0001367859false00013678592023-07-242023-07-24


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  July 24, 2023

CITIZENS COMMUNITY BANCORP, INC.
(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of incorporation)
001-33003 20-5120010
(Commission File Number) (I.R.S. Employer Identification No.)

2174 EastRidge Center
Eau Claire, WI 54701
(Address and Zip Code of principal executive offices)


715-836-9994
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
  
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par value per shareCZWINASDAQ Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter.)
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02.  Results of Operations and Financial Condition.

On July 24, 2023, Citizens Community Bancorp, Inc. (the “Company”) issued a press release announcing our financial results for the three and six months ended June 30, 2023 and posted its Earnings Release Supplement to its website. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K, a copy of the Earnings Release Supplement is attached hereto as Exhibit 99.2. The attached Exhibits 99.1 and 99.2 are furnished pursuant to Item 2.02 of Form 8-K.

The information in this Item 2.02, Item 9.01 and Exhibits 99.1 and 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of such section, nor shall it be deemed incorporated by reference in any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

Item 9.01.  Financial Statements and Exhibits.

(d)    Exhibits.  The following exhibit is being furnished herewith:

104The cover page from this Current Report on Form 8-K in Inline XBRL (Extensible Business Reporting Language)


        
    


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 CITIZENS COMMUNITY BANCORP, INC.
Date: July 24, 2023 By: /s/ James S. Broucek
  James S. Broucek
  Chief Financial Officer




bancorp_logoa34a.jpg

Citizens Community Bancorp, Inc. Reports Earnings of $0.31 Per Share in 2Q23;
Tangible Book Value Increases, Specific Reserve Declines

EAU CLAIRE, WI, July 24, 2023 - Citizens Community Bancorp, Inc. (the “Company”) (Nasdaq: CZWI), the parent company of Citizens Community Federal N.A. (the “Bank” or “CCFBank”), today reported earnings of $3.2 million and earnings per diluted share of $0.31 for the quarter ended June 30, 2023, compared to $3.7 million and $0.35 per diluted share for the quarter ended March 31, 2023, and $4.4 million and $0.41 per diluted share for the quarter ended June 30, 2022, respectively. For the first six months of 2023, earnings were $6.9 million, or $0.66 per diluted share, compared to earnings of $9.1 million, or $0.86 per diluted share for the first six months of 2022.

The Company’s second quarter 2023 operating results reflected the following changes from the first quarter of 2023: (1) lower net interest income due to the impact of higher deposit liability costs, partially offset by higher asset yields due to loan and security repricing and the addition of new loans; (2) increased provision for credit losses primarily due to the forecasted worsening economic scenario, partially offset by reductions in specific reserves; (3) $0.6 million higher non-interest income, primarily due to higher gains on sale of loans; (4) $0.3 million lower non-interest expense; and (5) a decline in specific reserves due to the repayment in full of 2 loans with specific reserves totaling $0.5 million and collateral improvement, which reduced specific reserves by an additional $0.4 million.

“We continue efforts to improve franchise value not withstanding a challenging economic climate and yield curve inversion. During the second quarter, we expanded our tangible book value per share and tangible common equity to assets ratio. Operationally, we continue to control expenses to lessen the impact of net interest margin compression and its impact on our efficiency ratio,” stated Stephen Bianchi, Chairman, President, and Chief Executive Officer. “Asset quality measures in aggregate remained healthy, specific reserves declined during the quarter and the allowance for credit losses stood at 1.63% of total loans.”

Book value per share was $15.81 at June 30, 2023, compared to $15.70 at March 31, 2023, and $15.64 at June 30, 2022. Tangible book value per share (non-GAAP)1 was $12.61 at June 30, 2023, compared to $12.48 at March 31, 2023, and $12.36 at June 30, 2022. For the quarter, tangible book value was positively influenced by net income and intangible amortization, partially offset by higher accumulated other comprehensive loss on investment securities.


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June 30, 2023 Highlights: (as of or for the 3-month period ended June 30, 2023 compared to March 31, 2023 and June 30, 2022.)

•Quarterly earnings of $3.2 million, or $0.31 per diluted share for the quarter ended June 30, 2023, decreased from the quarter ended March 31, 2023, earnings of $3.7 million or $0.35 per diluted share, and decreased from the quarter ended June 30, 2022, earnings of $4.4 million or $0.41 per diluted share. During the quarters reported, net income as adjusted is not reported as nothing occurred for which adjustments to earnings would better reflect performance.

•Earnings for the six months ended June 30, 2023, were $6.9 million, or $0.66 per diluted share, which is a decrease from $9.1 million, or $0.86 per diluted share, for the same period in the prior year.

•Net interest income decreased $1.1 million to $11.7 million for the quarter ended June 30, 2023, from $12.8 million the previous quarter and decreased $2.6 million from the second quarter of 2022. The decrease in net interest income and net interest margin from first quarter 2023 is due to the change in the deposit mix to higher yielding CD’s, an increase in indexed municipal deposits rates and other customer rate increases more than offsetting the 20 basis point increase in asset yields.

•The net interest margin without loan purchase accretion and SBA PPP net loan fee accretion was 2.69% for the quarter ended June 30, 2023, compared to 2.99% for the previous quarter and 3.29% for the comparable quarter one year earlier.

•The second quarter provision for credit losses was $0.45 million due to the impact of forecasted future worsening economic conditions and modest loan growth partially offset by reductions in specific reserves of $0.9 million, compared to $0.05 million for the preceding quarter. A provision of $0.40 million was recorded during the second quarter a year ago due to loan growth.

•The efficiency ratio was flat at 66% for the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023, as higher non-interest income and lower non-interest expense offset the impact of lower net interest income.

•Gross loans increased by $4.0 million during the second quarter of 2023. As a result of the current interest rate environment, residential 10/1 ARM loan originations were added to the portfolio which resulted in residential mortgage loan growth of $9.3 million. New construction funding was more than offset by a $20 million loan payoff as the construction period ended and other construction loans converted to permanent financing.

•Nonperforming assets were $17.4 million at June 30, 2023, compared to $11.7 million at March 31, 2023.

•Substandard loans increased by $3.8 million to $19.2 million at June 30, 2023, compared to $15.4 million at March 31, 2023. This increase was due to the movement from special mention of a $5.4 million hotel loan which, while current on its payments, has not fully recovered from the negative impact of the pandemic resulting in lower business travel, partially offset by nonaccrual substandard loan payoffs.

•Special mention loans increased $4.6 million. Special mention loans reflect the addition of a $9.6 million relationship offset by movement of the $5.4 million hotel from special mention to substandard. The $9.6 million relationship is a commercial business, secured by real estate, where the underlying business performance is weaker than forecasted, but the collateral position is strong.

•Specific reserves declined $0.95 million as agricultural real estate and commercial and industrial loans with specific reserves repaid in full. No new specific reserves were necessary on any new individually evaluated or substandard loans.

•Our office loan portfolio is $45.1 million and consists of 73 loans. There are no criticized loans in this portfolio and there have been no charge-offs in the trailing twelve months.
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•Stockholders’ equity as a percent of total assets was 9.05% at June 30, 2023, compared to 8.84% at March 31, 2023. Tangible common equity (“TCE”) as a percent of tangible assets (non-GAAP)1 was 7.35% at June 30, 2023, compared to 7.16% at March 31, 2023. The increase in TCE was primarily due to the modest shrinkage in assets largely due to decreases in cash and securities which we used to reduce FHLB advances. The positive impact of net income and amortization of intangibles was largely offset by an increase in the unrealized losses in the available for sale investment portfolio.

•From March 31, 2023, consumer, commercial and government deposits have been stable with some movement between non-maturity deposit accounts and CD’s. There are no material customer or industry concentrations.

•At June 30, 2023, our deposit portfolio composition was 54% consumer, 27% commercial, 12% public and 7% brokered deposits compared to 55% consumer, 27% commercial, 14% public and 4% brokered deposits at March 31, 2023.

•Uninsured and uncollateralized deposits were $268.1 million, or 18% of total deposits, at June 30, 2023, and $252.7 million, or 18% of total deposits, at March 31, 2023. Uninsured deposits alone at June 30, 2023, were $413.0 million, or 28% of total deposits, and $413.5 million, or 29% of total deposits at March 31, 2023, with the difference being fully secured government deposits.

•On-balance sheet liquidity, collateralized new borrowing capacity and uncommitted federal funds borrowing availability was 228% of uninsured and uncollateralized deposits at June 30, 2023, and 205% at March 31, 2023.

•On-balance sheet liquidity, collateralized new borrowing capacity and uncommitted federal funds borrowing availability was $611.1 million at June 30, 2023, and $517.4 million at March 31, 2023.

Balance Sheet and Asset Quality

Total assets decreased modestly by $30.9 million during the quarter to $1.83 billion at June 30, 2023, compared to $1.86 billion at March 31, 2023.

Cash and cash equivalents decreased $22.1 million during the quarter to $43.0 million at June 30, 2023, largely due to a decrease in interest-bearing deposits of $32.5 million used to reduce FHLB advances.

Securities available for sale decreased $12.3 million during the quarter ended June 30, 2023, to $161.1 million from $173.4 million at March 31, 2023. This decrease was primarily due to the sale of $5 million of floating-rate SBA backed pass-through securities, principal repayments, and a decrease in the market value of the portfolio.

Securities held to maturity decreased $1.5 million to $93.8 million during the quarter ended June 30, 2023, from $95.3 million at March 31, 2023, due to principal repayments.

