Citizens Holding Company (the “Company”) (OTCQX:CIZN) announced
today results of operations for the three and six months ended June
30, 2024.
(in thousands, except share and per share data)
Net income for the three months ended June 30, 2024 was $987, or
$0.18 per share-basic and diluted, a linked-quarter decrease of
($1,881), or (65.59%), from net income of $2,868, or $0.51, per
share-basic and diluted, for the three months ended March 31, 2024.
Net income also increased $687, or 228.93%, from net income of
$300, or $0.05, per share-basic and diluted for the same quarter in
2023.
Net income for the six months ended June 30, 2024 was $3,855, or
$0.69 per share-basic and diluted, an increase of $2,415, or
167.73%, from net income of $1,440, or $0.26 , per share-basic and
diluted, for the same period in 2023.
Second Quarter Highlights
- Total net loans held for investment (LHFI), as of June 30, 2024
totaled $672,402, an increase of $11,655, or 1.76%, compared to
March 31, 2024, and an increase of 104,065, or 18.31%, compared to
June 30, 2023.
- Net interest margin increased 16 basis points (“bps”) to 256
bps for the three months ended June 30, 2024 from 240 bps for the
three months ended March 31, 2024.
- Total revenues, or interest and non-interest income, for the
six months ended June 30, 2023 totaled $40,395, an increase of
$13,578, or 50.63%, from the same period in 2023. The increase in
total revenue is primarily attributed to an increase of $9,845, or
44.36% in interest income attributed to loan growth and rising
interest rates.
- Book value (“BV”) and tangible book value (“TBV”) at June 30,
2024 increased $0.19, or 2.30%, and $0.20, or 3.46%, respectively
from March 31, 2024, and increased $1.16, or 16.23% and $1.19, or
25.00%, respectively from June 30, 2023.
Chief Executive Officer (“CEO”)
Commentary
Stacy Brantley, President and Chief Executive Officer of the
Company, stated, “Our focus remains on the things we can control,
and we are working diligently to achieve strategic goals. I’m happy
to report the Bank achieved its second consecutive quarter of net
interest margin (NIM) expansion. The Bank’s NIM expanded to 256
bps, up 16 bps over the trailing quarter end and 21 bps over the
quarter ended December 31, 2023.
“Margin expansion continues to be driven by The Company’s solid
loan growth and repositioning of the balance sheet. The Bank
realized loan growth in the second quarter of 1.76% and 18.31% over
the prior year quarter ended June 30, 2023. Our loan pipelines are
strong as we close out the second quarter, and I expect continued
loan growth in line with our strategic plan in the third quarter.
Supporting strong production, our focus on strong underwriting has
produced solid credit quality metrics well within our established
targets.
“Additionally, we invested in AFS securities and executed a swap
of $15 million of our securities book from fixed to floating with
the primary goal of protecting capital and hedging rising interest
rates. We will continue to seek opportunities to buffer our balance
sheet, minimize interest rate sensitivity, and support organic
growth.”
Financial Condition and Results of Operations
Loans and Deposits
Total LHFI as of June 30, 2024 totaled $679,223 compared to
$667,416 at March 31, 2024 and $574,734 as of June 30, 2023.
Total deposits as of June 30, 2024 were $1,169,570 compared to
$1,210,600 at March 31, 2024 and $1,103,072 as of June 30, 2023.
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 June 30, 2024 was
$8,617, an increase of $827, or 10.62%, compared to $7,790 for the
three months ended March 31, 2024, and an increase of $1,202, or
16.20%, compared to $7,415 for the three months ended June 30,
2023. The net interest margin (“NIM”) was 2.56% for the three
months ended June 30, 2024 compared to 2.40% for the three months
ended March 31, 2024 and 2.55% for the same period in 2023.
Management expects continued pressure on cost of funds given the
current interest rate environment, however, the Company has seen
NIM expand for three consecutive quarters.
The linked-quarter increase in net interest income is primarily
a result of the increase in interest income of $1,288, or 8.38%,
partially offset by an increase in interest expense of $461, or
6.08%, compared to the three months ended March 31, 2024. The
increase from the same period ended June 30, 2023 is due to an
increase in interest income of $5,503, or 49.32%. This increase in
interest income is partially offset by an increase in total
interest expense of $4,301, or 114.87%, when compared to the same
period in 2023. This increase is the direct result of increased
loan production partially offset by increased deposit competition
primarily caused by higher short-term rates.
