Citizens Holding Company (the “Company”) (NASDAQ:CIZN) announced
today results of operations for the three and nine months ended
September 30, 2020.
(in thousands, except share and per share data)
Net income for the three months ended September 30, 2020 was
$2,083, or $0.37 per share-basic and diluted, an increase of $750
from net income of $1,333, or $0.27 per share-basic and diluted for
the same quarter in 2019.
Net income for the nine months ended September 30, 2020 was
$4,705, or $0.84 per share-basic and diluted, an increase of $774
from net income of $3,931, or $0.80 per share-basic and diluted for
the same period in 2019. The majority of the increase for the
three- and nine-month periods relate to an increase in net interest
income and non-interest income partially offset by additional
provision for loan losses and non-interest expense.
In light of the ongoing events surrounding the COVID-19
pandemic, the Company is continually assessing the effects of the
pandemic to its employees, customers and communities. While the
ultimate impact of the crisis cannot be accurately predicted at
this point, the Company is well-capitalized and has the financial
stability to continue to serve its customers and communities during
this unprecedented time.
Third Quarter Highlights
- Total revenues, or interest and noninterest income, for the
three months ended September 30, 2020 totaled $13,216, an increase
of $619 or 4.9%, compared to the three months ended June 30, 2020,
and an increase of $2,265, or 20.7%, compared to the three months
ended September 30, 2019.
- Beginning in the second quarter of 2020, the Bank participated
as a lender in the Small Business Administration’s (“SBA”) and U.S.
Department of Treasury’s Paycheck Protection Program (“PPP”) as
established by the Coronavirus Aid, Relief, and Economic Security
Act (“CARES Act”). The PPP loans are generally 100% guaranteed by
the SBA. At September 30, 2020, the balance of PPP loans was
$48,830 and the Company had recognized $578 in PPP fee income for
the nine months ended September 30, 2020.
- Total loans increased $19,438, or 3.1%, to $655,634 at
September 30, 2020, compared to $636,196 at June 30, 2020, and
increased $78,567, or 13.6%, compared to $577,067 at December 31,
2019. Excluding PPP loans with a total balance of $48,830 at
September 30, 2020, total loans increased $29,737, or 5.2%,
compared to December 31, 2019.
- In response to the COVID-19 pandemic, in the first quarter of
2020, the Bank instituted a 90-day loan deferral program for
affected customers and continues to offer assistance to those
experiencing financial hardships as a result of the pandemic. At
June 30, 2020, the Company had $157,948, or 259 loans, on the
deferral program. As of October 15, 2020, the balance of loans
remaining on the 90-day deferral plan was $33,601, or 16
loans.
- Total deposits increased $150,161, or 16.7%, to $1,049,157 at
September 30, 2020, compared to $898,996 at December 31, 2019.
Total noninterest-bearing deposits increased $63,356, or 33.3%, to
$253,762 at September 30, 2020, compared to $190,406 at December
30, 2019.
- The Bank recorded $247 in provision for loan losses for the
quarter ended September 30, 2020, compared to $622 and $12 for the
quarters ended June 30, 2020 and September 30, 2019, respectively.
The increases in the provision for loan losses in each of the first
three quarters of 2020 compared to the same quarters in 2019 are
primarily a result of the uncertainty of market conditions brought
about by the COVID-19 pandemic.
- Overall cost of funds decreased 18 basis points (“bps”) to 67
bps for the quarter ended September 30, 2020 compared to 85 bps for
the quarter ended June 30, 2020, and decreased 58 bps compared to
125 bps for the quarter ended September 30, 2019.
- Net interest margin increased 5 bps to 2.81% for the quarter
ended September 30, 2020 compared to 2.76% for the quarter June 30,
2020.
- The Company and Bank remain well capitalized with all capital
ratios above the regulatory requirements. The Tier 1 capital ratio
for the Company and Bank was 13.01% and 12.71%, respectively, at
September 30, 2020, compared to 13.50% and 13.20%, respectively, at
June 30, 2020.
Net Interest Income
Net interest income for the third quarter of 2020 was $8,906,
approximately 50.5% higher than the same period in 2019. The net
interest margin (“NIM”) was 2.81% for the third quarter of 2020
compared to 2.76% for the quarter ended June 30, 2020 and 2.59% for
the same period in 2019.
Net interest income for the nine months ended September 30, 2020
increased 34.4% to $24,641 from $18,334 for the same period in
2019. NIM for the nine months ended September 30, 2020, increased
to 2.76% from 2.69% in the same period in 2019.
While most banks are seeing margin compression, we are
experiencing an uptick in margin due to the following factors:
- Increase in the volume of loans, excluding PPP loans;
- Increase in the volume of investment securities;
- Decrease in the cost of funds.
