Citizens Community Bancorp, Inc. (Wisconsin) :CZWI-US: Earnings Analysis: 2017 By the Numbers : December 15, 2017

Citizens Community Bancorp, Inc. (Wisconsin) reports financial results for the year ended September 30, 2017.

We analyze the earnings along side the following peers of Citizens Community Bancorp, Inc. (Wisconsin) – First Defiance Financial Corp., Bank Mutual Corporation, United Community Financial Corp. and Flagstar Bancorp, Inc. (FDEF-US, BKMU-US, UCFC-US and FBC-US) that have also reported for this period.

Highlights

  • Net interest income margins narrowed from 83.68% to 83.41% compared to the same period last year.
  • Net loan assets changed 27.92% compared to same period last year and 27.92% from previous period, total deposits changed 33.14% compared to same period last year and 33.14% from previous period.
  • Year-on-year change in operating cash flow of -31.19% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline from worsening in operating margins as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017 2016 2015 2014 2013
Relevant Numbers (Annual)
Revenues 26.7 23.99 22.48 23.25 23.11
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 2.5 2.57 2.81 1.78 1.05
Earnings Growth (YOY) -2.88 -8.3 57.38 70.3 408.25
Net Margin 9.36 10.72 12.48 7.67 4.53
EPS 0.46 0.49 0.54 0.34 0.2
Return on Equity 3.62 4.11 4.76 3.2 1.92
Return on Assets 0.31 0.4 0.49 0.32 0.19

Access our Ratings and Scores for Citizens Community Bancorp, Inc. (Wisconsin)

Earnings Growth Analysis

CZWI-US’s year-on-year decline in earnings was influenced by a weakening of net interest income margins from 83.68% to 83.41% as well as issues with loan loss provisions. As a result, net interest income after provisions margins went from 83.37% to 82.22% in this period. For comparison, net interest income margins were 83.68% and net interest income after provisions margins 83.37% in the last period. In addition, loan loss provisions as a percentage of net interest income were 1.43% this period and 0.37% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (HY YOY)
Total Deposits Growth Rate History (HY YOY)

The firm’s decline in net interest income margins came despite the relative increase in the levels of net loan assets. In addition, total deposits as a percentage of equity went from 8.64% to 10.10%. On an absolute basis, net loan assets changed 27.92% compared to the same period last year and 27.92% from the previous period. Total deposits changed 33.14% compared to the same period last year and 33.14% from the previous period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

CZWI-US’s change in operating cash flow of -31.19% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Contraction of operating margins from 16.08% to 13.26% and (2) One-time items that contributed to a decrease in pretax margins from 16.08% to 14.32%

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for Citizens Community Bancorp, Inc. (Wisconsin)

Company Profile

Citizens Community Bancorp, Inc. operates as a holding company for Citizens Community Federal Bank. It offers a variety of products including residential mortgages, home equity lines-of-credit, consumer loans, demand deposits, various savings and money-market accounts, and certificates of deposits. The company was founded in 2004 and is headquartered in Eau Claire, WI.

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