10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to 

Commission file number 001-33003

CITIZENS COMMUNITY BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	20-5120010
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

2174 EastRidge Center, Eau Claire, WI 54701

(Address of principal executive offices)

715-836-9994

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Exchange on Which Registered
Common Stock, $.01 par value per share	NASDAQ Global MarketSM

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if the disclosure of delinquent filers pursuant to Rule 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨ (do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨ No  x

The aggregate market value of the voting and non-voting, if applicable, stock held by non-affiliates of the registrant, computed by reference to the average of the bid and asked price of such stock as of the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $38,337,492.  Shares of the registrant’s common stock held or beneficially owned by any executive officer or director of the registrant have been excluded from this computation because such persons may be deemed to be affiliates. This determination of affiliate status is not a conclusive determination for other purposes.

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

At December 8, 2014 there were 5,184,323 shares of the registrant’s common stock, par value $0.01 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2015 Annual Meeting of the Stockholders of the Registrant are incorporated by reference into Part III of this report.

As used in this report, the terms “we,” “us,” “our,” “Citizens Community Bancorp” and the “Company” mean Citizens Community Bancorp, Inc. and its wholly owned subsidiary, Citizens Community Federal N.A., unless the context indicates another meaning. As used in this report, the term “Bank” means our wholly owned subsidiary, Citizens Community Federal N.A.

CITIZENS COMMUNITY BANCORP, INC.

FORM 10-K

September 30, 2014

TABLE OF CONTENTS

			Page Number
PART I			4
	ITEM 1.	BUSINESS	4
	ITEM 1A.	RISK FACTORS	6
	ITEM 1B.	UNRESOLVED STAFF COMMENTS	10
	ITEM 2.	PROPERTIES	11
	ITEM 3.	LEGAL PROCEEDINGS	13
	ITEM 4.	MINE SAFETY DISCLOSURES	14
PART II			14
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	14
	ITEM 6.	SELECTED FINANCIAL DATA	14
	ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	38
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	74
	ITEM 9A.	CONTROLS AND PROCEDURES	74
	ITEM 9B.	OTHER INFORMATION	74
PART III			74
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	74
	ITEM 11.	EXECUTIVE COMPENSATION	75
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	75
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	75
	ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	76
PART IV			76
	ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	76
		SIGNATURES	77

3

Forward-Looking Statements

Certain matters discussed in this Form 10-K contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the Company intends that these forward-looking statements be covered by the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” “would,” or the negative of those terms or other words of similar meaning.  Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are inherently subject to many uncertainties in the Company’s operations and business environment.

Factors that could affect actual results or outcomes include the matters described under the caption “Risk Factors” in Item 1A of this report and the following: general economic conditions, in particular, relating to consumer demand for the Bank’s products and services; the Bank’s ability to maintain current deposit and loan levels at current interest rates; competitive and technological developments; deteriorating credit quality, including changes in the interest rate environment reducing interest margins; prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; the Bank’s ability to maintain required capital levels and adequate sources of funding and liquidity; maintaining capital requirements may limit the Bank’s operations and potential growth or restrict the Bank's ability to engage in strategic transactions; changes and trends in capital markets; competitive pressures among depository institutions; effects of critical accounting policies and judgments; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies; write-downs in the Bank’s investment securities portfolio; the Bank’s ability to implement its cost-savings and revenue enhancement initiatives; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Bank; fluctuation of the Company’s stock price; the Bank’s ability to attract and retain key personnel; the Bank’s ability to secure confidential information through the use of computer systems and telecommunications networks; and the impact of reputation risk created by these developments on such matters as business generation and retention, funding and liquidity. Stockholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this filing and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this report.

PART 1

ITEM 1. BUSINESS

General

The Company is a Maryland corporation organized in 2004. The Company is a bank holding company and was subject to regulation by the Office of Thrift Supervision (OTS) through July 21, 2011 and has been subject to regulation by the Office of the Comptroller of the Currency (“OCC”) and Federal Reserve Bank thereafter. Our primary activities consist of holding the stock of our wholly-owned subsidiary bank, Citizens Community Federal N.A., and providing consumer and small commercial and agricultural banking activities through the Bank. At September 30, 2014, we had approximately $570 million in total assets, $450 million in deposits, and $57 million in equity. Unless otherwise noted herein, all monetary amounts in this report, other than share, per share and capital ratio amounts, are stated in thousands.

Citizens Community Federal N.A.

