ | 6,429 |  |  | 0.57 | %
FHLB advances and other borrowings |  | 208,373 |  |  | 10,150 |  |  | 4.87 | % |  | 189,274 |  |  | 6,599 |  |  | 3.49 | %
Total interest bearing liabilities |  | $ | 1,391,722 |  |  | $ | 35,899 |  |  | 2.58 | % |  | $ | 1,323,923 |  |  | $ | 13,028 |  |  | 0.98 | %
Net interest income |  |  |  | $ | 48,349 |  |  |  |  |  |  | $ | 56,369 |  |  |
Interest rate spread |  |  |  |  |  | 2.31 | % |  |  |  |  |  | 3.19 | %
Net interest margin (1) |  |  |  |  |  | 2.81 | % |  |  |  |  |  | 3.39 | %
Average interest earning assets to average interest bearing liabilities |  |  |  |  |  | 1.24 |  |  |  |  |  |  | 1.26 |

(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 twelve months December 31, 2023 and December 31, 2022. The FTE adjustment to net interest income included in the rate calculations totaled $0 and $1 thousand for the twelve months ended December 31, 2023 and December 31, 2022, respectively.
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Key Financial Metric Ratios:

|  | Three Months Ended |  | Twelve Months Ended |  |
|  | December 31, 2023 |  | September 30, 2023 |  | December 31, 2022 |  |  |  |  | December 31, 2023 |  | December 31, 2022 |  |
Ratios based on net income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Return on average assets (annualized) |  | 0.79 | % |  | 0.54 | % |  | 1.03 | % |  |  |  |  | 0.71 | % |  | 1.00 | % |  |
Return on average equity (annualized) |  | 8.72 | % |  | 5.97 | % |  | 11.32 | % |  |  |  |  | 7.87 | % |  | 10.70 | % |  |
Return on average tangible common equity 4 (annualized) |  | 11.29 | % |  | 7.74 | % |  | 14.85 | % |  |  |  |  | 10.26 | % |  | 14.36 | % |  |
Efficiency ratio |  | 72 | % |  | 67 | % |  | 61 | % |  |  |  |  | 68 | % |  | 61 | % |  |
Net interest margin with loan purchase accretion |  | 2.69 | % |  | 2.79 | % |  | 3.40 | % |  |  |  |  | 2.81 | % |  | 3.39 | % |  |
Net interest margin without loan purchase accretion |  | 2.67 | % |  | 2.76 | % |  | 3.33 | % |  |  |  |  | 2.78 | % |  | 3.29 | % |  |
Ratios based on net income as adjusted (non-GAAP) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Return on average assets as adjusted 2 (annualized) |  | 0.86 | % |  | 0.54 | % |  | 1.14 | % |  |  |  |  | 0.73 | % |  | 1.04 | % |  |
Return on average equity as adjusted 3 (annualized) |  | 9.43 | % |  | 5.97 | % |  | 12.47 | % |  |  |  |  | 8.03 | % |  | 11.15 | % |  |

Reconciliation of Return on Average Assets
(in thousands, except ratios)

|  | Three Months Ended |  | Twelve Months Ended |  |  |
|  | December 31, 2023 |  | September 30, 2023 |  | December 31, 2022 |  | December 31, 2023 |  | December 31, 2022 |  |  |
GAAP earnings after income taxes |  | $ | 3,693 |  |  | $ | 2,498 |  |  | $ | 4,696 |  |  | $ | 13,059 |  |  | $ | 17,761 |  |  |  |
Net income as adjusted after income taxes (non-GAAP) (1) |  | $ | 3,993 |  |  | $ | 2,498 |  |  | $ | 5,176 |  |  | $ | 13,321 |  |  | $ | 18,500 |  |  |  |
Average assets |  | $ | 1,843,789 |  |  | $ | 1,836,775 |  |  | $ | 1,803,155 |  |  | $ | 1,836,337 |  |  | $ | 1,775,049 |  |  |  |
Return on average assets (annualized) |  | 0.79 | % |  | 0.54 | % |  | 1.03 | % |  | 0.71 | % |  | 1.00 | % |  |  |
Return on average assets as adjusted (non-GAAP) (annualized) |  | 0.86 | % |  | 0.54 | % |  | 1.14 | % |  | 0.73 | % |  | 1.04 | % |  |  |

