GlobeNewswire Inc | Jan 31, 2022 08:42AM EST

January 31, 2022

EAU CLAIRE, Wisc., Jan. 31, 2022 (GLOBE NEWSWIRE) -- Citizens Community Bancorp, Inc. (the Company) (Nasdaq: CZWI), the parent company of Citizens Community Federal N.A. (the Bank or CCFBank), today reported earnings of $6.1 million and earnings per diluted share of $0.58 for the quarter ended December 31, 2021, compared to $5.0 million and $0.47 per diluted share for the quarter ended September 30, 2021, and $3.6 million and $0.32 per diluted share for the quarter ended December 31, 2020, respectively. Net income as adjusted (non-GAAP)1 was $6.1 million and $0.58 per diluted share for the fourth quarter of 2021, compared to net income as adjusted of $5.0 million and $0.47 per diluted share for the preceding quarter, and $3.7 million and $0.33 per diluted share for the fourth quarter one year ago. For the fiscal year ended December 31, 2021, earnings increased 67% to a record $21.3 million, or $1.98 per diluted share compared to earnings of $12.7 million or $1.14 per diluted share, for the fiscal year ended December 31, 2020.

The Companys fourth quarter 2021 operating results reflected the following changes from the third quarter of 2021: (1) increase in loan interest income due to loan growth and the resulting increase in the loan portfolio, partially offset by lower net accretion of SBA PPP fees and purchase accretion; (2) lower deposit costs; (3) an increase in net gains on the sale of investment securities; and (4) a slight increase in compensation expense of $0.3 million largely due to higher incentive compensation based on performance, including loan growth.

Book value per share was $16.27 at December 31, 2021, compared to $15.77 at September 30, 2021, and $14.52 at December 31, 2020. Tangible book value per share (non-GAAP)5 was $12.90 at December 31, 2021, compared to $12.37 at September 30, 2021, and $11.18 at December 31, 2020. Book value per share increased $1.75 over the past 12 months, a 12.1% increase from December 31, 2020. Tangible book value per share increased $1.72 over the past 12 months, a 15.4% increase from December 31, 2020. These increases were net of the Companys payment of the annual shareholder dividend in the first quarter of 2021 of $0.23 per share.

We experienced a second consecutive quarter of exceptional loan growth in a period that typically shows decelerating business demand. However, our key markets are very strong with unemployment below 2%, which drove commercial real estate, multi-family and commercial development lending opportunities and growth. Our Ag based rural communities are also very healthy. SBA PPP loan forgiveness exceeded 95% of originations at year end. The reduction in cash balances at the Fed boosted our net interest margin and continued stability in asset quality was achieved. Expenses were well managed with compensation increasing due to higher loan production and net income incentives. As the year ended, loan pipelines had softened and some payoff activity expected in Q4 slipped into 2022, said Stephen Bianchi, Chairman, President and Chief Executive Officer.

December 31, 2021 Highlights: (as of or for the 3-month period ended December 31, 2021 compared to September 30, 2021 and December 31, 2020.)

-- Quarterly earnings of $6.1 million, or $0.58 per diluted share for the fourth quarter ended December 31, 2021, were the highest quarterly earnings in the Companys history and up modestly from the quarter ended September 30, 2021 earnings of $5.0 million or $0.47 per diluted share, and increased from the quarter ended December 31, 2020 earnings of $3.6 million or $0.32 per diluted share. Fiscal 2021 earnings were up 67% and exceeded fiscal 2020s previous record earnings. Year-over-year earnings for the fiscal year ended December 31, 2021, were $21.3 million, or $1.98 per share compared to $12.7 million, or $1.14 per share for the fiscal year ended December 31, 2020.

-- Total loans, exclusive of SBA PPP loans, increased $83.4 million, or 6.8% for the quarter ended December 31, 2021. Meanwhile, cash and investments declined $81.3 million during the quarter ended December 31, 2021. The Company sold $28.6 million of investments, most of which were 100% risk weighted for regulatory capital purposes, to help fund higher yielding loan growth and improve risk-based capital ratios. The reduction of $20.8 million in deposits this quarter was largely due to the withdrawal of temporary deposits by certain commercial depositors, who placed the net proceeds from sales of assets/businesses on deposit with the Bank the prior quarter, along with maturing certificates of deposit that were neither renewed nor converted to non-maturity deposits. Total assets decreased slightly in the quarter to $1.74 billion from $1.75 billion.

-- Stockholders equity as a percent of total assets was 9.82% at December 31, 2021, compared to 9.46% at September 30, 2021. Tangible common equity (TCE) as a percent of tangible assets (non-GAAP)5 was 7.95% at December 31, 2021, compared to 7.58% at September 30, 2021. Record quarterly income and a modest decrease in assets drove the growth in the TCE ratio. Risk-based capital ratios remained flat, as risk-based capital generated from our net income and investment sales offset the impact of loan growth.

-- As of December 31, 2021, approximately 373 thousand shares remain available for repurchase under the share repurchase authorization. We continue to balance the positive effect on earnings per share accretion with the need for capital to support loan growth and the impact on the TCE ratio and regulatory capital ratios. Maintaining our risk-based capital ratio led to very modest stock buybacks in the quarter. The Company had a net reduction in shares outstanding of 554 thousand due to the buyback in 2021, said James Broucek, Executive Vice President and CFO.

-- No loan loss provision was realized during the quarters ended December 31, 2021 and September 30, 2021, due to lower CARES Act Section 4013 deferrals, low net charge-off or low net recoveries, decreases in criticized assets and improving economic conditions in our markets. Our two MSA unemployment rates were under 2% for November 2021, which ranks in the lowest 10% of all United States MSA and down from the 4% range seen in November 2020. This has led to improving trends for businesses most impacted by the pandemic and allowed the Company to reduce its general economic Q-Factor allocation in its allowance calculation. Further reductions in loans deferred under Section 4013 of the CARES Act and improvements in our markets business activities due to the timing and efficacy of vaccinations, and related impact on consumer behavior and business activities may allow further reductions in this economic Q-Factor.

-- The Banks COVID-19 related modifications under Section 4013 of the CARES Act decreased to $6.6 million, or 0.5% of gross loans at December 31, 2021, versus $20.6 million, or 1.6% of gross loans at September 30, 2021. At December 31, 2021, hotel industry sector loans represent $6.0 million of the approved deferrals.

-- The allowance for loan losses on originated loans, excluding SBA PPP loans, decreased to 1.43% at December 31, 2021, from 1.54% at September 30, 2021, due to loan growth and no provision for loan losses. Since SBA PPP loans are guaranteed by the SBA, they are excluded from this reserve calculation. The allowance for loan losses to total loans decreased to 1.29% at December 31, 2021, down from 1.35% at September 30, 2021, and 1.38% at December 31, 2020. Additionally, loans resulting from Bank acquisitions were effectively marked to market value at the time of their acquisition and were also excluded from this reserve calculation.