Net interest income for the six months ended June 30, 2024
increased $1,314, or 8.71%, to $16,407 from $15,093 for the same
period in 2023. The year-to-date NIM was 2.49% as of June 30, 2024
compared to 2.40% at March 31, 2024 and 2.54% for the same period
in 2023.
Net interest income for the six months ended June 30, 2024
increased compared to the prior year due to interest income
increasing $9,845, or 44.36%. This increase is primarily the result
of the large increase in loans along with repricing of loans and
investment securities. This was partially offset interest rate
hikes in 2022 and 2023 causing increased and ongoing deposit
competition. Management expects continued pressure on cost of funds
given the current interest rate environment.
Credit Quality
The Company’s NPAs increased by $1,543, or 43.32%, to $5,105 at
June 30, 2024 compared to $3,562 at March 31, 2024, and increased
$940, or 22.56%, compared to $4,165 at June 30, 2023. The primary
cause of the increase year-over-year was due the increase in
non-accrual loans of $836, or 27.90%. The increase in non-accrual
loans during the quarter is primarily related to one relationship
in the amount of $1,328.
Net losses (recoveries) were $40 for the six months ended June
30, 2024. Year-to-date net losses to average loans were 0.00% at
June 30, 2024 compared to (0.01%) at June 30, 2023.
The provision for credit losses (“PCL”) for the three months
ended June 30, 2024 was $298 compared to $192 for the linked
quarter and $459 for the same period a year ago. The PCL was
primarily driven by loan growth partially offset by favorable
qualitative factor adjustments due to better than expected GDP
growth and better than expected unemployment. Additionally, the
Company has not observed material deterioration in local CRE
valuations that some of the larger central business districts have
experienced. The ACL to LHFI was 1.00% and 1.11% at June 30, 2024
and 2023, respectively, and 1.00% at March 31, 2024, representing a
level management considers commensurate with the risk in the loan
portfolio.
Liquidity and Capital
Given the events within the banking industry during 2023,
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 June 30, 2024 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 June 30, 2024, March 31, 2024, and $4,000 at June 30,
2023. The Company currently has capacity to borrow $309,311 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:
June 30,
2024
March 31,
2024
June 30,
2023
Citizens Holding Company
Tier 1 leverage ratio
7.16
%
7.31
%
8.17
%
Common Equity tier 1 capital ratio
7.16
%
7.31
%
8.17
%
Tier 1 risk-based capital ratio
11.70
%
11.87
%
13.40
%
Total risk-based capital ratio
12.49
%
12.65
%
14.28
%
The Citizens Bank
Tier 1 leverage ratio
8.21
%
8.37
%
9.48
%
Common Equity tier 1 capital ratio
8.21
%
8.37
%
9.48
%
Tier 1 risk-based capital ratio
13.29
%
13.48
%
15.53
%
Total risk-based capital ratio
14.08
%
14.25
%
16.30
%
Noninterest Income
Noninterest income decreased for the three months ended June 30,
2024, by ($3,317), or (56.82%), compared to the three months ended
March 31, 2024, and increased by $258, or 11.42%, compared to the
same period in 2023.
The decrease quarter-over-quarter is primarily due to other
noninterest income decreasing ($4,984), or (94.39%), driven by a
one-time gain on the sale-leaseback transaction of three locations
of $4,535 during the prior quarter.
Noninterest income increased for the six months ended June 30,
2024, by $3,734, or 80.71%, compared to the same period in
2023.
The increase year-over-year is primarily due to other
noninterest income increasing $4,863, or 682.03%, driven by the
aforementioned sale-leaseback transaction.
Noninterest Expense
Noninterest expense decreased for the three months ended June
30, 2024 by ($113), or (1.17%), compared to the three months ended
March 31, 2024 and increased by $574, or 6.38%, compared to the
same period in 2023.
Noninterest expense increased for the six months ended June 30,
2024 by $1,517, or 8.55%, compared to the same period in 2023.
