Citizens Community Bancorp, Inc. · NASDAQ:CZWI
Citizens Community Bancorp — Investor Presentation (June 2018)
46 slides from Citizens Community Bancorp's investor presentation, Jun 21, 2018
Slide 1: $65,000,000 Private Placement, June 2018
Filed Pursuant to Rule 433 ExRegistration Statement No. __________ Issuer Free Writing Prospectus Dated October __, 2015 Relating to Preliminary Prospectus SupplemeEXHIBITnt Dated Oc99.2tober __, 2015 $65,000,000 Private Placement June 2018 Strictly Confidential 1
Slide 2: Caution Regarding Forward Looking Statements
Caution 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 include, but are not limited to, descriptions of the fi
Slide 3: Unaudited Pro Forma Financial Information
Unaudited Pro Forma Financial Information This presentation contains certain unaudited pro forma information regarding the financial condition and results of operations of the company after giving effect to the private placement, acquisition and other pro forma adjustments. The unaudited pro forma i
Slide 4: Additional Disclosures & Abbreviations
Additional Disclosures & Abbreviations DOCUMENTS INCORPORATED BY REFERENCE This presentation should be read in conjunction with any documents that are filed by the Company with the Securities and Exchange Commission (SEC), including, without limitation, its Annual Report on Form 10-K for the year en
Slide 5: Offering Summary
Offering Summary Issuer: Citizens Community Bancorp, Inc. Ticker: NASDAQ: CZWI Offering Type: Private placement Security Type: Mandatorily convertible preferred stock Offering Amount: $65,000,000 Expected Closing Date: June 2018 Convertible into common stock; mandatory conversion immediately followi
Slide 6: Offering Rationale
Offering Rationale ❑ Offering an attractive valuation and entry point for a pro forma $1.2 billion asset institution ❑ Proposed acquisition of United Bank is consistent with CZWI’s turnaround and expansion strategy and is expected to substantially increase the Company’s presence in it’s primary mark
Slide 7: Company Overview: Citizens Community Bancorp, Inc.
Company Overview: Citizens Community Bancorp, Inc.(1) ❑ Operates 21 branches primarily located in southeastern Minnesota and northwestern Wisconsin(2) CZWI Locations ❑ Balance Sheet (2018 FQ2): ▪ Assets – $940.4 million ▪ Gross Loans – $725.1 million ▪ Deposits – $748.6 million ▪ Tangible Common Equ
Slide 8: Experienced Leadership Team
Experienced Leadership Team Stephen M. “Steve” Bianchi – President & Chief Executive Officer Board of Directors Mr. Bianchi has served as President and Chief Executive Officer of Name Bio the Company and President and a director of Citizens Community Federal N.A., the Company's wholly owned subsidia
Slide 9: Recent Franchise Expansion
Recent Franchise Expansion ❑ CZWI has been focused on transforming the Company away from a consumer based bank into a commercial focused operation, creating a strengthened franchise value through this process ❑ The proposed acquisition of United Bank is consistent with this strategy, particularly gi
Slide 10: Financial Performance Since 2014
Financial Performance Since 2014(1) CAGR Balance Sheet ($ in millions) 2014 2015 2016 2017 2018(2) Since 2014 Total Assets $570 $580 $696 $941 $940 15.4% Total Loans $470 $451 $574 $733 $721 13.0% Deposits $450 $456 $558 $743 $749 15.7% Loans/Deposits 104% 99% 103% 99% 96% Net Income $2.5 $2.8 $2.6
Slide 11: 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 12: 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 banks, superior to smaller results community banks • Entrepreneurial spirit,
Slide 13: Execution of Current Business Strategy
Execution of Current Business Strategy Total Loans Loans / Deposits $1,000 120% 110% $800 $733 $721 104% 103% 99% 99% $574 100% 96% $600 $470 $451 90% $400 80% $200 70% $0 60% 2014 2015 2016 2017 2018YTD 2014 2015 2016 2017 2018YTD NPAs / Assets(1) Diluted Earnings Per Share 3.0% $1.00 2.5% $0.80 2.