-- Nonperforming assets increased $1.1 million to $13.2 million at December 31, 2021, compared to $12.1 million one quarter earlier. This increase was due to a transfer of a closed acquired bank branch to OREO, on which we have a purchase agreement from a non-financial institution supporting the carrying value of $1.4 million. The Bank was able to construct a new, smaller facility that supports the Banks needs on this site.

-- Substandard loans decreased $4.3 million to $22.8 million at December 31, 2021, compared to $27.1 million at September 30, 2021. The decrease was largely due to the payoff of a $3.0 million accruing substandard TDR loan.

-- On January 27, 2022, the Board of Directors approved a 13% increase in the annual cash dividend to $0.26 per share. The dividend will be payable on February 28, 2022 to the shareholders of record on February 14, 2022.

Balance Sheet and Asset Quality

Total assets decreased $13.8 million during the quarter to $1.74 billion at December 31, 2021, compared to $1.75 billion at September 30, 2021. The modest decline was due to lower deposit levels, which reduced excess liquidity.

Securities available for sale decreased $31.3 million during the quarter ended December 31, 2021 to $203.1 million, from $234.4 million at September 30, 2021. This decrease was primarily due to the sale of $28.6 million of securities, primarily consisting of lower yielding trust preferred securities issued by large bank holding companies, and senior debt of large bank holding companies along with the amortization on agency securities. The decrease was partially offset by $6.7 million in purchases of subordinated debt issued by banks.

Securities held to maturity increased $3.4 million to $71.1 million during the quarter ended December 31, 2021, from $67.7 million at September 30, 2021, primarily due to a net increase in agency mortgage-backed securities as purchases exceeded principal reductions.

Loans receivable increased by $62.3 million to $1.311 billion at December 31, 2021, from $1.249 billion as of September 30, 2021. The originated loan portfolio, before SBA PPP loans, increased $101.6 million in the quarter. The growth was largely in commercial real estate and multifamily loans, with agricultural and C&I loans also showing modest growth. Acquired loans decreased by $18.3 million and total SBA PPP loans decreased $22.5 million during the current quarter.

The allowance for loan losses was $16.9 million at December 31, 2021, representing 1.29% of total loans receivable compared to $16.8 million at September 30, 2021, representing 1.35% of total loans receivable. Approximately 15% of the loan portfolio, excluding SBA loans at December 31, 2021, consists of loans purchased through whole bank acquisitions resulting in these loans being recorded at fair market value at acquisition. The allowance for loan losses allocated to originated loans as a percent of originated loans excluding SBA PPP loans was 1.43% at December 31, 2021, compared to 1.54% at September 30, 2021, with the decrease due to growth in the originated loan portfolio. For the quarter ended December 31, 2021, the Bank had modest net recoveries of $81 thousand.

Allowance for Loan Losses Percentages

(in thousands, except ratios)

December 31, September 30, June 30, 2021 December 31, 2021 2021 2020Originatedloans, netof deferred $ 1,107,555 $ 1,006,159 $ 877,534 $ 835,769 fees andcostsSBA PPPloans, net 8,457 29,753 71,508 120,711 of deferredfeesAcquiredloans, netof 194,951 212,742 232,516 281,101 unamortizeddiscountLoans, end $ 1,310,963 $ 1,248,654 $ 1,181,558 $ 1,237,581 of periodSBA PPPloans, net (8,457 ) (29,753 ) (71,508 ) (120,711 )of deferredfeesLoans, netof SBA PPPloans and $ 1,302,506 $ 1,218,901 $ 1,110,050 $ 1,116,870 deferredfeesAllowancefor loanlossesallocated $ 15,830 $ 15,505 $ 15,059 $ 14,819 tooriginatedloansAllowancefor loanlosses 1,083 1,327 1,786 2,224 allocatedto otherloansAllowancefor loan $ 16,913 $ 16,832 $ 16,845 $ 17,043 lossesALL as apercentageof loans, 1.29 % 1.35 % 1.43 % 1.38 %end ofperiodALL as apercentageof loans,net of SBA 1.30 % 1.38 % 1.52 % 1.53 %PPP loansanddeferredfeesALLallocatedtooriginatedloans as apercentage 1.43 % 1.54 % 1.72 % 1.77 %oforiginatedloans, netof deferredfees andcosts

Nonperforming assets increased to $13.2 million or 0.76% of total assets at December 31, 2021, compared to $12.1 million or 0.69% of total assets at September 30, 2021. This increase was due to the addition of $1.4 million in OREO related to the transfer of a closed acquired branch facility at its carrying value, which is supported by a current purchase agreement. The Bank was able to build and open a more appropriately sized branch on this site in the fourth quarter. Included in nonperforming assets at December 31, 2021, are $5.3 million of nonperforming loans acquired during recent whole-bank acquisitions and $1.4 million of OREO related to recent whole-bank acquisitions. Originated nonperforming assets were $6.5 million, or 0.37% of total assets for the most recent quarter. Over the past year, total criticized loans decreased 22% from $35.2 million at December 31, 2020, to $27.4 million at December 31, 2021. In the fourth quarter, a $3.0 million accruing substandard TDR loan was paid in full.

(in thousands) December September June 30, March 31, December 31, 2021 30, 2021 2021 2021 31, 2020Special mention $ 4,536 $ 2,548 $ 12,308 $ 13,659 $ 6,672loan balancesSubstandard 22,817 27,137 25,890 26,064 28,541loan balancesCriticizedloans, end of $ 27,353 $ 29,685 $ 38,198 $ 39,723 $ 35,213period

Deposits decreased $20.8 million to $1.388 billion at December 31, 2021, from $1.408 billion at September 30, 2021. As previously mentioned, the reduction in deposits was largely due to commercial depositors, who temporarily placed the net proceeds from sales of assets/businesses on deposit with the Bank the previous quarter and withdrew the sale proceeds during the current quarter. Certificates of deposit decreased $22.5 million in the fourth quarter with some of those maturing deposits moving to interest-bearing non-maturity deposits. The decrease in certificates of deposit was due to the Company choosing not to match higher rate local retail certificate competition, with some of these matured certificates being transferred to interest-bearing non-maturity deposits.

Review of Operations

Net interest income was $14.4 million for the fourth quarter ended December 31, 2021, compared to $13.7 million for the third quarter ended September 30, 2021, and $13.4 million for the quarter ended December 31, 2020. Compared to the third quarter, net interest income benefited from increases in: (1) average loan balances, due to strong loan growth; (2) $0.3 million of non-recurring loan interest income; and (3) lower deposit costs, partially offset by lower accretion on SBA PPP debt forgiveness of $0.6 million.

