SOUTH HILL, Va., Feb. 11 /PRNewswire-FirstCall/ -- Citizens Community Bank (OTC Bulletin Board: CZYB) today released fourth quarter and year-end results for the period ended Dec. 31, 2007. Fourth quarter net income reported at $155,483 compared to $243,718 during the same period in 2006, a drop of $88,235 (36%) directly correlated with the Bank's ongoing expansion of its footprint and core business. On an annualized basis, return on average assets was .40%, and return on average equity was 3.49% for the respective quarter. EPS for the fourth quarter was $0.12 versus $0.18 for the same period in 2006.

The Bank ended 2007 with total assets of $148.8 million which was up $14.9 million or 11.1% over year end 2006. Loan growth was solid for 2007 with net loans increasing $19.2 million, or 20.1%, since year end 2006 and totaling $114.9 million. A majority of the loan growth was funded through the deposit base which grew $12.6 million, or 10.8%, to $129.3 million since prior year end.

Full year 2007 net income totaled $489,221 compared to $841,707 for 2006. This equated to a return on average assets ratio of .34% compared to .66% the prior year. Both basic and diluted earnings per share were $.36 versus $.62 in 2006, respectively.

"Solid loan and deposit growth during 2007 continue to pave our way for success in the new year," stated Tom Manson, president and CEO. "Having completed our first full year of operations in North Carolina, the Gaston branch's hearty community endorsement resulted in excess of $16 million in deposits. Deposits at the Gasburg, Virginia facility also reached the $16 million mark as of December 31, 2007. Additionally, our leased facility in Gasburg, Virginia, was replaced with a permanent branch facility during June and showed solid growth in excess of 25% in both loans and deposits during 2007."

During 2007, the Bank began construction on its fifth branch. Located in Roanoke Rapids, North Carolina, this new addition will be the second full service branch facility in North Carolina, following the Gaston branch which opened in December 2006. The Roanoke Rapids branch is expected to open second quarter 2008.

Net interest income was up 10.5% to $4,941,470 over 2006 as the Bank held its net margin fairly steady and benefited from strong loan growth. For 2007, the net interest margin slipped only 2 basis points to 3.68% during a challenging market environment and a period when the Bank experienced robust loan and deposit growth.

Noninterest income increased $182,317 to $587,267, a 45% boost, reflective of a complete operating year from the Bank's secondary mortgage business. Increased customer activity also generated higher ATM revenue and service charges on deposit accounts. The Bank also purchased additional Bank owned life insurance during 2007.

Noninterest expenses grew 25.1% to $4,542,684 as the Bank continued to build the franchise. These expenses included new and upgraded banking facilities; hiring of additional personnel; new products and services including added functionality to the online banking platform; an enhanced compliance program inclusive of SOX 404 compliance; along with other associated expenses and investments that occur with franchise growth. Salaries and benefits, the largest component of the Bank's operating expenses increased $361,589 or 20% to $2,146,648 for 2007. During the fourth quarter 2007, the Bank recognized a $10,171 tax benefit to reflect an adjusted effective tax rate of 24.2% for full year 2007. The Bank also recognized prior period tax adjustments which increased net income by $41,644 for 2006 and $61,658 for 2005.

Loan loss provisions totaled $340,591, an increase of $235,561 over 2006, as the Bank experienced strong loan growth during 2007. The loan loss reserve ratio stood unchanged at 1.13% of loans at December 31, 2007. Nonperforming loans represented .50% of total loans at year-end 2006 compared to .02% one year ago. Net loan charge-offs as a percentage of average loans remained well contained for the year at .11% compared to .08% for 2006.

Citizens Community Bank is a Virginia state chartered bank headquartered in South Hill, Va. Opened in December 1999, it operates additional branches in Boydton and Gasburg, Va., as well as its newest branch in Gaston, NC, all serving the Lake Country Area of Virginia and North Carolina. An additional North Carolina branch in Roanoke Rapids is currently under construction with plans to open this spring. For more information and additional financial data, please visit www.ccbsite.com.

Certain statements in this document are "forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in Citizens Community Bank's filings with the Board of Governors of the Federal Reserve.





                           CITIZENS COMMUNITY BANK
                    Selected Annual Financial Information
                                 (Unaudited)

    (Actual dollars, except
     per share data)
                               2007         2006         2005         2004
    Results of Operations:
    Net interest income    $4,941,470   $4,470,966   $3,512,819   $3,004,412
    Noninterest income        587,267      404,950      402,074      334,706
    Noninterest expense     4,542,684    3,630,493    2,781,587    2,208,677
    Provision for loan
     losses                   340,591      105,030      250,901      460,113
    Income tax expense
     (benefit)                156,241      298,686      169,348      213,408
    Net income               $489,221     $841,707     $713,057     $456,920

    Per Share Data:
    Basic net income            $0.36        $0.62        $0.79        $0.57
    Fully diluted net income    $0.36        $0.62        $0.79        $0.56
    Book value at period end   $13.21       $12.68       $11.96       $10.77
    Shares outstanding,
     period end             1,351,341    1,351,341    1,344,091      794,941
    Average shares
     outstanding, basic     1,351,341    1,347,709      896,971      794,941
    Average shares
     outstanding, diluted   1,355,247    1,353,540      902,279      819,397

    Balance Sheet Data:(1)
    Total assets         $148,807,381 $133,892,390 $120,702,707 $103,703,060
    Total loans, net      114,897,460   95,705,199   85,260,841   67,846,076
    Total investment
     securities            17,238,349   21,362,746   22,861,747   23,368,390
    Total deposits        129,274,940  116,636,929  104,222,471   94,905,601
    Total borrowed funds    1,500,000            -            -            -
    Total shareholders
     equity                17,854,773   17,128,695   16,071,684    8,560,853

    Balance Sheet Data:(2)
    Average total
     assets              $143,036,922 $128,208,735 $109,278,626  $94,285,275
    Average total
     loans, net           107,827,058   91,841,610   74,655,342   62,953,702
    Average total
     deposits             124,770,260  111,377,560   98,984,053   85,709,547
    Average total
     stockholders equity   17,363,219   16,495,048    9,233,608    8,438,304

    Performance Ratios:(3)
    Return on average
     assets                      0.34%        0.66%        0.65%        0.48%
    Return on average
     equity                      2.82%        5.10%        7.72%        5.41%
    Net interest margin          3.68%        3.70%        3.47%        3.28%
    Overhead efficiency         82.16%       74.46%       71.05%       66.15%

    Asset Quality Ratios:(4)
    Allowance for loan
     loss to total loans         1.13%        1.13%        1.23%        1.31%
    Nonperforming loans
     to total loans              0.50%        0.02%        0.36%        1.01%
    Net loan (charge-offs)
     to average loans            (.11%)       (.08%)       (.11%)       (.44%)
    Capital Ratios:
    Tier 1 risk-based
     capital                    14.86%       17.28%       18.76%       12.18%
    Total risk-based
     capital                    15.96%       18.38%       19.99%       13.43%
    Tier 1 leverage
     capital                    11.55%       12.86%       13.55%        8.37%

    (1) Period end data; investment securities are at fair market value.
    (2) Average for the period.
    (3) Net interest margin is net interest income expressed as a percentage
        of average earning assets; overhead efficiency ratio is expressed as
        non-interest expense divided by net interest income before provisions,
        plus non-interest income.
    (4) Nonperforming assets consist of nonaccrual loans, restructured loans
        and foreclosed properties; net loan charge-offs to average loans is
        annualized.

SOURCE Citizens Community Bank