Citizens Community Bancorp Inc. (CZWI)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 EPS was $0.33, up sequentially from $0.32 but down year-over-year from $0.35; net interest margin expanded 42 bps to 3.27% and the efficiency ratio improved to 66% .
• Wall Street consensus (S&P Global) was $0.29 EPS and $14.7M revenue; CZWI delivered $0.33 EPS and $14.80M revenue, a beat on both metrics; revenue beat was driven by higher NII and non-interest income, offset by a higher credit provision (Values retrieved from S&P Global)*.
• Board authorized a new 5% stock buyback (499k shares) and approved redemption of $15M sub debt (6% coupon) effective Sept 1, 2025; both actions support capital efficiency and future interest expense reduction .
• Asset quality mixed: NPLs and NPAs fell, ACL coverage rose to 176% of NPLs, but special mention loans increased largely due to one multifamily relationship; net charge-offs were minimal at $16k .
• Liquidity strong: on-balance sheet liquidity was 12.17% of assets and total available liquidity covered 277% of uninsured/unsecured deposits; uninsured deposits were 28% of total deposits; FHLB advances at $0 .

What Went Well and What Went Wrong

What Went Well

• Margin and earnings quality improved: NIM 3.27% (+42 bps q/q) aided by lower deposit costs and loan repricing; efficiency ratio improved to 66% (≈70% ex one-time loan payoff income) .
• Capital return and balance sheet optimization: new 5% buyback authorization and planned redemption of $15M sub debt to avoid SOFR+591 bps reset; TCE-to-tangible assets rose to 8.89% .
• Management tone constructive: “quarter was solid… business activity… poised to accelerate in second half of 2025,” with net charge-offs at $16k and rising allowance-to-NPL coverage to 176% .

What Went Wrong

• Credit costs rose: provision for credit losses of $1.35M vs negative $0.25M in Q1, driven by three 30–89 day CRE relationships, macro assumption changes, and higher unfunded commitments .
• Special mention increased: +$8.2M q/q to $23.2M, largely one multifamily relationship with slower leasing; substandard loans decreased but criticized loans rose to $41.1M .
• Deposits declined $45.2M q/q on seasonal public deposit shrinkage and commercial customers reinvesting in operations; on-balance liquidity ratio fell to 12.17% .

Financial Results

Consensus vs Actual (S&P Global) – Q2 2025:

Values retrieved from S&P Global*

Segment/Portfolio Mix

Key KPIs

Guidance Changes

Earnings Call Themes & Trends

(Note: A Q2 2025 earnings call transcript was not available; themes derived from Q1 and Q2 releases.)

Management Commentary

• “The quarter was solid overall with continued margin improvement of 15 bps to 3.00% (42 bps reported), strong net interest income… Tangible book value was higher by 2.4%… Asset quality was mixed… Good credit administration practices kept net charge-offs manageable at $16 thousand… Business activity… seems poised to accelerate in the second half of 2025.” — Stephen Bianchi, Chairman, President & CEO .
• Q1 tone: “Balance sheet is well positioned… strong capital and liquidity positions, strong ACL reserves… loan repricing and originations will benefit our net-interest margin expansion… in the second half of 2025.” — Stephen Bianchi .

Q&A Highlights

• A Q2 2025 earnings call transcript could not be located; no Q&A highlights available based on current filings and sources (we searched SEC filings, company IR, and document catalog; none returned a transcript) .

Estimates Context

• EPS: $0.33 vs $0.29 consensus (beat); Revenue (S&P-defined, NII after provision + non-interest income): $14.80M vs $14.70M consensus (beat). Values retrieved from S&P Global*.

Where estimates may adjust:

• Higher NIM trajectory and lower deposit costs could push FY run-rate net interest income higher; however, elevated provision in Q2 and special mention migration may temper forward EPS raises until credit trends stabilize .

Key Takeaways for Investors

• Margin inflection is real: NIM 3.27% and efficiency ratio 66% signal operating leverage; ex one-time loan payoff income, efficiency ≈70% — still improved q/q .
• Capital return and liability management: 5% buyback and $15M sub debt redemption (to avoid SOFR+591 bps reset) should be accretive to TBV/EPS and reduce interest expense run-rate in H2/Q4 .
• Credit watchlist: special mention loans rose due to one multifamily relationship; monitor CRE/multifamily leasing performance; coverage robust with ACL/NPL at 176% and minimal net charge-offs .
• Liquidity and deposit dynamics: despite seasonal deposit declines, liquidity remains strong (277% coverage of uninsured/unsecured deposits) and uninsured deposits are stable at 28% of total; limited wholesale funding reliance .
• Tactical catalysts: execution on buybacks, NIM continuation, and proof of credit containment could drive sentiment; expect updates on sub debt redemption impact and deposit seasonality in Q3 .
• Near-term trade: positioning ahead of Q3 seasonality and redemption timing may capture improving NII trends; risk is additional provision from watchlist migration .
• Medium-term thesis: franchise repositioning toward commercial banking, disciplined underwriting, and operating efficiency trend support ROATCE stability with upside if deposit beta remains favorable and credit normalizes .

Notes:
- Consensus figures marked with * are from S&P Global (Capital IQ) estimates and are provided without document citations per tool design.
- We searched for the Q2 2025 earnings call transcript across SEC filings and company IR; none were found as of this report **[1367859_0001367859-25-000065_czwi-20250728.htm:1]**.