The net interest margin (NIM) increased to 3.50% in the fourth quarter ended December 31, 2021, compared to 3.34% for the third quarter ended September 30, 2021, and decreased from 3.51% for the quarter ended December 31, 2020. The increase in NIM from the third quarter is largely due to the growth in the higher yielding loan portfolio replacing lower yielding investment securities and lower yielding cash,approximately 8 basis points of one time loan interest income and lower deposit and borrowing costs. These positive influences on NIM were offset by lower net accretion of SBA PPP loans and purchase accretion.

In comparison to the quarter ended December 31, 2020, the current quarter NIM of 3.50% benefited from: (1) 30 basis points due to lower deposit costs; (2) 10 basis point improvement from replacing lower yielding cash; and (3) 4 basis points from increased SBA PPP net loan fee accretion. This increase was partially offset by decreases in NIM largely due to lower loan and investment yields due to reductions in market rates, and the increases in the balances of lower yielding investments.

The table below shows the impact of accretion related to purchased credit impaired loans and SBA PPP loans on interest income and NIM.

Net interest income and net interest margin analysis:(in thousands, except yields and rates)

Three months ended December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 Net Net Net Net Net Net Net Net Net Net Interest Interest Interest Interest Interest Interest Interest Interest Interest Interest Income Margin Income Margin Income Margin Income Margin Income MarginAs reported $ 14,384 3.50 % $ 13,688 3.34 % $ 12,831 3.22 % $ 12,764 3.31 % $ 13,372 3.51 %Lessnon-accretabledifferencerealized asinterest from $ (2 ) ? % $ (8 ) ? % $ (37 ) (0.01 )% $ (58 ) (0.02 )% $ (324 ) (0.08 )%payoff ofpurchasedcreditimpaired(?PCI?) loansLessacceleratedaccretion frompayoff ofcertain PCI $ (200 ) (0.05 )% $ (12 ) ? % $ ? ? % $ (90 ) (0.02 )% $ (872 ) (0.23 )%loans withtransferrednon-accretabledifferencesLess scheduledaccretion $ (264 ) (0.06 )% $ (261 ) (0.06 )% $ (265 ) (0.07 )% $ (266 ) (0.07 )% $ (252 ) (0.07 )%interestWithout loanpurchase $ 13,918 3.39 % $ 13,407 3.28 % $ 12,529 3.14 % $ 12,350 3.20 % $ 11,924 3.13 %accretionLess SBA PPPnet loan fee $ (1,251 ) (0.30 )% $ (1,878 ) (0.46 )% $ (1,309 ) (0.33 )% $ (1,750 ) (0.45 )% $ (985 ) (0.26 )%accretionWithout SBAPPP purchase $ 12,667 3.09 % $ 11,529 2.82 % $ 11,220 2.81 % $ 10,600 2.75 % $ 10,939 2.87 %and net loanfee accretion

The table below lists the SBA PPP loans and net deferred loan fee accretion balances related to 2020 and 2021 SBA PPP loan originations:

2020 Originations 2021 Originations Total Net Net Net Balance Deferred Balance Deferred Balance Deferred Fee Income Fee Income Fee IncomeSBA PPPloans, $ 123,702 $ 2,991 $ ? $ ? $ 123,702 $ 2,991 December 31,20202021 SBA PPPloan ? ? 47,467 1,770 47,467 1,770 originationsLess: 2021SBA PPP loanforgiveness (52,238 ) (1,706 ) ? (44 ) (52,238 ) (1,750 )and feeaccretionSBA PPPloans, March 71,464 1,285 47,467 1,726 118,931 3,011 31, 20212021 SBA PPPloan ? ? 8,323 1,715 8,323 1,715 originationsLess: 2021SBA PPP loanforgiveness (50,057 ) (977 ) (2,272 ) (332 ) (52,329 ) (1,309 )and feeaccretionSBA PPPloans, June 21,407 308 53,518 $ 3,109 74,925 3,417 30, 20212021 SBA PPPloan ? ? 64 9 64 9 originationsLess: 2021SBA PPP loanforgiveness (18,286 ) (279 ) (25,402 ) (1,599 ) (43,688 ) (1,878 )and feeaccretionSBA PPPLoans, 3,121 29 28,180 1,519 31,301 1,548 September30, 20212021 SBA PPPloan ? ? ? ? ? ? originationsLess: 2021SBA PPP loanforgiveness (993 ) (25 ) (21,553 ) (1,226 ) (22,546 ) (1,251 )and feeaccretionSBA PPPLoans, $ 2,128 $ 4 $ 6,627 $ 293 $ 8,755 $ 297 December 31,2021

The Bank continued to manage deposit interest rates, primarily as interest rates on new and renewed certificates of deposit were lower than the previous quarter. At December 31, 2021, the Bank had approximately $64 million of certificate of deposit accounts (CDs) maturing in the first quarter of 2022 with a weighted average cost of approximately 1.50% and $73 million of CDs maturing in the second quarter of 2022 with a weighted average cost of approximately 1.50%. For all of 2022, there is approximately $179 million of maturing certificate of deposit accounts with a weighted average cost of approximately 1.35%. The approximate weighted average cost of new certificates in the fourth quarter of 2021 was below 0.3%.

Loan loss provisions were zero for the quarters ended December 31, 2021 and September 30, 2021, and $2.5 million for the quarter ended December 31, 2020. No loan loss provision was realized during the quarters ended December 31, 2021, and September 30, 2021, due to lower CARES Act Section 4013 deferrals, low net charge-off or recovery activity, decreases in criticized assets and improving economic conditions in our markets from the last quarter of 2020. Continued improving economic conditions in our markets, as evidenced by unemployment rates below 2% in our two largest population centers, have resulted in improving overall economic trends for businesses. For the twelve-months ended December 31, 2021, provision for loan losses was zero compared to $7.75 million for the twelve months ended December 31, 2020. For the twelve months ended December 31, 2020, the qualitative factor impact on the provision for loan losses expense due to the impact of the pandemic was an increase of approximately $4.8 million, with the remaining provision split due to loan growth and changes in credit quality.

Non-interest income increased to $4.4 million in the quarter ended December 31, 2021, compared to $3.4 million in the quarter ended September 30, 2021, and decreased from $4.8 million in the quarter ended December 31, 2020. The increase in the fourth quarter compared to the third quarter was largely due to an increase in gain on sale of investment securities of $0.9 million and a $0.3 million increase in gain on sale of loans. The sale of securities helped fund loan growth and decreased 100% risk-weighted AFS investment securities. Relative to the comparable quarter one year earlier, non-interest income was lower as a result of the following factors: (1) lower gain on sale of loans; (2) lower loan servicing income; and (3) lower loan fees and service charges. These decreases were partially offset by higher gains on the sale of investment securities.

