 EAU CLAIRE, Wis., July 30, 2020 GLOBE NEWSWIRE -- 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 3.1 million, or 0.28 per diluted share for the quarter ended June 30, 2020, compared to 2.6 million, or 0.23 per diluted share for the previous quarter ended March 31, 2020. Tangible book value per share non-GAAP5 was 10.31 at June 30, 2020 compared to 9.80 at March 31, 2020. This increase in tangible book value reflects the second quarter net income of 3.1 million, quarterly increase in accumulated other comprehensive income of 1.6 million and a reduction of intangibles of 0.9 million, including a reduction of 0.5 million from the sale of the Wells Insurance Agency. For the six months ended June 30, 2020, earnings totaled 5.7 million, or 0.51 per share compared to earnings of 5.1 million, or 0.46 per share for the six months ended June 30, 2019. The Companys second quarter operating results reflected: 1 improved asset quality, 2 interest income benefiting from fee accretion on SBA Payment Protection Program PPP originations and accretion from purchase credit impaired PCI loans, 3 a continued robust refinancing market which lead to all-time high gains on sale of mortgage loans, 4 higher loan loss provisions, primarily due to increasing our COVID-19-related qualitative allowance factor, 5 lower net interest margin related to the addition of low yielding SBA PPP loans and further reductions in short term interest rates, and 6 higher non-interest expenses due to increased impairment of mortgage servicing right assets and variable compensation on all-time high mortgage loan production.We were pleased with asset quality improvements evidenced by reductions in special mention and substandard loans and the accretion of interest on PCI loans. Deferments tapered off as the quarter progressed and ended the quarter at 15 of total loans. We found through our client outreach, focused on high risk segments and larger borrowers covering approximately 700 million in loans, that businesses remained optimistic but that more visibility on the reopening of the economy in their markets is needed for them to better assess future prospects. said Stephen Bianchi, Chairman, President and Chief Executive Officer. The development of our mortgage banking platform over the last three years and the teams commitment to long hours allowed us to take advantage of heavy refinance activity and accelerating purchase market to recognize all-time high gains on sale and loan servicing income. During the COVID-19 shutdown, we evaluated our business and began the implementation of a restructuring plan which began with the sale of Wells Insurance Agency, continued Bianchi.June 30, 2020 Highlights: as of or for the 3-month period ended June 30, 2020, compared to March 31, 2020 Non-performing assets declined to 17.4 million or 1.08 of total assets at June 30, 2020 from 19.2 million or 1.28 of total assets at March 31, 2020. With the payoff of certain purchased credit impaired loans in the second quarter of 2020, the Company realized loan accretion of approximately 0.3 million, which is reflected in interest income, and positively impacts net interest margin. SBA PPP loan production of 137 million increased loans receivable to 1.28 billion at June 30, 2020 compared to 1.18 billion at March 31, 2020. The strong SBA PPP loan growth was partially offset by reductions in the acquired loan portfolio of 33 million. Loan growth was also offset by principal reductions in the community banking portfolio of 7.2 million in residential mortgage loans and 4.4 million of principal repayments on indirect paper. The net interest margin, excluding purchase accounting related accretion, was 3.19 for the quarter ended June 30, 2020 compared to 3.27 for the previous quarter. This decrease was largely due to two components. First, the impact of modestly lower yielding SBA PPP loans during the second quarter reduced the net interest margin by 4 bp. Secondly, the reduction in interest income recognized on nonaccrual loan payoffs during the current quarter compared to the previous quarter reduced the net interest margin by 4 bp. Although asset yields decreased due to the swift first quarter reduction in interest rates, this impact was offset by lower liability yields, partially due to the increase in non-interest bearing checking deposit growth. While reducing the overall margin percentage, net interest income grew as the Company recognized 0.8 million interest income on the SBA PPP loans, which included 0.5 million of deferred origination fees on the SBA PPP loans. The reported net interest margin NIM decreased to 3.34 for the quarter ended June 30, 2020, from 3.64 for the quarter ended March 31, 2020. The decrease