Citizens Community Bancorp, Inc. · NASDAQ:CZWI
Citizens Community Bancorp — DA Davidson Investor Conference May 2020
39 slides from Citizens Community Bancorp's conference presentation, May 5, 2020
Slide 1: Citizens Community Bancorp Inc. DA Davidson Investor Conference May 2020 First Quarter Results
Filed Pursuant to Rule 433 Registration Statement No. __________ Issuer Free Writing Prospectus Dated October __, 2015 Relating to Preliminary Prospectus Supplement Dated October __, 2015 Citizens Community Bancorp Inc. DA Davidson Investor Conference May 2020 First Quarter Result 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 REBUILD TANGIBLE BOOK VALUE Following the successful integration of four acquisitions since May 2016, CZWI is committed to building consistency in earnings and a TCE ratio >8%. REDUCE NPA’S & CLASSIFIED LOANS TO PEER GROUP MEDIAN Reducing problem assets from acquired banks will be a
Slide 4: Timeline of Pandemic Response Actions
Timeline of Pandemic Response Actions JANUARY FEBRUARY Monitoring MARCH Preparing • Management begins tracking news developments • Safety materials acquired (gloves, Mobilizing sanitizer, and disinfectant wipes) • Response Team executes tabletop • Probability of impact informally exercise March 3rd.
Slide 5: Pandemic Committee
Pandemic Committee Pandemic Committee (PC) Board Involvement • Weekly colleague calls • Frequent Pandemic communication updates Director Credit Committee • Weekly Pandemic Committee meetings • CEO/CRO/CTO communication daily • Board/Committee communication weekly Compensation Committee Participants
Slide 6: Colleague Assistance, Safety & Readiness
Colleague Assistance, Safety & Readiness Taking Care of Colleagues Location & Readiness Benefits • Daily attendance & work location tracking Emergency Sick Leave for employees • of colleagues diagnosed, quarantined or lost daycare for Date as of April 9, 2020 children • Permit PTO accrual for employ
Slide 7: COVID-19 Colleague Survey Results
COVID-19 Colleague Survey Results Employee satisfaction with safe at work and home guidelines Safety of colleagues, customers 10% and communities is our priority! 90% Satisfaction with communication from Satisfied Not Satisfied leadership 1% Frequent communication through varying channels is meeting
Slide 8: COVID-19 Business Impact
COVID-19 Business Impact • Teller transactions have decreased 30% since early March • Branch hours and shifts reduced Branch Transaction Trends 0% -5% -13% -10% -24% -15% -30% -31% -34% -36% -20% -38% -25% -30% -35% -40% 3/08-3/14 3/15-3/21 3/22-3/28 3/30-4/04 4/06-4/11 4/13-4/18 4/19-4/24 % Change
Slide 9: COVID-19 Business Impact
COVID-19 Business Impact • Stable inbound call volumes except week 4/13-4/18 • Spike in call volume coincides with EIP release which caused industry wide slowdown of mobile/online banking sites Inbound Call Center Volume 6000 5000 4000 3000 2000 1000 0 9
Slide 10: COVID-19 Business Impact
COVID-19 Business Impact • Communication channels have changed for small and large meetings Zoom Usage 250 600 500 200 Thousands 400 150 300 100 200 50 100 0 0 Nov'19 Dec'19 Jan'20 Feb'20 Mar'20 April '20 # Meetings Meeting Minutes 10
Slide 11: Operational Response and Preparedness
Operational Response and Preparedness • Activated Board and Pandemic Committee to provide COVID-19 updates • Implemented “spacing” Best Practices in all locations • Expanded remote work capacity to 42% of workforce • Utilized video conferencing and other innovative ways to conduct business • Raised
Slide 12: Customer & Community Outreach
Customer & Community Outreach • Participated in PPP by originating over 1,500 loans • Participated in PPP by originating over $135 million in authorizations • Saved approximately 18,000 local jobs • COVID-19 resources and support made available via website and social media • Donated $220,000 to loca
Slide 13: Outstanding PPP Execution