Total non-interest expense increased $0.2 million in the fourth quarter of 2021 to $10.5 million, compared to $10.3 million for the quarter ended September 30, 2021, and decreased from $10.8 million for the quarter ended December 31, 2020. The increase from the third quarter was largely due to: (1) an increase in compensation, as incentives increased based on performance, including strong loan origination; (2) an increase in advertising, marketing and public relations as the Bank provided contributions to support community projects; and (3) higher mortgage servicing rights expensed due to lower reversals of previously recorded MSR impairment in the fourth quarter of $0.15 million compared to $0.38 million in the third quarter. The increases were partially offset by lower data processing expenses due to one-time credits recognized in the fourth quarter. The decrease in non-interest expense from the fourth quarter of 2020 was due to the reversal of MSR impairment in the fourth quarter of 2021 and a modest MSR impairment recorded in the fourth quarter of 2020. This was partially offset by $0.6 million of higher compensation in the current quarter due to higher incentives discussed above which more than offset the reduction in full time equivalent employees from a year ago.

Provisions for income taxes increased to $2.2 million in the fourth quarter of 2021 from the third quarter of 2021 at $1.8 million, due to higher pre-tax income as the effective tax rate for both current year quarters was 26.7%. The effective tax rate was 25.9% for the comparable prior year quarter.

These financial results are preliminary until the Form 10-K is filed in March 2022.

About the Company

Citizens Community Bancorp, Inc. (NASDAQ: CZWI) is the holding company of the Bank, a national bank based in Altoona, Wisconsin, currently serving customers primarily in Wisconsin and Minnesota through 25 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas. The Bank offers traditional community banking services to businesses, ag operators and consumers, including residential mortgage loans.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this release are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified using forward-looking words or phrases such as anticipate, believe, could, expect, estimates, intend, may, on pace, preliminary, planned, potential, should, will, would or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the operations and business environment of the Company and the Bank. These uncertainties include the conditions in the financial markets and economic conditions generally; adverse impacts to the Company or Bank arising from the COVID-19 pandemic; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; the sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; our ability to maintain our reputation; our ability to realize the benefits of net deferred tax assets; our ability to maintain or increase our market share; acts of terrorism and political or military actions by the United States or other governments; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or Bank; increases in FDIC insurance premiums or special assessments by the FDIC; disintermediation risk; our inability to obtain needed liquidity; our ability to successfully execute our acquisition growth strategy; risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits; our ability to raise capital needed to fund growth or meet regulatory requirements; the possibility that our internal controls and procedures could fail or be circumvented; our ability to attract and retain key personnel; our ability to keep pace with technological change; cybersecurity risks; changes in federal or state tax laws; changes in accounting principles, policies or guidelines and their impact on financial performance; restrictions on our ability to pay dividends; and the potential volatility of our stock price. Stockholders, potential investors, and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Companys performance are discussed further in Part I, Item 1A, Risk Factors, in the Companys Form 10-K, for the year ended December 31, 2020, filed with the Securities and Exchange Commission (SEC) on March 8, 2021 and the Companys subsequent filings with the SEC. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, such as net income as adjusted, net income as adjusted per share, tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets, return on average tangible common equity and return on average tangible common equity as adjusted, which management believes may be helpful in understanding the Companys results of operations or financial position and comparing results over different periods.

Net income as adjusted and net income as adjusted per share are non-GAAP measures that eliminate the impact of certain expenses such as acquisition and branch closure costs and related data processing termination fees, legal costs, severance pay, accelerated depreciation expense and lease termination fees, the gain on sale of branch deposits and fixed assets and the net impact of the Tax Cuts and Jobs Act of 2017, which management believes enhances investors ability to better understand the underlying business performance and trends related to core business activities. Merger related charges represent expenses to either satisfy contractual obligations of acquired entities without any useful benefit to the Company or to convert and consolidate customer records onto the Company platforms. These costs are unique to each transaction based on the contracts in existence at the merger date. Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity are non-GAAP measures that eliminate the impact of preferred stock equity, goodwill, and intangible assets on our financial position. Management believes these measures are useful in assessing the strength of our financial position.

Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions.

Contact: Steve Bianchi, CEO(715)-836-9994

(CZWI-ER)

CITIZENS COMMUNITY BANCORP, INC.Consolidated Balance Sheets(in thousands, except shares and per share data)

December 31, September 30, December 31, 2021 2021 2020 (unaudited) (unaudited) (audited)Assets Cash and cash equivalents $ 47,691 $ 102,341 $ 119,440 Other interest-bearing deposits 1,511 1,512 3,752 Securities available for sale 203,068 234,425 144,233 ?AFS?Securities held to maturity ?HTM? 71,141 67,739 43,551 Equity investments 1,328 327 200 Other investments 15,305 14,965 14,948 Loans receivable 1,310,963 1,248,654 1,237,581 Allowance for loan losses (16,913 ) (16,832 ) (17,043 )Loans receivable, net 1,294,050 1,231,822 1,220,538 Loans held for sale 6,670 1,675 3,075 Mortgage servicing rights, net 4,161 4,082 3,252 Office properties and equipment, 21,169 21,730 21,165 netAccrued interest receivable 3,916 4,882 5,652 Intangible assets 3,898 4,297 5,494 Goodwill 31,498 31,498 31,498 Foreclosed and repossessed 1,408 4 197 assets, netBank owned life insurance 24,312 24,149 23,684 (?BOLI?)Other assets 8,502 8,029 8,416 TOTAL ASSETS $ 1,739,628 $ 1,753,477 $ 1,649,095 Liabilities and Stockholders? EquityLiabilities: Deposits $ 1,387,535 $ 1,408,315 $ 1,295,256 Federal Home Loan Bank (?FHLB?) 111,527 111,512 123,498 advancesOther borrowings 58,426 58,400 58,328 Other liabilities 11,274 9,324 11,449 Total liabilities 1,568,762 1,587,551 1,488,531 Stockholders? equity: Common stock? $0.01 par value,authorized 30,000,000;10,502,442; 10,518,885 and 105 105 111 11,056,349 shares issued andoutstanding, respectivelyAdditional paid-in capital 119,925 119,929 126,154 Retained earnings 50,675 44,660 32,809 Accumulated other comprehensive 161 1,232 1,490 incomeTotal stockholders? equity 170,866 165,926 160,564 TOTAL LIABILITIES AND $ 1,739,628 $ 1,753,477 $ 1,649,095 STOCKHOLDERS? EQUITY

Note: Certain items previously reported were reclassified for consistency with the current presentation.