Total loans receivable increased to $1.425 billion at June 30, 2023, from $1.421 billion at March 31, 2023. As a result of current market conditions, residential 10/1 ARM loan originations were added to the portfolio which resulted in residential mortgage loan growth of $9.3 million. Pricing has been changed such that mortgage originations sold will increase, although at a lower gain on sale. Draws on construction loans were $24.6 million during the second quarter, which were more than offset by the payoff of a $20 million loan ending it’s construction cycle and other construction loans converted to permanent financing.

The allowance for credit losses on loans increased by $0.49 million to $23.2 million at June 30, 2023, representing 1.63% of total loans receivable compared to 1.60% of total loans receivable at March 31, 2023. For the quarter ended June 30, 2023, the Bank had net recoveries of $49 thousand.



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Allowance for Credit Losses (“ACL”) - Loans Percentage
(in thousands, except ratios)
June 30, 2023March 31, 2023December 31, 2022June 30, 2022
Loans, end of period$1,424,988 $1,420,955 $1,411,784 $1,346,855 
Allowance for credit losses - Loans$23,164 $22,679 
Allowance for loan losses “ALL”$17,939 $16,825 
ACL - Loans as a percentage of loans, end of period1.63 %1.60 %
ALL as a percentage of loans, end of period1.27 %1.25 %

Allowance for Credit Losses - Unfunded Commitments:
(in thousands)

In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $1.544 million at June 30, 2023 and $1.530 million at March 31, 2023, classified in other liabilities on the consolidated balance sheets.

June 30, 2023 and Three Months EndedJune 30, 2022 and Three Months EndedJune 30, 2023 and Six Months EndedJune 30, 2022 and Six Months Ended
ACL - Unfunded commitments - beginning of period$1,530 $— $— $— 
Cumulative effect of ASU 2016-13 adoption— — 1,537 — 
Additions (reductions) to ACL - Unfunded commitments via provision for credit losses charged to operations14 — 7 — 
ACL - Unfunded commitments - end of period$1,544 $— $1,544 $— 

Nonperforming assets increased $5.6 million to $17.4 million or 0.95% of total assets at June 30, 2023, compared to $11.7 million or 0.63% at March 31, 2023.

(in thousands)
June 30, 2023March 31, 2023December 31, 2022September 30, 2022June 30, 2022
Special mention loan balances$11,194 $6,636 $12,170 $20,178 $17,274 
Substandard loan balances19,203 15,439 17,319 20,227 20,680 
Criticized loans, end of period$30,397 $22,075 $29,489 $40,405 $37,954 

Special mention loans increased $4.6 million, largely due to the addition of a $9.6 million relationship, offset by the $5.4 million hotel previously in special mention moving to substandard. The $9.6 million relationship is a commercial business, secured by real estate, where the underlying business performance is weaker than forecasted, but the collateral position is strong.

Substandard loans increased by $3.8 million to $19.2 million at June 30, 2023, compared to $15.4 million at March 31, 2023. This increase was due to the movement from special mention of a $5.4 million hotel loan which, while current on its payments, has not fully recovered from the negative impact of the pandemic resulting in lower business travel.

Total deposits increased $27.9 million during the quarter ended June 30, 2023, to $1.46 billion with most of the growth in brokered, commercial and consumer deposits. Public deposits declined $18.8 million during the quarter ended June 30, 2023, from the previous quarter. Deposit composition changed during the second quarter, as both business and retail depositors sought higher yields on deposit accounts. Modest brokered deposit growth of $33.4 million supplemented deposit growth.

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Deposit Portfolio Composition
(in thousands)
June 30, 2023March 31, 2023December 31, 2022
Consumer deposits$790,404 $786,614 $805,598 
Commercial deposits401,079 391,534 405,733 
Public deposits175,869 194,683 173,548 
Brokered deposits97,330 63,962 39,841 
Total deposits$1,464,682 $1,436,793 $1,424,720 
Deposit Composition
(in thousands)
June 30, 2023March 31, 2023December 31, 2022June 30, 2022
Non-interest bearing demand deposits$261,876 $247,735 $284,722 $276,815 
Interest bearing demand deposits358,226 390,730 371,210 401,857 
Savings accounts206,380 214,537 220,019 239,322 
Money market accounts288,934 309,005 323,435 328,718 
Certificate accounts349,266 274,786 225,334 153,498 
Total deposits$1,464,682 $1,436,793 $1,424,720 $1,400,210 

Federal Home Loan Bank advances decreased $60 million to $122.5 million at June 30, 2023, from $182.5 million one quarter earlier, as deposit growth over loan growth, along with reductions in cash and securities funded payments on advances.

The Company repurchased 14 thousand shares of the Company’s common stock in the second quarter of 2023. As of June 30, 2023, approximately 229 thousand shares remain available for repurchase under the current share repurchase authorization.

Review of Operations

Net interest income was $11.7 million for the second quarter ended June 30, 2023, compared to $12.8 million for the quarter ended March 31, 2023, and decreased from $14.3 million for the quarter ended June 30, 2022. “The decrease in net interest income in the second quarter was due to funding costs exceeding increases in asset yields. Our one-year interest rate risk profile remains nearly neutral with repricing borrowings and deposits modestly exceeding repricing assets. We could see modest compression in the net interest margin during the third quarter of 2023, as our ending spread at June 30, 2023 was approximately 15 basis points below the second quarter average due to increasing deposit costs,” said Jim Broucek, Executive Vice President and Chief Financial Officer.












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Net interest income and net interest margin analysis:
(in thousands, except yields and rates)
Three months ended
June 30, 2023March 31, 2023December 31, 2022September 30, 2022June 30, 2022
Net Interest IncomeNet Interest MarginNet Interest IncomeNet Interest MarginNet Interest IncomeNet Interest MarginNet Interest IncomeNet Interest MarginNet Interest IncomeNet Interest Margin
As reported$11,686 2.72 %$12,795 3.02 %$14,478 3.40 %$14,457 3.43 %$14,267 3.46 %
Less non-accretable difference realized as interest from payoff of purchased credit impaired (“PCI”) loans— — %— — %(109)(0.02)%(34)(0.01)%(70)(0.02)%
Less accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences— — %— — %(32)(0.01)%(117)(0.06)%(308)(0.08)%
Less accretion for PCD loans(39)(0.01)%(37)(0.01)%— — %— — %— — %
Less scheduled accretion interest(85)(0.02)%(84)(0.02)%(169)(0.04)%(247)(0.03)%(255)(0.06)%
Without loan purchase accretion$11,562 2.69 %$12,674 2.99 %$14,168 3.33 %$14,059 3.33 %$13,634 3.30 %
Less SBA PPP net loan fee accretion— — %— — %— — %— — %(39)(0.01)%
Without SBA PPP net loan fee accretion and loan purchase accretion$11,562 2.69 %$12,674 2.99 %$14,168 3.33 %$14,059 3.33 %$13,595 3.29 %

The provision for credit losses for the quarter ended June 30, 2023, was $0.45 million reflecting the impact of forecasted future worsening economic conditions and modest loan growth, which was modestly offset by $0.95 million in specific reserve decreases. Loan loss provisions for the quarters ended March 31, 2023, and June 30, 2022, were $0.05 million and $0.4 million, respectively.

Non-interest income increased to $2.9 million in the quarter ended June 30, 2023, compared to $2.3 million in the quarter ended March 31, 2023, and $2.4 million in the quarter ended June 30, 2022. The increase in the second quarter of 2023, compared to the first quarter, was largely due to higher gains on sale of loans, primarily SBA loans. Relative to the comparable quarter one year earlier, non-interest income was higher primarily due to higher gains on sale of loans, which were partially offset by lower loan servicing income.

Total non-interest expense decreased $275 thousand in the second quarter of 2023 to $9.8 million, compared to $10.1 million for the quarter ended March 31, 2023, and $10.5 million for the quarter ended June 30, 2022. The decrease from the first quarter of 2023 was due to seasonal factors resulting in lower occupancy costs due to better weather conditions and lower professional costs. In comparison to the second quarter of 2022, non-interest expense decreased $0.6 million largely due to (1) lower incentive compensation resulting in $0.2 million lower compensation expense, (2) reduction in amortization of intangible assets of $0.2 million and (3) new market tax credit depletion being reclassified to tax expense.

Provision for income taxes decreased to $1.1 million in the second quarter of 2023 from $1.3 million in the first quarter of 2023 due primarily to lower pre-tax income. However, income tax provisions compared to 2022 were impacted by the adoption of new accounting practices related to tax credit investments. Effective January 1, 2023, the Company early adopted ASU 2023-02. This guidance results in new market tax credit depletion being reclassified from non-interest expense to tax expense and changes the amortization method to be proportional to the tax credit realized. As a result, retained earnings increased $130 thousand, effective January 1, 2023, non-interest expense decreased by $162 thousand from the prior year second quarter results, and the effective tax rate increased to 25.5% reflecting the
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proportional amortization of the new market tax credit in tax expense. The effective tax rate was 25.5% for the quarters ended June 30, 2023 and March 31, 2023.

These financial results are preliminary until the Form 10-Q is filed in August 2023.

About the Company
Citizens Community Bancorp, Inc. (NASDAQ: “CZWI”) is the holding company of the Bank, a national bank based in Altoona, Wisconsin, currently serving customers primarily in Wisconsin and Minnesota through 23 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas. The Bank offers traditional community banking services to businesses, ag operators and consumers, including residential mortgage loans.

Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this release are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified using forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “estimates,” “intend,” “may,” “on pace,” “preliminary,” “planned,” “potential,” “should,” “will,” “would” or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the operations and business environment of the Company and the Bank. These uncertainties include conditions in the financial markets and economic conditions generally; adverse impacts to the Company or Bank arising from the COVID-19 pandemic; acts of terrorism and political or military actions by the United States or other governments; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; higher lending risks associated with our commercial and agricultural banking activities; the sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; disintermediation risk; our ability to maintain our reputation; our ability to maintain or increase our market share; our ability to realize the benefits of net deferred tax assets; our inability to obtain needed liquidity; our ability to raise capital needed to fund growth or meet regulatory requirements; our ability to attract and retain key personnel; our ability to keep pace with technological change; prevalence of fraud and other financial crimes; cybersecurity risks; the possibility that our internal controls and procedures could fail or be circumvented; our ability to successfully execute our acquisition growth strategy; risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits; restrictions on our ability to pay dividends; the potential volatility of our stock price; accounting standards for credit losses; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or Bank; public company reporting obligations; changes in federal or state tax laws; and changes in accounting principles, policies or guidelines and their impact on financial performance. Stockholders, potential investors, and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Company’s performance are discussed further in Part I, Item 1A, “Risk Factors,” in the Company’s Form 10-K, for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 7, 2023 and the Company’s subsequent filings with the SEC. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release.
1 Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity, which management believes may be helpful in understanding the Company’s results of operations or financial position and comparing results over different periods.

Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity are non-GAAP measures that eliminate the impact of goodwill and intangible
7



assets on our financial position. Management believes these measures are useful in assessing the strength of our financial position.

Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions.

Contact: Steve Bianchi, CEO
(715)-836-9994

(CZWI-ER)

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CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
(in thousands, except shares and per share data)
June 30, 2023 (unaudited)March 31, 2023 (unaudited)December 31, 2022 (audited)June 30, 2022 (unaudited)
Assets
Cash and cash equivalents$42,969 $65,050 $35,363 $31,743 
Other interest bearing deposits— 249 249 1,505 
Securities available for sale “AFS”161,135 173,423 165,991 177,068 
Securities held to maturity “HTM”93,800 95,301 96,379 99,249 
Equity investments2,299 2,151 1,794 1,365 
Other investments16,347 17,428 15,834 14,899 
Loans receivable1,424,988 1,420,955 1,411,784 1,346,855 
Allowance for credit losses(23,164)(22,679)(17,939)(16,825)
Loans receivable, net1,401,824 1,398,276 1,393,845 1,330,030 
Loans held for sale2,394 761 — 1,172 
Mortgage servicing rights, net4,008 4,120 4,262 4,520 
Office properties and equipment, net19,827 20,197 20,493 21,589 
Accrued interest receivable5,702 5,550 5,285 4,243 
Intangible assets2,052 2,245 2,449 3,100 
Goodwill31,498 31,498 31,498 31,498 
Foreclosed and repossessed assets, net1,199 1,113 1,271 1,437 
Bank owned life insurance (“BOLI”)25,290 25,118 24,954 24,622 
Other assets19,493 18,240 16,719 15,567 
TOTAL ASSETS$1,829,837 $1,860,720 $1,816,386 $1,763,607 
Liabilities and Stockholders’ Equity
Liabilities:
Deposits$1,464,682 $1,436,793 $1,424,720 $1,400,210 
Federal Home Loan Bank (“FHLB”) advances122,530 182,530 142,530 102,030 
Other borrowings67,357 67,300 72,409 87,124 
Other liabilities9,710 9,536 9,639 9,500 
Total liabilities1,664,279 1,696,159 1,649,298 1,598,864 
Stockholders’ equity:
Common stock— $0.01 par value, authorized 30,000,000; 10,470,175, 10,482,821, 10,425,119 and 10,530,415 shares issued and outstanding, respectively105 105 104 105 
Additional paid-in capital119,404 119,327 119,240 119,987 
Retained earnings64,926 61,720 65,400 56,928 
Accumulated other comprehensive loss(18,877)(16,591)(17,656)(12,277)
Total stockholders’ equity165,558 164,561 167,088 164,743 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$1,829,837 $1,860,720 $1,816,386 $1,763,607 
        Note: Certain items previously reported were reclassified for consistency with the current presentation.
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CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
 Three Months EndedSix Months Ended
June 30, 2023 (unaudited)March 31, 2023 (unaudited)June 30, 2022 (unaudited)June 30, 2023 (unaudited)June 30, 2022 (unaudited)
Interest and dividend income: 
Interest and fees on loans$17,960 $17,126 $14,893 $35,086 $28,660 
Interest on investments2,817 2,547 1,810 5,364 3,419 
Total interest and dividend income20,777 19,673 16,703 40,450 32,079 
Interest expense:
Interest on deposits6,162 4,348 985 10,510 2,053 
Interest on FHLB borrowed funds1,892 1,493 297 3,385 608 
Interest on other borrowed funds1,037 1,037 1,154 2,074 1,984 
Total interest expense9,091 6,878 2,436 15,969 4,645 
Net interest income before provision for credit losses11,686 12,795 14,267 24,481 27,434 
Provision for credit losses450 50 400 500 400 
Net interest income after provision for credit losses11,236 12,745 13,867 23,981 27,034 
Non-interest income:
Service charges on deposit accounts488 485 482 973 970 
Interchange income591 551 614 1,142 1,163 
Loan servicing income499 569 600 1,068 1,301 
Gain on sale of loans904 298 414 1,202 1,136 
Loan fees and service charges88 80 141 168 233 
Net gains (losses) on investment securities10 56 (75)66 (112)
Other333 253 196 586 394 
Total non-interest income2,913 2,292 2,372 5,205 5,085 
Non-interest expense:
Compensation and related benefits5,336 5,338 5,589 10,674 10,987 
Occupancy1,359 1,423 1,343 2,782 2,708 
Data processing1,444 1,460 1,415 2,904 2,716 
Amortization of intangible assets193 204 399 397 798 
Mortgage servicing rights expense, net148 158 195 306 (132)
Advertising, marketing and public relations151 136 250 287 462 
FDIC premium assessment203 201 118 404 233 
Professional services306 505 368 811 770 
Gains on repossessed assets, net(9)(29)(2)(38)(9)
New market tax credit depletion— — 162 — 325 
Other715 725 625 1,440 1,272 
Total non-interest expense9,846 10,121 10,462 19,967 20,130 
Income before provision for income taxes4,303 4,916 5,777 9,219 11,989 
Provision for income taxes1,097 1,254 1,411 2,351 2,917 
Net income attributable to common stockholders$3,206 $3,662 $4,366 $6,868 $9,072 
Per share information:
Basic earnings $0.31 $0.35 $0.41 $0.66 $0.86 
Diluted earnings$0.31 $0.35 $0.41 $0.66 $0.86 
Cash dividends paid$— $0.29 $— $0.29 $0.26 
Book value per share at end of period$15.81 $15.70 $15.64 $15.81 $15.64 
Tangible book value per share at end of period (non-GAAP)$12.61 $12.48 $12.36 $12.61 $12.36 
Note: Certain items previously reported were reclassified for consistency with the current presentation.
10



 
Loan Composition
(in thousands)
June 30, 2023March 31, 2023December 31, 2022June 30, 2022
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate$732,435 $726,748 $725,971 $702,917 
Agricultural real estate87,198 90,958 87,908 77,807 
Multi-family real estate208,211 207,786 208,908 179,929 
Construction and land development105,625 114,951 102,492 115,188 
C&I/Agricultural operating:
Commercial and industrial133,763 130,943 136,013 139,002 
Agricultural operating24,358 24,146 28,806 24,469 
Residential mortgage:
Residential mortgage119,724 110,379 105,389 88,575 
Purchased HELOC loans3,216 3,206 3,262 3,419 
Consumer installment:
Originated indirect paper8,189 9,314 10,236 12,736 
Other consumer6,487 6,728 7,150 7,785 
Gross loans$1,429,206 $1,425,159 $1,416,135 $1,351,827 
Unearned net deferred fees and costs and loans in process(2,827)(2,689)(2,585)(2,338)
Unamortized discount on acquired loans(1,391)(1,515)(1,766)(2,634)
Total loans receivable$1,424,988 $1,420,955 $1,411,784 $1,346,855 
Nonperforming Assets
(in thousands, except ratios)
June 30, 2023 (1)March 31, 2023 (1)December 31, 2022June 30, 2022
Nonperforming assets:
Nonaccrual loans
Commercial real estate$11,359 $5,514 $5,736 $5,275 
Agricultural real estate1,712 2,496 2,742 3,169 
Construction and land development94 — — 43 
Commercial and industrial (“C&I”)4 452 552 211 
Agricultural operating1,436 794 890 555 
Residential mortgage1,029 1,131 1,253 1,122 
Consumer installment29 23 31 59 
Total nonaccrual loans$15,663 $10,410 $11,204 $10,434 
Accruing loans past due 90 days or more492 224 246 714 
Total nonperforming loans (“NPLs”)16,155 10,634 11,450 11,148 
Foreclosed and repossessed assets, net1,199 1,113 1,271 1,437 
Total nonperforming assets (“NPAs”)$17,354 $11,747 $12,721 $12,585 
Loans, end of period$1,424,988 $1,420,955 $1,411,784 $1,346,855 
Total assets, end of period$1,829,837 $1,860,720 $1,816,386 $1,763,607 
Ratios:
NPLs to total loans1.13 %0.75 %0.81 %0.83 %
NPAs to total assets0.95 %0.63 %0.70 %0.71 %

(1) Loan balances are at amortized cost.



