Citizens Holding Company (the “Company”) (OTCQX:CIZN) announced
today results of operations for the three and twelve months ended
December 31, 2023.
(in thousands, except share and per share data)
Net loss for the three months ended December 31, 2023 was
($794), or ($0.14) per share-basic and diluted, a linked-quarter
decrease of ($2,001), or (165.78%) from net income of $1,207, or
$0.22 per share-basic and diluted, for the three months ended
September 30, 2023. Net income also decreased ($3,257), or
(132.24%) from net income of $2,463, or $0.44 per share-basic and
diluted for the same quarter in 2022.
Net income for the twelve months ended December 31, 2023 was
$1,854, or $0.33 per share-basic and diluted, a decrease of
($7,766), or (80.73%) from net income of $9,620, or $1.72 per
share-basic and diluted for the same period in 2022.
Fourth Quarter Highlights
- Total revenues, or interest and non-interest income, for the
three months ended December 31, 2023 totaled $17,178, an increase
of $1,170, or 7.31% from the prior quarter. The increase in total
revenue is primarily attributed to an increase of $1,455, or 11.35%
in interest income attributed to loan growth and higher interest
rates.
- Yields on earning assets increased 34 basis point (“bps”) to
442 bps for the three months ended December 31, 2023 compared to
408 bps for the three months ended September 30, 2023 and increased
88 bps compared to 354 bps for the three months ended December 31,
2022.
- Loans held for investment (“LHFI”) increased $54,790, or 9.33%,
to $642,028 at December 31, 2023, compared to $587,238 at September
30, 2023. With the Company’s strong on-balance sheet liquidity, the
Company is in an opportune position, relative to the banking
industry, to continue to fund loan demand.
- Credit quality continues to remain solid with total
non-performing assets (“NPA”) to loans at 60 bps at December 31,
2023 compared to 73 bps at December 31, 2022. Total non-performing
assets decreased ($167), or (4.18%), to $3,826 at December 31,
2023, compared to $3,993 at September 30, 2023, and decreased
($452), or (10.57%), compared to $4,278 at December 31, 2022.
- Allowance for credit losses (“ACL”) to loans was 1.02% at
December 31, 2023 compared to 1.09% in the prior quarter and 0.90%
the same period a year ago.
Chief Executive Officer (“CEO”)
Commentary
Stacy Brantley, President and Chief Executive Officer of the
Company, stated, “The Citizens Bank of Philadelphia (the “Bank”),
the wholly owned subsidiary of the Company, accelerated the
strategic restructuring of our balance sheet during the quarter
through expansion of lending and reallocation of the investment
securities portfolio. The bank realized a pre-tax loss of $1,986 on
the sale of bonds reinvesting the proceeds in higher yielding
assets.”
“The company’s strong loan growth of $54,790 in the quarter
represents a 9.33% increase in LHFI over the prior quarter end and
a 9.64% increase over the prior year end. This growth is the result
of internal realignment in the lending and credit functions in the
second and third quarters of the year. In addition to loan growth,
credit metrics remain strong with past dues at historically low
levels. Our stable deposit base contracted slightly over the
quarter but experienced solid growth over the course of the
year.”
“Although we experienced slight margin compression over the
prior quarter, we were encouraged by margin expansion for the month
of December and anticipate continued margin expansion in the
subsequent quarter.”
“Through execution of strategic planning, improved operational
structure, and repositioning of our balance sheet we believe we are
well positioned for further growth and able to add long-term value
for our shareholders.”
Financial Condition and Results of Operations
Loans and Deposits
Total loans outstanding, net of unearned income, as of December
31, 2023 totaled $642,028 compared to $587,238 at September 30,
2023 and $585,591 as of December 31, 2022.
Total deposits as of December 31, 2023 were $1,170,077 compared
to $1,194,697 at September 30, 2023 and $1,126,402 as of December
31, 2022. With the pressure throughout the banking system in
regards to deposits, the Company has not experienced material
outflows in deposits, but continues to see a shift from noninterest
bearing deposits to interest bearing deposits.