As of May 31, 2014, the Bank is a federally chartered National Bank with 23 full-service offices; eight stand-alone locations and 15 in-store branches, predominantly in Wal-Mart Supercenter stores. We grew from six legacy Wisconsin branches to twelve stand-alone branch offices from 2002 to 2005 through a combination of acquisitions and new branch openings in Wisconsin, Minnesota and Michigan. We added 17 in-store branches during 2008 and 2009 through a combination of acquisitions and new branch openings in Wisconsin and Minnesota. In 2010, we moved 2 of our stand-alone locations to in-store locations to better serve our customers. In December 2012, as part of our ongoing efforts to improve efficiencies and cost-effectiveness in delivering banking products to our customers, we closed one in-store location. In fiscal 2014, we closed two additional in-store branches, completed the selective sale of assets of one in-store location and opened a new full-service facility in Rice Lake, WI. In October 2014, we announced the closing of three additional in-store branches, effective January 2015; and the relocation of the Mankato, Minnesota branch to a new full-service traditional branch in Mankato, MN in 2015. We intend to review our branch network to deploy assets and capital to growth markets and exit markets where we have limited growth opportunities. Through all of our branch locations, primarily in Wisconsin, Minnesota and Michigan, we provide a variety of commercial and consumer banking products and services to customers, including online and mobile banking options.

4

Internet Website

We maintain a website at www.ccf.us. We make available through that website, free of charge, copies of our Annual report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements for our annual stockholders’ meetings and amendments to those reports or documents, as soon as reasonably practicable after we electronically file those materials with, or furnish them to, the Securities and Exchange Commission (“SEC”). We are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this Annual Report on Form 10-K. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding SEC registrants.

Selected Consolidated Financial Information

This information is included in Item 6; “Selected Financial Data” herein.

Yields Earned and Rates Paid

This information is included in Item 7; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, under the heading “Statement of Operations Analysis” herein.

Rate/Volume Analysis

This information is included in Item 7; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, under the heading “Statement of Operations Analysis” herein.

Average Balance, Interest and Average Yields and Rates

This information is included in Item 7; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, under the heading “Statement of Operations Analysis” herein.

Lending

We offer a variety of loan products including commercial loans, agricultural loans, residential mortgages, home equity lines-of-credit, commercial and industrial (C&I) loans and consumer loans. We make real estate, consumer, commercial and agricultural loans in accordance with the basic lending policies established by Bank management and approved by our Board of Directors. We focus our lending activities on individual consumers and small commercial borrowers within our market areas. Our lending has been historically concentrated primarily within Wisconsin, Minnesota and Michigan. Competitive and economic pressures exist in our lending markets, and recent and any future developments in (a) the general economy, (b) real estate lending markets, and (c) the banking regulatory environment could have a material adverse effect on our business and operations. These factors may impact the credit quality of our existing loan portfolio, or adversely impact our ability to originate sufficient high quality loans in the future.

Our total gross outstanding loans, before net deferred loan costs, as of September 30, 2014, were $467,319, consisting of $223,025 in consumer real estate loans, $39,061 in commercial real estate loans, $201,721 in secured consumer and other loans, and $3,512 in unsecured consumer loans.

Investments

We maintain a portfolio of investments, consisting primarily of U.S. Government sponsored agency securities, bonds and other obligations issued by states and their political subdivisions. We attempt to balance our portfolio to manage interest rate risk, regulatory requirements, and liquidity needs while providing an appropriate rate of return commensurate with the risk of the investment.

Deposits

We offer a broad range of deposit products through our branches, including demand deposits, various savings and money-market accounts and certificates of deposit. Deposits are insured by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (“FDIC”) up to statutory limits. At September 30, 2014, our total deposits were $449,767 including interest bearing deposits of $430,098 and non-interest bearing deposits of $19,669.

5

Competition

We compete with other financial institutions and businesses both in attracting and retaining deposits and making loans in all of our principal markets. We believe the primary factors in competing for deposits are interest rates, personalized services, the quality and range of financial services, convenience of office locations and office hours. Competition for deposit products comes primarily from other banks, credit unions and non-bank competitors, including insurance companies, money market and mutual funds, and other investment alternatives. We believe the primary factors in competing for loans are interest rates, loan origination fees, and the quality and the range of lending services. Competition for loans comes primarily from other banks, mortgage banking firms, credit unions, finance companies, leasing companies and other financial intermediaries. Some of our competitors are not subject to the same degree of regulation as that imposed on national banks or federally insured institutions, and these other institutions may be able to price loans and deposits more aggressively. We also face direct competition from other banks and their holding companies that have greater assets and resources than ours.