The increase year-over-year is primarily due to 2 factors, (1)
an increase in salaries and employee benefits as a result of
several strategic production hires in key markets and (2) an
increase in occupancy expense of $1,429, or 38.61%, driven by
increasing technology costs and an increase in rent due to the
aforementioned sale-leaseback transaction.
Dividends
The Company paid aggregate cash dividends in the amount of
$1,803, or $0.32 per share six-month period ended June 30, 2024
compared to $2,244, or $0.40 per share, for the same period in
2023.
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 Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2024
2024
2023
2024
2023
INTEREST INCOME Loans, including fees
$
11,160
$
10,264
$
7,529
$
21,424
$
14,852
Investment securities
3,014
3,045
3,334
$
6,059
6,704
Other interest
2,488
2,065
296
$
4,553
635
16,662
15,374
11,159
32,036
22,191
INTEREST EXPENSE Deposits
5,239
5,261
2,450
10,500
4,270
Other borrowed funds
2,806
2,323
1,294
5,129
2,828
8,045
7,584
3,744
15,629
7,098
NET INTEREST INCOME
8,617
7,790
7,415
16,407
15,093
PCL
298
192
459
490
465
NET INTEREST
INCOME AFTER PCL
8,319
7,598
6,956
15,917
14,628
NONINTEREST INCOME
Service charges on deposit accounts
944
957
890
1,901
1,804
Other service charges and fees
1,281
1,176
1,072
2,457
2,109
Net (losses) gains on sales of securities
-
(1,574
)
-
(1,574
)
-
Other noninterest income
296
5,280
301
5,576
713
2,521
5,839
2,263
8,360
4,626
NONINTEREST EXPENSE
Salaries and employee benefits
4,936
4,885
4,710
9,821
9,405
Occupancy expense
2,805
2,325
1,856
5,130
3,701
Other noninterest expense
1,830
2,474
2,431
4,304
4,632
9,571
9,684
8,997
19,255
17,738
NET INCOME BEFORE TAXES
1,269
3,753
222
5,022
1,516
INCOME TAX EXPENSE (BENEFIT)
282
885
(78
)
1,167
76
NET INCOME
$
987
$
2,868
$
300
$
3,855
$
1,440
Earnings per share - basic
$
0.18
$
0.51
$
0.05
$
0.69
$
0.26
Earnings per share - diluted
$
0.18
$
0.51
$
0.05
$
0.69
$
0.26
Dividends paid
$
0.16
$
0.16
$
0.16
$
0.32
$
0.40
Average shares outstanding - basic
5,609,999
5,603,570
5,601,213
5,609,999
5,598,299
Average shares outstanding - diluted
5,609,999
5,603,570
5,601,213
5,609,999
5,598,501
June 30,
March 31,
June 30,
2024
2024
2023
Assets
(Unaudited)
(Unaudited)
Change
% Change
(Unaudited)
Change
% Change
Cash and due from banks
$
18,572
$
16,868
$
1,704
10.10
%
$
17,086
$
1,486
8.70
%
Interest bearing deposits with other banks
97,469
145,924
(48,455
)
-33.21
%
862
96,607
11207.29
%
Cash and cash equivalents
116,041
162,792
(46,751
)
-28.72
%
17,948
98,093
546.54
%
Investment securities held-to-maturity, at amortized cost
379,347
384,015
(4,668
)
-1.22
%
396,931
(17,584
)
-4.43
%
Investment securities available-for-sale, at fair value
184,988
152,553
32,435
21.26
%
196,866
(11,878
)
-6.03
%
Loans held for investment (LHFI) (1)
679,223
667,416
11,808
1.77
%
574,734
104,489
18.18
%
Less allowance for credit losses (ACL), LHFI (1)
6,821
6,668
153
2.29
%
6,397
424
6.63
%
Net LHFI
672,402
660,748
11,655
1.76
%
568,337
104,065
18.31
%
Premises and equipment, net
20,370
20,530
(160
)
-0.78
%
27,381
(7,011
)
-25.61
%
Other real estate owned, net
1,234
1,234
-
0.00
%
1,009
225
22.26
%
Accrued interest receivable
5,487
4,784
703
14.70
%
