Business Context and Reporting Period
Citizens Community Bancorp, Inc. filed this Form 8-K on May 16, 2016, to report the completion of a merger and the entry into a material definitive agreement. The Company's wholly-owned subsidiary, Citizens Community Federal N.A. (CCF), merged with and into Community Bank of Northern Wisconsin (CBN), with CCF surviving as the sole entity. The transaction was effective at 11:59 p.m. Central Time on May 16, 2016.
Key Financial Metrics and Transaction Details
- Acquisition Price: Total cash purchase price of $17.44 million paid to Old Murry Bancorp, Inc.
- Price Composition: Based on a $16.76 million book value of CBN (as of April 30, 2016), less a $4.34 million capital dividend, plus a $5 million fixed premium.
- Financing: The Company secured an $11 million term loan from First Tennessee Bank National Association to finance the acquisition.
- Loan Terms: Maturity date of May 15, 2021; interest based on LIBOR.
- Collateral: The loan is secured by a pledge of all issued and outstanding shares of common stock of CCF.
Material Changes and Covenants
The filing details the creation of a direct financial obligation and the disposition of CBN's assets and charter. Key covenants in the Loan Agreement include:
- Maintenance of a loan-to-value ratio of no greater than 50%.
- Prohibition on selling, transferring, pledging, or encumbering the Company's stock of CCF.
- Customary events of default, including payment defaults and bankruptcy, with a cross-default provision related to other outstanding indebtedness.
Guidance, Outlook, and Missing Information
This filing does not provide revenue, profit, cash flow, or margin data for the Company or the acquired entity. The filing explicitly states that financial statements of the business acquired and pro forma financial information are not included in this report. These documents will be filed by amendment no later than 71 calendar days after the filing date.
Investor Verification Checklist
- Verify the upcoming amendment filing (within 71 days) for the required financial statements of CBN and pro forma financial information.
- Review the full text of the Loan Agreement (Exhibit 10.1) and Pledge Agreement (Exhibit 10.2) for detailed covenant restrictions and default triggers.
- Confirm the impact of the $5 million fixed premium on the Company's future earnings and capital adequacy ratios.
- Monitor the Company's ability to maintain the required 50% loan-to-value ratio under the new debt structure.