Citizens Community Bancorp Inc. 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K, dated June 26, 2019, details material agreements entered into by Citizens Community Bancorp, Inc. (CZWI) to facilitate the acquisition of F. & M. Bancorp. of Tomah, Inc. The acquisition closed on July 1, 2019.
Key Financial Metrics and Agreements
- Debt Financing: Entered into a Business Note with Chippewa Valley Bank (CVB) for an initial principal amount of $29,856,388.88. This refinances $10,073,888.88 in existing debt and matures on June 26, 2031.
- Interest Rate: The Note bears a variable interest rate based on the U.S. Prime Rate.
- Revolving Credit: Established a new Business Credit Agreement (Line of Credit) with CVB for up to $5,000,000.00, effective August 1, 2019, maturing August 1, 2020.
- Acquisition Consideration: Total aggregate consideration paid to F. & M. Bancorp. shareholders was approximately $24 million.
- Payment Structure: Consideration consisted of $94.92 in cash per share, 1.3350 shares of Citizens common stock per share, and cash in lieu of fractional shares.
Material Changes
The primary material change is the completion of the merger with F. & M. Bancorp. of Tomah, Inc. on July 1, 2019. F. & M. Bancorp. became a wholly-owned subsidiary, and its banking subsidiary, Farmers & Merchants Bank, merged into Citizens Community Federal, National Association. The Company's debt structure was altered through the new Note and Line of Credit secured by the pledge of all outstanding common stock of its subsidiary, Citizens Community Federal N.A.
Outlook, Risks, and Contingencies
The filing does not provide specific forward-looking guidance, revenue projections, or management commentary regarding future performance. Risks associated with the new debt instruments include customary events of default (payment defaults, covenant breaches, insolvency), which could allow CVB to accelerate payment and sell the pledged collateral (CCF stock). The Pledge Agreement restricts the Company's ability to sell or encumber the subsidiary's stock.
Investor Verification Checklist
- Verify the full terms of the Business Note and Line of Credit in Exhibits 10.1 and 10.2.
- Confirm the exact number of shares issued to F. & M. shareholders to calculate total dilution.
- Review the Merger Agreement (Exhibit 2.1) for any contingent liabilities or earn-out provisions not detailed in this summary.
- Assess the impact of the variable interest rate on future interest expense given current U.S. Prime Rate trends.
- Check subsequent filings for the integration progress of the acquired bank and any changes to liquidity ratios.