(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of Return on Average Equity
(in thousands, except ratios)

|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, 2023 |  | September 30, 2023 |  | December 31, 2022 |  | December 31, 2023 |  | December 31, 2022
GAAP earnings after income taxes |  | $ | 3,693 |  |  | $ | 2,498 |  |  | $ | 4,696 |  |  | $ | 13,059 |  |  | $ | 17,761 |
Net income as adjusted after income taxes (non-GAAP) (1) |  | $ | 3,993 |  |  | $ | 2,498 |  |  | $ | 5,176 |  |  | $ | 13,321 |  |  | $ | 18,500 |
Average equity |  | $ | 168,058 |  |  | $ | 166,131 |  |  | $ | 164,621 |  |  | $ | 165,968 |  |  | $ | 165,921 |
Return on average equity (annualized) |  | 8.72 | % |  | 5.97 | % |  | 11.32 | % |  | 7.87 | % |  | 10.70 | %
Return on average equity as adjusted (non-GAAP) (annualized) |  | 9.43 | % |  | 5.97 | % |  | 12.47 | % |  | 8.03 | % |  | 11.15 | %

(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
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Reconciliation of Efficiency Ratio
(in thousands, except ratios)

|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, 2023 |  | September 30, 2023 |  |  |  | December 31, 2022 |  | December 31, 2023 |  | December 31, 2022
Non-interest expense (GAAP) |  | $ | 10,206 |  |  | $ | 9,969 |  |  |  |  | $ | 10,336 |  |  | $ | 40,142 |  |  | $ | 41,743 |
Less amortization of intangibles |  | (179) |  |  | (179) |  |  |  |  | (252) |  |  | (755) |  |  | (1,449) |
Efficiency ratio numerator (GAAP) |  | $ | 10,027 |  |  | $ | 9,790 |  |  |  |  | $ | 10,084 |  |  | $ | 39,387 |  |  | $ | 40,294 |
Non-interest income |  | $ | 2,480 |  |  | $ | 2,565 |  |  |  |  | $ | 2,873 |  |  | $ | 10,250 |  |  | $ | 10,430 |
(Gain) loss on investment securities |  | (277) |  |  | (116) |  |  |  |  | (708) |  |  | (459) |  |  | (541) |
Net interest margin |  | 11,747 |  |  | 12,121 |  |  |  |  | 14,478 |  |  | 48,349 |  |  | 56,369 |
Efficiency ratio denominator (GAAP) |  | $ | 13,950 |  |  | $ | 14,570 |  |  |  |  | $ | 16,643 |  |  | $ | 58,140 |  |  | $ | 66,258 |
Efficiency ratio (GAAP) |  | 72 | % |  | 67 | % |  |  |  | 61 | % |  | 68 | % |  | 61 | %

Reconciliation of tangible book value per share (non-GAAP)
(in thousands, except per share data)

Tangible book value per share at end of period |  | December 31, 2023 |  | September 30, 2023 |  | June 30, 2023 |  | December 31, 2022 |  |  |  |
Total stockholders’ equity |  | $ | 173,334 |  |  | $ | 165,402 |  |  | $ | 165,558 |  |  | $ | 167,088 |  |  |  |  |
Less: Goodwill |  | (31,498) |  |  | (31,498) |  |  | (31,498) |  |  | (31,498) |  |  |  |  |
Less: Intangible assets |  | (1,694) |  |  | (1,873) |  |  | (2,052) |  |  | (2,449) |  |  |  |  |
Tangible common equity (non-GAAP) |  | $ | 140,142 |  |  | $ | 132,031 |  |  | $ | 132,008 |  |  | $ | 133,141 |  |  |  |  |
Ending common shares outstanding |  | 10,440,591 |  |  | 10,468,091 |  |  | 10,470,175 |  |  | 10,425,119 |  |  |  |  |
Book value per share |  | $ | 16.60 |  |  | $ | 15.80 |  |  | $ | 15.81 |  |  | $ | 16.03 |  |  |  |  |
Tangible book value per share (non-GAAP) |  | $ | 13.42 |  |  | $ | 12.61 |  |  | $ | 12.61 |  |  | $ | 12.77 |  |  |  |  |