Credit Quality
The provision for loan losses for the three months ended
September 30, 2020 was $247 compared to a provision for loan losses
of $12 for the same period in 2019. The increase in the provision
reflects management’s estimate of inherent losses in the loan
portfolio including, but not limited to, the government shutdown of
the local and national economy in March of 2020 due to the COVID-19
pandemic, the continued uncertainty surrounding the pandemic for
the Company and our customers, increased risks related to certain
industry sectors such as restaurants, hotels and retail businesses
and an overall increase in the loan portfolio when compared to the
same quarter in 2019.
The Company’s non-performing assets decreased $831, or 5.6%, to
$14,071 at September 30, 2020 compared to June 30, 2020 and
decreased $1,731, or 11.0%, from $15,802 at December 31, 2019.
Year-to-date net charge-offs totaled $444 or 0.07% of average
net loans at September 30, 2020 compared to 0.07% and 0.03% at June
30, 2020 and December 31, 2019, respectively.
The Company continues to maintain strong credit quality, but
these numbers could change materially, up or down, should the
economic recovery from the COVID-19 pandemic last longer than
expected or more government stimulus is approved. The overarching
theme continues to be uncertainty, but management believes the
Company is taking the steps necessary to prepare for the continued
uncertainty.
Noninterest Income
Non-interest income increased in the third quarter of 2020 by
$167, or 6.8% compared to June 30, 2020 and by $130 or 5.2%
compared to the same period in 2019.
Non-interest income increased by $862, or 13.0%, for the nine
months ended September 30, 2020 when compared to the same period in
2019.
The increase in non-interest income was primarily due to the
following factors:
- Increase in mortgage loan origination income due to a decrease
in long-term mortgage rates;
- Increase in gains from the sale of investment securities;
- Partially offset by a decrease in overdraft income due to the
savings trend related to the COVID-19 pandemic.
Noninterest Expense
Non-interest expense increased in the third quarter of 2020 by
$309, or 3.7% compared to June 30, 2020 and by $1,785 or 26.0%
compared to the same period in 2019.
Non-interest expense increased by $5,234, or 26.4%, for the nine
months ended September 30, 2020 when compared to the same period in
2019.
The increase in non-interest expense is mainly attributable to
residual operational cost increases from the merger with Charter
Bank that closed on October 1, 2019 coupled with an increase in
expenses related to COVID-19 safety measures.
Dividends
The Company paid aggregate cash dividends in the amount of
$4,022, or $0.72 per share, during the nine-month period ended
September 30, 2020 compared to $3,535, or $0.72 per share, for the
same period in 2019.
Citizens Holding Company (the “Company”) is a one-bank holding
company and the parent company of The Citizens Bank of Philadelphia
(the “Bank”), both headquartered in Philadelphia, Mississippi. The
Bank currently has twenty-four banking locations in fourteen
counties in East Central and South Mississippi and a Loan
Production Office in Oxford, Mississippi to offer loan services to
north Mississippi. In addition to full service commercial banking,
the Bank offers mortgage loans, title insurance services through
its subsidiary, Title Services, LLC, and a full range of Internet
banking services including online banking, bill pay and cash
management services for businesses. Internet banking services are
available at the Bank’s website, www.thecitizensbankphila.com.
Citizens Holding Company stock is listed on the NASDAQ Global
Market and is traded under the symbol CIZN. The Company’s transfer
agent is American Stock Transfer & Trust Company. Information
about Citizens Holding Company may be obtained by accessing its
corporate website at www.citizensholdingcompany.com.
This press release includes “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. All statements
other than statements of historical facts included in this release
regarding the Company’s financial position, results of operations,
business strategies, plans, objectives and expectations for future
operations, are forward looking statements. The Company can give no
assurances that the assumptions upon which such forward-looking
statements are based will prove to have been correct.
Forward-looking statements speak only as of the date they are made.
The Company does not undertake a duty to update forward-looking
statements to reflect circumstances or events that occur after the
date the forward-looking statements are made. Such forward-looking
statements are subject to certain risks, uncertainties and
assumptions. The risks and uncertainties that may affect the
operation, performance, development and results of the Company’s
and the Bank’s business include, but are not limited to, the
following: (a) the risk of adverse changes in business conditions
in the banking industry generally and in the specific markets in
which the Company operates; (b) the impact of COVID-19 on our
business, including the impact of the actions taken by governmental
authorities to try and contain the virus or address the impact of
the virus on the United States economy (including, without
limitation, the CARES Act), and the resulting effect of all of such
items on our operations, liquidity and capital position, and on the
financial condition of our borrowers and other customers; our
ability to mitigate our risk exposures; (c) changes in the
legislative and regulatory environment that negatively impact the
Company and Bank through increased operating expenses; (d)
increased competition from other financial institutions; (e) the
impact of technological advances; (f) expectations about the
movement of interest rates, including actions that may be taken by
the Federal Reserve Board in response to changing economic
conditions; (g) changes in asset quality and loan demand; (h)
expectations about overall economic strength and the performance of
the economics in the Company’s market area; and (i) other risks
detailed from time to time in the Company’s filings with the
Securities and Exchange Commission. Should one or more of these
risks materialize or should any such underlying assumptions prove
to be significantly different, actual results may vary
significantly from those anticipated, estimated, projected or
expected.