11



Average Balances, Interest Yields and Rates
(in thousands, except yields and rates)
 Three Months Ended
June 30, 2023		Three Months Ended
March 31, 2023		Three Months Ended
June 30, 2022
Average
Balance		Interest
Income/
Expense		Average
Yield/
Rate (1)		Average
Balance		Interest
Income/
Expense		Average
Yield/
Rate (1)		Average
Balance		Interest
Income/
Expense		Average
Yield/
Rate (1)
Average interest earning assets:
Cash and cash equivalents$24,779 $327 5.29 %$18,270 $140 3.11 %$25,195 $43 0.68 %
Loans receivable1,414,925 17,960 5.09 %1,412,409 17,126 4.92 %1,328,661 14,893 4.50 %
Interest bearing deposits5 — — %249 1 1.63 %1,509 8 2.13 %
Investment securities (1)264,579 2,210 3.34 %270,174 2,175 3.22 %285,332 1,593 2.23 %
Other investments17,491 280 6.42 %16,663 231 5.62 %14,969 166 4.45 %
Total interest earning assets (1)$1,721,779 $20,777 4.84 %$1,717,765 $19,673 4.64 %$1,655,666 $16,703 4.05 %
Average interest bearing liabilities:
Savings accounts$209,277 $393 0.75 %$216,169 $382 0.72 %$241,245 $131 0.22 %
Demand deposits366,037 1,752 1.92 %391,635 1,432 1.48 %410,468 257 0.25 %
Money market accounts299,201 1,774 2.38 %301,710 1,096 1.47 %323,907 277 0.34 %
CD’s293,262 2,243 3.07 %255,567 1,438 2.28 %159,578 320 0.80 %
Total deposits$1,167,777 $6,162 2.12 %$1,165,081 $4,348 1.51 %$1,135,198 $985 0.35 %
FHLB advances and other borrowings238,776 2,929 4.92 %232,166 2,530 4.42 %186,050 1,451 3.13 %
Total interest bearing liabilities$1,406,553 $9,091 2.59 %$1,397,247 $6,878 2.00 %$1,321,248 $2,436 0.74 %
Net interest income$11,686 $12,795 $14,267 
Interest rate spread2.25 %2.64 %3.31 %
Net interest margin (1)2.72 %3.02 %3.46 %
Average interest earning assets to average interest bearing liabilities1.22 1.23 1.25 

(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the quarters ended June 30, 2023, March 31, 2023 and June 30, 2022. The FTE adjustment to net interest income included in the rate calculations totaled $0, $0 and $0 thousand for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively.
 

12



 Six Months Ended
 June 30, 2023		Six Months Ended
 June 30, 2022
Average
Balance		Interest
Income/
Expense		Average
Yield/
Rate (1)		Average
Balance		Interest
Income/
Expense		Average
Yield/
Rate (1)
Average interest earning assets:
Cash and cash equivalents$17,931 $467 5.25 %$30,174 $56 0.37 %
Loans receivable1,412,870 35,086 5.01 %1,316,469 28,660 4.39 %
Interest bearing deposits126 1 1.60 %1,510 15 2.00 %
Investment securities (1)266,224 4,385 3.32 %286,789 3,009 2.10 %
Other investments16,923 511 6.09 %15,112 339 4.52 %
Total interest earning assets (1)$1,714,074 $40,450 4.76 %$1,650,054 $32,079 3.92 %
Average interest bearing liabilities:
Savings accounts$213,106 $776 0.73 %$237,464 $231 0.20 %
Demand deposits378,450 3,183 1.70 %410,678 470 0.23 %
Money market accounts299,393 2,870 1.93 %311,524 492 0.32 %
CD’s270,819 3,681 2.74 %174,300 860 0.99 %
Total deposits$1,161,768 $10,510 1.82 %$1,133,966 $2,053 0.37 %
FHLB advances and other borrowings229,825 5,459 4.79 %176,139 2,592 2.97 %
Total interest bearing liabilities$1,391,593 $15,969 2.31 %$1,310,105 $4,645 0.71 %
Net interest income$24,481 $27,434 
Interest rate spread2.45 %3.21 %
Net interest margin (1)2.88 %3.35 %
Average interest earning assets to average interest bearing liabilities1.23 1.26 
(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the six months June 30, 2023 and June 30, 2022. The FTE adjustment to net interest income included in the rate calculations totaled $0 and $1 thousand for the six months ended June 30, 2023 and June 30, 2022, respectively.


13



Key Financial Metric Ratios:
 Three Months EndedSix Months Ended
June 30, 2023March 31, 2023June 30, 2022June 30, 2023June 30, 2022
Ratios based on net income:
Return on average assets (annualized)0.70 %0.81 %0.99 %0.76 %1.04 %
Return on average equity (annualized)7.81 %9.03 %10.63 %8.42 %11.00 %
Return on average tangible common equity4 (annualized)
10.26 %11.85 %14.41 %11.05 %14.85 %
Efficiency ratio66 %66 %60 %66 %59 %
Net interest margin with loan purchase accretion2.72 %3.02 %3.46 %2.88 %3.35 %
Net interest margin without loan purchase accretion2.69 %2.99 %3.30 %2.85 %3.24 %

Reconciliation of Return on Average Assets
(in thousands, except ratios)

 Three Months EndedSix Months Ended
June 30, 2023March 31, 2023June 30, 2022June 30, 2023June 30, 2022
GAAP earnings after income taxes$3,206 $3,662 $4,366 $6,868 $9,072 
Average assets$1,844,196 $1,823,748 $1,764,517 $1,830,150 $1,754,722 
Return on average assets (annualized)0.70 %0.81 %0.99 %0.76 %1.04 %


Reconciliation of Return on Average Equity
(in thousands, except ratios)

 Three Months EndedSix Months Ended
June 30, 2023March 31, 2023June 30, 2022June 30, 2023June 30, 2022
GAAP earnings after income taxes$3,206 $3,662 $4,366 $6,868 $9,072 
Average equity$164,661 $164,426 $164,737 $164,541 $166,348 
Return on average equity (annualized)7.81 %9.03 %10.63 %8.42 %11.00 %


Reconciliation of Efficiency Ratio
(in thousands, except ratios)

 Three Months EndedSix Months Ended
June 30, 2023March 31, 2023June 30, 2022June 30, 2023June 30, 2022
Non-interest expense (GAAP)$9,846 $10,121 $10,462 $19,967 $20,130 
Less amortization of intangibles(193)(204)(399)(397)(798)
Efficiency ratio numerator (GAAP) $9,653 $9,917 $10,063 $19,570 $19,332 
Non-interest income$2,913 $2,292 $2,372 $5,205 $5,085 
Loss (Gain) on investment securities(10)(56)75 (66)112 
Net interest margin11,686 12,795 14,267 24,481 27,434 
Efficiency ratio denominator (GAAP)$14,589 $15,031 $16,714 $29,620 $32,631 
Efficiency ratio (GAAP)66 %66 %60 %66 %59 %



14



Reconciliation of tangible book value per share (non-GAAP)
(in thousands, except per share data)

Tangible book value per share at end of periodJune 30, 2023March 31, 2023December 31, 2022June 30, 2022
Total stockholders’ equity$165,558 $164,561 $167,088 $164,743 
Less: Goodwill(31,498)(31,498)(31,498)(31,498)
Less: Intangible assets(2,052)(2,245)(2,449)(3,100)
Tangible common equity (non-GAAP)$132,008 $130,818 $133,141 $130,145 
Ending common shares outstanding10,470,175 10,482,821 10,425,119 10,530,415 
Book value per share$15.81 $15.70 $16.03 $15.64 
Tangible book value per share (non-GAAP)$12.61 $12.48 $12.77 $12.36 

Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)
(in thousands, except ratios)

Tangible common equity as a percent of tangible assets at end of period June 30, 2023March 31, 2023December 31, 2022June 30, 2022
Total stockholders’ equity$165,558 $164,561 $167,088 $164,743 
Less: Goodwill(31,498)(31,498)(31,498)(31,498)
Less: Intangible assets(2,052)(2,245)(2,449)(3,100)
Tangible common equity (non-GAAP)$132,008 $130,818 $133,141 $130,145 
Total Assets$1,829,837 $1,860,720 $1,816,386 $1,763,607 
Less: Goodwill(31,498)(31,498)(31,498)(31,498)
Less: Intangible assets(2,052)(2,245)(2,449)(3,100)
Tangible Assets (non-GAAP)$1,796,287 $1,826,977 $1,782,439 $1,729,009 
Total stockholders’ equity to total assets ratio9.05 %8.84 %9.20 %9.34 %
Tangible common equity as a percent of tangible assets (non-GAAP)7.35 %7.16 %7.47 %7.53 %

Reconciliation of Return on Average Tangible Common Equity (non-GAAP)
(in thousands, except ratios)
Three Months EndedSix Months Ended
June 30, 2023March 31, 2023June 30, 2022June 30, 2023June 30, 2022
Total stockholders’ equity$165,558 $164.561 $164,743 $165,558 $164,743 
Less: Goodwill(31,498)(31.498)(31,498)(31,498)(31,498)
Less: Intangible assets(2,052)(2.245)(3,100)(2,052)(3,100)
Tangible common equity (non-GAAP)$132,008 $130.818 $130,145 $132,008 $130,145 
Average tangible common equity (non-GAAP)$131,016 $130,582 $129,939 $130,796 $131,351 
GAAP earnings after income taxes3,206 3,662 4,366 $6,868 $9,072 
Amortization of intangible assets, net of tax144 152 302 296 604 
Tangible net income$3,350 $3,814 $4,668 $7,164 $9,676 
Return on average tangible common equity (annualized)10.26 %11.85 %14.41 %11.05 %14.85 %

Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on tangible common equity are non-GAAP measures that management believes enhances investors’ ability to better understand the Company’s financial position. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of tangible book value per share (non-GAAP)”, “Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)”, and “Reconciliation of return on average tangible common equity)”.