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 |  | December 31, 2023 |  | September 30, 2023 |  | June 30, 2023 |  | December 31, 2022 |  |  |  |
Total stockholders’ equity |  | $ | 173,334 |  |  | $ | 165,402 |  |  | $ | 165,558 |  |  | $ | 167,088 |  |  |  |  |
Less: Goodwill |  | (31,498) |  |  | (31,498) |  |  | (31,498) |  |  | (31,498) |  |  |  |  |
Less: Intangible assets |  | (1,694) |  |  | (1,873) |  |  | (2,052) |  |  | (2,449) |  |  |  |  |
Tangible common equity (non-GAAP) |  | $ | 140,142 |  |  | $ | 132,031 |  |  | $ | 132,008 |  |  | $ | 133,141 |  |  |  |  |
Total Assets |  | $ | 1,851,391 |  |  | $ | 1,831,087 |  |  | $ | 1,829,837 |  |  | $ | 1,816,386 |  |  |  |  |
Less: Goodwill |  | (31,498) |  |  | (31,498) |  |  | (31,498) |  |  | (31,498) |  |  |  |  |
Less: Intangible assets |  | (1,694) |  |  | (1,873) |  |  | (2,052) |  |  | (2,449) |  |  |  |  |
Tangible Assets (non-GAAP) |  | $ | 1,818,199 |  |  | $ | 1,797,716 |  |  | $ | 1,796,287 |  |  | $ | 1,782,439 |  |  |  |  |
Total stockholders’ equity to total assets ratio |  | 9.36 | % |  | 9.03 | % |  | 9.05 | % |  | 9.20 | % |  |  |  |
Tangible common equity as a percent of tangible assets (non-GAAP) |  | 7.71 | % |  | 7.34 | % |  | 7.35 | % |  | 7.47 | % |  |  |  |

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Reconciliation of Return on Average Tangible Common Equity (non-GAAP)
(in thousands, except ratios)

|  | Three Months Ended |  | Twelve Months Ended |  |  |  |  |  |
|  | December 31, 2023 |  | September 30, 2023 |  | December 31, 2022 |  | December 31, 2023 |  | December 31, 2022 |  |  |  |  |  |
Total stockholders’ equity |  | $ | 173,334 |  |  | $ | 165,402 |  |  | $ | 167,088 |  |  | $ | 173,334 |  |  | $ | 167,088 |  |  |  |  |  |  |
Less: Goodwill |  | (31,498) |  |  | (31,498) |  |  | (31,498) |  |  | (31,498) |  |  | (31,498) |  |  |  |  |  |  |
Less: Intangible assets |  | (1,694) |  |  | (1,873) |  |  | (2,449) |  |  | (1,694) |  |  | (2,449) |  |  |  |  |  |  |
Tangible common equity (non-GAAP) |  | $ | 140,142 |  |  | $ | 132,031 |  |  | $ | 133,141 |  |  | $ | 140,142 |  |  | $ | 133,141 |  |  |  |  |  |  |
Average tangible common equity (non-GAAP) |  | $ | 134,776 |  |  | $ | 132,671 |  |  | $ | 130,577 |  |  | $ | 132,409 |  |  | $ | 131,305 |  |  |  |  |  |  |
GAAP earnings after income taxes |  | 3,693 |  |  | 2,498 |  |  | 4,696 |  |  | 13,059 |  |  | 17,761 |  |  |  |  |  |  |
Amortization of intangible assets, net of tax |  | 142 |  |  | 89 |  |  | 190 |  |  | 521 |  |  | 1,095 |  |  |  |  |  |  |
Tangible net income |  | $ | 3,835 |  |  | $ | 2,587 |  |  | $ | 4,886 |  |  | $ | 13,580 |  |  | $ | 18,856 |  |  |  |  |  |  |
Return on average tangible common equity (annualized) |  | 11.29 | % |  | 7.74 | % |  | 14.85 | % |  | 10.26 | % |  | 14.36 | % |  |  |  |  |  |

1 Net income as adjusted and net income as adjusted per share are non-GAAP financial measures 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)”.
2 Return 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)”.
3 Return 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)”.
4 Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on tangible common equity are non-GAAP measures 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)”, “Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)”, and “Reconciliation of return on average tangible common equity)”.
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