Net Interest Income
Net interest income for the three months ended December 31, 2023
was $7,354, a decrease of ($78), or (1.05%), compared to $7,432 for
the three months ended September 30, 2023, and a decrease of
($1,456), or (16.53%), compared to $8,810 for the three months
ended December 31, 2022. The net interest margin (“NIM”) was 2.35%
for the three months ended December 31, 2023 compared to 2.40% for
the three months ended September 30, 2023 and 2.87% for the same
period in 2022.
The linked-quarter decrease in net interest income is primarily
a result of the increase in interest expense of $1,533 or 28.45%,
partially offset by an increase in loan interest income of $919, or
10.81%, compared to the three months ended September 30, 2023. The
decrease from the same period ended December 31, 2022 is due to an
increase in funding cost of $4,765 or 221.09%. This increase in
funding costs is partially offset by an increase in total interest
income of $3,309, or 30.18%, when compared to the same period in
2022.
Net interest income for the twelve months ended December 31,
2023 decreased ($5,031), or (14.41%), to $29,878 from $34,909 for
the same period in 2022. The year-to-date NIM was 2.45% as of
December 31, 2023 compared to 2.49% at September 30, 2023 and 2.80%
for the same period in 2022.
Net interest income for the twelve months ended December 31,
2023 decreased compared to the prior year due to interest expense
increasing $14,614, or 304.97%. This increase is the direct result
of increased deposit competition primarily caused by higher
short-term rates. This was partially offset as loans and investment
securities repriced also. Total interest income increased by
$9,583, or 24.14%, compared to the same period in 2022. Management
expects continued pressure on NIM given the current interest rate
environment.
Credit Quality
The Company’s NPAs decreased by ($167), or (4.18%), to $3,826 at
December 31, 2023 compared to $3,993 at September 30, 2023, and
decreased ($452), or (10.57%), compared to $4,278 at December 31,
2022. The primary cause of the decrease year-over-year was due the
decrease in non-accrual loans of ($412), or (13.79%).
Net recoveries were $24 and $200 for the quarter and the twelve
months ended December 31, 2023, respectively. Year-to-date net
recoveries to average loans were (0.03%) at December 31, 2023
compared to (0.11%) at December 31, 2022.
The provision for credit losses (“PCL”) for the three months
ended December 31, 2023 was $107 compared to $97 for the linked
quarter and $28 for the same period a year ago. The PCL was
primarily driven by loan growth and qualitative factor adjustments
due to declining commercial real estate (“CRE”) valuations on the
national scale. The Company has not observed material deterioration
in local CRE valuations. The ACL to LHFI was 1.02% and 0.90% at
December 31, 2023 and 2022, respectively, and 1.09% at September
30, 2023, representing a level management considers commensurate
with the risk in the loan portfolio.
Liquidity and Capital
Given the events within the banking industry over the past year,
investment securities portfolios, interest rate risk, liquidity and
capital have become much more of a focus for the Company’s
management team and Board, regulators and investors. As a result of
this, the Company is providing additional information on our
liquidity and capital position as of December 31, 2023 to disclose
the more traditional and stable nature of the Company’s banking
model.
The Company currently has limited reliance on the wholesale
funding market. The Company had $-0- in overnight Federal Funds
borrowings at December 31, 2023, September 30, 2023, and December
31, 2022. The Company currently has capacity to borrow $179,000
from the Federal Home Loan Bank of Dallas (“FHLB”), approximately
$150,000 in brokered deposit availability and $50,000 in
availability with our correspondent Fed Funds lines. Additionally,
the Company could provide additional collateral to the FHLB to
increase the capacity there, should that avenue be needed.
