April 24, 2006
Mail Stop 4561
By U.S. Mail and facsimile to (715) 831-4299
James G. Cooley
President
Citizens Community Bancorp
2174 EastRidge Center
Eau Claire, WI 54701
Re: Citizens Community Bancorp
Form 10-KSB for the Fiscal Year Ended September 30, 2005
Form 10-QSB for the Fiscal Quarter Ended December 31, 2005
File Number: 000-50585
Dear Mr. Cooley:
We have reviewed your response letter dated April 4, 2006
and
have the following comments. Where indicated, we think you should
revise your filing in response to these comments. If you
disagree,
we will consider your explanation as to why our comment is
inapplicable or a revision in future filings is unnecessary.
Please
be as detailed as necessary in your explanation. We welcome any
questions you may have about our comments or on any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
* * * * * * *
Form 10-KSB for the Fiscal Year Ended September 30, 2005
General
1. We note your responses to comments 1 and 5 of our letter dated
March 27, 2006. However, in light of the significance of our
other
comments below, which we believe require amendments to your filing
where indicated, please also revise your filing to incorporate the
changes you describe in your April 4, 2006 response letter.
2005 Annual Report
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Commitments, page 12
2. We note your response to comment 2 of our letter dated March
27,
2006. Given that a significant portion of your total loan
portfolio
includes loans with payable on demand clauses and interest rates
are
generally expected to continue to increase from their historically
low levels over the past few years, it appears reasonably possible
that you may determine it is in the company`s best interest to
begin
triggering these clauses in the near future. Therefore, please
revise your MD&A to more fully describe the following:
* purpose behind the payable on demand clause;
* circumstances under which you are able to and historically have
invoked your rights under the payable on demand clause; and
* the extent (if determinable) to which you expect to exercise the
payable on demand clause in future periods.
Consolidated Financial Statements
Statement of Cash Flows, page 24
3. We note your response to comment 4 of our letter dated March
27,
2006. Please confirm that the cash flow statement line item
titled
"cash received for branch acquisition" is intended to reflect both
net cash received in the merger with Community Plus Savings Bank
and
cash received for the Mankato branch of Alliance Bank for the
fiscal
years ended 2005 and 2004, respectively.
4. As a related matter, please revise Note 2 of your financial
statements to clarify the cash flows paid and/or received as part
of
your acquisition of Community Plus Savings Bank.
Note 1 - Summary of Significant Accounting Policies, page 26
5. We note your response to comment 7 of our letter dated March
27,
2006. Please provide us with a quantitative and qualitative
materiality analysis demonstrating how you were able to determine
that on a quarterly and annual basis, the effect of recognizing
loan
origination fees to income when received has not been material to
your consolidated financial statements. Your materiality analysis
should address considerations such as how your error in the
application of SFAS 91, if recorded, would have affected your
compliance with regulatory requirements, compliance with loan
covenants, and earnings per share computations. Your analysis
should
also address the reasons why (other than materiality) you decided
not
to follow the guidance provided in SFAS 91 as it pertains to
accounting for loan origination fees. Refer to SAB Topic 1.M.
6. We note that in your April 4, 2006 response letter, you state
that
you performed an analysis of the accounting treatment for loan
fees
and costs on an annual basis. Please tell us the procedures you
performed on a quarterly basis to determine that the effect of
recognizing loan origination fees to income when received was not
material.
7. We note your response to comments 8 and 9 of our letter dated
March 27, 2006, however, we are unable to agree with your
conclusion
that presenting earnings per share for the years ended September
30,
2004 and would not be meaningful. Paragraph 6 of SFAS 128
specifies
that presentation of EPS is required for all entities that have
issued common stock that trades in a public market. Furthermore,
paragraph 8 of SFAS 128 states that shares issued during a period
shall be weighted for the portion of the period that they were
outstanding.
You state in Note 1 of your financial statements on page 26 of the
2005 annual report that in connection with your reorganization,
you
sold 978,650 shares of common stock in a subscription offering and
issued 2,063,100 shares to CCMHC. Paragraph 29 of SFAS 128
provides
guidance for reorganization situations and states that EPS
computations shall be based on an analysis of the particular
transaction and the provisions of the standard.
Based your specific facts and circumstances, it appears that your
reorganization represents a change in capital structure similar to
that of a stock dividend or stock split. Paragraph 54 of SFAS 128
provides that computations of basic and diluted EPS shall be
adjusted
retroactively for all periods presented to reflect changes in
capital
structure. Thus, we believe that a more appropriate method for
calculating EPS would be as follows:
* present pro forma EPS for all periods ended 9/30/04 and prior;
* the pro forma EPS denominator for the year ended 9/30/04 would
give
effect to the 978,650 shares issued at the time of the offering,
weighted from the time of the offering. The 2,063,100 shares
would
be weighted as if outstanding for all periods presented;
* the pro forma EPS denominator for the years ended 9/30/03 and
prior
would not give effect to the 978,650 shares issued at the time of
offering; and
* present a table in the financial statement footnotes of pro
forma
EPS for all income statement periods presented and provide a
description of how the computations were determined.
Form 10-QSB for the Quarterly Period Ended December 31, 2005
Consolidated Financial Statements
General
8. We note your response to our comment 10 from our letter dated
March 27, 2006 and do not object to your request to address this
comment in future filings.
* * * * * * *
Please furnish a response letter that keys your responses to our
comments. Detailed letters greatly facilitate our review. Please
file your response letter on EDGAR. Please understand that we may
have additional comments after reviewing your responses to our
comments.
You may contact Lisa Haynes, Staff Accountant at (202) 551-
3424
or me at (202) 551-3492 if you have questions.
Sincerely,
John P. Nolan
Accounting Branch Chief
Mr. James G. Cooley
Citizens Community Bancorp
April 24, 2006
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