Executive Summary

Sequential rebound: EPS improved to $0.22 from $0.05 on higher total revenues ($16.01M, +19.3% q/q) and stronger loan yields, though EPS remained down y/y vs $0.46 on elevated funding costs .
Margin pressure persisted: Quarterly NIM declined to 2.40% (from 2.55% in Q2; 2.90% a year ago), but management expects loan production/renewals to lift loan yields and put upward pressure on NIM over time .
Balance sheet/liquidity strengthened: Deposits grew 8.3% q/q to $1.195B; management executed $66.6M of fixed-to-floating swaps, ended the quarter with $0 overnight Fed funds borrowings and substantial contingent liquidity (e.g., $190M FHLB capacity) .
Credit quality solid: NPA/loans improved to 0.68% (from 0.77% y/y) with ACL/loans at 1.09% (vs. 1.11% in Q2, 0.88% y/y) and net recoveries in Q3 .
Estimates: Wall Street consensus (S&P Global) was unavailable at time of analysis; estimate-based beat/miss cannot be determined (consensus data unavailable) [SPGI error returned on request].

What Went Well and What Went Wrong

What Went Well
- Sequential revenue and earnings recovery: Total revenues rose to $16.01M (+19.3% q/q), lifting EPS to $0.22 from $0.05 .
- Deposits and liquidity: Deposits +$91.6M q/q to $1.195B; $0 in overnight Fed funds borrowings at quarter-end; ample borrowing capacity and access to BTFP approved .
- Management actions and positioning: CEO noted $66.6M fixed-to-floating swaps “to protect capital and hedge against rising rates,” positioning for higher loan yields and eventual NIM improvement as the book reprices .
What Went Wrong
- Net interest margin compression: Quarterly NIM fell to 2.40% (Q2: 2.55%; Q3’22: 2.90%) as deposit costs rose, reflecting intense funding competition .
- Y/Y profitability down: Net income declined to $1.21M from $2.58M y/y on materially higher funding costs, despite higher interest income .
- Operating expenses modestly higher: Noninterest expense edged up q/q to $9.07M, with management noting one-time items impacting results (loan and OREO sale gains also present in the period’s mix) .

Financial Results

Metric	Q3 2022	Q2 2023	Q3 2023
Total Revenues (Interest Income + Noninterest Income, $M)	$13.00	$13.42	$16.01
Net Interest Income ($M)	$9.05	$7.41	$7.43
Noninterest Income ($M)	$2.88	$2.26	$3.19
Net Income ($M)	$2.58	$0.30	$1.21
Diluted EPS ($)	$0.46	$0.05	$0.22
Net Interest Margin (Quarterly, %)	2.90%	2.55%	2.40%
Yield on Earning Assets (%)	3.23%	3.71%	4.08%

Balance Sheet & Credit KPIs	Q3 2022	Q2 2023	Q3 2023
Loans, EOP ($M)	$578.67	$574.73	$587.24
Deposits, EOP ($B)	$1.135	$1.103	$1.195
NPA / Loans (%)	0.77%	0.72%	0.68%
ACL / Loans (%)	0.88%	1.11%	1.09%
Provision for Credit Losses ($M)	($0.05)	$0.46	$0.10
Noninterest Expense ($M)	$8.94	$9.00	$9.07

Regulatory Capital (Company)	Q3 2022	Q2 2023	Q3 2023
Tier 1 Leverage Ratio (%)	7.84%	8.17%	7.83%
Tier 1 Risk-Based Capital (%)	13.10%	13.50%	13.17%
Total Risk-Based Capital (%)	13.72%	14.28%	13.97%

Notes: “Total Revenues” reflect interest income + noninterest income per company presentation. Q3’23 YTD NIM was 2.49% vs 2.54% at Q2 YTD (context to CEO comment) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Deposit Costs	2H23	Expected to continue rising through 2023	“Expect deposit costs to rise slightly over the remainder of the year”	Maintained/slightly tempered
Loan Yields	2H23	Anticipated to rise with production/renewals	“Loan production and renewal… to push loan yields higher”	Maintained
Net Interest Margin	2H23	“Expect continued pressure on NIM” given rates	Near-term pressure, but higher loan yields to place upward pressure on NIM over time	Maintained trajectory
Liquidity Actions	2H23	Capacity at FHLB/BTFP application	$0 Fed funds at Q3-end; FHLB capacity ~$190M; brokered deposits ~$150–200M; correspondent lines $50M; BTFP approved	Enhanced disclosure
Dividend per Share	Quarterly	Reduced to $0.16 in Q2 as prudent capital allocation	Continuing at $0.16 per share (yield ~6%)	Maintained at reduced level

No formal quantitative revenue/EPS guidance provided; management commentary remains directional .