The Company and the Bank, remain in a strong capital position
and well-capitalized. A comparison of the various regulatory ratios
for the Company and the Bank are noted below:
December 31,
September 30,
December 31,
2023
2023
2022
Citizens Holding Company
Tier 1 leverage ratio
7.43
%
7.83
%
7.96
%
Common Equity tier 1 capital ratio
7.43
%
7.83
%
7.96
%
Tier 1 risk-based capital ratio
11.95
%
13.17
%
13.19
%
Total risk-based capital ratio
12.70
%
13.97
%
13.83
%
The Citizens Bank
Tier 1 leverage ratio
8.64
%
9.08
%
9.23
%
Common Equity tier 1 capital ratio
8.64
%
9.08
%
9.23
%
Tier 1 risk-based capital ratio
13.78
%
15.16
%
15.30
%
Total risk-based capital ratio
14.52
%
15.95
%
15.94
%
Noninterest Income
Noninterest income decreased for the three months ended December
31, 2023, by ($285), or (8.94%) compared to the three months ended
September 30, 2023, and increased by $193 or 7.12% compared to the
same period in 2022.
The decrease quarter-over-quarter is primarily due to other
noninterest income decreasing ($409), or (37.56%), primarily driven
by a one-time gain on the sale of three loans of $488 in the prior
quarter.
Noninterest Expense
Noninterest expense increased for the three months ended
December 31, 2023 by $2,272, or 25.05%, compared to the three
months ended September 30, 2023 and increased by $2,843, or 33.45%,
compared to the same period in 2022.
The year-over-year and linked quarter increases are primarily
being driven by the sale of approximately $15,400 of investment
securities, resulting in a one-time loss on sale of securities of
$1,986. This loss was taken in order to reposition some of the
securities portfolio into higher yielding assets.
Dividends
The Company paid aggregate cash dividends in the amount of
$4,042 or $0.72 per share, during the twelve-month period ended
December 31, 2023 compared to $5,377, or $0.96 per share, for the
same period in 2022.
At $0.16 per share, the Company’s current quarterly dividend
yield is approximately 8% which reflects the Company’s continued
commitment to returning shareholder value.
Citizens Holding Company
Financial Highlights
(amounts in thousands, except
share and per share data)
For the Three Months Ended
For the Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2023
2023
2022
2023
2022
INTEREST INCOME
Loans, including fees
$
9,422
$
8,503
$
7,307
$
32,777
$
27,198
Investment securities
3,163
3,275
3,400
13,141
12,115
Other interest
1,689
1,041
258
3,366
388
14,274
12,819
10,965
49,284
39,701
INTEREST EXPENSE
Deposits
4,503
3,481
958
12,254
2,538
Other borrowed funds
2,417
1,906
1,197
7,152
2,254
6,920
5,387
2,155
19,406
4,792
NET INTEREST INCOME
7,354
7,432
8,810
29,878
34,909
PCL
107
97
28
669
124
NET INTEREST INCOME AFTER PCL
7,247
7,335
8,782
29,209
34,785
NONINTEREST INCOME
Service charges on deposit accounts
990
994
965
3,788
3,896
Other service charges and fees
1,234
1,106
1,038
4,449
4,268
Other noninterest income
680
1,089
708
2,497
2,720
2,904
3,189
2,711
10,734
10,884
NONINTEREST EXPENSE
Salaries and employee benefits
4,522
4,656
4,292
18,583
17,649
Occupancy expense
2,199
1,935
1,957
7,835
7,411
Loss on sale of securities
1,986
-
-
1,986
-
Other noninterest expense
2,635
2,479
2,250
9,759
9,108
11,342
9,070
8,499
38,163
34,168
NET (LOSS) INCOME BEFORE TAXES
(1,191
)
1,454
2,994
1,780
11,501
INCOME TAX (BENEFIT) EXPENSE
(397
)
247
531
(74
)
1,881
NET (LOSS) INCOME
$
(794
)
$
1,207
$
2,463
$
1,854
$
9,620
(Loss) earnings per share - basic
$
(0.14
)
$
0.22
$
0.44
$
0.33
$
1.72
(Loss) earnings per share - diluted
$
(0.14
)
$
0.22
$
0.44
$
0.33
$
1.72
Dividends paid
$
0.16
$
0.16
$
0.24
$
0.72
$
0.96
Average shares outstanding - basic
5,603,570
5,603,570