Regulation and Supervision

As of July 21, 2011, the Bank is examined and regulated by the Office of the Comptroller of Currency (OCC), and the Company is examined and regulated by the Federal Reserve Bank of Minneapolis. The Bank is a member of the Federal Reserve System and Federal Home Loan Bank of Chicago, which is one of the 12 regional banks in the Federal Home Loan Bank System. In addition, the Bank’s deposit accounts are insured by the FDIC to the maximum extent permitted by law, and the FDIC has certain enforcement powers over the Bank. Effective, January 28, 2013, the Comptroller of the Currency, the primary regulator for the Bank, terminated the Memorandum of Understanding dated December 23, 2009, which formerly imposed certain restrictions on the Bank's operations. On March 15, 2013, the Federal Reserve Bank, as successor to the Office of Thrift Supervision, formerly announced termination of the Memorandum of Understanding previously entered into by the Company.

Employees

At December 8, 2014, we had 116 full-time employees and 189 total employees, company-wide. We have no unionized employees, and we are not subject to any collective bargaining agreements.

ITEM 1A. RISK FACTORS

The risks described below are not the only risks we face. Additional risks that we do not yet know of or that we currently think are immaterial may also impair our future business operations. If any of the events or circumstances described in the following risks actually occurs, our business, financial condition or results of operations could be materially adversely affected. In such cases, the trading price of our common stock could decline.

Our business may be adversely affected by conditions in the financial markets and economic conditions generally. From December 2007 to June 2009, the United States economy experienced the worst economic downturn since the Great Depression, resulting in a general reduction of business activity and growth across industries and regions as well as significant increases in unemployment. Many businesses experienced serious financial difficulties due to the lack of consumer spending and liquidity in the credit markets. The financial services industry and the securities markets generally were materially and adversely affected by significant declines in the values of nearly all asset classes. General declines in home prices and the resulting impact on sub-prime mortgages, and eventually, all mortgage and real estate classes as well as equity markets resulted in continued widespread shortages of liquidity across the financial services industry. Moreover, the country and our geographic region experienced high rates of unemployment which negatively impacted the creditworthiness of our borrowers and customer base.

Although the economy has been in the recovery phase since 2009, the recovery is weak and there can be no assurance that the economy will not enter into another recession, whether in the near term or long term. Continuation of the slow recovery or another economic downturn or sustained, high unemployment levels may negatively impact our operating results. Additionally, adverse changes in the economy may also have a negative effect on the ability of our borrowers to make timely repayments of their loans. These factors could expose us to an increased risk of loan defaults and losses and could have an adverse impact on our earnings.

Weaknesses in the markets for residential real estate, including secondary residential mortgage loan markets, could reduce our net income and profitability. During the severe recession that lasted from 2007 to 2009, softened residential housing markets, increased delinquency and default rates, and volatile and constrained secondary credit markets negatively impacted the mortgage industry. Our financial results were adversely affected by these effects including changes in real estate values, primarily in Wisconsin, Minnesota and Michigan, and our net income declined as a result. Decreases in real estate values adversely affected the value of property used as collateral for loans as well as investments in our portfolio. Continued

6

slow growth in the economy since 2009 has resulted in increased competition and lower rates, which has negatively impacted our net income and profits.

The foregoing changes could affect our ability to originate loans and deposits, the fair value of our financial assets and liabilities and the average maturity of our securities portfolio. An increase in the level of interest rates may also adversely affect the ability of certain of our borrowers to repay their obligations. If interest rates paid on deposits or other borrowings were to increase at a faster rate than the interest rates earned on loans and investments, our net income would be adversely affected.

We are subject to interest rate risk. The rates of interest we earn on assets and pay on liabilities generally are established contractually for a period of time. Market interest rates change over time due to many factors that are beyond our control, including but not limited to: general economic conditions and government policy decisions, especially policies of the Federal Reserve Bank. Accordingly, our results of operations, like those of other financial institutions, are impacted by changes in interest rates and the interest rate sensitivity of our assets and liabilities. The risk associated with changes in interest rates and our ability to adapt to these changes is known as interest rate risk.