Outstanding PPP Execution Funded over >1,000 PPP Loans to Small Businesses saving approximately 16,000 jobs in first appropriation! • Bankers conducted outreach to their clients about CARES Act legislation and that CCFBank would help them March 23 upon receiving SBA guidelines • PPP Planning Team es
Slide 14: PPP Objectives & Results
PPP Objectives & Results Achieving Our Objectives Help our customers with much needed liquidity Grow market share by helping other bank’s customers Strengthen our reputation as a commercial bank PPP Metrics PPP 1 PPP 2 Total Number of Jobs Saved 16,100 1,800 17,900 Number of Loans Funded 1,004
Slide 15: COVID-19 Business Impact
COVID-19 Business Impact • Over 1,500 businesses received loans and over 17,500 jobs saved • Approximately 30% of PPP Loans were customers of other banks PPP Customer Survey Results Would refer a friend Satisfaction with Banker Banker was knowledgeable 95% 96% 96% 97% 97% 98% 98% 99% 15
Slide 16: PPP Survey Comments
PPP Survey Comments “My banker was A+. How many bankers call “I was so appreciative that the representative reached out you back at Midnight to help you. Very to me, I would not have even known I could get this loan if impressive! Everyone has been extremely she had not. Love the small community ban
Slide 17: Net Income and Diluted EPS
Net Income and Diluted EPS Net Income $12,000 Diluted EPS And Book Value Per Share $10,675 $0.90 $16.00 $9,463 $10,000 $0.80 $14.00 $0.70 $12.00 $8,000 $0.60 $10.00 $0.50 $8.00 $6,000 $0.40 $4,962 $6.00 $4,221 $4,283 $0.30 Diluted EPS Diluted $4,000 $3,563 $2,606 $0.20 $4.00 $2,573 $2,499 $2,606 $0.
Slide 18: Return on Average Assets and Return on Average Tangible Common Equity
Return on Average Assets and Return on Average Tangible Common Equity ROAA ROATCE 1.40% 20.0% 1.20% 1.00% 15.0% 0.76% 0.80% 0.69% 0.68% 0.69% 10.1% 9.5% 9.5% 0.56% 0.58% 10.0% 9.0% 0.60% 0.53% 7.3% 0.40% 0.45% 6.2% 5.6% 0.40% 0.34% 4.4% 4.3% 4.8% 5.0% 0.20% 0.00% 0.0% 2016 2017 2018 2019 Mar-20 2016
Slide 19: Efficiency Ratio and Tangible Book Value
Efficiency Ratio and Tangible Book Value Efficiency Ratio Net Interest Margin 90% 4.00% 84% 85% 85% 79% 77% 78% 80% 75% 73% 3.80% 75% 68% 3.64% 70% 66% 66% 65% 3.60% 60% 3.42% 55% 3.37% 3.40% 3.31% 50% 3.27% 45% 3.20% 40% 2016 2017 2018 2019 Mar-20 3.00% Efficiency Ratio Efficiency Ratio as Adjusted
Slide 20: Loan Portfolio
Loan Portfolio . CZWI has transformed its loan portfolio 1-4 Family Cons & Other C&D - 1-4 Family C&D - Commercial Ag. Real Estate Ag. Non-RE HELOC Owner-Occ. CRE through organic growth and acquisitions Non-Owner Occ. CRE C&I Multifamily Investor 1-4 CRE . Change has occurred from a primarily consum
Slide 21: Asset Quality
Asset Quality ALLL and non-accretable discount to total loans was 1.37% ALLL and Nonaccretable Discount to Total Loans NPA (1) / Assets 3.00% 1.60% 1.40% 1.37% 2.50% 1.20% 2.00% 1.00% 1.00% 0.80% 1.49% 1.41% 1.50% 1.28% 0.60% 1.14% 0.40% 0.37% 1.00% 0.62% 0.20% 0.50% 0.00% 2016 2017 2018 2019 Mar-
Slide 22: COVID-19 Affected Lending Sectors
COVID-19 Affected Lending Sectors • Hotels and restaurants are portfolio’s most affected industry sectors • Hotels = $115 million • Hotels; weighted-average LTV = 58.5% • Hotels; weighted-average debt service ratio = 1.75 times • Restaurants = $33 million; $21 million of which are franchise, quick-
Slide 23: Customer Programs & Support
Customer Programs & Support • Commercial/Ag banker scripted calling program to customers and prospects • Customer telephone support through branches and Phone Center during business hours; mobile banking 24/7 • Payment deferral program established for Commercial/Ag, consumer and mortgage portfolio l
Slide 24: COVID-19 Related Loan Deferrals
COVID-19 Related Loan Deferrals • No completed COVID–19 related modifications/deferrals through March 31, 2020 • As of April 22, 2020; $167.4 million approved COVID–19 related deferrals • As of April 22, 2020; $133.4 million COVID–19 related deferrals completed • Hotel & restaurant sectors; $94 mill
