EXHIBIT 99.3
Citizens Community Bancorp and Community Plus Savings Bank
Unaudited Pro Forma Consolidated Condensed Combined Balance Sheet
as of June 30, 2005
(In thousands) | Historical
| | |
| ASSETS: | Citizens
Community
Bancorp
| Community
Plus Savings
Bank
| Pro Forma
Adjustments
| | Pro Forma
Combined
|
| | | | | |
| Cash and cash equivalents | $4,177 | 13,537 | | | $17,714 |
| Investment securities held to maturity | 0 | 1,376 | $(11) | B | 1,365 |
| Investment securities available for sale | 0
| 1,983
|
| | 1,983
|
| Total investment securities | 0 | 3,359 | (11) | | 3,348 |
| Loans receivable, net | 181,576 | 27,166 | (456) | B | 208,286 |
| Office properties and equipment, net | 2,207 | 849 | (82) | B | 2,974 |
| Federal Home Loan Bank stock | 1,675 | 285 | | | 1,960 |
| Accrued interest receivable | 543 | 104 | | | 647 |
| Core deposit intangible | 329 | 0 | 1,877 | B | 2,206 |
| Goodwill | 0 | 0 | 5,466 | C | 5,466 |
| Other assets | 1,418
| 654
| (420)
| B | 1,652
|
| TOTAL ASSETS | $191,925
| $45,954
| $6,374
| | $244,253
|
| | | | | |
| | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY: | | | | | |
| | | | | |
| Liabilities: | | | | | |
| Deposits | $137,500 | $41,521 | $50 | B | $179,071 |
| Federal Home Loan Bank advances | 33,500 | 0 | | | 33,500 |
| Other liabilities | 1,341
| 289
| 710
| B | 2,340
|
| Total liabilites | 172,341
| 41,810
| 760
| | 214,911
|
| | | | | |
| Stockholders' Equity: | | | | | |
| Common stock - 3,747,319 shares issued | 30 | 0 | 7 | E,F | 37 |
| Additional paid-in capital | 9,013 | 0 | 9,751 | C,E,F | 18,764 |
| Retained earnings | 12,390 | 4,152 | (4,152) | E | 12,390 |
| Treasury stock - 26,251 shares at cost | (394) | 0 | | | (394) |
| Unearned ESOP shares | (1,043) | 0 | | | (1,043) |
| Unearned compensation | (412) | 0 | | | (412) |
| Accumulated other comprehensive (net of tax) | 0
| (8)
| 8
| E | 0
|
| Total stockholders' equity | 19,584
| 4,144
| 5,614
| | 29,342
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $191,925
| $45,954
| $6,374
| | $244,253
|
See Notes to the Unaudited Consolidated Pro Forma Condensed Combined Financial Statements.
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Citizens Community Bancorp and Community Plus Savings Bank
Unaudited Pro Forma Consolidated Condensed Combined Statement of Operations
For the Nine Months Ended June 30, 2005
(In Thousands) | Historical
| | |
| Citizens
Community
Bancorp
| Community
Plus Savings
Bank
| Pro Forma
Adjustments
| | Pro Forma
Combined
|
| Interest and dividend income: | | | | | |
| Interest and fees on loans | $8,245 | $1,042 | $38 | D | $9,325 |
| Other interest and dividend income | 68
| 301
| 5
| D | 374
|
| Total interest and dividend income | 8,313
| 1,343
| 43
| | 9,699
|
| |
| Interest expense: | | | | | |
| Interest on deposits | 2,266 | 305 | (13) | D | 2,558 |
| Notes payable interest | 404
| 0
| 0
| | 404
|
| Total interest expense | 2,670
| 305
| (13)
| | 2,962
|
| |
| Net interest income | 5,643 | 1,038 | 56 | | 6,737 |
| |
| Provision for loan losses | 305
| 13
| 0
| | 318
|
| Net interest income after provision for loan losses | 5,338
| 1,025
| 56
| | 6,419
|
| |
| Noninterest income: | | | | | |
| Service charges on deposit accounts | 565 | 0 | 0 | | 565 |
| Insurance commissions | 274 | 0 | 0 | | 274 |
| Loan fees and service charges | 232 | 0 | 0 | | 232 |
| Other | 460
| 152
| 0
| | 612
|
| Total noninterest income | 1,531
| 152
| 0
| | 1,683
|
| |
| | | | | |
| Noninterest expense: | | | | | |
| Salaries and related benefits | 3,311 | 519 | 44 | D | 3,874 |
| Occupancy - net | 530 | 132 | (2) | D | 660 |
| Office | 449 | 218 | 0 | | 667 |
| Data processing | 221 | 72 | 0 | | 293 |
| Amortization of core deposit intangible | 0 | 0 | 207 | D | 207 |
| Other | 940
| 264
| 0
| | 1,204
|
| Total noninterest expense | 5,451 | 1,205 | 249 | | 6,905 |
| | | | | | |
| Income before provision for income tax | 1,418 | (28) | (193) | | 1,197 |
| Provision for income taxes | 562
| (15)
| (75)
| D | 472
|
| | | | | |
| Net income | $856
| $(13)
| $(118)
| | $725
|
| Basic and Fully Diluted Earnings Per Share | $0.29
| | | | $0.25
|
See Notes to the Unaudited Consolidated Pro Forma Condensed Combined Financial Statements.