We are subject to lending risk. There are inherent risks associated with our lending activities. These risks include the impact of changes in interest rates and changes in the economic conditions in the markets we serve, as well as those across the United States. An increase in interest rates or weakening economic conditions (such as high levels of unemployment) could adversely impact the ability of borrowers to repay outstanding loans, or could substantially weaken the value of collateral securing those loans. Downward pressure on real estate values could increase the potential for problem loans and thus have a direct impact on our consolidated results of operations.

Our allowance for loan losses may be insufficient. To address risks inherent in our loan portfolio, we maintain an allowance for loan losses that represents management’s best estimate of probable losses that exist within our loan portfolio. The level of the allowance reflects management’s continuing evaluation of various factors, including specific credit risks, historical loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions, and unidentified losses inherent in the current loan portfolio. Determining the appropriate level of the allowance for loan losses involves a high degree of subjectivity and requires us to make estimates of significant credit risks, which may undergo material changes. In evaluating our impaired loans, we assess repayment expectations and determine collateral values based on all information that is available to us. However, we must often make subjective decisions based on our assumption about the creditworthiness of the borrowers and the values of collateral securing these loans.

Deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans, and other factors, both within and outside of our control, may require an increase in our allowance for loan losses. In addition, bank regulatory agencies periodically examine our allowance for loan losses and may require an increase in the allowance or the recognition of further loan charge-offs, based on judgments different from those of our management.

If charge-offs in future periods exceed our allowance for loan losses, we will need to take additional loan loss provisions to increase our allowance for loan losses. Any additional loan loss provision will reduce our net income or increase our net loss, which could have a direct material adverse affect on our financial condition and results of operations.

Changes in the fair value or ratings downgrades of our securities may reduce our stockholders’ equity, net earnings, or regulatory capital ratios. At September 30, 2014, $62,189 of our securities, were classified as available for sale and $8,785 were classified as held to maturity. The estimated fair value of our available for sale securities portfolio may increase or decrease depending on market conditions. Our available for sale securities portfolio is comprised primarily of fixed-rate securities. We increase or decrease stockholders’ equity by the amount of the change in unrealized gain or loss (the difference between the estimated fair value and amortized cost) of our available for sale securities portfolio, net of the related tax benefit or provision, under the category of accumulated other comprehensive income/loss. Therefore, a decline in the estimated fair value of this portfolio will result in a decline in our reported stockholders’ equity, as well as our book value per common share and tangible book value per common share. This decrease will occur even though the securities are not sold. In the case of debt securities, if these securities are never sold, the decrease may be recovered over the life of the securities.

We conduct a periodic review and evaluation of our securities portfolio to determine if the decline in the fair value of any security below its cost basis is other-than-temporary. Factors which we consider in our analysis include, but are not limited to, the severity and duration of the decline in fair value of the security, the financial condition and near-term prospects of the issuer, whether the decline appears to be related to issuer conditions or general market or industry conditions, our intent and ability to retain the security for a period of time sufficient to allow for any anticipated recovery in fair value and the likelihood of any near-term fair value recovery. We generally view changes in fair value caused by changes in interest rates as temporary, which is consistent with our experience. If we deem such decline to be other-than-temporary related to credit losses, the

7

security is written down to a new cost basis and the resulting loss is charged to earnings as a component of non-interest income in the period in which the decline in value occurs.

We have, in the past, recorded other than temporary impairment (“OTTI”) charges, principally arising from investments in non-agency mortgage-backed securities. We continue to monitor our securities portfolio as part of our ongoing OTTI evaluation process. No assurance can be given that we will not need to recognize OTTI charges related to securities in the future. Future OTTI charges would cause decreases to both Tier 1 and Risk-based capital levels which may expose the Company and/or the Bank to additional regulatory restrictions.

The capital that we are required to maintain for regulatory purposes is impacted by, among other factors, the securities ratings on our portfolio. Therefore, ratings downgrades on our securities may have a material adverse effect on our risk-based regulatory capital levels.

Competition may affect our results. We face strong competition in originating loans, in seeking deposits and in offering other banking services. We must compete with commercial banks, trust companies, mortgage banking firms, credit unions, finance companies, mutual funds, insurance companies and brokerage and investment banking firms. Our market area is also served by commercial banks and savings associations that are substantially larger than us in terms of deposits and loans and have greater human and financial resources. This competitive climate can make it more difficult to establish and maintain relationships with new and existing customers and can lower the rate we are able to charge on loans, increase the rates we must offer on deposits, and affect our charges for other services. Those factors can, in turn, adversely affect our results of operations and profitability.

We may not have sufficient pre-tax net income in future periods to fully realize the benefits of our net deferred tax assets. