Updated 3/6/25
Citizens Community Bancorp, Inc. (CZWI) is a small but steady bank operating in the Midwest, providing traditional banking services such as loans, deposits, and wealth management. With a market capitalization of around $147 million, it’s not a household name, but it has carved out a niche in community banking.
For dividend investors, CZWI offers a compelling mix of stability and sustainability. It pays a steady dividend, has a low payout ratio, and maintains a disciplined approach to capital allocation. But is it an ideal pick for income investors? Let’s dive in.
Key Dividend Metrics
📈 Dividend Yield: 2.44%
💰 Annual Dividend: $0.36 per share
📆 Most Recent Dividend: February 21, 2025
🚨 Payout Ratio: 23.88%
📊 5-Year Average Dividend Yield: 2.33%
📉 Trailing Dividend Yield: 2.15%
🔄 Ex-Dividend Date: February 7, 2025
Dividend Overview
CZWI’s dividend yield of 2.44% is decent for a small regional bank. It’s not high enough to grab headlines, but it also doesn’t come with excessive risk. The company has a history of making consistent dividend payments, showing a commitment to returning value to shareholders.
One of the strongest aspects of CZWI’s dividend is its payout ratio. At 23.88%, the company is keeping its dividend well within sustainable limits, ensuring there’s plenty of room for reinvestment and future growth. For dividend investors, a payout ratio below 50% is generally a good sign, and CZWI checks that box with ease.
Dividend Growth and Safety
While CZWI has been reliable in paying dividends, the growth rate has been on the slower side. It’s not a high-growth dividend stock, but rather a steady income play. That said, the company has managed to maintain its dividend even during economic downturns, which is a testament to its stability.
Looking at dividend safety, the low payout ratio stands out as a key factor in CZWI’s favor. It suggests that the dividend is well-covered by earnings, reducing the risk of cuts even if the company faces headwinds. While some investors might prefer a more aggressive dividend growth trajectory, those who prioritize reliability will appreciate the company’s cautious approach.
Chart Analysis
Price Action and Trend
The stock price for CZWI has been in a strong uptrend since mid-2024, climbing steadily above both the 50-day and 200-day moving averages. However, in recent weeks, there’s been a noticeable pullback from its peak. The price has now dipped below the 50-day moving average, which previously acted as a level of support. This shift suggests that short-term momentum is weakening.
Despite this decline, the 200-day moving average continues to trend upward, showing that the stock is still in a broader long-term uptrend. As long as the price remains above this level, the overall structure of the trend remains intact. However, if the stock fails to reclaim the 50-day moving average, it could indicate that this recent pullback is developing into a larger consolidation phase.
Volume Activity
Trading volume has remained relatively stable, though there were a few noticeable spikes during the late-year rally. Increased volume in November and December corresponded with the stock’s strong upward movement, suggesting strong buying interest during that period. Recently, however, volume appears to have declined as the price softened.
A drop in volume while the stock pulls back could mean that this is just a temporary correction rather than a significant trend reversal. If volume starts picking up again while the price stabilizes, it could indicate renewed buying interest. On the other hand, a surge in selling volume would be a sign that more investors are looking to exit, which could put further pressure on the price.
Relative Strength Index (RSI)
The RSI indicator shows that the stock was in overbought territory during its peak but has since cooled off. It is now approaching more neutral levels, which suggests that some of the buying pressure from earlier has faded.
An RSI reading below 50 often signals that momentum is shifting downward, but the stock hasn’t yet entered oversold territory. If RSI continues to decline, it could indicate further downside potential before the stock finds a support level. Conversely, if RSI flattens out and starts to turn higher, it could be a sign that the pullback is losing steam.
Moving Averages and Key Support Levels
The 50-day moving average has acted as a key support level throughout the rally, but the price is now testing below it. If the stock fails to regain this level soon, the next logical support would be near the 200-day moving average.
A successful bounce off either the 50-day or 200-day moving average would suggest that buyers are stepping back in to support the stock. However, if the price continues to decline and breaks below the 200-day moving average, it could signal a more prolonged downturn.
Recent Candlestick Action
The last few daily candles indicate some hesitation in price direction. The wicks on the most recent candles suggest that sellers have been active near the highs, preventing the stock from rebounding strongly. The lack of strong bullish candles indicates that buyers aren’t stepping in aggressively yet.
If the next few sessions show smaller-bodied candles with long lower wicks, it could suggest that selling pressure is easing and a reversal is possible. On the other hand, if the stock continues closing near its lows, it may indicate that further downside is likely before buyers regain control.
Analyst Ratings
📈 Upgrades
In March 2024, Hovde Group upgraded CZWI from Market Perform to Outperform 🔼. This positive shift was driven by the company’s improving financial performance and strategic efforts to enhance shareholder returns. Analysts pointed to strong earnings stability and a favorable interest rate environment as key reasons for the rating increase. With a solid balance sheet and steady loan growth, CZWI showed potential to outperform market expectations in the coming quarters.
📉 Downgrades
On the other side, Citigroup downgraded CZWI from Outperform to Market Perform 🔽 in April 2023. Analysts cited concerns over slowing revenue growth and pressure on profitability margins. At that time, the broader banking sector faced headwinds, including regulatory uncertainties and credit quality concerns, which impacted investor sentiment. While CZWI remained fundamentally strong, analysts took a more cautious approach regarding near-term performance.
💰 Consensus Price Target
- April 2023: Analysts set a consensus price target of $11.50 📉, reflecting a more conservative outlook at the time.
- February 2025: The consensus price target increased to $15.25 📈, indicating improved sentiment and expectations for the company’s valuation and growth prospects.