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Citizens Community Bancorp and Community Plus Savings Bank
Unaudited Pro Forma Consolidated Condensed Combined Statement of Operations
For the Twelve Months Ended September 30, 2004
(In Thousands) | Historical
| | | |
| Citizens
Community
Bancorp
| Community
Plus Savings
Bank
| Pro Forma
Adjustments
| | Pro Forma
Combined
|
| Interest and dividend income: | | | | | |
| Interest and fees on loans | $9,544 | $1,970 | $50 | D | $11,564 |
| Other interest and dividend income | 75
| 205
| 7
| D | 287
|
| Total interest and dividend income | 9,619
| 2,175
| 57
| | 11,851
|
| |
| Interest expense: | | | | | |
| Interest on deposits | 2,806 | 416 | (17) | D | 3,205 |
| Notes payable interest | 83
| 0
|
| | 83
|
| Total interest expense | 2,889
| 416
| (17)
| | 3,288
|
| |
| Net interest income | 6,730 | 1,759 | 74 | | 8,563 |
|
| Provision for loan losses | 396
| 13
| 0
| | 409
|
| Net interest income after provision for loan losses | 6,334
| 1,746
| 74
| | 8,154
|
| |
| | | | | |
| Noninterest income: | | | | | |
| Service charges on deposit accounts | 784 | 0 | 0 | | 784 |
| Insurance commissions | 309 | 0 | 0 | | 309 |
| Loan fees and service charges | 17 | 0 | 0 | | 17 |
| Other | 259
| 37
| 0
| | 296
|
| Total noninterest income | 1,369
| 37
| 0
| | 1,406
|
| |
| | | | | |
| Noninterest expense: | | | | | |
| Salaries and related benefits | 3,987 | 686 | 58 | D | 4,731 |
| Occupancy - net | 630 | 160 | (3) | D | 787 |
| Office | 546 | 267 | 0 | | 813 |
| Data processing | 301 | 96 | 0 | | 397 |
| Amortization of core deposit intangible | 0 | 0 | 276 | D | 276 |
| Other | 859
| 269
| 0
| | 1,128
|
| Total noninterest expense | 6,323
| 1,478
| 331
| | 8,132
|
| | | | | | |
| Income before provision for income tax | 1,380 | 305 | (257) | | 1,428 |
| Provision for income taxes | 543
| 106
| (100)
| D | 549
|
| | | | | |
| Net income | $837
| $199
| $(157)
| | $879
|
See Notes to the Unaudited Consolidated Pro Forma Condensed Combined Financial Statements.
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Notes to the Unaudited Pro Forma Consolidated Condensed
Combined Financial StatementsA. Basis of Presentation The pro forma information presented is not necessarily indicative of the results of operations or the combined financial position or results of operation that would have resulted had the merger been consummated as of or for the periods indicated, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined company. The merger was completed on July 1, 2005.
The unaudited pro forma consolidated financial information reflects the application of the purchase method of accounting. Under this method, the assets and liabilities of Community Plus Savings Bank will be recorded at their estimated fair values at the effective time. As described in the accompanying notes, the estimated fair values of the assets and liabilities of Community Plus Savings Bank have been combined with the historical carrying amounts of the assets and liabilities of Citizens Community Bancorp and subsidiary.
The unaudited pro forma consolidated condensed combined statement of operations for the nine months ended June 30, 2005, gives effect to the merger as if the merger had been consummated on October 1, 2004. The unaudited pro forma consolidated condensed combined statement of operations for the year ended September 30, 2004 gives effect to the merger as if the merger occurred on October 1, 2003. The unaudited pro forma consolidated condensed combined balance sheet assumes the merger was consummated on June 30, 2005. Certain reclassifications have been included in the unaudited pro forma consolidated condensed combined balance sheet and unaudited pro forma consolidated condensed combined statements of operations to conform the presentation.
Assumptions relating to the pro forma adjustments set forth in the unaudited pro forma consolidated condensed combined financial statements are summarized as follows:
Estimated fair values for the assets and liabilities of Community Plus Savings Bank were obtained as follows:
Cash and Cash Equivalents. The carrying amounts of cash and cash equivalents approximate their fair value.
Investments and Mortgage-Backed Securities. Fair values for securities are based on quoted market prices.