Citizens Holding Company
Financial Highlights
(amounts in thousands, except
share and per share data)
For the Three Months Ending
For the Nine Months Ending
September 30,
June 30,
September 30,
September 30,
September 30,
2020
2020
2019
2020
2019
INTEREST INCOME
Loans, including fees
$7,805
$7,632
$5,940
$22,917
$17,220
Investment securities
2,766
2,464
2,291
7,227
7,728
Other interest
8
31
213
271
530
10,579
10,127
8,444
30,415
25,478
INTEREST EXPENSE
Deposits
1,506
1,612
1,923
5,087
5,568
Other borrowed funds
167
165
603
687
1,576
1,673
1,777
2,526
5,774
7,144
NET INTEREST INCOME
8,906
8,350
5,918
24,641
18,334
PROVISION FOR LOAN LOSSES
247
622
12
1,183
472
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
8,659
7,728
5,906
23,458
17,862
NON-INTEREST INCOME
Service charges on deposit accounts
771
668
1,126
2,488
3,269
Other service charges and fees
1,031
871
864
2,675
2,317
Other non-interest income
835
931
517
2,325
1,040
2,637
2,470
2,507
7,488
6,626
NON-INTEREST EXPENSE
Salaries and employee benefits
4,389
4,307
3,509
13,131
10,525
Occupancy expense
1,861
2,036
1,288
5,556
4,120
Other non-interest expense
2,403
2,001
2,071
6,377
5,185
8,653
8,344
6,868
25,064
19,830
NET INCOME BEFORE TAXES
2,643
1,854
1,545
5,882
4,658
INCOME TAX EXPENSE
560
392
212
1,177
727
NET INCOME
$2,083
$1,462
$1,333
$4,705
$3,931
Earnings per share - basic
$0.37
$0.26
$0.27
$0.84
$0.80
Earnings per share - diluted
$0.37
$0.26
$0.27
$0.84
$0.80
Dividends Paid
$0.24
$0.24
$0.24
$0.72
$0.72
Average shares outstanding - basic
5,578,281
5,580,340
4,900,030
5,574,060
4,896,871
Average shares outstanding - diluted
5,580,728
5,583,789
4,901,495
5,576,884
4,899,192
For the Period Ended,
September 30,
June 30,
December 31,
2020
2020
2019
Period End Balance Sheet Data:
Total assets
$1,374,217
$1,402,224
$1,195,434
Total earning assets
1,284,602
1,308,683
1,105,163
Gross loans
655,634
636,196
577,067
Allowance for loan losses
4,494
4,257
3,755
Total deposits
1,049,157
1,075,348
898,996
Short-term borrowings
15,000
-
-
Long-term borrowings
-
-
7
Shareholders' equity
117,498
119,369
112,800
Book value per share
$21.03
$21.37
$20.22
Period End Average Balance Sheet Data:
Total assets
$1,308,298
$1,267,163
$1,164,570
Total earning assets
1,215,916
1,173,734
1,068,683
Gross loans
613,674
596,555
561,483
Total deposits
995,403
964,224
929,598
Short-term borrowings
7,377
28
2,096
Long-term borrowings
2
4
10
Shareholders' equity
117,539
116,096
96,295
Period End Non-performing Assets:
Non-accrual loans
$10,412
$10,248
$11,993
Loans 90+ days past due and accruing
246
301
257
Other real estate owned
3,413
4,358
3,552
As of
September 30,
June 30,
December 31,
2020
2020
2019
Year to Date Net charge-offs as a
percentage of average net loans
0.07%
0.07%
0.03%
Year to Date Performance Ratios:
Return on average assets(1)
0.50%
0.41%
0.51%
Return on average equity(1)
5.40%
4.52%
6.13%
Year to Date Net Interest
Margin (tax equivalent)(1)
2.76%
2.74%
2.77%
(1) Annualized
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201026005214/en/
Citizens Holding Company, Philadelphia Phillip R. Branch,
601/656-4692 Phillip.branch@thecitizensbank.bank
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