15



EXHIBIT 99.2  Earnings Release Supplement  Second Quarter 2023 

 
Citizens Community Bancorp, Inc.  Table of Contents  Cautionary Notes and Additional Disclosures  Deposit Composition  Commercial Deposit Concentrations  Top 100 Depositors  Liquidity  Non‐Owner Occupied CRE  Owner Occupied CRE  Multi‐family  Commercial & Industrial Loans  Construction & Development Loans  Agricultural Real Estate & Operating Loans  Hotel Loans  Restaurant Loans  Campground Loans  Office Loans  Credit Quality/Risk Rating Descriptions  Loans by Risk Rating as of June 30, 2023  Loans by Risk Rating as of March 31, 2023  Loans by Risk Rating as of December 31, 2022  Loans by Risk Rating as of March 31, 2022  Allowance for Credit Losses – Loans  Allowance for Credit Losses – Unfunded  Commitments  Delinquency as of June 30, 2023, and March, 31  2023  Delinquency as of December 31, 2022 and June  30, 2022  Nonaccrual Loans Roll forward  Other Real Estate Owned Roll forward  Page(s)  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  18  19  19  20  20  21  22  23  23  Investments – Amortized Cost and Fair Value  Investments – Credit Ratings  Earnings Per Share  Economic Value of Equity  Net Interest Income Over One Year Horizon  Selected Capital Composition Highlights – Bank  and Company  Page(s)  23  24  25  26  26  27  1

 
Cautionary Notes and Additional Disclosures DATES AND PERIODS PRESENTED In this earnings release financial supplement, unless otherwise noted, “20YY” refers to either the corresponding fiscal year-end date or the corresponding 12-months (i.e. fiscal year) then ended. “MMM-YY” refers to either the corresponding quarter-end date, or the corresponding three-month period then ended. CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This earnings release financial supplement may contain 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 financial condition, results of operations, asset and credit quality trends, profitability, projected earnings, future plans, strategies and expectations of Citizens Community Bancorp, Inc. (“CZWI” or the “Company”) and its subsidiary, Citizens Community Federal, National Association (“CCFBank”). The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions of the Company, are generally identifiable by use of the words “believe,” “expect,” “estimates,” “intend,” “anticipate,” “estimate,” “project,” “on pace,” “seek,” “target,” “potential,” “focus,” “may,” “preliminary,” “could,” “should” or similar expressions. These forward-looking statements express management’s current expectations or forecasts of future events, and by their nature, are subject to risks and uncertainties. Therefore, there are a number of factors that might cause actual results to differ materially from those in such statements. These uncertainties include conditions in the financial markets and economic conditions generally; adverse impacts to the Company or CCFBank arising from the COVID-19 pandemic; acts of terrorism and political or military actions by the United States or other governments; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; higher lending risks associated with our commercial and agricultural banking activities; the sufficiency of credit allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; disintermediation risk; our ability to maintain our reputation; our ability to maintain or increase our market share; our ability to realize the benefits of net deferred tax assets; our inability to obtain needed liquidity; our ability to raise capital needed to fund growth or meet regulatory requirements; our ability to attract and retain key personnel; our ability to keep pace with technological change; prevalence of fraud and other financial crimes; cybersecurity risks; the possibility that our internal controls and procedures could fail or be circumvented; our ability to successfully execute our acquisition growth strategy; risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits; restrictions on our ability to pay dividends; the potential volatility of our stock price; accounting standards for credit losses; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or CCFBank; public company reporting obligations; changes in federal or state tax laws; and changes in accounting principles, policies or guidelines and their impact on financial performance. Stockholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Company's performance are discussed further in Part I, Item 1A, “Risk Factors,” in the Company’s Form 10-K, for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 7, 2023, in the Company’s Form 10-Q, for the quarter ended March 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on May 4, 2023, and the Company's subsequent filings with the SEC. The Company undertakes no obligation to make any revisions to the forward- looking statements contained herein or to update them to reflect events or circumstances occurring after the date hereof. NON-GAAP FINANCIAL MEASURES This earnings release financial supplement contains 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 or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Non-GAAP financial measures referred to herein include net income as adjusted, return on average equity as adjusted, and return on average assets as adjusted. Reconciliations of all non-GAAP financial measures used herein to the comparable GAAP financial measures in the appendix at the end of this presentation. 2

 
Deposit Composition June 30, 2023 Average Account Size (In Thousands) AmountType $14Retail $70Commercial $391Public$1.47 Billion 82% of  deposits  insured or  collateralized Top 10 Depositors Coverage Beyond FDIC(1)Industry% of DepositsRank ICSPublic Administration2.0%1 ICSEducational Services1.7%2 CollateralizedGovernmental Entity1.5%3 ICSHealth Care1.3%4 CollateralizedGovernmental Entity1.0%5 CollateralizedGovernmental Entity0.9%6 ICS and CollateralizedGovernmental Entity0.9%7 NoneProfessional Services0.8%8 CollateralizedGovernmental Entity0.7%9 ICSPublic Administration0.7%10 (1) Coverage by ICS and private insurance my not cover entire balance 3

 
Commercial Deposit Concentrations June 30, 2023 Source: Internal Company Documents Diverse commercial  deposit base with no  industry concentration  over 12% 4

 
Top 100 Depositors June 30, 2023 $378 Million 5

 
Liquidity June 30, 2023 $611.1  Million 6

 
Portfolio Fundamentals 62% 30% 8% Wisconsin Minnesota Other By Geography As of 6/30/23 • Typically well seasoned investors with multiple projects, track record of  success and personal financial strength (net worth/Liquidity) • Maximum LTV =<80% with recourse to owners with >20% interest • Term of 5‐10 years with 20 to 25‐year amortizations depending on  property type, markets and strength and liquidity of sponsors • Minimum DSC and/or Global DSC covenant required to monitor  performance ranging from 1.15x‐1.25x • Conservative underwriting approach emphasizing actual results or  market data • Appropriate use of SBA 504/7a for lower cash injection or special use  projects Non – Owner Occupied CRE 6/30/2023 3/31/2023 $453 $452 746 747 $607 $606 Approximate Weighted Average LTV 60% 60% 33 31 Trailing 12 Month Net Charge‐Offs  0.00% 0.02% $11.2 $11.3 2.5% 2.5% Weighted Average Seasoning In Months Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Thousands Portfolio Characteristics ‐ Non‐Owner Occupied CRE As of Criticized Loans Millions Criticized Loans as a Percent of Total 22% 20% 12% 11% 8% 7% 7% 6% 3% 4% Investor Residential Hotel CRE ‐ Retail CRE ‐ Senior Living CRE ‐ Campground CRE ‐ Office CRE ‐ Warehouse/Mini Storage CRE ‐ Industrial/Manufacturing CRE ‐ Mixed Use Other Non – Owner  Occupied CRE As of 6/30/23 7

 
16% 16% 14% 11% 10% 9% 8% 4% 12% CRE Campground CRE Restaurant CRE Industrial/Manufacturing CRE Warehouse/Mini Storage CRE Senior Living CRE Retail CRE Mixed Use CRE Office Other Owner  Occupied CRE As of 6/30/23 Portfolio Fundamentals 74% 10% 16% Wisconsin Minnesota Other By Geography As of 6/30/23 • Underwritten to <80% LTV based on appraised value (<75% for Restaurant) • Term of 5‐10 years with 20‐year amortization • Recourse to owners with greater than 20% interest • DSC covenant of 1.25x on project and/or Global DSC of 1.15x • Appropriate use of SBA 504/7a for lower cash injection or special use projects • By Geography “Other” segment includes borrowers with warm climates, no income tax states Owner Occupied CRE 6/30/2023 3/31/2023 $279 $274 422 422 $661 $650 Approximate Weighted Average LTV 50% 51% 33 31 Trailing 12 Month Net Charge‐Offs  0.00% 0.00% $1.1 $1.7 0.4% 0.6%Criticized Loans as a Precent of Total Weighted Average Seasoning In Months Criticized Loans In Millions Portfolio Characteristics ‐ Owner Occupied CRE Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Thousands As of 8

 
Portfolio Fundamentals 64% 35% 1% Wisconsin Minnesota Other By Geography As of 6/30/23 1% 20% 43% 23% 4% 7% 2% 2023 2022 2021 2020 2019 2018 Prior By Vintage As of 6/30/23 • Robust housing markets in Eau Claire and Mankato markets supported by student populations at state universities, technical colleges, and growing population and job markets • Multi‐family sponsors experienced owners with multi‐project portfolios • Typically underwritten to 75% LTV based on appraised value with recourse; metro markets and/or strong sponsors may warrant up to 80% LTV • Generally, term of 5‐10 years with 20 to 25‐year amortization (varies by new versus existing, size of market and sponsor strength) • Covenant for minimum DSC/Global DSC Multi-family 6/30/2023 3/31/2023 $208 $208 123 119 $1.69 $1.75 62% 62% Weighted Average Seasoning In Months 27 25 0% 0% $0.0 $0.0 0.0% 0.0%Criticized Loans as a Percent of Total Approximate Weighted Average LTV Trailing 12 Month Net Charge‐Offs Criticized Loans in Millions Portfolio Characteristics ‐ Multi‐family Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Millions As of 9