5,595,320
5,600,964
5,592,668
Average shares outstanding - diluted
5,603,570
5,603,570
5,595,320
5,600,964
5,592,668
December 31,
September 30,
December 31,
2023
2023
2022
Assets
(Unaudited)
(Unaudited)
Change
% Change
(Audited)
Change
% Change
Cash and due from banks
$
14,553
$
14,061
$
492
3.50
%
$
26,948
$
(12,395
)
-46.00
%
Interest bearing deposits with other
banks
79,923
130,320
(50,397
)
-38.67
%
1,646
78,277
4755.56
%
Cash and cash equivalents
94,476
144,381
(49,905
)
-34.56
%
28,594
65,882
230.40
%
Investment securities held-to-maturity, at
amortized cost
387,799
392,133
(4,334
)
-1.11
%
406,590
(18,791
)
-4.62
%
Investment securities available-for-sale,
at fair value
177,795
183,535
(5,740
)
-3.13
%
201,322
(23,527
)
-11.69
%
Loans held for investment (LHFI)
642,028
587,238
54,790
9.33
%
585,591
56,437
9.64
%
Less allowance for credit losses (ACL),
LHFI
6,551
6,390
161
2.52
%
5,264
1,287
24.45
%
Net LHFI
635,477
580,848
54,629
9.40
%
580,327
55,150
9.50
%
Premises and equipment, net
27,073
27,353
(280
)
-1.02
%
27,705
(632
)
-2.28
%
Other real estate owned, net
1,234
974
260
26.66
%
1,179
55
4.63
%
Accrued interest receivable
5,231
4,712
519
11.01
%
4,864
367
7.54
%
Cash surrender value of life insurance
26,284
26,191
93
0.35
%
25,724
560
2.18
%
Deferred tax assets, net
28,008
31,417
(3,409
)
-10.85
%
29,574
(1,566
)
-5.29
%
Identifiable intangible assets, net
13,331
13,359
(28
)
-0.21
%
13,442
(111
)
-0.82
%
Other assets
8,972
9,107
(134
)
-1.47
%
4,682
4,291
91.66
%
Total Assets
$
1,405,680
$
1,414,010
$
(8,330
)
-0.59
%
$
1,324,003
$
81,677
6.17
%
Liabilities and Shareholders'
Equity Liabilities
Deposits:
Non-interest bearing deposits
$
264,528
$
277,949
$
(13,421
)
-4.83
%
$
299,112
$
(34,584
)
-11.56
%
Interest bearing deposits
905,549
916,748
(11,199
)
-1.22
%
827,290
78,259
9.46
%
Total deposits
1,170,077
1,194,697
(24,620
)
-2.06
%
1,126,402
43,675
3.88
%
Securities sold under agreement to
repurchase
158,086
151,089
6,997
4.63
%
127,574
30,512
23.92
%
Borrowings on secured line of credit
18,000
18,000
-
0.00
%
18,000
-
0.00
%
Deferred compensation payable
9,929
10,120
(191
)
-1.89
%
9,868
61
0.62
%
Other liabilities
6,815
5,759
1,055
18.32
%
3,134
3,680
117.43
%
Total liabilities
1,362,907
1,379,665
(16,758
)
-1.21
%
1,284,978
77,929
6.06
%
Shareholders' Equity
Common stock, $0.20 par value, 22,500,000
shares authorized, Issued and outstanding: 5,616,438 shares -
September 30, 2023 and December 31, 2023; 5,603,570 shares -
December 31, 2022
1,123
1,123
-
0.00
%
1,122
1
0.11
%
Additional paid-in capital
18,585
18,554
31
0.17
%
18,448
137
0.75
%
Accumulated other comprehensive loss, net
of tax benefit of $25,362 at December 31, 2023; $28,717 at
September 30, 2023 and $29,355 at December 31, 2022
(76,289
)
(86,377
)
10,088
-11.68
%
(83,070
)
6,781
-8.16
%
Retained earnings
99,354
101,045
(1,691
)
-1.67
%
102,525
(3,171
)
-3.09
%
Total shareholders' equity
42,773
34,345
8,428
24.54
%
39,025
3,748
9.60
%
Total liabilities and shareholders'
equity
$
1,405,680
$
1,414,010
$
(8,330
)
-0.59
%
$
1,324,003
$
81,677
6.17
%
SELECTED FINANCIAL INFORMATION
December 31,
September 30,
December 31,
2023
2023
2022
Dollars in thousands, except per share
data
(Unaudited)
(Unaudited)
(Audited)
Per Share Data
Basic Earnings per Common Share
$
(0.14
)
$
0.22
$
1.72
Diluted Earnings per Common Share
(0.14
)
0.22
1.72
Dividends per Common Share
0.16
0.16
0.24
Book Value per Common Share
7.62
6.12
6.96
Tangible Book Value per Common Share
5.24
3.74
4.57
Average Diluted Shares Outstanding
5,603,570
5,603,570
5,595,320
End of Period Common Shares
Outstanding
5,616,438
5,616,438
5,603,570
Annualized Performance Ratios
Return on Average Assets