CITIZENS COMMUNITY BANCORP, INC.Consolidated Statements of Operations(in thousands, except per share data)

Three Months Ended Twelve Months Ended December 31, September December 31, December 31, December 2021 30, 2021 2020 2021 31, 2020 (unaudited) (unaudited) (unaudited) (unaudited) (audited)Interest anddividend income:Interest andfees on $ 15,158 $ 14,537 $ 15,463 $ 58,172 $ 59,763 loansInterest on 1,604 1,638 1,052 5,863 4,764 investmentsTotalinterest and 16,762 16,175 16,515 64,035 64,527 dividendincomeInterest expense:Interest on 1,261 1,354 1,958 5,850 10,000 depositsInterest onFHLB and FRB 388 389 428 1,572 1,814 borrowedfundsInterest onother 729 744 757 2,946 2,458 borrowedfundsTotalinterest 2,378 2,487 3,143 10,368 14,272 expenseNet interestincomebefore 14,384 13,688 13,372 53,667 50,255 provisionfor loanlossesProvisionfor loan ? ? 2,500 ? 7,750 lossesNet interestincome afterprovision 14,384 13,688 10,872 53,667 42,505 for loanlossesNon-interest income:Servicecharges on 470 463 496 1,726 1,832 depositaccountsInterchange 577 600 520 2,354 2,029 incomeLoanservicing 762 842 1,014 3,322 4,158 incomeGain on sale 1,268 1,014 2,108 5,399 6,693 of loansLoan feesand service 158 118 342 705 1,383 chargesInsurancecommission ? ? ? ? 475 incomeNet gains(losses) on 879 73 13 1,224 110 investmentsecuritiesNet gain onsale ofacquired ? ? ? ? 432 businesslinesSettlement ? ? ? ? 131 proceedsOther 293 338 277 1,094 1,205 Totalnon-interest 4,407 3,448 4,770 15,824 18,448 incomeNon-interest expense:Compensationand related 5,987 5,718 5,409 22,723 22,256 benefitsOccupancy 1,384 1,313 1,417 5,327 5,523 Data 1,186 1,582 1,384 5,560 5,193 processingAmortizationof 399 399 399 1,596 1,622 intangibleassetsMortgageservicing 163 37 720 191 3,050 rightsexpense, netAdvertising,marketing 409 220 165 986 967 and publicrelationsFDIC premium 156 148 148 551 584 assessmentProfessional 350 328 420 1,542 1,757 servicesGains onrepossessed (50 ) (3 ) (64 ) (199 ) (259 )assets, netOther 541 578 828 2,255 2,980 Totalnon-interest 10,525 10,320 10,826 40,532 43,673 expenseIncomebeforeprovision 8,266 6,816 4,816 28,959 17,280 for incometaxesProvisionfor income 2,209 1,819 1,246 7,693 4,555 taxesNet incomeattributable $ 6,057 $ 4,997 $ 3,570 $ 21,266 $ 12,725 to commonstockholdersPer share information:Basic $ 0.58 $ 0.47 $ 0.32 $ 1.98 $ 1.14 earningsDiluted $ 0.58 $ 0.47 $ 0.32 $ 1.98 $ 1.14 earningsCashdividends $ ? $ ? $ ? $ 0.23 $ 0.21 paidBook valueper share at $ 16.27 $ 15.77 $ 14.52 $ 16.27 $ 14.52 end ofperiodTangiblebook valueper share at $ 12.90 $ 12.37 $ 11.18 $ 12.90 $ 11.18 end ofperiod(non-GAAP)

Note: Certain items previously reported were reclassified for consistency with the current presentation.

Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)(in thousands, except per share data)

Three Months Ended Twelve Months Ended December 31, September 30, December 31, December 31, December 31, 2021 2021 2020 2021 2020 GAAP pretax $ 8,266 $ 6,816 $ 4,816 $ 28,959 $ 17,280 incomeBranchclosure ? ? 165 ? 165 costs (1)Net gain onsale ofacquired ? ? ? ? (432 )businesslines (2)Settlementproceeds ? ? ? ? (131 )(3)FHLBborrowings ? ? ? 102 ? prepaymentfee (4)Pretaxincome as 8,266 6,816 4,981 29,061 16,882 adjusted(5)Provisionfor incometax on net 2,209 1,819 1,290 7,722 4,457 income asadjusted(6)Net incomeas adjusted $ 6,057 $ 4,997 $ 3,691 $ 21,339 $ 12,425 (non-GAAP)(5)GAAPdilutedearnings $ 0.58 $ 0.47 $ 0.32 $ 1.98 $ 1.14 per share,net of taxBranchclosure ? ? 0.01 ? 0.01 costs, netof taxNet gain onsale ofacquired ? ? ? ? (0.03 )businesslinesSettlement ? ? ? ? (0.01 )proceedsFHLBborrowings ? ? ? 0.01 ? prepaymentfeeDilutedearningsper share,as $ 0.58 $ 0.47 $ 0.33 $ 1.99 $ 1.11 adjusted,net of tax(non-GAAP) Averagediluted 10,516,130 10,622,595 11,128,628 10,726,539 11,161,811 sharesoutstanding

(1) Branch closure costs include severance pay recorded in compensation and benefits, accelerated depreciation expense and lease termination fees included in occupancy and other costs included in other non-interest expense in the consolidated statement of operations.(2) Net gain on sale of acquired business lines resulted from (1) the sale of Wells Insurance Agency and (2) the termination and sale of the wealth management business line sales contract acquired in a former acquisition. (3) Settlement proceeds includes litigation income from a JP Morgan Residential Mortgage-Backed Security (RMBS) claim. This distribution represents a supplement to the proceeds received in March 2017 from a JP Morgan RMBS previously owned by the Bank and sold in 2011.(4) FHLB borrowings prepayment fee resulted from the early termination of $8 million in FHLB borrowings at a weighted average rate of 2.19% and weighted average maturity of 8.75 months included in other non-interest expense in the consolidated statement of operations. (5) Net income as adjusted is a non-GAAP measure that management believes enhances the markets ability to assess the underlying business performance and trends related to core business activities.(6) Provision for income tax on net income as adjusted is calculated at our effective tax rate for each respective period presented.