 
91% 8% 1% Wisconsin Minnesota Other By Geography As of 6/30/23 19% 13% 11% 10%9% 7% 5% 5% 4% 4% 3% 10% Finance and Insurance Manufacturing Transportation and Warehousing Wholesale Trade Construction Agriculture Public Admin Administrative Support Real Estate, Rental and Leasing Retail Trade Education Services Other Commercial &  Industrial As of 6/30/23 • Highly diversified, secured loan portfolio underwritten with recourse • Lines of credit reviewed annually and may have borrowing base  certificates governing line usage • Fixed asset LTV’s based on age and type of equipment; <5‐year  amortization • Use of SBA Guaranty Program (Preferred Lender or General Processing)  as appropriate • “Retail Trade” segment consists of Farm Supply, Franchised Hardware,  Franchised Auto Parts, Franchised and Non‐franchised Auto Dealers and  Repair Shops, Convenience Stores/Gas Stations  Commercial & Industrial Loans 6/30/2023 3/31/2023 $134 $131 662 663 $202 $198 27 26 0.02% 0.02% $60 $61 $2.9 $0.5 Criticized Loans as a Precent of Total 2.2% 0.4% Criticized Loans In Millions Weighted Average Seasoning In Months Trailing 12 Month Net Charge‐Offs  Committed Line, if collateral In Millions Portfolio Characteristics ‐ Commercial & Industrial Loan Balance In Millions Number of Loans Average Loan Size In Thousands As of Portfolio Fundamentals 10

 
Portfolio Fundamentals 34% 28% 21% 5% 4% 3% 5% Campgrounds Multi‐Family 1‐4 Family Land Retail Hospitality Other Commercial &  Development As of 6/30/23 35% 23% 13% 10% 5% 5% 4% 4%1% Wisconsin Minnesota South Dakota Utah Illinois Florida Ohio Tennessee Other By Geography As of 6/30/23 • Underwritten to 75‐80% LTV based on lesser of cost or appraised value with full recourse • Interest only typically up to 18 months (depending on project complexity and seasonal timing) followed by amortization of 15‐25 years (terms vary by property type) • Borrower equity contribution of cash/land value =>15% injected at the beginning of project (cash/land contribution) • Construction loans require 3rd party inspections and title company draws after balancing to sworn construction statement • 1‐4 residential construction centered in eastern Twin Cities and Northwest Wisconsin.  Generally, 80% LTC /60%‐80% of AV. Spec building capped. Progress reporting monthly by individual home Construction & Development Loans 6/30/2023 3/31/2023 Loan Balance Outstanding In Millions $106  $115  Number of Loans 121 114 Average Loan Size In Millions $0.9  $1.0  Approximate Weighted Average LTV 60% 61% Trailing 12 Month Net Charge‐Offs 0.00% 0.00% Percent Utilized of Commitments 54% 56% $0.2 $0.1 Criticized Loans as a Percent of Total 0.2% 0.1% Portfolio Characteristics ‐ Construction & Development As of Criticized Loans in Millions 11

 
33% 26% 19% 22% Crop Other Farming Dairy Other Agricultural As of 6/30/23 Portfolio Fundamentals 75% 24% 1% Wisconsin Minnesota Other By Geography As of 6/30/23 • Producers required to have marketing plans to mitigate volatility of commodities • Appropriate crop/revenue insurance and/or dairy margin protection required • Maximum ag RE LTV of less than 65%; equipment LTV of less than 75% • Appropriate structuring to separate crop production cycles and to match length of loan with asset financed • Use of Farmer Mac, FSA, SBA or USDA programs to address DSC, collateral margins or working capital • Operating and ag loan relationships are typically cross collateralized Agricultural Real Estate & Operating Loans 6/30/2023 3/31/2023 $112 $115 489 511 $228 $225 32 32 ‐0.05% 0.18% Criticized Loans in Millions $11.8 $5.5 10.5% 4.8%Criticized Loans as a Percent of Total Weighted Average Seasoning  In Months Trailing 12 Month Net Charge‐Offs  Portfolio Characteristics ‐ Agricultural Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Thousands As of  12

 
64% 28% 8% Limited Service Full Service Other Hotels As of 6/30/23 Portfolio Fundamentals 38% 46% 16% Minnesota Wisconsin Illinois By Geography As of 6/30/23 • Mainly experienced multi project hoteliers and guarantors with strong  personal financial statements (net worth and liquidity)   • Mainly flagged/franchised limited stay properties • Underwriting consistent with management's conservative approach to  Investor CRE, emphasizing actual results in underwriting Hotel Loans 6/30/2023 3/31/2023 $91  $92  27 26 $3.4  $3.4  56% 56% 0.00% 0.00% Criticized Loans in Millions $5.9 $5.9 6.5% 6.4%Criticized Loans as a Precent of Total As of Number of Loans Trailing 12 Month Net Charge Offs Portfolio Characteristics ‐ Hotels Loan Balance Outstanding In Millions  Average Loan Size In Millions Approximate Weighted Average LTV 13

 
68% 15% 6% 4% 3% 4% Culver's ‐ Limited Service Restaurants Other National Limited Services Drinking Establishments Bowling Centers Other Restaurants As of 6/30/23 Portfolio Fundamentals 56% 27% 17% Wisconsin Minnesota Other By Geography As of 6/30/23 • Experienced developers/operators of national Limited /Quick Service brands (Culver’s, Subway, Dairy Queen, McDonalds, Jimmy John’s, A&W) • Underwritten to =<80% LTV with full recourse (depending on sponsor history); 20‐year amortization with 5 to 10‐year terms • Use of SBA Guaranty Program (Preferred Lender or General Processing) as appropriate • Drinking establishments may have other collateral pledged and tend to be in smaller communities in our footprint • Lessors of RE include investor and owner‐occupied structure Restaurant Loans 6/30/2023 3/31/2023 $51  $48  72 69 $702  $689  51% 54% 0.00% 0.00% Criticized Loans In Millions $0.8 $0.8 1.6% 1.7%Criticized Loans as a Percent of Total Portfolio Characteristics ‐ Restaurants As of  Trailing 12 Month Net Charge‐Offs  Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Thousands Approximate Weighted Average LTV 14

 
10% 21% 29% 29% 3% 3% 5% 2023 2022 2021 2020 2017 2016 Prior By Vintage As 6/30/23 Portfolio Fundamentals 21% 12% 11% 9%9% 7% 5% 4% 4% 4% 14% Wisconsin Ohio Utah Maryland Illinois Pennsylvania Kentucky New York North Carolina Tennessee Other By Geography As of 6/30/23 • Experienced multi‐unit operators and owner‐occupied franchised  campgrounds (typically Jellystone Park)  • Grounds offer a mix of camping, RV and cabin options with recreational  amenities • Park locations within reasonable proximity of metropolitan areas and/or  near national and state parks • Underwritten with recourse generally with 5‐10 year terms and 20 year  amortization • Use of SBA 7a and 504, or other government guaranteed loan programs  as appropriate • 20+ years of history through CCF acquisition with no charge‐off  history Campground Loans 6/30/2023 3/31/2023 $104  $97  50 49 $2.1  $2.0  47% 47% 28 26 0.00% 0.00% $0.0 $0.0 Criticized Loans as a Percent of Total 0.0% 0.0% Portfolio Characteristics ‐ Campgrounds As of Weighted Average Seasoning in Months Criticized Loans in Millions Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Millions Approximate Weighted Average LTV Trailing 12 Month Net Charge‐Offs  15

 
3% 28% 4% 40% 25% 2023 2024 2025 2026 2027 & Beyond Maturity or Next Repricing Date As of 6/30/23 Portfolio Fundamentals 63% 32% 5% Wisconsin Minnesota Other By Geography As of 6/30/23  Properties financed are generally in Wisconsin and Minnesota and 98% of properties are located outside of large cities  Projects underwritten with 5‐10 year term, up to 20 year amortization, and less than 80% LTV  Loans are with recourse to the sponsor/owner(s)  Buildings are mostly single level buildings and no more than three floors high  Tenants centered in medical, insurance, professional services and government Office Loans 6/30/2023 3/31/2023 $45  $45  72 72 $618  $626  66% 65% 34 31 0.00% 0.00% $0.0  $0.0  0.0% 0.0%Criticized Loans as a Percent of Total Portfolio Characteristics ‐ Office As of Weighted Average Seasoning in Months Criticized Loans in Millions Loan Balance Outstanding In Millions Number of Loans Average Loan Size In Thousands Approximate Weighted Average LTV Trailing 12 Month Net Charge‐Offs  16

 
Credit Quality/Risk Ratings: Management utilizes a numeric risk rating system to identify and quantify the Bank’s risk of loss within its loan portfolio. Ratings are initially assigned prior to funding the loan, and may be changed at any time as circumstances warrant. Ratings range from the highest to lowest quality based on factors that include measurements of ability to pay, collateral type and value, borrower stability and management experience. The Bank’s loan portfolio is presented below in accordance with the risk rating framework that has been commonly adopted by the federal banking agencies. The definitions of the various risk rating categories are as follows: 1 through 4 - Pass. A “Pass” loan means that the condition of the borrower and the performance of the loan is satisfactory or better. 5 - Watch. A “Watch” loan has clearly identifiable developing weaknesses that deserve additional attention from management. Weaknesses that are not corrected or mitigated, may jeopardize the ability of the borrower to repay the loan in the future. 6 - Special Mention. A “Special Mention” loan has one or more potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position in the future. 7 - Substandard. A “Substandard” loan is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Assets classified as substandard must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. 8 - Doubtful. A “Doubtful” loan has all the weaknesses inherent in a Substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. 9 - Loss. Loans classified as “Loss” are considered uncollectible, and their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, and a partial recovery may occur in the future. 17

