SOUTH HILL, Va., April 20 /PRNewswire-FirstCall/ -- Citizens Community Bank (OTC Bulletin Board: CZYB) today reported first quarter results for the quarter ended March 31, 2010. For the first quarter of 2010, net income available to common shareholders equaled $84,893, an increase of $34,312 or 67.8% over the first quarter of 2009. Basic and diluted earnings per share to common shareholders equaled $.06 for the first quarter of 2010 compared to $.04 for the first quarter of 2009. The Bank's pre-tax income jumped $111,531 or 141.1% to $190,599 despite provision for loan losses increasing $202,414 over the comparable period.

As of March 31, 2010, total assets were $171.9 million, up $1.0 million from one year ago and essentially unchanged from December 31, 2009. Gross loans equaled $131.4 million which was a decline of $1.1 million or .8% from year end 2009. The Bank's $22.8 million investment portfolio declined $934,124 or 3.9% over the past three months as cash flows and maturities were reinvested into federal funds sold. For the quarter ended March 31, 2010, deposits totaled $142.2 million which was down $155,701 or 0.1% over the past three months.

"We are making steady progress to emerge from the stresses of a weak economy, lagging high unemployment levels and increasing levels of non-performing assets in our trading area. Despite this challenging environment, we have affected significant growth in our net interest margin and delivered an increase of 82 basis points over the first quarter of 2009. This strong margin allowed us to continue to increase our loan loss reserve while aggressively addressing weaknesses in our loan portfolio. We remain hopeful that as the economy improves, we will sustain a strong net interest margin resulting in further improvement in our return to shareholders as credit losses begin to decline," says President and CEO Tom Manson.

For the first quarter of 2010, net interest income totaled $1,656,512, a marked increase of $369,551 or 28.7% over the first three months of 2009. The solid and consistent improvement in net interest income was attributable to a stronger net interest margin accompanied by continued growth in earning assets. For the quarter ended March 31, 2010, the Bank generated a 4.23% net interest margin, which was 82 basis points higher than the first quarter of 2009 and 30 basis points higher than the fourth quarter of 2009. The continued widening of the net interest margin resulted from steady earning asset yields over the period coupled with a decline in funding cost. For the first quarter of 2010, earning asset yields remained relatively stable at 6.01% while the Bank's funding costs declined 102 basis points to 2.09%.

Noninterest income equaled $213,431, up $38,744 or 22.2% over the first quarter of 2009, as elevated fee revenues from deposit accounts and ATMs combined with rental income from other real estate owned during the first quarter of 2010. Noninterest expense increased $94,350 or 7.5% for the three months ended March 31, 2010 as compared to the same period in 2009. The largest increases in noninterest expense occurred with FDIC insurance and other operating expenses. For the first quarter of 2010, FDIC insurance increased $29,758 or 127.7% and other operating costs increased $34,018 or 20.0% with the bulk of these costs related to managing deteriorated credits and other real estate owned. Salaries and benefits, which represented 45.7% of noninterest expense, increased a modest 1.5% or $8,894 over the comparable three month period.

For the quarter ended March 31, 2010, provision for loan losses amounted to $323,724, an increase of $202,414 over the first quarter of 2009. The additional provisioning resulted from higher net charge-offs during the first three months of 2010 coupled with the Bank increasing its loan loss reserve as nonperforming assets continue to rise and the local economy remains weak. For the first quarter of 2010, net loan charge-offs equaled $222,883 or .67% of average loans compared to $25,554 or .08% of loans for the first three months of 2009. Nonperforming loans equaled $3,200,559 or 2.44% of outstanding loans compared to $2,388,702 or 1.83% one year ago. There were no loans 90 days past due and still accruing interest at March 31, 2010. At the end of the first quarter of 2010, the Bank held $1,016,527 of other real estate owned, up from $498,351 on March 31, 2009. The allowance for loan losses equaled 1.69% of loans as of March 31, 2010 compared to 1.24% at March 31, 2009 and 1.60% on December 31, 2009.

Citizens Community Bank is a Virginia state chartered bank headquartered in South Hill, Va. Opened in December 1999, it operates five branches, three in south central Virginia and two in northern North Carolina. For more information and additional financial data, please visit www.ccbsite.com.

This press release contains "forward-looking statements" that concern future events which are subject to risks and uncertainties. Any such statements are based on certain assumptions and analyses by the Bank and other factors it believes are appropriate in the circumstances. The Bank's actual results, events and developments may differ materially from those contemplated by any forward-looking statement. 

                  Citizens Community Bank
                   Financial Highlights

    (Unaudited)
    (Actual dollars, except        Three Months Ended March
     per share data)                          31,
    Selected Operating Data:            2010            2009
                                        ----            ----

    Net interest income           $1,656,152      $1,286,601
    Provision for loan
     losses                          323,724         121,310
    Noninterest income               213,431         174,687
    Noninterest expense            1,355,260       1,260,910
                                   ---------       ---------
    Income before income tax         190,599          79,068
    Income tax expense                57,331           1,004
                                      ------           -----
    Net income                      $133,268         $78,064
                                    ========         =======
    Less: Preferred
     dividends                       $48,375         $27,483
                                     -------         -------
    Net income available to
     common
    shareholders                     $84,893         $50,581
                                     =======         =======

    Income per share
     available to
    common shareholders:
    Basic                              $0.06           $0.04
                                       =====           =====
    Diluted                            $0.06           $0.04
                                       =====           =====

    Average shares
     outstanding, basic            1,364,670       1,364,670
    Average shares
     outstanding, diluted          1,364,670       1,364,670



                        Citizens Community Bank
                          Financial Highlights


                                     (Unaudited)            (Audited)
                                      March 31             December 31,
                                      --------             ------------
    (Actual dollars, except
     per share data)                          2010                  2009
                                              ----                  ----
    Balance Sheet Data:

    Total assets                      $171,896,712          $171,862,449
    Loans, net                         129,134,064           130,301,003
    Deposits                           142,150,434           142,306,135
    Borrowings                           8,000,000             8,000,000
    Stockholders' equity                21,509,091            21,396,677
    Book value per share (1)                $13.54                $13.46
    Total shares outstanding             1,364,670             1,364,670

                                      Three Months Ended March 31,
                                      ----------------------------
                                              2010                  2009
                                              ----                  ----
    (Unaudited)
    Asset Quality Ratios:
    Allowance for loan loss             $2,219,556            $1,618,331
    Nonperforming assets                 4,217,086             2,887,053
    Nonperforming loans                  3,200,559             2,388,702
    Other real estate owned              1,016,527               498,351
    Net charge-offs                        222,883                25,554
    Allowance for loan loss
     to total loans                           1.69%                 1.24%
    Nonperforming loans to
     total loans                              2.44%                 1.83%
    Nonperforming assets to
     total assets                             2.45%                 1.69%
    Net charge-offs to
     average loans                            0.67%                 0.08%

    Selected Performance
     Ratios:
    Return on average assets                  0.20%                 0.12%
    Return on average equity                  1.59%                 0.96%
    Net interest margin (TE)                  4.23%                 3.41%
    Overhead efficiency                      72.49%                86.29%



    Note: (1) Book value excludes $3,038,167 and $3,008,167 of preferred
    stock for 2010 and 2009, respectively.

SOURCE Citizens Community Bank