LoanComposition December 31, September 30, June 30, 2021 December 31,(in 2021 2021 2020thousands)Originated Loans:Commercial/Agricultural real estate:Commercial $ 578,395 $ 508,540 $ 420,565 $ 351,113 real estateAgricultural 52,372 49,082 42,925 31,741 real estateMulti-family 174,050 150,094 113,790 112,731 real estateConstructionand land 78,613 84,399 89,586 91,241 developmentC&I/Agricultural operating:Commercialand 107,937 90,581 80,783 95,290 industrialAgricultural 26,202 25,390 23,014 24,457 operatingResidential mortgage:Residential 63,855 68,986 72,965 86,283 mortgagePurchased 3,871 3,921 4,949 6,260 HELOC loansConsumer installment:Originatedindirect 15,971 17,689 20,377 25,851 paperOther 8,473 9,414 10,296 12,056 consumerOriginatedloans before 1,109,739 1,008,096 879,250 837,023 SBA PPPloansSBA PPP 8,755 31,301 74,925 123,702 loansTotaloriginated $ 1,118,494 $ 1,039,397 $ 954,175 $ 960,725 loansAcquired Loans:Commercial/Agricultural real estate:Commercial $ 120,070 $ 129,784 $ 139,497 $ 156,562 real estateAgricultural 26,123 27,552 29,740 37,054 real estateMulti-family 4,299 5,928 7,401 9,421 real estateConstructionand land 907 1,139 1,202 7,276 developmentC&I/Agricultural operating:Commercialand 14,230 16,554 19,701 21,263 industrialAgricultural 5,386 4,541 4,893 8,328 operatingResidential mortgage:Residential 27,135 30,795 33,781 45,103 mortgageConsumer installment:Other 401 516 648 1,157 consumerTotalacquired $ 198,551 $ 216,809 $ 236,863 $ 286,164 loansTotal Loans: Commercial/Agricultural real estate:Commercial $ 698,465 $ 638,324 $ 560,062 $ 507,675 real estateAgricultural 78,495 76,634 72,665 68,795 real estateMulti-family 178,349 156,022 121,191 122,152 real estateConstructionand land 79,520 85,538 90,788 98,517 developmentC&I/Agricultural operating:Commercialand 122,167 107,135 100,484 116,553 industrialAgricultural 31,588 29,931 27,907 32,785 operatingResidential mortgage:Residential 90,990 99,781 106,746 131,386 mortgagePurchased 3,871 3,921 4,949 6,260 HELOC loansConsumer installment:Originatedindirect 15,971 17,689 20,377 25,851 paperOther 8,874 9,930 10,944 13,213 consumerGross loansbefore SBA 1,308,290 1,224,905 1,116,113 1,123,187 PPP loansSBA PPP 8,755 31,301 74,925 123,702 loansGross loans $ 1,317,045 $ 1,256,206 $ 1,191,038 $ 1,246,889 Unearned netdeferredfees and (2,482 ) (3,486 ) (5,133 ) (4,245 )costs andloans inprocessUnamortizeddiscount on (3,600 ) (4,066 ) (4,347 ) (5,063 )acquiredloansTotal loans $ 1,310,963 $ 1,248,654 $ 1,181,558 $ 1,237,581 receivable

Nonperforming Originated and Acquired Assets

(in thousands, except ratios)

December 31, September 30, June 30, 2021 December 31, 2021 2021 and Three 2020 and Three and Three Months and Three Months Months Ended Months Ended Ended EndedNonperforming assets:Originatednonperforming assets:Nonaccrual loans $ 6,448 $ 6,408 $ 2,420 $ 3,649 Accruing loanspast due 90 days 63 295 88 415 or moreTotal originatednonperforming 6,511 6,703 2,508 4,064 loans (?NPL?)Other real estate ? ? ? 63 owned (?OREO?)Other collateral 2 2 16 41 ownedTotal originatednonperforming $ 6,513 $ 6,705 $ 2,524 $ 4,168 assets (?NPAs?)Acquirednonperforming assets:Nonaccrual loans $ 5,217 $ 5,298 $ 5,655 $ 7,098 Accruing loanspast due 90 days 97 130 454 171 or moreTotal acquirednonperforming 5,314 5,428 6,109 7,269 loans (?NPL?)Other real estate 1,406 2 129 93 owned (?OREO?)Other collateral ? ? ? ? ownedTotal acquirednonperforming $ 6,720 $ 5,430 $ 6,238 $ 7,362 assets (?NPAs?)Totalnonperforming $ 13,233 $ 12,135 $ 8,762 $ 11,530 assets (?NPAs?)Loans, end of $ 1,310,963 $ 1,248,654 $ 1,181,558 $ 1,237,581 periodTotal assets, end $ 1,739,628 $ 1,753,477 $ 1,714,472 $ 1,649,095 of periodRatios: Originated NPLs 0.50 % 0.54 % 0.21 % 0.33 %to total loansAcquired NPLs to 0.41 % 0.43 % 0.52 % 0.59 %total loansOriginated NPAs 0.37 % 0.38 % 0.15 % 0.25 %to total assetsAcquired NPAs to 0.39 % 0.31 % 0.36 % 0.45 %total assets

Nonperforming Total Assets

(in thousand, except ratios)

December 31, September 30, June 30, 2021 December 31, 2021 2021 and Three 2020 and Three and Three Months and Three Months Months Ended Months Ended Ended EndedNonperforming assets:Nonaccrual loans Commercial real $ 5,374 $ 5,427 $ 1,027 $ 827 estateAgricultural real 3,490 3,567 3,716 5,084 estateCommercial andindustrial (?C& 298 311 313 357 I?)Agricultural 993 1,063 1,163 1,872 operatingResidential 1,433 1,263 1,768 2,451 mortgageConsumer 77 75 88 156 installmentTotal nonaccrual $ 11,665 $ 11,706 $ 8,075 $ 10,747 loansAccruing loanspast due 90 days 160 425 542 586 or moreTotalnonperforming 11,825 12,131 8,617 11,333 loans (?NPLs?)Foreclosed andrepossessed 1,408 4 145 197 assets, netTotalnonperforming $ 13,233 $ 12,135 $ 8,762 $ 11,530 assets (?NPAs?)Troubled DebtRestructurings $ 12,523 $ 15,689 $ 16,597 $ 18,477 (?TDRs?)Nonaccrual TDRs $ 4,539 $ 4,324 $ 4,861 $ 6,735 Loans, end of $ 1,310,963 $ 1,248,654 $ 1,181,558 $ 1,237,581 periodTotal assets, end $ 1,739,628 $ 1,753,477 $ 1,714,472 $ 1,649,095 of periodRatios: NPLs to total 0.90 % 0.97 % 0.73 % 0.92 %loansNPAs to total 0.76 % 0.69 % 0.51 % 0.70 %assets

Deposit Composition(in thousands)

December 31, September 30, June 30, December 31, 2021 2021 2021 2020Non-interestbearing $ 276,631 $ 280,611 $ 253,097 $ 238,348 demanddepositsInterestbearing 396,231 381,315 375,005 301,764 demanddepositsSavings 222,674 229,623 220,698 196,348 accountsMoney market 288,985 291,242 263,390 245,549 accountsCertificate 203,014 225,524 259,036 313,247 accountsTotal $ 1,387,535 $ 1,408,315 $ 1,371,226 $ 1,295,256 deposits

Average balances, Interest Yields and Rates(in thousands, except yields and rates)