Slide 14: Execution of Current Business Strategy
Execution of Current Business Strategy Net Income ($000) Efficiency Ratio $4,000 90.0% 83.6% 84.7% $3,500 80.0% 77.4% 77.0% $2,806 $3,000 $2,681 74.1% $2,510 $2,573 $2,499 $2,500 70.0% $2,000 $1,500 60.0% $1,000 50.0% $500 $0 40.0% 2014 2015 2016 2017 2018YTD 2014 2015 2016 2017 2018YTD (1) ROAA ROA
Slide 15: Net Income and Diluted EPS
Net Income and Diluted EPS ▪ Positive earnings trends ▪ First half of FY 2018 shows impact of Wells acquisition First Half First Half (In $000’s) Net Income ($000) Diluted EPS $5,000 $1.00 $4,260 $0.79 $4,000 $3,563 $3,322 $0.75 $0.67 $3,143 $0.62 $2,806 $0.54 $3,000 $2,573 $2,499 $2,681 $0.52 $0.49
Slide 16: Loan Portfolio
Loan Portfolio ▪ CZWI has transformed its loan 100% portfolio through organic growth and acquisitions 80% 1-4 Family ▪ Cons & Other Change has occurred from a C&D - 1-4 Family 60% primarily consumer focused C&D - Commercial Ag. Real Estate portfolio to a diversified mix Ag. consisting of commercial
Slide 17: Commercial Loan Detail
Commercial Loan Detail ▪ Commercial loan portfolio well diversified C&I & Own. Occ. CRE C&D CRE $115.2 million C&I 4.2% ▪ 15.4% $119.2 Total portfolio of $322.1 million at 3/31/2018 million ▪ Non-Owner Occ. Strong growth in all commercial loan categories CRE 20.9% ▪ Average note size is under $225 t
Slide 18: Deposit Composition
Deposit Composition 100% ▪ Since 2016 FQ2, demand deposit growth has Demand 80% significantly outpaced the NOW & Other growth of the rest of the Trans. portfolio 60% MMDA & Sav ▪ CZWI remains focused on a 40% lower cost deposit base CDs < 100k 20% CDs > 100k 0% 2016 FQ2 2016 FQ3 2016 FQ4 2017 FQ1 20
Slide 19: Market Demographics
Market Demographics ❑ CZWI operates in diverse markets within the northwestern region of Wisconsin, metro Twin Cities and the Mankato, Minnesota MSA Eau Claire: ▪ Features a broad-based, diverse economy, which is driven by commercial, retail and medical industries Mankato: ▪ The Mankato market also
Slide 20: Net Interest Margin Analysis
Net Interest Margin Analysis 2017 FY YTD March 31, 2018 Average Income/ Average Average Income/ Average ($ Dollars in Thousands) Balance Expense Rates Balance Expense Rates Interest earning assets: Cash and Equivalents 19,368 139 0.72% $ 27,659 $ 130 0.94% Loans $ 568,670 $ 25,826 4.54% 729,185 17,2
Slide 21: Capital Raising Thought Process
Capital Raising Thought Process • Following its recent acquisition of Wells Financial in mid 2017, CZWI began evaluating the timing of a smaller capital raise intended to (i) strengthen TCE / TA and consolidated regulatory capital ratios and (ii) “right size“ the Company’s capital ratios Strengthen
Slide 22: Proposed Acquisition – United Bank
Proposed Acquisition – United Bank Transaction Terms Financial Highlights – United Bank For the Twelve Months Ended Quarters Ended ($000) 12/31/15 12/31/16 12/31/17 03/31/18 Transaction Value: $50.7 million Balance Sheet Total Assets $248,130 $264,747 $269,890 $280,833 Price / TBV: 171.2% Total Loan
Slide 23: Transaction Rationale
Transaction Rationale ▪ Attractive in-market/contiguous market transaction, as United Bank has one Eau Claire branch plus five other “close proximity” locations ▪ Assuming consummation of the proposed acquisition, Company would rank Strategic #2 in deposit market share in Eau Claire County(1) Ration
Slide 24: Strengthened Market Presence