 
Below is a breakdown of loans by risk rating as of June 30, 2023: 1 to 5 6 7 8 9 TOTAL Total Loans: Commercial/Agricultural real estate: Commercial real estate $ 720,169 $ 398 $ 11,868 $ — $ — $ 732,435 Agricultural real estate 78,173 6,761 2,264 — — 87,198 Multi-family real estate 208,211 — — — — 208,211 Construction and land development 105,418 113 94 — — 105,625 C&I/Agricultural operating: Commercial and industrial 130,881 2,870 12 — — 133,763 Agricultural operating 21,575 1,052 1,731 — — 24,358 Residential mortgage: Residential mortgage 116,541 — 3,183 — — 119,724 Purchased HELOC loans 3,216 — — — — 3,216 Consumer installment: Originated indirect paper 8,148 — 41 — — 8,189 Other consumer 6,477 — 10 — — 6,487 Gross loans $ 1,398,809 $ 11,194 $ 19,203 $ — $ — $ 1,429,206 Less: Unearned net deferred fees and costs and loans in process (2,827) Unamortized discount on acquired loans (1,391) Allowance for credit losses (23,164) Loans receivable, net $ 1,401,824 Below is a breakdown of loans by risk rating as of March 31, 2023: 1 to 5 6 7 8 9 TOTAL Total Loans: Commercial/Agricultural real estate: Commercial real estate $ 713,745 $ 5,765 $ 7,238 $ — $ — $ 726,748 Agricultural real estate 87,626 539 2,793 — — 90,958 Multi-family real estate 207,786 — — — — 207,786 Construction and land development 114,857 — 94 — — 114,951 C&I/Agricultural operating: Commercial and industrial 130,444 21 478 — — 130,943 Agricultural operating 21,956 311 1,879 — — 24,146 Residential mortgage: Residential mortgage 107,474 — 2,905 — — 110,379 Purchased HELOC loans 3,206 — — — — 3,206 Consumer installment: Originated indirect paper 9,278 — 36 — — 9,314 Other consumer 6,712 — 16 — — 6,728 Gross loans $ 1,403,084 $ 6,636 $ 15,439 $ — $ — $ 1,425,159 Less: Unearned net deferred fees and costs and loans in process (2,689) Unamortized discount on acquired loans (1,515) Allowance for credit losses (22,679) Loans receivable, net $ 1,398,276 18

 
Below is a breakdown of loans by risk rating as of December 31, 2022: 1 to 5 6 7 8 9 TOTAL Total Loans: Commercial/Agricultural real estate: Commercial real estate $ 712,658 $ 5,771 $ 7,542 $ — $ — $ 725,971 Agricultural real estate 84,215 549 3,144 — — 87,908 Multi-family real estate 208,908 — — — — 208,908 Construction and land development 102,385 — 107 — — 102,492 C&I/Agricultural operating: Commercial and industrial 129,748 5,526 739 — — 136,013 Agricultural operating 26,418 324 2,064 — — 28,806 Residential mortgage: Residential mortgage 101,730 — 3,659 — — 105,389 Purchased HELOC loans 3,262 — — — — 3,262 Consumer installment: Originated indirect paper 10,190 — 46 — — 10,236 Other consumer 7,132 — 18 — — 7,150 Gross loans $ 1,386,646 $ 12,170 $ 17,319 $ — $ — $ 1,416,135 Less: Unearned net deferred fees and costs and loans in process (2,585) Unamortized discount on acquired loans (1,766) Allowance for loan losses (17,939) Loans receivable, net $ 1,393,845 Below is a breakdown of loans by risk rating as of June 30, 2022: 1 to 5 6 7 8 9 TOTAL Total Loans: Commercial/Agricultural real estate: Commercial real estate $ 688,219 $ 6,084 $ 8,614 $ — $ — $ 702,917 Agricultural real estate 72,963 406 4,438 — — 77,807 Multi-family real estate 179,649 280 — — — 179,929 Construction and land development 115,009 — 179 — — 115,188 C&I/Agricultural operating: Commercial and industrial 126,818 10,452 1,732 — — 139,002 Agricultural operating 22,355 52 2,062 — — 24,469 Residential mortgage: Residential mortgage 85,064 — 3,511 — — 88,575 Purchased HELOC loans 3,419 — — — — 3,419 Consumer installment: Originated indirect paper 12,651 — 85 — — 12,736 Other consumer 7,726 — 59 — — 7,785 Gross loans $ 1,313,873 $ 17,274 $ 20,680 $ — $ — $ 1,351,827 Less: Unearned net deferred fees and costs and loans in process (2,338) Unamortized discount on acquired loans (2,634) Allowance for loan losses (16,825) Loans receivable, net $ 1,330,030 19

 
Allowance for Credit Losses - Loans (in thousand, except ratios) June 30, 2023 and Three Months Ended March 31, 2023 and Three Months Ended December 31, 2022 and Three Months Ended June 30, 2022 and Three Months Ended Allowance for Credit Losses (“ACL”) ACL - Loans, at beginning of period $ 22,679 $ 17,939 $ 17,217 $ 16,818 Cumulative effect of ASU 2016-13 adoption — 4,706 — Loans charged off: Commercial/Agricultural real estate (14) (32) — (122) C&I/Agricultural operating — — (36) (247) Residential mortgage (10) (14) — (56) Consumer installment (16) (11) (14) (16) Total loans charged off (40) (57) (50) (441) Recoveries of loans previously charged off: Commercial/Agricultural real estate 27 3 62 3 C&I/Agricultural operating 16 15 8 9 Residential mortgage 36 4 — 25 Consumer installment 10 12 2 11 Total recoveries of loans previously charged off: 89 34 72 48 Net loan recoveries/(charge-offs) (“NCOs”) 49 (23) 22 (393) Additions to ACL - Loans via provision for credit losses charged to operations 436 57 700 400 ACL - Loans, at end of period $ 23,164 $ 22,679 $ 17,939 $ 16,825 Average outstanding loan balance $ 1,414,925 $ 1,421,096 $ 1,399,244 $ 1,328,661 Ratios: NCOs (annualized) to average loans (0.01) % 0.01 % (0.01) % 0.12 % Allowance for Credit Losses - Unfunded Commitments: (in thousands) In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $1,544 at June 30, 2023 and $0 at December 31, 2022, classified in other liabilities on the consolidated balance sheets. June 30, 2023 and Three Months Ended March 31, 2023 and Three Months Ended December 31, 2022 and Three Months Ended June 30, 2022 and Three Months Ended ACL - Unfunded commitments - beginning of period $ 1,530 $ — $ — $ — Cumulative effect of ASU 2016-13 adoption — 1,537 — — Additions (reductions) to ACL - Unfunded commitments via provision for credit losses charged to operations 14 (7) — — ACL - Unfunded commitments - End of period $ 1,544 $ 1,530 $ — $ — 20

 
Delinquency Detail (in thousands) 30-59 Days Past Due and Accruing 60-89 Days Past Due and Accruing Greater Than 89 Days Past Due and Accruing Total Past Due and Accruing Nonaccrual Loans Total Past Due Accruing and Nonaccrual Loans Current Total Loans June 30, 2023 (1) Commercial/Agricultural real estate: Commercial real estate $ 127 $ — $ — $ 127 $ 11,359 $ 11,486 $ 718,905 $ 730,391 Agricultural real estate — — — — 1,712 1,712 85,247 86,959 Multi-family real estate — — — — — — 208,109 208,109 Construction and land development — — — — 94 94 104,797 104,891 C&I/Agricultural operating: Commercial and industrial — — — — 4 4 133,244 133,248 Agricultural operating 15 — — 15 1,436 1,451 22,930 24,381 Residential mortgage: Residential mortgage 973 757 492 2,222 1,029 3,251 115,867 119,118 Purchased HELOC loans 456 — — 456 — 456 2,760 3,216 Consumer installment: Originated indirect paper 17 — — 17 27 44 8,145 8,189 Other consumer 20 6 — 26 2 28 6,458 6,486 Total $ 1,608 $ 763 $ 492 $ 2,863 $ 15,663 $ 18,526 $ 1,406,462 $ 1,424,988 March 31, 2023 (1) Commercial/Agricultural real estate: Commercial real estate $ 684 $ — $ — $ 684 $ 5,514 $ 6,198 $ 718,487 $ 724,685 Agricultural real estate — — — — 2,496 2,496 88,210 90,706 Multi-family real estate — — — — — — 207,686 207,686 Construction and land development 94 — — 94 — 94 114,194 114,288 C&I/Agricultural operating: Commercial and industrial — — — — 452 452 129,965 130,417 Agricultural operating 15 — — 15 794 809 23,359 24,168 Residential mortgage: Residential mortgage 1,313 160 221 1,694 1,131 2,825 106,934 109,759 Purchased HELOC loans — — — — — — 3,206 3,206 Consumer installment: Originated indirect paper 24 — — 24 21 45 9,268 9,313 Other consumer 24 2 3 29 2 31 6,696 6,727 Total $ 2,154 $ 162 $ 224 $ 2,540 $ 10,410 $ 12,950 $ 1,408,005 $ 1,420,955 (1) Current year balances are at amortized cost. 21