Three months ended December 31, 2021 Three months ended September 30, Three months ended December 31, 2020 2021 Interest Average Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate (1) (1) (1)Averageinterest earningassets:Cash andcash $ 45,758 $ 15 0.13 % $ 111,192 $ 50 0.18 % $ 79,225 $ 21 0.11 %equivalentsLoans 1,271,956 15,158 4.73 % 1,192,636 14,537 4.84 % 1,240,895 15,463 4.96 %receivableInterestbearing 1,512 8 2.10 % 1,512 8 2.10 % 3,752 23 2.44 %depositsInvestmentsecurities 296,444 1,404 1.88 % 303,325 1,412 1.85 % 176,802 824 1.85 %(1)Other 15,081 177 4.66 % 14,961 168 4.46 % 15,015 184 4.88 %investmentsTotalinterest $ 1,630,751 $ 16,762 4.08 % $ 1,623,626 $ 16,175 3.95 % $ 1,515,689 $ 16,515 4.33 %earningassets (1)Averageinterest bearingliabilities:Savings $ 217,460 $ 92 0.17 % $ 216,304 $ 95 0.17 % $ 187,474 $ 87 0.18 %accountsDemand 384,477 259 0.27 % 392,080 280 0.28 % 285,001 200 0.28 %depositsMoney market 288,683 207 0.28 % 276,582 193 0.28 % 243,631 206 0.34 %accountsCD?s 183,137 607 1.31 % 207,494 682 1.30 % 284,728 1,304 1.82 %IRA?s 38,453 96 0.99 % 39,525 104 1.04 % 41,493 161 1.54 %Total $ 1,112,210 $ 1,261 0.45 % $ 1,131,985 $ 1,354 0.47 % $ 1,042,327 $ 1,958 0.75 %depositsFHLBadvances and 170,475 1,117 2.60 % 169,891 1,133 2.65 % 182,463 1,185 2.58 %otherborrowingsTotalinterest $ 1,282,685 $ 2,378 0.74 % $ 1,301,876 $ 2,487 0.76 % $ 1,224,790 $ 3,143 1.02 %bearingliabilitiesNet interest $ 14,384 $ 13,688 $ 13,372 incomeInterest 3.34 % 3.19 % 3.31 %rate spreadNet interest 3.50 % 3.34 % 3.51 %margin (1)Averageinterestearningassets to 1.27 1.25 1.24 averageinterestbearingliabilities

(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the quarters ended December31, 2021, September 30, 2021 and December31, 2020. The FTE adjustment to net interest income included in the rate calculations totaled $0, $1 and $0 thousand for the three months ended December31, 2021, September 30, 2021 and December31, 2020, respectively.

Twelve months ended December 31, Twelve months ended December 31, 2021 2020 Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate (1) (1)Averageinterest earningassets:Cash andcash $ 99,839 $ 122 0.12 % $ 52,016 $ 162 0.31 %equivalentsLoans 1,216,244 58,172 4.78 % 1,234,732 59,763 4.84 %receivableInterestbearing 2,047 45 2.20 % 3,914 96 2.45 %depositsInvestmentsecurities 271,715 5,009 1.84 % 174,396 3,789 2.17 %(1)Other 15,025 687 4.57 % 15,081 717 4.75 %investmentsTotalinterest $ 1,604,870 $ 64,035 3.99 % $ 1,480,139 $ 64,527 4.36 %earningassets (1)Averageinterest bearingliabilities:Savings $ 212,867 $ 369 0.17 % $ 174,184 $ 435 0.25 %accountsDemand 367,103 1,047 0.29 % 268,311 1,065 0.40 %depositsMoney market 269,620 783 0.29 % 244,632 1,446 0.59 %accountsCD?s 224,708 3,200 1.42 % 316,264 6,325 2.00 %IRA?s 39,699 451 1.14 % 42,039 729 1.73 %Total $ 1,113,997 $ 5,850 0.53 % $ 1,045,430 $ 10,000 0.96 %depositsFHLBadvances and 173,029 4,518 2.61 % 186,724 4,272 2.29 %otherborrowingsTotalinterest $ 1,287,026 $ 10,368 0.81 % $ 1,232,154 $ 14,272 1.16 %bearingliabilitiesNet interest $ 53,667 $ 50,255 incomeInterest 3.18 % 3.20 %rate spreadNet interest 3.34 % 3.40 %margin (1)Averageinterestearningassets to 1.25 1.20 averageinterestbearingliabilities

(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the twelve months ended December31, 2021 and December31, 2020, respectively. The FTE adjustment to net interest income included in the rate calculations totaled $3 and $1 thousand for the twelve months ended December31, 2021 and December31, 2020, respectively.

The following table reports key financial metric ratios based on a net income and net income as adjusted basis:

Three Months Ended Twelve Months Ended December September December December December 31, 30, 31, 31, 31, 2021 2021 2020 2021 2020Ratios based on net income:Return on averageassets 1.37 % 1.13 % 0.87 % 1.23 % 0.80 %(annualized)Return on averageequity 14.29 % 12.00 % 8.93 % 12.97 % 8.29 %(annualized)Return on averagetangible common 18.13 % 15.34 % 11.67 % 16.64 % 11.04 %equity^5(annualized)Efficiency ratio 56 % 60 % 60 % 58 % 64 %Net interestmargin with loan 3.50 % 3.34 % 3.51 % 3.34 % 3.40 %purchase accretionNet interestmargin without 3.39 % 3.28 % 3.13 % 3.25 % 3.15 %loan purchaseaccretionRatios based onnet income as adjusted(non-GAAP):Return on averageassets as adjusted 1.37 % 1.13 % 0.90 % 1.24 % 0.78 %^2 (annualized)Return on averageequity as adjusted 14.29 % 12.00 % 9.24 % 13.01 % 8.09 %^3 (annualized)Return on averagetangible common 18.13 % 15.34 % 12.06 % 16.70 % 10.78 %equity as adjusted^5 (annualized)Efficiency ratio^4as adjusted 56 % 60 % 59 % 58 % 64 %(non-GAAP)

Reconciliation of Return on Average Assets as Adjusted (non-GAAP)(in thousands, except ratios)

Three Months Ended Twelve Months Ended December 31, September 30, December 31, December 31, December 31, 2021 2021 2020 2021 2020 GAAPearnings $ 6,057 $ 4,997 $ 3,570 $ 21,266 $ 12,725 after incometaxesNet incomeas adjustedafter income $ 6,057 $ 4,997 $ 3,691 $ 21,339 $ 12,425 taxes(non-GAAP)(1)Average $ 1,751,609 $ 1,748,065 $ 1,634,459 $ 1,722,483 $ 1,594,053 assetsReturn onaverage 1.37 % 1.13 % 0.87 % 1.23 % 0.80 %assets(annualized)Return onaverageassets as 1.37 % 1.13 % 0.90 % 1.24 % 0.78 %adjusted(non-GAAP)(annualized)