Strengthened Market Presence ❑ Eau Claire, WI With the proposed acquisition of United Bank, 2017 2017 Number of Total Deposits In Total Market CZWI would become the #2 ranked bank in Eau Rank Institution (ST) Branches Market ($000) Share (%) Claire County by deposit market share 1 Charter Bankshares
Slide 25: United Bank Financial Highlights
United Bank Financial Highlights United would provide CZWI with stable, low cost deposits and… Loans / Deposits % Noninterest-Bearing Deposits Cost of Interest-Bearing Deposits 100.0 % 35.0% 94.8% 0.90% 90.5% 29.4% 89.0% 89.7% 88.8% 89.2% 28.9% 28.3% 0.78% 90.0 % 87.9% 30.0% 27.4% 0.80% 0.70% 25.0%
Slide 26: Pro Forma Earnings Capacity: United Bank
Pro Forma Earnings Capacity: United Bank Pro forma net income of $6.1 million Excludes revenue synergies opportunities Excludes benefits of private placement which increases CZWI’s TCE and loans to one borrower level Last Twelve Months ($000)(1) $7,000 $6,000 $6,052 $5,000 $4,959 $4,000 $3,000 $3,11
Slide 27: Pro Forma Loans
Pro Forma Loans(1) CZWI United Pro Forma(2) C&D Ag. Real C&D 2.4% Estate Consumer & 3.9% 5.4% Other C&D 3.4% Ag. 8.9% Consumer & Consumer & Ag. Real Estate Other 4.4% Other 8.1% 13.8% 16.8% 1-4 Fam 1-4 Fam C&I 13.7% 1-4 Fam Ag. Real 31.3% 10.0% 27.3% Estate HELOC Ag. 8.9% 3.2% Multifam 3.5% Ag. 3.6%
Slide 28: Pro Forma Deposits
Pro Forma Deposits(1) CZWI United Pro Forma NOW Accts CDs > $100k 0.2% 4.5% CDs < $100k NOW Accts 6.2% 2.1% Non Int. Non Int. CDs > $100k CDs > $100k Bearing Bearing 15.2% 12.6% 10.6% Non Int. 14.6% Bearing 27.4% CDs < $100k 20.4% CDs < $100k 25.0% MMDA & Sav NOW Accts MMDA & Sav 49.1% 8.0% 53.9% MM
Slide 29: Pro Forma Map
Pro Forma Map CZWI Locations United Locations Note: CZWI Rochester Hills, MI branch not shown Source: S&P Global Market Intelligence 29
Slide 30: Pro Forma Balance Sheet
Pro Forma Balance Sheet Dollars in thousands, except per share data Pro Forma Balance Sheet: Fair Value M&A Total CZWI (1) United Bank Capital Raise(2) Pro Forma Adjustments Adjustments Adjustments 3/31/18 3/31/18 Cash and equivalents $ 66,871 $ 25,062 $ - $ (52,939) f $ (52,939) $ 30,064 j $ 69,058
Slide 31: Pro Forma Impact
Pro Forma Impact ❑ $65,000,000 common stock raise ❑ The proposed acquisition would be $1.87 dilutive to tangible book value at close, earned back over approximately 4.4 years(1) ❑ Pro forma capital ratios: Proposed Acquisition & $65.0 Million CZWI (Actual) Offering 3/31/2018 3/31/2018 TCE / TA:(2) 6
Slide 32: Pro Forma Balance Sheet Footnotes
Pro Forma Balance Sheet Footnotes Footnotes a. Loan fair value adjustment b. Elimination of loan loss reserve c. Net DTL related to fair value purchase marks d. Fixed asset fair value adjustment e. Deposit fair value adjustment f. $50.7 million cash consideration plus $2.2 million of transaction rel
Slide 33: Franchise Transformation Since 9/30/2016
Franchise Transformation Since 9/30/2016 CZWI 9/30/2016 CZWI pro forma United 3/31/2018 ❑ Improved loan Consumer & composition Other 13.8% ▪ Commercial, CRE, HELOC Commercial, CRE, and & Ag. Related 6.0% Consumer & Other Ag. Related loans grow 27.9% Loans from 28% of total loans 34.2% at 9/30/2016 t
Slide 34: Disciplined Acquisition Strategy
Disciplined Acquisition Strategy ❑ Strategic consolidation of community banks Areas of Potential Acquisition Opportunities ▪ Provides scale and operating efficiencies CZWI Locations ▪ Adds experienced and knowledgeable banking talent United Locations ▪ Opportunity to continue commercial loan growth
