Citizens Community Bancorp, Inc. · NASDAQ:CZWI
Citizens Community Bancorp — FIG Investor Conference 2018
31 slides from Citizens Community Bancorp's conference presentation, Sep 17, 2018
Slide 1: FIG Investor Conference September 17-18, 2018
Filed Pursuant to Rule 433 Registration Statement No. __________ Issuer Free Writing Prospectus Dated October __, 2015 R: 242 R: 13 R: 174 Relating to Preliminary Prospectus Supplement Dated October __, 2015 G: 151 G: 43 G: 33 B: 36 B: 76 B: 42 FIG Investor Conference September 17-18, 2018 1
Slide 2: 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 3: 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 4: 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 5: Execution of Current Business Strategy
Execution of Current Business Strategy Total Loans Loans / Deposits $1,000 120% 110% $761 104% $800 $733 103% 102% 99% 99% 100% $574 $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 6: 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 $3,184 79.8% 80.0% 77.4% $3,000 $2,806 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 (3) ROAA ROA
Slide 7: Net Income and Diluted EPS
Net Income and Diluted EPS . Positive earnings trends . First 9 months of FY 2018 shows impact of Wells acquisition 9 Months 9 Months (In $000’s) Net Income ($000) Diluted EPS $5,000 $1.00 $4,260 $3,873 $0.79 $4,000 $3,563 $3,322 $0.75 $0.67 $3,184 $0.62 $0.62 $2,806 $0.54 $3,000 $2,573 $2,499 $0.52
Slide 8: Loan Portfolio
Loan Portfolio . CZWI has transformed its loan 100% 1-4 Family portfolio through organic growth Cons & Other C&D - 1-4 and acquisitions 80% Family C&D - Commercial . Ag. Real Estate Change has occurred from a 60% Ag. primarily consumer focused HELOC portfolio to a diversified mix 40% Owner-Occ. CRE
Slide 9: Commercial Loan Detail
Commercial Loan Detail . Commercial loan portfolio well diversified C&I & Own. Occ. CRE C&D CRE 3.4% $139.1 million C&I $140.3 . Total portfolio of $433.2 million at 6/30/2018 16.0% Non-Owner million Occ. CRE . Strong growth in all commercial loan categories 18.4% Owner-Occ. CRE Investor 1-4 Investo
Slide 10: Agricultural Loan Detail
Agricultural Loan Detail Agricultural Loan Concentration . Ag accounts for 13% of the total loan portfolio $95.6 million 13% . Current Lending policy limits Agriculture agricultural loan advances to the lesser of 65% of appraised value, or a maximum debt of $4,500 per Other acre $628.6 million 87% A
Slide 11: Deposit Composition
Deposit Composition 100% . Since 2016 FQ2, demand Demand deposit growth has 80% NOW & significantly outpaced the Other growth of the rest of the 60% Trans. MMDA & portfolio Sav 40% . CDs < CZWI remains focused on a 100k lower cost deposit base 20% CDs > 100k 0% 2016 2016 2017 2017 2017 2017 2018 201
Slide 12: Market Demographics
Market Demographics CZWI operates in diverse markets within the northwestern region of Wisconsin, metro Twin Cities and the Mankato, Minnesota MSA Eau Claire: . Features a broad-based, diverse economy, which is driven by commercial, retail and medical industries Mankato: . The Mankato market also
Slide 13: Net Interest Margin Analysis
Net Interest Margin Analysis 2017 FY YTD June 30, 2018 Average Income/ Average Average Income/ Average ($ Dollars in Thousands) Balance Expense Rates Balance Expense Rates Interest earning assets: Cash and Equivalents 19,368 139 0.72% $ 24,840 $ 191 1.03% Loans $ 568,670 $ 25,826 4.54% 729,253 26,12
Slide 14: 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 15: 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 06/30/18 Transaction Value: $50.7 million Balance Sheet Total Assets $248,130 $264,747 $269,890 $280,833 $287,191 Total Loans
Slide 16: Pro Forma Map
Pro Forma Map CZWI Locations United Locations Note: CZWI Rochester Hills, MI branch not shown Source: S&P Global Market Intelligence 16
Slide 17: 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 18: 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 Rank Institution (ST) Branches Market ($000) Share (%) Eau Claire County by deposit market share 1 Charter Bankshares
Slide 19: 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 % 94.8% 40.0% 0.90% 90.5% 34.6% 89.0% 89.7% 88.8% 35.0% 0.78% 90.0 % 87.9% 0.80% 29.4% 28.9% 28.3% 82.4% 30.0% 0.70%
Slide 20: Pro Forma Loans
Pro Forma Loans(1) CZWI United Pro Forma(2) Ag Real Cons & C&D Cons & C&D C&D Estate Other Cons & 6.0% Other 3.3% Other 2.5% 7.0% 3.4% 1-4 Fam 1-4 Fam Ag Real 12.3% 20.2% 14.6% 1-4 Fam Ag 14.4% 4.6% Estate Ag Real 21.8% 8.8% Estate Ag 9.3% C&I HELOC 3.3% 3.7% 11.4% HELOC Ag 5.7% 3.4% HELOC C&I 6.4%
Slide 21: Pro Forma Deposits
Pro Forma Deposits(1) CZWI United Pro Forma CDs > CDs < $100k $100k 4.4% 6.0% MMDA & Non Int. CDs > CDs > Sav Bearing $100k Non Int. $100k 11.0% 3.5% Bearing 15.2% 12.5% NOW 19.7% Accts Non Int. CDs < 20.3% $100k CDs < Bearing 46.1% 20.1% NOW $100k NOW Accts 24.8% Accts 25.2% 40.0% MMDA & MMDA & Sav
Slide 22: Pro Forma Balance Sheet
Pro Forma Balance Sheet Pro Forma Merger Model Analysis Pro Forma Balance Sheet Dollars in thousands, except per share data Pro Forma Balance Sheet: Est. Fair Value Estimated M&A Assumed Conversion Total CZWI United Bank Adjustments Adjustments of Preferred Equity (1) Adjustments Pro Forma 6/30/18 6
Slide 23: 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 24: Franchise Transformation Since 9/30/2016
Franchise Transformation Since 9/30/2016 CZWI 9/30/2016 CZWI pro forma United 6/30/2018 Improved loan composition Cons & Other Commerci HELOC 12.3% . Commercial, CRE, and al, CRE, & 5.7% Consumer Ag. Related loans grow Ag. & Other Related Loans from 34% of total loans Commercial, 34.0% 33.6% 1-4 F
Slide 25: 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 26: Highlights
Highlights 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 cross the $1.0 Billion in assets threshold which should lead to greater market capitalization and potential for
Slide 27: Citizens Community Bancorp Inc.
Citizens Community Bancorp Inc.
Slide 28: Appendix
Citizens Community Bancorp Inc. Appendix
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of GAAP Earnings and Core Earnings (non-GAAP): FY2015 FY2016 FY2017 FQ3-18 (Dollars in Thousands, except share data) GAAP pre-tax earnings $ 4,420 $ 3,859 $ 3,822 $ 4,774 Merger related costs (1) 0 701 1,860 332 Branch closure costs (2) 61
Slide 30: 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 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Return on Average Tangible Common Equity (ROATCE) (In thousands except ROATCE) 2014 2015 2016 2017 2018 YTD Common Equity $ 58,019 $ 61,453 $ 64,544 $ 73,483 $ 73,922 Less: Goodwill - - (4,663) (10,444) (10,444) Less: Core Deposit and other intangibles (
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