Earnings Call Themes & Trends

Note: Company did not have a Q3 2023 earnings call transcript available in our document set; themes below draw from management’s press release commentary for Q1–Q3 2023.

Topic	Previous Mentions (Q1 & Q2 2023)	Current Period (Q3 2023)	Trend
Deposit Costs & NIM	Rising deposit costs and NIM compression highlighted; expected continued pressure on NIM .	NIM down to 2.40%; expect deposit costs to rise slightly; higher loan yields anticipated to support NIM over time .	Still pressured, potential stabilization later
Loan Yields	Anticipated to rise via new production and renewals .	Loan yields up 19 bps vs Q2; expect continued uplift from production/renewals .	Improving
Liquidity/Capital	Detailed FHLB capacity and BTFP application in Q2; focus on stable model .	$0 Fed funds borrowings; reiterated substantial contingent liquidity; strong capital ratios .	Stable/strengthened
Technology/Operations	Invested in technology to enhance efficiency and customer delivery; internal restructuring of production/credit .	Not specifically updated in Q3 PR; cost base modestly higher; focus on hedging and balance sheet .	Neutral
Credit Quality	Solid credit, NPAs down; low net charge-offs/recoveries .	NPAs declined q/q and y/y; net recoveries in Q3; ACL/loans ~1.09% .	Stable/positive
Interest Rate Risk Hedging	Not emphasized in prior quarters.	Executed $66.6M fixed-to-floating swaps to protect capital/hedge rising rates .	New/Proactive

Management Commentary

“We executed a swap of $66,600 of our securities book from fixed to floating with the primary goal of protecting capital and hedging against rising rates. We kept these swaps in the three-year range during which we foresee rates at elevated levels.” — CEO Stacy Brantley .
“Deposit growth was strong… total deposits up $91,626 or 8.31% over [Q2]… Credit quality remains solid with NPAs down (4.13%) over June 30, 2023 and (9.84%)… over the same period in 2022.” — CEO Stacy Brantley .
“We expect deposit costs to rise slightly over the remainder of the year… We expect loan production and the renewal of the loan book to push loan yields higher and place upward pressure on the net interest margin.” — CEO Stacy Brantley .
Prior quarter context: “Rapidly rising interest rates and intense competition for deposits has resulted in an increased cost of funds and tightening [NIM]… While we expect deposit costs to continue to rise…, we also anticipate loan yields will rise…” — CFO Phillip Branch and CEO commentary in Q2 .

Q&A Highlights

No Q3 2023 earnings call transcript was available; therefore, no Q&A highlights or on-call guidance clarifications could be reviewed (no transcript found in document set) [Search returned no call documents].

Estimates Context

Wall Street consensus (S&P Global) for Q3 2023 EPS and revenue was unavailable at time of analysis due to data access limitations; as a result, we cannot assess beat/miss vs consensus for this quarter (consensus data unavailable).

Key Takeaways for Investors

Sequential earnings recovery driven by higher loan yields and stronger noninterest income (notably recoveries), but funding costs and NIM compression remain the core headwinds near term .
Deposit growth and substantial on/off-balance-sheet liquidity provide flexibility to fund loan demand and navigate a higher-for-longer rate backdrop; hedging actions should dampen rate risk to capital/NIM over the next ~3 years .
Credit quality remains a differentiator: low NPAs, net recoveries, and stable ACL positioning despite CRE macro headlines; management cites no material deterioration locally .
Expense discipline remains important as technology/vendor costs and inflation pressure operating expense; watch efficiency as revenues normalize and as one-time items (recoveries/gains) fade .
Dividend reset in Q2 to $0.16 was maintained; income investors should monitor capital ratios and earnings trajectory for sustainability of payouts in a prolonged tight NIM environment .
Near-term trading: stock likely sensitive to incremental signs of NIM stabilization, deposit mix/cost trajectory, and continued credit outperformance; medium term, sustained loan yield uplift and swap positioning could ease margin pressure as repricing rolls through .

Sources: Q3 2023 earnings 8-K and press release with financial highlights, plus Q2 and Q1 2023 earnings 8-K press releases for trend analysis . SPGI consensus data unavailable at time of analysis.

CITIZENS HOLDING CO /MS/ (CIZN)·Q3 2023 Earnings Summary