Slide 35: Investment Highlights
Investment Highlights ❑ Offering an attractive valuation and entry point for a pro forma $1.2 billion asset institution ❑ CZWI’s proposed acquisition of United would be transformative for the Company and would establish CZWI as #2 in deposit market share in Eau Claire County ❑ CZWI is expected to cr
Slide 36: Appendix
Asset Liability Management Appendix 36
Slide 37: Experienced Leadership Team
Experienced Leadership Team 174 Years of Banking Experience… President / CEO EVP / CFO SVP Chief Credit Officer SVP Corporate Development 31 / 2 32 / < 1 year 23 / 23 24 / 3 SVP Chief Technology Officer SVP West Region President SVP East Region President VP Human Resources Community Banking Communit
Slide 38: Agricultural Loan Detail
Agricultural Loan Detail Agricultural Loan Concentration ($000)(1) ▪ Ag accounts for 12% of the total loan portfolio $87,672 12% ▪ Current Lending policy limits agricultural loan advances to the Agricultural lesser of 65% of appraised value, or Other a maximum debt of $4,500 per acre $634,975 88% Ag
Slide 39: Market Demographics
Market Demographics CZWI Market Demographics 2018 Market Data Proj. 2023 Median Households with Number of Population Population HHI Income > 100K Businesses (Actual) Growth (%) (Actual) (Actual) (Actual) Counties Washington, MN 256,433 4.2% 93,755 45,104 7,437 Eau Claire, WI 103,866 2.7% 57,170 9,42
Slide 40: Asset Liability Management
Asset Liability Management ($000) CZWI United Bank Pro Forma % Change of Net % Change of Net % Change of Net Change in Interest Rates Interest Income Interest Income Interest Income Up 300 bps (7.1) 5.4 (4.2) Up 200 bps (3.6) 3.6 (1.9) Up 100 bps (0.1) 1.8 0.3 0 bps Down 100 bps 0.6 -4.0 (0.4) Sourc
Slide 41: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures FY2015 FY2016 FY2017 FY2018 YTD Core Income (Dollars in Thousands, except share data) GAAP pre-tax earnings $4,420 $3,859 $3,822 $4,051 Merger related costs (1) - 701 1,860 104 Branch closure costs (2) 614 839 951 8 Settlement proceeds (3) - - (283) - FH
Slide 42: 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 and other noninterest expense in the consolidated statement of operations. (2) Branch closure costs include severance pay recorded in compe
Slide 43: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Tangible common equity and March 31, 2018 Tangible common equity/ tangible March 31, 2018 tangible book value per share at assets at end of period end of period ($000 except ($000 except share data and share data and per share data) per share data) Total
Slide 44: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ROATCE (Return on Average Tangible Common Equity) (1) (2) (2) (2) (2) Tangible common equity and ROATCE ($000) March 31, 2018 September 30, 2017 September 30, 2016 September 30, 2015 September 30, 2014 Total stockholder's equity $ 73,509 $ 73,483 $ 64,54
Slide 45: Abbreviations
Abbreviations Abbreviation Definition Abbreviation Definition Ag. Agriculture (1) LTM (2) Last Twelve(2) Months (2) (2) BPS Basis Points M&A Mergers & Acquisitions C&D Construction & Development MMDA & Sav. Money Market Deposit Account & Savings C&I Commercial & Industrial MSA Metropolitan Statistic
Slide 46: Citizens Community Bancorp Inc.
Citizens Community Bancorp Inc.
Citizens Community Bancorp — Investor Presentation (June 2018) on 6ix