Citizens Community Bancorp, Inc. · NASDAQ:CZWI
Citizens Community Bancorp — D.A. Davidson Financial Institutions Conference 2019
28 slides from Citizens Community Bancorp's conference presentation, May 6, 2019
Slide 1: Exhibit 99.1 Investor Presentation Materials
Exhibit 99.1 The following presentation materials will be used by Citizens Community Bancorp, Inc. at one or more investor relations conferences, or meetings with analysts or potential investors. 1
Slide 2: D.A. Davidson Financial Institutions Conference May 7-8, 2019
Filed Pursuant to Rule 433 Registration Statement No. __________ Issuer Free Writing Prospectus Dated October __, 2015 Relating to Preliminary Prospectus Supplement Dated October __, 2015 D.A. Davidson Financial Institutions Conference May 7-8, 2019 2
Slide 3: Cautionary Notes and Additional Disclosures
Cautionary Notes and Additional Disclosures CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This presentation contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements inc
Slide 4: Cautionary Notes and Additional Disclosures (Cont'd)
Cautionary Notes and Additional Disclosures (Cont’d) NON-GAAP FINANCIAL MEASURES These slides may contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the registrant's historical or future financial performance, financial position
Slide 5: CZWI Focus Items
CZWI Focus Items ENHANCING THE QUANTITY AND QUALITY OF EARNINGS We are enhancing shareholder value by improving the loan and deposit mix, deepening customer relationships and strengthening other sources of revenue. EXPERTISE IN COMMERCIAL & AG BANKING We take pride in serving small and mid-sized bus
Slide 6: Key Market Differentiators
Key Market Differentiators • Serving small to mid-sized • Experienced, energetic entrepreneurs leadership team • Responsive professionals • Accountability for doing the • Products to compete vs. big right thing and getting results banks, superior to smaller • Entrepreneurial spirit, winning communit
Slide 7: Execution of Current Business Strategy
Execution of Current Business Strategy Total Loans Loans / Deposits $1,200 120% $993 $1,020 $1,000 110% 103% 102% $759 99% 99% 99% $800 $733 100% $574 $600 90% $400 80% $200 70% $0 60% 2016 2017 2018 Dec-18 Mar-19 2016 2017 2018 Dec-18 Mar-19 NPAs / Assets(1) 3.0% 2.5% 2.0% 1.49% 1.5% 1.14% 1.03% 1.
Slide 8: Execution of Current Business Strategy
Execution of Current Business Strategy (1) (1) (3) (2) (2) (2) (2) (1) Return on Average Assets (ROAA); Return on Average Tangible Common Equity (ROATCE) (2) Annualized (3) Non-GAAP financial measure: see appendix for reconciliations Note: Dec-18 refers to the 3 – Month period ended December 31, 201
Slide 9: Net Income and Diluted EPS
Net Income and Diluted EPS Net Income as Adjusted and EPS Income as Adjusted are non-GAAP financial measures, which management believes may be helpful in understanding the Company's results of operations or financial position and comparing results over different periods. Reconciliation of Income and
Slide 10: Loan Portfolio
Loan Portfolio . CZWI has transformed its loan portfolio through organic growth and acquisitions . Change has occurred from a primarily consumer focused portfolio to a diversified mix consisting of commercial real estate, agricultural and commercial business loans . Credit quality remains a focus in
Slide 11: Commercial Loan Detail
Commercial Loan Detail . Commercial loan portfolio well diversified . Total portfolio of $732.9 million at 03/31/2019 . Strong growth in all commercial loan categories . Average note size is under $264 thousand ($M) Dec-18 Mar-19 C&D $35.1 $42.4 Non-Owner Occ. CRE 133.3 145.2 Investor 1-4 CRE 62.8 9
Slide 12: Deposit Composition
Deposit Composition . Since 2016 FQ2, demand deposit growth has significantly outpaced the growth of the rest of the portfolio . CZWI remains focused on a lower cost deposit base Deposit Composition - Quarter Lookback ($000) 2017 FQ2 2017 FQ3 2017 FQ4 2018 FQ1 2018 FQ2 2018 FQ3 2018 FQ4 Dec-18 Mar-1
Slide 13: Market Demographics
Market Demographics CZWI operates in diverse markets within the northwestern region of Wisconsin, metro Twin Cities and the Mankato, Minnesota MSA Eau Claire: . Features a broad-based, diverse economy, which is driven by commercial, retail and medical industries Mankato: . The Mankato market also
Slide 14: Net Interest Margin Analysis