4,766
721
15.12
%
Cash surrender value of life insurance
26,610
26,438
172
0.65
%
26,062
548
2.10
%
Deferred tax assets, net
27,171
27,533
(363
)
-1.32
%
29,346
(2,175
)
-7.41
%
Identifiable intangible assets, net
13,277
13,304
(27
)
-0.21
%
13,386
(109
)
-0.82
%
Other assets
18,032
19,592
(1,560
)
-7.96
%
7,307
10,725
146.78
%
Total Assets
$
1,464,959
$
1,473,523
$
(8,564
)
-0.58
%
$
1,289,339
$
175,620
13.62
%
Liabilities and Shareholders' Equity
Liabilities Deposits: Non-interest bearing deposits
$
259,848
$
263,006
$
(3,159
)
-1.20
%
$
281,812
$
(21,964
)
-7.79
%
Interest bearing deposits
909,722
947,594
(37,871
)
-4.00
%
821,260
88,462
10.77
%
Total deposits
1,169,570
1,210,600
(41,030
)
-3.39
%
1,103,072
66,498
6.03
%
Securities sold under agreement to repurchase
205,604
173,254
32,349
18.67
%
109,526
96,078
87.72
%
Short-term borrowings
-
-
-
0.00
%
4,000
(4,000
)
0.00
%
Borrowings on secured line of credit
18,000
18,000
-
0.00
%
18,000
-
0.00
%
Deferred compensation payable
9,746
9,841
(95
)
-0.97
%
10,104
(358
)
-3.55
%
Other liabilities
15,205
16,135
(930
)
-5.76
%
4,496
10,709
238.19
%
Total liabilities
1,418,125
1,427,830
(9,706
)
-0.68
%
1,249,198
168,927
13.52
%
Shareholders' Equity Common stock, $0.20 par value,
22,500,000 shares authorized, Issued and outstanding: 5,637,061
shares - June 30, 2024; 5,616,438 shares - December 31, 2023
1,125
1,123
-
0.00
%
1,123
2
0.17
%
Additional paid-in capital
18,646
18,618
28
0.15
%
18,519
127
0.69
%
Accumulated other comprehensive loss, net of tax benefit of $24,715
at June 30, 2024 and $25,362 at December 31, 2023
(74,343
)
(75,369
)
1,026
-1.36
%
(80,238
)
5,895
-7.35
%
Retained earnings
101,406
101,321
85
0.08
%
100,737
669
0.66
%
Total shareholders' equity
46,834
45,693
1,141
2.50
%
40,141
6,693
16.67
%
-
Total liabilities and shareholders' equity
$
1,464,959
$
1,473,523
$
(8,564
)
-0.58
%
$
1,289,339
$
175,620
13.62
%
June 30, March 31, June 30,
2024
2024
2023
Dollars in thousands, except per share data (Unaudited) (Unaudited)
(Unaudited)
Per Share Data Basic Earnings per Common
Share
$
0.18
$
0.51
$
0.05
Diluted Earnings per Common Share
0.18
0.51
0.05
Dividends per Common Share
0.16
0.16
0.16
BV per Common Share
8.31
8.12
7.15
BV per Common Share (ex OCI)
21.50
21.51
21.43
TBV per Common Share
5.95
5.75
4.76
TBV per Common Share (ex OCI)
19.14
19.14
19.05
Average Diluted Shares Outstanding
5,609,999
5,603,570
5,601,213
End of Period Common Shares Outstanding
5,637,061
5,628,811
5,616,438
Annualized Performance Ratios Return on Average
Assets
0.26
%
0.78
%
0.22
%
Return on Average Equity
8.78
%
18.79
%
7.26
%
Equity/Assets
3.20
%
3.10
%
3.10
%
Yield on Earning Assets
4.84
%
4.61
%
3.71
%
Cost of Funds
2.75
%
2.66
%
1.47
%
Net Interest Margin
2.56
%
2.40
%
2.55
%
Credit Metrics Allowance for Loan Losses to Total
Loans
1.00
%
1.00
%
1.11
%
Non-performing assets to loans
0.76
%
0.54
%
0.62
%
SELECTED FINANCIAL INFORMATION
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 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/20240719200795/en/
Citizens Holding Company, Philadelphia Phillip R. Branch,
601/519-4016 Phillip.branch@thecitizensbank.bank
Citizens (NASDAQ:CIZN)
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