These adjustments in ratings and price targets reflect shifting analyst perspectives based on economic conditions, earnings reports, and company strategy.
Earning Report Summary
Citizens Community Bancorp wrapped up the fourth quarter of 2024 with net income coming in at $2.7 million, or $0.27 per share. That’s a bit of a step down from the previous quarter’s $3.3 million ($0.32 per share) and lower than the $3.7 million ($0.35 per share) they posted in the same period last year. While earnings softened, there were a few bright spots worth noting.
Interest Income and Margins
One positive takeaway was the bank’s net interest income, which ticked up by $0.4 million to reach $11.7 million. The boost came largely from an improved net interest margin, which widened to 2.79%, helped by lower deposit costs. That’s a good sign, as it shows the bank is still managing to squeeze out more profitability from its lending and deposit operations.
Non-Interest Income and Expenses
On the flip side, non-interest income took a bit of a hit, dropping by $0.9 million for the quarter. A big part of that was a $0.5 million dip in gains from loan sales, along with $0.2 million in losses from equity securities. Expenses also crept up, with higher real estate-related costs and increased professional fees adding some extra weight.
Loans and Deposits
The bank saw a noticeable decline in total loans, which shrank by $56 million. This wasn’t an accident—it was part of a strategic effort to clean up and optimize the balance sheet. Deposits also fell by $32.5 million, mostly due to a pullback in wholesale brokered deposits. While shrinking loan and deposit balances might raise eyebrows, these moves suggest the bank is being selective and disciplined rather than chasing growth for the sake of it.
Asset Quality Holding Up
One encouraging trend was in asset quality. Nonperforming assets dropped to $14.3 million from $17.1 million in the prior quarter, showing that credit risk is being managed well. That’s a solid improvement and suggests the bank is keeping a close eye on loan performance.
Shareholder Value and Dividends
The bank’s book value per share climbed to $17.94, up from $16.60 a year ago, while the tangible book value per share rose to $14.69. In a move that should make income-focused investors happy, the Board of Directors announced a 12.5% increase in the annual dividend, bumping it up to $0.36 per share. The dividend is set to be paid out on February 21, 2025, reinforcing the bank’s commitment to rewarding shareholders.
While net income softened and the bank trimmed down its loan and deposit balances, there were still some positive takeaways. The improvements in net interest margins, asset quality, and shareholder equity show that Citizens Community Bancorp is staying focused on long-term financial health. The dividend hike also signals confidence in the bank’s ability to generate steady returns, even in a changing economic landscape.
Financial Health and Stability
For any dividend-paying stock, financial health is just as important as yield. CZWI’s financials indicate a stable, if not overly exciting, operation.
- Revenue (TTM): $59.57 million
- Net Income (TTM): $13.75 million
- Return on Equity (ROE): 7.8%
- Return on Assets (ROA): 0.76%
These figures suggest that CZWI is generating profits, but its efficiency could be stronger. The return on equity of 7.8% is reasonable but not outstanding, and the return on assets is relatively low, reflecting the capital-intensive nature of banking.
One potential concern is the decline in revenue and earnings growth. Quarterly revenue has fallen by 4.8% year-over-year, while earnings have dropped by 26.8%. While this isn’t necessarily a long-term issue, it’s something investors should keep an eye on.
On the balance sheet side, CZWI appears to be in decent shape.
- Total Cash: $50.17 million
- Total Debt: $66.61 million
- Book Value Per Share: $17.94
With a price-to-book ratio of 0.82, CZWI is trading below its book value. For bank stocks, this can sometimes signal that a company is undervalued relative to its assets, though it could also reflect market concerns about future growth prospects.
Valuation and Stock Performance
Looking at valuation metrics, CZWI seems fairly priced, if not slightly undervalued, relative to its fundamentals.
- Trailing P/E: 11.00
- Forward P/E: 11.25
- Price/Sales: 2.69
- Price/Book: 0.82
These numbers suggest that the stock isn’t overpriced. In fact, the price-to-book ratio below 1 indicates a potential value opportunity. However, valuation alone isn’t enough to justify an investment—investors need to consider the company’s growth prospects as well.
In terms of stock performance, CZWI has been on a bit of a rollercoaster.
- 52-Week High: $17.04
- 52-Week Low: $10.14
- Recent Price: $14.74
The stock has rebounded from its lows but is still trading below its 50-day moving average of $15.74. That suggests some short-term weakness, though it remains above its 200-day moving average of $13.98, which indicates longer-term stability.
Risks and Considerations
While CZWI has its strengths, there are some risks investors should consider.
- Interest Rate Sensitivity – Like all banks, CZWI’s earnings are influenced by interest rate movements. If rates shift unpredictably, it could impact profitability.
- Loan Portfolio Risk – As a regional bank, CZWI’s fortunes are tied to the economic health of the Midwest. Any downturn in local business conditions could lead to higher loan defaults.
- Slower Dividend Growth – While the dividend is safe, it’s not growing at a fast pace. Investors looking for strong dividend appreciation may want to look elsewhere.
- Liquidity and Size – With a market cap of just $147 million, CZWI is a small-cap stock. That means it can be more volatile and less liquid than larger bank stocks.
- Earnings Decline – The recent drop in earnings is a potential red flag. If this trend continues, it could put pressure on the stock price.
Final Thoughts
Citizens Community Bancorp is a solid choice for dividend investors who value stability over rapid growth. It offers a well-covered dividend, a reasonable yield, and trades at a fair valuation. While it may not be the most exciting stock, it provides steady income with a conservative payout ratio.
For those seeking a reliable, small-cap regional bank with a sustainable dividend, CZWI is worth a look. However, investors should be mindful of its slow dividend growth, earnings decline, and interest rate exposure before making any long-term commitments.
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