Slide 25: Commercial Loan Detail
Commercial Loan Detail . Commercial loan portfolio well diversified C&D C&I 8.5% . Total portfolio of $947.4 million at 03/31/2020. 12.9% Non-Owner Occ. . Strong growth in all commercial loan categories CRE Owner-Occ. CRE 19.9% 24.9% . Average note size is under $350 thousand Investor 1-4 CRE 10.1%
Slide 26: Agricultural Loan Detail
Agricultural Loan Detail Agricultural Loans by Major Product Type Agricultural Loans by Industry Mar - 20 Mar - 20 Operating Other Lines 14% 20% Row Crop 37% Term Debt 14% Secured Real Dairy Estate 26% Owned & 66% Rented Land 23% Row Crop Owned and Rented Land Dairy Other Source: Company Documents 2
Slide 27: Deposit Composition
Deposit Composition Non-interest bearing demand deposits Interest bearing demand deposits Savings accounts Money market accounts $1,200,000 Certificate accounts . September 2019 Quarter $1,000,000 reflects the purchase of $148.5 million due to F&M acquisition. $800,000 $600,000 . June 2019 Quarter r
Slide 28: Appendix
Citizens Community Bancorp Inc. aA Appendix 28
Slide 29: Net Interest Margin Analysis
Net Interest Margin Analysis Quarter ended March 31, 2020 Quarter ended December 31, 2019 Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ ($ Dollars in Thousands) Balance Expense Rate Balance Expense Rate Average interest earning assets: Cash and cash equivalents $ 31
Slide 30: 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 FY 2019 Sep-19 Dec-19 Mar-20 GAAP pre-tax earnings $ 3,859 $ 3,822 $ 6,609 $ 12,277 $ 1,664 $ 3,731 $ 3,543 Merger related costs (1) 701 1,860 463 3,880 2,911 104 - Bra
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (1) Costs incurred are included as professional fees and other non-interest expense in the consolidated statement of operations and include costs of $0, $0 and $61,000 for the quarters ended March 31, 2020, December 31, 2019 and September 30, 2019, respe
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Return on Average Assets (ROAA) as Adjusted (In thousands except ROAA and ROAA as adjusted) 2016 2017 2018 2019 Sep-19 Dec-19 Mar-20 Net Income (annualized for Sep 2019, Dec 2019 and Mar 2020) $ 2,573 $ 2,499 $ 4,283 $ 9,463 $ 4,896 $ 12,573 $ 10,481 Net
Slide 33: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Effiency Ratio as Adjusted (In thousands except Efficiency Ratio and Efficiency Ratio as adjusted) 2016 2017 2018 2019 Sep-19 Dec-19 Mar-20 Non-interest Expense (GAAP) $ 20,058 $ 22,878 $ 29,764 $ 42,686 $ 12,975 $ 10,428 $ 10,731 Merger related costs (7
Slide 34: Mission, Vision and Values
Mission, Vision and Values Mission Provide the best products, service, and ideas to our customers every interaction every day. Vision Values Make more possible for our Our six main values are: customers, colleagues, integrity, commitment, communities, and shareholders! innovation, collaboration, foc
Slide 35: Key Market Differentiators
Key Market Differentiators • Serving small to mid-sized • Experienced, energetic entrepreneurs leadership team • Responsive professionals • Accountability for doing the right thing and getting results • Products to compete vs. big banks, superior to • Entrepreneurial spirit, smaller community banks
Slide 36: 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 37: Branch Locations
Branch Locations CZWI Locations Source: S&P Global Market Intelligence 37
Slide 38: 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 39: Disciplined Acquisition Strategy
Disciplined Acquisition Strategy Areas of Potential Acquisition Opportunities Duluth Superior Rice Lake Eau Claire Minneapolis Wausau St. Paul Mankato Mason City La Crosse Winona Rochester Source: FIG Partners, S&P Global Market Intelligence 39
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