Net Interest Margin Analysis Quarter ended March 31, 2019 Quarter ended December 31, 2018 Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ ($ Dollars in Thousands) Balance Expense Rate Balance Expense Rate Average interest earning assets: Cash and cash equivalents $ 26
Slide 15: Recent Franchise Expansion
Recent Franchise Expansion CZWI has been focused on transforming the Company away from a consumer based bank into a commercial focused operation, creating a strengthened franchise value through this process 2016 Acquisition of 2 Central Bank branches in Northwestern WI: $27.1 million deposits 2016
Slide 16: Pro Forma Map
Pro Forma Map CZWI Locations (1) F. & M. Bancorp Locations (1) Includes acquisition of United Bank Source: S&P Global Market Intelligence 16
Slide 17: Transaction Highlights
Transaction Highlights • Transaction adds an adjacent market to CZWI’s Wisconsin presence with Tomah branch locations that are attractively located nearby CZWI’s Eau Claire and Osseo markets • Transaction provides CZWI with a stable, modestly priced deposit base for organic growth opportunities • At
Slide 18: Transaction Rationale
Transaction Rationale . Straightforward follow-on acquisition to United Bank with stable deposits concentrated in one market . Strategic Accelerates pro forma franchise growth in total assets and deposits . Consistent with CZWI’s strategy of “re-formulating” its loan and Rationale deposit compositio
Slide 19: Transaction Terms
Transaction Terms F. & M. Bancorp of Tomah Transaction Value(1) $21.6 million Consideration 85% Cash, 15% Stock Price/TBV 105.8% Price/LTM EPS(2) 16.0x Customary regulatory and F. & M. Bancorp of Required Approvals Tomah shareholder approval Expected Closing Summer 2019 (1) Based on total F. & M. Ba
Slide 20: Pro Forma Loans
Pro Forma Loans CZWI F. & M. ProForma Composition Composition Composition Loan Type ($000) % of Total Loan Type ($000) % of Total Loan Type ($000) % of Total Constr & Dev 53,588 5.2% Constr & Dev 2,751 2.1% Constr & Dev 56,339 4.9% 1-4 Family Residential 149,765 14.6% 1-4 Family Residential 18,246 1
Slide 21: Pro Forma Deposits
Pro Forma Deposits CZWI F. & M. ProForma Composition Composition Composition Deposit Type ($000) % of Total Deposit Type ($000) % of Total Deposit Type ($000) % of Total Non Interest Bearing 141,793 13.8% Non Interest Bearing 20,858 13.8% Non Interest Bearing 162,651 13.8% NOW & Other Trans 192,212
Slide 22: Pro Forma Balance Sheet
Pro Forma Balance Sheet Dollars in thousands, except per share data Pro Forma Balance Sheet: Fair Value M&A CZWI F. & M. Bancorp Pro Forma Adjustments Adjustments 3/31/19 3/31/19 Cash and equivalents $ 47,593 $ 18,729 $ - $ (25,351) G $ 40,971 Securities 165,094 41,745 - - $ 206,839 Total loans held
Slide 23: Pro Forma Balance Sheet Footnotes
Pro Forma Balance Sheet Footnotes A) 2.2% credit mark; 3.0% interest rate mark; 5.2% total loan mark B) Reversal of existing F. & M. reserves C) 20% mark on OREO D) Deferred tax liability related to E) Deposit fair value adjustment F) Borrowing fair value adjustment G) Cash consideration + options c
Slide 24: Disciplined Acquisition Strategy
Disciplined Acquisition Strategy Strategic consolidation of community banks Areas of Potential Acquisition Opportunities . Provides scale and operating efficiencies . Adds experienced and knowledgeable banking talent CZWI Locations . Opportunity to continue commercial loan growth F. & M. Locations
Slide 25: Appendix
Citizens Community Bancorp Inc. aA Appendix
Slide 26: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of GAAP Earnings and Core Earnings (non-GAAP): FY 2016 FY 2017 FY 2018 Dec-18 Mar-19 GAAP pre-tax earnings $ 3,859 $ 3,822 $ 6,609 $ 1,822 $ 1,275 Merger related costs (1) 701 1,860 463 1,057 659 Branch closure costs (2) 839 951 26 12 15 S
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (1) Costs incurred are included as data processing, advertising, marketing and public relations, professional fees, compensation and other non-interest expense in the consolidated statement of operations and include costs of $119,000, $461,000 and $0 for
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Return on Average Tangible Common Equity (ROATCE) (In thousands except ROATCE) 2016 2017 2018 Dec-18 Mar-19 Common Equity $ 64,544 $ 73,483 $ 135,847 138,187 138,380 Less: Goodwill (4,663) (10,444) (10,444) (31,474) (31,474) Less: Core Deposit and other
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