(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)

Reconciliation of Return on Average Equity as Adjusted (non-GAAP)(in thousands, except ratios)

Three Months Ended Twelve Months Ended December 31, September 30, December 31, December 31, December 31, 2021 2021 2020 2021 2020 GAAPearnings $ 6,057 $ 4,997 $ 3,570 $ 21,266 $ 12,725 after incometaxesNet incomeas adjustedafter income $ 6,057 $ 4,997 $ 3,691 $ 21,339 $ 12,425 taxes(non-GAAP)(1)Average $ 168,165 $ 165,203 $ 158,968 $ 163,987 $ 153,497 equityReturn onaverage 14.29 % 12.00 % 8.93 % 12.97 % 8.29 %equity(annualized)Return onaverageequity as 14.29 % 12.00 % 9.24 % 13.01 % 8.09 %adjusted(non-GAAP)(annualized)

(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)

Reconciliation of Return on Average Tangible Common Equity and Reconciliation of Return on Average Tangible Common Equity, as Adjusted (non-GAAP)(in thousands, except ratios)

Three Months Ended Twelve Months Ended December September December December December 31, 2021 30, 2021 31, 2020 31, 2021 31, 2020Totalstockholders? $ 170,866 $ 165,926 $ 160,564 $ 170,866 $ 160,564 equityLess: (31,498 ) (31,498 ) (31,498 ) (31,498 ) (31,498 )GoodwillLess:Intangible (3,898 ) (4,297 ) (5,494 ) (3,898 ) (5,494 )assetsTangiblecommon equity $ 135,470 $ 130,131 $ 123,572 $ 135,470 $ 123,572 (non-GAAP)Averagetangible $ 132,569 $ 129,208 $ 121,752 $ 127,793 $ 115,313 common equity(non-GAAP)GAAP earningsafter income $ 6,057 $ 4,997 $ 3,570 $ 21,266 $ 12,725 taxesNet income asadjustedafter income $ 6,057 $ 4,997 $ 3,691 $ 21,339 $ 12,425 taxes(non-GAAP)(1)Return onaveragetangible 18.13 % 15.34 % 11.67 % 16.64 % 11.04 %common equity(annualized)Return onaveragetangiblecommon equity 18.13 % 15.34 % 12.06 % 16.70 % 10.78 %as adjusted(non-GAAP)(annualized)

(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)

Reconciliation of Efficiency Ratio as Adjusted (non-GAAP)(in thousands, except ratios)

Three Months Ended Twelve Months Ended December September December December December 31, 2021 30, 2021 31, 2020 31, 2021 31, 2020 Non-interest $ 10,525 $ 10,320 $ 10,826 $ 40,532 $ 43,673 expense (GAAP)Branch Closure ? ? (165 ) ? (165 )Costs (1)FHLB borrowings ? ? ? (102 ) ? prepayment fee (1)Non-interestexpense as adjusted 10,525 10,320 10,661 40,430 43,508 (non-GAAP)Non-interest income 4,407 3,448 4,770 15,824 18,448 Net interest margin 14,384 13,688 13,372 53,667 50,255 Efficiency ratio $ 18,791 $ 17,136 $ 18,142 $ 69,491 $ 68,703 denominator (GAAP)Net gain onacquired business ? ? ? ? (432 )lines (1)Settlement proceeds ? ? ? ? (131 )(1)Efficiency ratiodenominator $ 18,791 $ 17,136 $ 18,142 $ 69,491 $ 68,140 (non-GAAP)Efficiency ratio 56 % 60 % 60 % 58 % 64 %(GAAP)Efficiency ratio as 56 % 60 % 59 % 58 % 64 %adjusted (non-GAAP)

(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)

Reconciliation of tangible book value per share (non-GAAP)(in thousands, except per share data)

Tangible book value per share December 31, September 30, December 31,at end of period 2021 2021 2020Total stockholders? equity $ 170,866 $ 165,926 $ 160,564 Less: Goodwill (31,498 ) (31,498 ) (31,498 )Less: Intangible assets (3,898 ) (4,297 ) (5,494 )Tangible common equity $ 135,470 $ 130,131 $ 123,572 (non-GAAP)Ending common shares 10,502,442 10,518,885 11,056,349 outstandingBook value per share $ 16.27 $ 15.77 $ 14.52 Tangible book value per share $ 12.90 $ 12.37 $ 11.18 (non-GAAP)

Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)(in thousands, except ratios)

Tangible common equity as a December 31, September 30, December 31,percent of tangible assets at end 2021 2021 2020of periodTotal stockholders? equity $ 170,866 $ 165,926 $ 160,564 Less: Goodwill (31,498 ) (31,498 ) (31,498 )Less: Intangible assets (3,898 ) (4,297 ) (5,494 )Tangible common equity (non-GAAP) $ 135,470 $ 130,131 $ 123,572 Total Assets $ 1,739,628 $ 1,753,477 $ 1,649,095 Less: Goodwill (31,498 ) (31,498 ) (31,498 )Less: Intangible assets (3,898 ) (4,297 ) (5,494 )Tangible Assets (non-GAAP) $ 1,704,232 $ 1,717,682 $ 1,612,103 Total stockholders? equity to 9.82 % 9.46 % 9.74 %total assets ratioTangible common equity as apercent of tangible assets 7.95 % 7.58 % 7.67 %(non-GAAP)

1Net income as adjusted and net income as adjusted per share are non-GAAP financial measures that management believes enhances investors ability to better understand the underlying business performance and trends related to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP).

2Return on average assets as adjusted is a non-GAAP measure that management believes enhances investors ability to better understand the underlying business performance and trends relative to average assets. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table Reconciliation of Return on Average Assets as Adjusted (non-GAAP).

3Return on average equity as adjusted is a non-GAAP measure that management believes enhances investors ability to better understand the underlying business performance and trends relative to average equity. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table Reconciliation of Return on Average Equity as Adjusted (non-GAAP).

4The efficiency ratio as adjusted (non-GAAP) is a non-GAAP measure that management believes enhances investors ability to better understand the underlying business performance and the Companys ability to use what it has to generate the most profit possible for shareholders relative to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table Reconciliation of Efficiency Ratio as Adjusted (non-GAAP).

5Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets, return on tangible common equity and return on tangible common equity as adjusted are non-GAAP measures that management believes enhances investors ability to better understand the Companys financial position. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table Reconciliation of tangible book value per share (non-GAAP), Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP), and Reconciliation of return on average tangible common equity and Reconciliation of Return on Average Tangible Common Equity as Adjusted (non-GAAP).