SOUTH HILL, Va., Oct. 28 /PRNewswire-FirstCall/ -- Citizens Community Bank (OTC: CZYB) today reported third quarter results for the three month period ended September 30, 2009. Quarterly net income available to common shareholders was $60,081, an increase of 7.0% or $3,919 over third quarter 2008. After $48,375 of preferred stock dividends and amortization, basic and diluted earnings per share to common shareholders equaled $.04 for three months ended September 30, 2009. Return on average assets decreased 1 basis point to .14%, while return on average equity decreased 14 basis points to 1.10% over the comparable period. Year to date, net income available to common shareholders totaled $126,563, down $90,628 or 41.7% compared to $217,191 for the first nine months of 2008. For the first nine months of 2009, both basic and diluted earnings per share to common shareholders equaled $.09 per share, with 1,364,670 of weighted average shares outstanding, respectively. This compares to $.16 per share for the first nine months of 2008, with 1,351,341 basic and 1,352,216 of diluted shares outstanding. Year to date, return on average assets equaled .10% compared to .20% for 2008, while return on average equity declined to .79% from 1.60% over the same period.

As of September 30, 2009, total assets amounted to $172.9 million, up $18.5 million or 12.0% from December 31, 2008. Gross loans equaled $131.8 million, an increase of $4.7 million or 3.7% over the past nine months, while investment securities grew $11.9 million, or 83.4% to $26.3 million during the same period. Total deposits equaled $142.9 million, up $10.0 million or 7.6% over the nine month period.

"While some areas continue to present ongoing challenges, our net interest income growth during the third quarter is notable," says President and CEO Tom Manson. "Our results in this area (a 21.7% increase over the same period in 2008) are supported by a growing deposit base and renewed confidence from our community and client base. Our lower funding costs also helped us bolster our reserves while showing marginal income growth in spite of a weak economy and continued job losses."

For the third quarter of 2009, net interest income totaled $1,521,151, an increase of $271,495 or 21.7% over the same quarter for 2008. For the first nine months of the year, net interest income increased $563,048 or 15.5% over the first three quarters of 2008. The increase for both comparative periods reflected a larger earning asset base coupled with lower funding costs. With additional purchases of securities during the first quarter of 2009, interest income for the first nine months of 2009 increased $321,679 or 4.8%, while lower deposit rates pushed interest expense down $241,369 or 7.7% for the year. For the first nine months of 2009, the net interest margin on a tax equivalent basis slipped 4 basis points to 3.54% over the first nine months of 2008. During the third quarter of 2009, the net interest margin was 3.74%, up 3 basis points from the same quarter a year ago. Sequentially, the net interest margin expanded 29 basis points from the second quarter of 2009 as deposits repriced lower.

When including $104,747 of other real estate owned valuation writedowns during the third quarter of 2009, noninterest income equaled $118,396, a decrease of $60,059 or 33.7% compared to the same period one year ago. Excluding these writedowns, non interest income grew $44,688 or 25.0% to $223,143 versus $178,455 generated during the third quarter of 2008. For the first nine months on 2009, noninterest revenue declined $20,884 or 4.2% to $479,141 as this included the $104,747 of other real estate writedowns. Excluding this, noninterest income totaled $583,888, an increase of $83,863 or 16.8% over the same nine month period in 2008.

For the third quarter of 2009, noninterest expense totaled $1,286,667, an increase of $47,171 or 3.8% over the third quarter of 2008. The increase was mostly attributed to $32,897 of additional FDIC insurance. For the first nine months of 2009, noninterest expense amounted to $3,907,589, an increase of $325,574 or 9.1%. The rise in noninterest expense reflects $143,697 of additional FDIC insurance expenses, increased salaries and employee benefits along with higher audit and compliance costs. The increase in compensation costs for the first nine months of 2009 reflects opening a fifth branch in April of 2008.

During the third quarter and nine months of 2009, provision for credit losses totaled $213,100 and $471,610 respectively, compared with $130,400 and $287,900 for the same periods in 2008. For the first nine months of 2009, the Bank experienced higher net charge-offs and an increase in nonperforming loans. For the third quarter, net charge-offs equaled $74,697 or .23% of average loans on an annualized basis compared with .16% for the third quarter of 2008. Year to date, annualized net charge-offs amounted to .18% of average loans, up 2 basis points from the same period in 2008. At September 30, 2009, nonperforming loans totaled $3,593,182, or 2.73% of outstanding loans compared to $1,376,052 or 1.12% of loans one year ago. At the end of the third quarter of 2009, the Bank held $1,375,569 of other real estate owned consisting of twelve properties. This combined with $3,593,182 of nonperforming loans, caused nonperforming assets to represent 2.87% of total assets as of September 30, 2009. With increased charge-offs and an elevation of impaired loans, the additional provisions increased the loan loss reserve to 1.38% of total loans, up 20 basis points from one year ago and 18 basis points higher since December 31, 2008.

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