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Citizens Community Bancorp Inc (CZWI) Reports 3Q2023 Earnings of $0.24 Per Share Amid Tax Changes

  • Citizens Community Bancorp Inc (NASDAQ:CZWI) reported 3Q2023 earnings of $2.5 million, or $0.24 per diluted share, compared to $3.2 million and $0.31 per diluted share for the quarter ended June 30, 2023.

  • For the first nine months of 2023, earnings were $9.4 million, or $0.89 per diluted share, compared to earnings of $13.1 million, or $1.24 per diluted share for the first nine months of 2022.

  • Net interest income increased $0.4 million to $12.1 million for the quarter ended September 30, 2023, from $11.7 million the previous quarter.

  • The effective tax rate increased to 50.5% for the third quarter from 25.5% in the second quarter due to a new Wisconsin budget signed July 5, 2023.


On October 24, 2023, Citizens Community Bancorp Inc (NASDAQ:CZWI) released its earnings report for the third quarter of 2023. The company reported earnings of $2.5 million, or $0.24 per diluted share, for the quarter ended September 30, 2023. This is a decrease from the $3.2 million and $0.31 per diluted share reported for the quarter ended June 30, 2023, and the $4.0 million and $0.38 per diluted share reported for the quarter ended September 30, 2022.

Financial Performance and Challenges


For the first nine months of 2023, Citizens Community Bancorp Inc (NASDAQ:CZWI) reported earnings of $9.4 million, or $0.89 per diluted share. This is a decrease from the $13.1 million, or $1.24 per diluted share, reported for the first nine months of 2022. The company's third quarter 2023 operating results reflected several changes from the second quarter of 2023, including a one-time $1.8 million tax expense related to a reduction in the carrying value of the net deferred tax asset due to the impact of the Wisconsin taxation change decreasing the incremental tax rate, partially offset by a $0.6 million tax benefit due to a lower tax rate.

Financial Achievements


The company's net interest income increased by $0.4 million to $12.1 million for the quarter ended September 30, 2023, from $11.7 million the previous quarter. This increase is due to the recognition of $0.4 million of interest income on the payoff of a nonaccrual loan, with positive asset repricing and higher non-interest bearing checking balances offsetting the impact of higher liability costs.

Income Statement, Balance Sheet, and Cash Flow Statement Details


The company's effective tax rate increased to 50.5% for the third quarter from 25.5% in the second quarter. This increase is due to a Wisconsin budget signed July 5, 2023, effective January 1, 2023, which makes originated loans in Wisconsin for business purposes of up to $5.0 million non-taxable. The third quarter reflects three quarters of the benefit, retroactive to January 1, 2023, reducing income tax expense $0.6 million. This positive impact was more than offset by a one-time $1.8 million expense, related to a reduction in the carrying value of the deferred tax asset, due to the impact of the Wisconsin law decreasing the incremental tax rate.

Company's Performance Analysis


The company's gross loans increased by $22.6 million during the third quarter ended September 30, 2023, to $1.45 billion from $1.43 billion at June 30, 2023. Nonperforming assets were $15.5 million at September 30, 2023, compared to $17.4 million at June 30, 2023. The decrease is due to the payoff of a nonaccrual agricultural loan, payments on nonaccrual loans, and modest new nonaccrual additions and modest additions of ninety day plus delinquent loans still accruing.

Other Pertinent Details


The company's stockholders equity as a percent of total assets was 9.03% at September 30, 2023, compared to 9.05% at June 30, 2023. The positive impact of net income and amortization of intangibles was largely offset by an increase in the unrealized losses in the available for sale (AFS) investment portfolio.

This article first appeared on GuruFocus.

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