- Solid asset growth balances a challenging economic period -

SOUTH HILL, Va., April 29 /PRNewswire-FirstCall/ -- Citizens Community Bank (OTC Bulletin Board: CZYB) today reported first quarter results for 2009. For the three months ended March 31, 2009, net income to common shareholders equaled $50,581, a decrease of 66.9% or $102,015 from the first quarter of 2008. Earnings per share, both basic and diluted, totaled $.04, a decline of $.07, or 63.6% over 2008. Return on average assets equaled .12%, down 29 basis points, while return on average equity of .96% was down from 3.39% for 2008.

"The first quarter of 2009 continues to present a challenging environment for both the national and local economies. Despite this economic turmoil, we did experience significant asset growth during this period which helped significantly improve our bottom line on a quarterly basis from the fourth quarter of 2008. We continue to see growth in our newest branches as well as our main office in South Hill. We are hopeful that this will continue to lead to increasing profitability in the coming quarters," stated President and CEO Tom Manson.

During the first quarter of 2009, the Bank experienced significant growth in loans and deposits. As of March 31, 2009, total assets were $170.9 million, up $16.5 million or 10.7% over the past three months. Since year end 2008, net loans grew $3.2 million or 2.5% and increased a solid $14.0 million or 12.2% over the past twelve months. The deposit base continued to grow as the Bank benefited from recent branch expansion and enhanced products and services. Deposits reached a record $141.5 million at March 31, 2009, an increase of $8.6 million or 6.5% since December 31, 2008. The influx of deposits was from both consumers and wholesale depositors. During the three month period, the Bank increased its investment securities holdings by $11.7 million or 83.8%, with much of the funding from cost-effective Federal Home Loan Bank advances. This strategy was implemented to improve net interest income during a period where the net interest margin tightened and additional provisions were allocated to the loan loss reserve.

For the first three months of 2009, net interest income increased $94,678 or 7.9% over first quarter 2008, as a higher volume of earning assets and lower funding costs mitigated much of the net interest margin compression experienced over the comparable periods. The net interest margin stood at 3.38% for the first quarter of 2009, down 10 basis points from 2008 as the Bank faced a dramatic reduction in interest rates. Noninterest income of $174,687 was $13,213 or 8.2% higher than the first quarter of 2008 as increased business activity and a larger deposit base boosted ATM and service charge revenue. Noninterest expenses totaled $1,260,910, an increase of $154,502 or 14.0% over the first quarter of 2008 as the first quarter of 2009 included the impact of the new Roanoke Rapids branch which opened in April of 2008. When combined with a general increase in operating expenses due to the Bank's overall growth and expenditures over the comparable periods, operating expenses naturally increased.

Provision for loan losses equaled $121,310 for the three months ended March 31, 2009, an increase of $80,110 over the same comparable period in 2008. The additional provisions to the loan loss reserve are reflective of the deteriorating economic environment and inherently led to a decline in asset quality. When compared to the first quarter of 2008, net charge-offs remained relatively steady at $25,554 for the first quarter of 2009 versus $20,641 in the previous year; however, the Bank experienced an increase in nonperforming assets. Nonperforming assets equaled $2,887,053 or 1.69% of total assets versus $544,652 one year ago and $2,074,968 at December 31, 2008. These assets are, however, supported by a loan loss reserve ratio of 1.24% and an exceptionally strong capital base. As of March 31, 2009, the Bank held capital well in excess of regulatory guidelines and had a large enough capital cushion to support a severe economic downturn.

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.

SOURCE Citizens Community Bank