0.14
%
0.15
%
0.72
%
Return on Average Equity
4.89
%
5.01
%
15.30
%
Equity/Assets
3.04
%
2.43
%
2.95
%
Yield on Earning Assets
3.97
%
3.82
%
3.17
%
Cost of Funds
1.89
%
1.67
%
0.49
%
Net Interest Margin
2.45
%
2.49
%
2.80
%
Efficiency Ratio
93.95
%
87.41
%
71.32
%
Credit Metrics
Allowance for Loan Losses to Total
Loans
1.02
%
1.09
%
0.90
%
Adversely Classified Assets to Tier 1
Capital plus Allowance for Loan Losses
21.69
%
29.81
%
38.37
%
Citizens Holding Company is a one-bank holding company and the
parent company of the Bank, both headquartered in Philadelphia,
Mississippi. The Bank currently has twenty-seven banking locations
in fourteen counties throughout the state of Mississippi. In
addition to full service commercial banking, the Company offers
mortgage loans, title insurance services through third party
partnerships and a full range of Internet banking services
including online banking, bill pay and cash management services for
businesses. Internet services are available at the Bank web site,
www.thecitizensbankphila.com. Citizens
Holding Company stock is listed on the OTCQX Best Market and is
traded under the symbol CIZN. The Company's transfer agent is
American Stock Transfer & Trust Company. Investor relations
information may be obtained at the corporate website, https://www.thecitizensbankphila.com/investor-relations.
Cautionary Note Regarding Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements
other than statements of historical facts included in this release
regarding the Company’s financial position, results of operations,
business strategies, plans, objectives and expectations for future
operations, are forward looking statements. The Company can give no
assurances that the assumptions upon which such forward-looking
statements are based will prove to have been correct.
Forward-looking statements speak only as of the date they are made.
The Company does not undertake a duty to update forward-looking
statements to reflect circumstances or events that occur after the
date the forward-looking statements are made. Such forward-looking
statements are subject to certain risks, uncertainties and
assumptions. The risks and uncertainties that may affect the
operation, performance, development and results of the Company’s
and the Bank’s business include, but are not limited to, the
following: (a) the risk of adverse changes in business conditions
in the banking industry generally and in the specific markets in
which the Company operates; (b) our ability to mitigate our risk
exposures; (c) changes in the legislative and regulatory
environment that negatively impact the Company and Bank through
increased operating expenses; (d) increased competition from other
financial institutions; (e) the impact of technological advances;
(f) expectations about the movement of interest rates, including
actions that may be taken by the Federal Reserve Board in response
to changing economic conditions; (g) changes in asset quality and
loan demand; (h) expectations about overall economic strength and
the performance of the economics in the Company’s market area; and
(i) other risks detailed from time to time in the Company’s filings
with the Securities and Exchange Commission. Should one or more of
these risks materialize or should any such underlying assumptions
prove to be significantly different, actual results may vary
significantly from those anticipated, estimated, projected or
expected.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240126287840/en/
Citizens Holding Company, Philadelphia Phillip R. Branch,
601/519-4016 Phillip.branch@thecitizensbank.bank
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