Stock in Federal Home Loan Bank and Other Restricted Equity Securities. No ready market exists for these stocks and they have no quoted market value; however, redemption of these stocks has historically been at par value. Accordingly, the carrying amount is deemed to be a reasonable estimate of fair value.
Loans. Fair values for loans held for investment and other loans are estimated by segregating the portfolio by type of loan and discounting scheduled cash flows using interest rates currently being offered for loans with similar terms. A prepayment assumption is used as an estimate of the portion of loans that will be repaid prior to their scheduled maturity. The allowance for loan losses as recorded is deemed to be a reasonable estimate of the credit adjustment.
Office Properties and Equipment. The fair value of office properties is based on management's best estimate of current fair value. The book value of equipment is deemed to be a reasonable estimate of fair value.
Deposits. The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificate accounts are estimated using a discounted cash flow calculation that applies interest rates offered at the time of the merger on certificates to a schedule of aggregated expected monthly maturities on certificate accounts.
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Identifiable Intangible Assets. A fair value for the core deposit intangible asset was estimated by calculating a 5.56% premium on core deposits of $33.7 million.
Other Assets and Other Liabilities. Because these financial instruments will typically be received or paid within three months, the carrying amounts of such instruments are deemed to be a reasonable estimate of fair value. Business combination costs of $420,000 recorded as other assets at June 30, 2005, have been written off, which increases goodwill.
The discount on loans will be accreted to interest income over eight years so as to approximate a constant yield to maturity. The fair market value adjustment for term deposits will be accreted to interest expense over three years so as to approximate a constant yield to maturity.
B. Purchase Accounting Adjustments Purchase accounting adjustments are estimated as follows (in thousands):
| Decrease in value of investments | $ (11) |
| Decrease in value of loans | (456) |
| Decrease in value of building | (82) |
| Increase in other liabilities | (77) |
| Core deposit intangible recorded | 1,877 |
| Increase in liability for term deposits | (50) |
| Increase pension liability | (220) |
| Decrease in other assets | (420) |
| Deferred tax liability | (413)
|
| | |
| Total | 148 |
| Equity of Community Plus | 4,144
|
| | |
| Total fair value of net assets acquired | $4,292
|
C. Calculation of Goodwill Excess of cost over the fair value of net assets acquired for the merger was calculated as follows (in thousands):
| Cost | $9,250 |
| Business combination costs | 508
|
| | |
| Total cost | 9,758 |
| Fair value of net assets acquired | 4,292
|
| |
Total excess of cost over the fair value of net
assets acquired |
$5,466
|
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D. Pro Forma Income Statement Adjustments Pro forma income statement adjustments that were calculated for the merger are as follows (in thousands):
| For the Year
Ended
September 30,
2004
Income
(Expense)
| For the Nine
Months Ended
June 30,
2005
Income
(Expense)
|
| | | |
| Accretion of discount on investments | $ 7 | $ 5 |
| Accretion of discount on loans receivable | 50 | 38 |
| Accretion of fair value adjustment for building | 3 | 2 |
| Accretion of fair value adjustment for term deposits | 17 | 13 |
| Provision for deferred compensation | (58) | (44) |
| Income tax expense | 100 | 75 |
| Amortization of core deposit intangible asset | (276)
| (207)
|
| | | |
| Total adjustments | $(157)
| $(118)
|
Income tax benefit is adjusted using a combined effective tax rate of 39%.
The following table summarizes the pro forma estimated net future impact of the amortization of the purchase accounting adjustments as if the merger occurred October 1, 2003, including the provision for officer and director deferred compensation, made in connection with the merger on our results of operations (in thousands):
Fiscal Years Ended
September 30,
| Net Increase
(Decrease)
In Net Income
of Amortized
Amounts
|
| |
| 2005 | $(164) |
| 2006 | $(167) |
| 2007 | $(181) |
| 2008 | $(182) |
| 2009 | $(186) |
| 2010 and thereafter | $(257) |
E. Transfer of Capital Amounts reclassed from Retained Earnings and Accumulated Other Comprehensive Income represent recognized value of Community Plus Savings Bank.
F. Issuance of Shares to Citizens Community MHC Based on the average closing price of common stock of Citizens Community Bancorp of $13.11 per share for the 20th through 5th trading days prior to the July 1, 2005 closing date and the $9.25 million valuation appraisal of Community Plus Savings Bank, 705,569 shares of common stock of Citizens Community Bancorp, $.01 par value was issued to Citizens Community Federal MHC and the total purchase price for the acquisition was $9.8 million (see Note C). This resulted in an increase of $7,056 to common stock and an increase of $9.8 million to additional paid-in capital.
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G. Earnings Per Share When presented, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Because the initial stock offering by Citizens Community Bancorp was not completed until March 29, 2004, per share earnings data is not meaningful and is therefore not presented.
7END.