primarily related to lower realized non-accretable differences included in loan interest income, as payoffs of certain purchased credit impaired loans were higher in the prior quarter and to a lesser extent, the changes discussed above. The Bank recorded provision for loan losses of 1.75 million for the quarter ended June 30, 2020. In continued anticipation of a COVID-19 related adverse economic impact, management reserved 1.25 million increasing the allowance for loan losses allocated to COVID-19 to 2.00 million. Various Stay-at-Home Orders continued to result in temporary business closures, reduced operating capacity and uncertainty regarding potential future revenue and cash flows for certain businesses, including bank borrowers. Approximately 100 thousand of the provision was related to loan portfolio growth in the quarter. The remaining provision was related to the impact of net loan charge-offs of 212 thousand and necessary increases in specific and unallocated allowance for loan losses. In the first quarter of 2020, approximately 750 thousand of provision for loan losses was due to COVID-19, 600 thousand was due to loan growth with the remaining 650 thousand due to increases in specific and unallocated allowances, and net charge-offs of 485 thousand. Hotels and restaurants represent our portfolios two industry sectors most directly and adversely affected by the COVID-19 pandemic. These sectors loans totaled approximately 109 million and 42 million, respectively, at June 30, 2020. As of June 30, 2020, the Bank had approved 197 million of COVID-19 related modifications under Section 4013 of the CARES Act, primarily consisting of payment deferrals. Hotel industry sectors represent approximately 78 million of the approved deferrals and restaurant industry sectors represent 25 million. Approximately, 39 million of approved deferrals are in the non-owner occupied CRE sector, where many of these are to facilitate landlords providing payment deferrals for their tenants. Non-interest income increased to 5.0 million for the quarter ended June 30, 2020 from 3.6 million for the quarter ended March 31, 2020. The increase is largely due to higher gains on sale of mortgage loans, modestly offset by lower levels of deposit charges and loan fees and service charges. Higher customer deposit balances led to lower service charges on deposit accounts and muted loan demand resulted in lower loan fees and service charges. Nonrecurring gains of 252 thousand from the sale of Wells Insurance Agency and 131 thousand related to a private-mortgage backed security claim were recorded during the current quarter. The latter represents a supplement to the proceeds received in March 2017 from this private-mortgage backed security previously owned by the Bank and sold in 2011. Total non-interest expense was higher due in part to increased impairment on mortgage servicing rights MSR due to higher actual and forecasted prepayment rates, higher variable compensation related to higher mortgage loan originations and higher FDIC insurance expense as the final FDIC insurance credit was recognized in the first quarter. These expenses were partially offset by lower professional fees.Bank and Company capital ratios exceeded regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at June 30, 2020: Citizens Community Federal N.A. Citizens Community Bancorp, Inc. To Be Well Capitalized Under Prompt Corrective Action Provisions Tier 1 leverage ratio to adjusted total assets 9.9 7.4 5.0 Tier 1 capital to risk weighted assets 12.9 9.7 8.0 Common equity tier 1 capital to risk weighted assets 12.9 9.7 6.5 Total capital to risk weighted assets 14.0 12.1 10.0 Balance Sheet and Asset QualityTotal assets increased 101.8 million during the quarter to 1.61 billion at June 30, 2020 from 1.51 billion at March 31, 2020. The increase is due to the loan portfolio growth due to the origination of SBA PPP loans, partially offset by reductions in the acquired loan portfolio.Total stockholders equity increased to 153 million at June 30, 2020 from 148 million one quarter earlier. This increase reflects second quarter net income of 3.1 million and the positive impact of unrealized gains on the available-for-sale securities portfolio reflected in other comprehensive income. Book value per share was 13.70 at June 30, 2020 compared to 13.27 at March 31, 2020. Tangible book value per share non-GAAP5 was 10.31 at June 30, 2020 compared to 9.80 at March 31, 2020. Tangible common equity non-GAAP5 as a percent of tangible assets non-GAAP was 7.33 at June 30, 2020 compared to 7.45 at March 31, 2020. Tangible common equity non-GAAP5 as a percent of tangible assets non-GAAP excluding SBA PPP loans was 8.03 at June 30, 2020. 