 
Delinquency Detail (Continued) (in thousands) 30-59 Days Past Due and Accruing 60-89 Days Past Due and Accruing Greater Than 89 Days Past Due and Accruing Total Past Due and Accruing Nonaccrual Loans Total Past Due Accruing and Nonaccrual Loans Current Total Loans December 31, 2022 Commercial/Agricultural real estate: Commercial real estate $ 202 $ 88 $ — $ 290 $ 5,736 $ 6,026 $ 719,945 $ 725,971 Agricultural real estate 4,992 — — 4,992 2,742 7,734 80,174 87,908 Multi-family real estate — — — — — — 208,908 208,908 Construction and land development 3,975 — — 3,975 — 3,975 98,517 102,492 C&I/Agricultural operating: Commercial and industrial — 26 — 26 552 578 135,435 136,013 Agricultural operating 826 — — 826 890 1,716 27,090 28,806 Residential mortgage: Residential mortgage 767 479 236 1,482 1,253 2,735 102,654 105,389 Purchased HELOC loans — — — — — — 3,262 3,262 Consumer installment: Originated indirect paper 15 — — 15 27 42 10,194 10,236 Other consumer 39 2 10 51 4 55 7,095 7,150 Total $ 10,816 $ 595 $ 246 $ 11,657 $ 11,204 $ 22,861 $ 1,393,274 $ 1,416,135 June 30, 2022 Commercial/Agricultural real estate: Commercial real estate $ — $ — $ — $ — $ 5,275 $ 5,275 $ 697,642 $ 702,917 Agricultural real estate 78 — — 78 3,169 3,247 74,560 77,807 Multi-family real estate — — — — — — 179,929 179,929 Construction and land development — — — — 43 43 115,145 115,188 C&I/Agricultural operating: Commercial and industrial 7 8 — 15 211 226 138,776 139,002 Agricultural operating 146 — — 146 555 701 23,768 24,469 Residential mortgage: Residential mortgage 1,032 668 712 2,412 1,122 3,534 85,041 88,575 Purchased HELOC loans — — — — — — 3,419 3,419 Consumer installment: Originated indirect paper 13 — — 13 41 54 12,682 12,736 Other consumer 54 3 2 59 18 77 7,708 7,785 Total $ 1,330 $ 679 $ 714 $ 2,723 $ 10,434 $ 13,157 $ 1,338,670 $ 1,351,827 22

 
Nonaccrual Loans Roll forward (in thousands) Quarter Ended June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 Balance, beginning of period $ 10,410 $ 11,204 $ 10,772 $ 10,434 $ 11,858 Additions 7,826 154 1,039 257 1,918 Acquired nonaccrual loans — — — — — Charge offs (23) (49) (37) (4) (437) Transfers to OREO (110) (25) — (27) (65) Return to accrual status — (252) — (117) — Repurchase of government guaranteed loans — — — 517 Payments received (2,429) (527) (561) (288) (2,830) Other, net (11) (95) (9) — (10) Balance, end of period $ 15,663 $ 10,410 $ 11,204 $ 10,772 $ 10,434 Other Real Estate Owned Roll forward (in thousands) Quarter Ended June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 Balance, beginning of period $ 1,113 $ 1,265 $ 1,584 $ 1,427 $ 1,360 Loans transferred in 110 25 — 27 65 Branch properties transferred in — — 1,041 130 — Branch properties sales — (130) (1,360) Sales (33) (48) — — — Write-downs — — — — — Other, net 9 1 — — 2 Balance, end of period $ 1,199 $ 1,113 $ 1,265 $ 1,584 $ 1,427 23

 
The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of June 30, 2023 and December 31, 2022, respectively, were as follows: Available for sale securities Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value June 30, 2023 U.S. government agency obligations $ 18,820 $ 107 $ 224 $ 18,703 Mortgage-backed securities 94,382 — 18,406 75,976 Corporate debt securities 47,147 — 6,894 40,253 Asset-backed securities 26,823 10 630 26,203 Total available for sale securities $ 187,172 $ 117 $ 26,154 $ 161,135 December 31, 2022 U.S. government agency obligations $ 18,373 $ 173 $ 233 $ 18,313 Mortgage-backed securities 97,458 — 18,848 78,610 Corporate debt securities 44,636 — 4,385 40,251 Asset-backed securities 29,877 — 1,060 28,817 Total available for sale securities $ 190,344 $ 173 $ 24,526 $ 165,991 Held to maturity securities Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value June 30, 2023 Obligations of states and political subdivisions $ 600 $ — $ 49 $ 551 Mortgage-backed securities 93,200 5 19,075 74,130 Total held to maturity securities $ 93,800 $ 5 $ 19,124 $ 74,681 December 31, 2022 Obligations of states and political subdivisions $ 600 $ — $ 54 $ 546 Mortgage-backed securities 95,779 7 19,553 76,233 Total held to maturity securities $ 96,379 $ 7 $ 19,607 $ 76,779 The composition of our available for sale portfolios by credit rating as of the dates indicated below was as follows: June 30, 2023 December 31, 2022 Available for sale securities Amortized Cost Fair Value Amortized Cost Fair Value U.S. government agency $ 103,495 $ 85,056 $ 112,477 $ 93,669 AAA 10,546 10,241 8,640 8,334 AA 25,984 25,585 24,591 23,737 A 8,200 7,362 5,700 5,133 BBB 38,947 32,891 38,936 35,118 Non-rated — — — — Total available for sale securities $ 187,172 $ 161,135 $ 190,344 $ 165,991 24

 
The composition of our held to maturity portfolio by credit rating as of the dates indicated was as follows: June 30, 2023 December 31, 2022 Held to maturity securities Amortized Cost Fair Value Amortized Cost Fair Value U.S. government agency $ 93,200 $ 74,130 $ 95,779 $ 76,233 AAA — — — — AA — — — — A 600 551 600 546 Total $ 93,800 $ 74,681 $ 96,379 $ 76,779 On July 23, 2021, the Board of Directors adopted a share repurchase program, pursuant to which Citizens Community Bancorp, Inc. is authorized to repurchase 532,962 shares of its common stock, or approximately 5% of the outstanding shares on that date. As of the beginning of the quarter ended June 30, 2023, 243 thousand shares were available for purchase under the share repurchase program. During the quarter ended June 30, 2023, 14 thousand shares were repurchased under the program. As of June 30, 2023, an additional 229 thousand shares remain available for repurchase under the program. Earnings Per Share (Amounts in thousands, except per share data) Three Months Ended Six Months Ended June 30, 2023 March 31, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Basic Net income attributable to common shareholders $ 3,206 $ 3,662 $ 4,366 $ 6,868 $ 9,072 Weighted average common shares outstanding 10,478 10,472 10,530 10,475 10,528 Basic earnings per share $ 0.31 $ 0.35 $ 0.41 $ 0.66 $ 0.86 Diluted Net income attributable to common shareholders $ 3,206 $ 3,662 $ 4,366 $ 6,868 $ 9,072 Weighted average common shares outstanding 10,478 10,472 10,530 10,475 10,528 Add: Dilutive stock options outstanding — 6 12 2 13 Average shares and dilutive potential common shares 10,478 10,478 10,542 10,477 10,541 Diluted earnings per share $ 0.31 $ 0.35 $ 0.41 $ 0.66 $ 0.86 Common stock issued and outstanding 10,470 10,483 10,530 10,470 10,530 25

 
Economic Value of Equity Percent Change in Economic Value of Equity (EVE) Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1) At June 30, 2023 At December 31, 2022 +300 bp (3) % 0 % +200 bp (2) % 0 % +100 bp (1) % 0 % -100 bp 1 % (1) % -200 bp 1 % (4) % Net Interest Income Over One Year Horizon Percent Change in Net Interest Income Over One Year Horizon Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1) At June 30, 2023 At December 31, 2022 +300 bp (7) % (3) % +200 bp (4) % (2) % +100 bp (2) % (1) % -100 bp 2 % 1 % -200 bp 3 % 2 % 26

 
CITIZENS COMMUNITY FEDERAL N.A. Selected Capital Composition Highlights June 30, 2023 (unaudited) March 31, 2023 (unaudited) December 31, 2022 (audited) June 30, 2022 (unaudited) To Be Well Capitalized Under Prompt Corrective Action Provisions Tier 1 leverage ratio (to adjusted total assets) 11.7% 11.7% 11.5% 11.4% 5.0% Tier 1 capital (to risk weighted assets) 13.4% 13.3% 13.0% 13.2% 8.0% Common equity tier 1 capital (to risk weighted assets) 13.4% 13.3% 13.0% 13.2% 6.5% Total capital (to risk weighted assets) 14.7% 14.6% 14.2% 14.3% 10.0% CITIZENS COMMUNITY BANCORP, INC. Selected Capital Composition Highlights June 30, 2023 (unaudited) March 31, 2023 (unaudited) December 31, 2022 (audited) June 30, 2022 (unaudited) For Capital Adequacy Purposes Tier 1 leverage ratio (to adjusted total assets) 8.6% 8.5% 8.5% 8.2% 4.0% Tier 1 capital (to risk weighted assets) 9.8% 9.7% 9.7% 9.6% 6.0% Common equity tier 1 capital (to risk weighted assets) 9.8% 9.7% 9.7% 9.6% 4.5% Total capital (to risk weighted assets) 14.3% 14.1% 14.0% 15.1% 8.0% 27

 
v3.23.2
Cover Page
Jul. 24, 2023
Cover [Abstract]  
Entity Central Index Key 0001367859
Amendment Flag false
Document Type 8-K
Document Period End Date Jul. 24, 2023
Entity Registrant Name CITIZENS COMMUNITY BANCORP, INC.
Entity Incorporation, State or Country Code MD
Entity File Number 001-33003
Entity Tax Identification Number 20-5120010
Entity Address, Address Line One 2174 EastRidge Center
Entity Address, City or Town Eau Claire
Entity Address, State or Province WI
Entity Address, Postal Zip Code 54701
City Area Code 715
Local Phone Number 836-9994
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $.01 par value per share
Trading Symbol CZWI
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
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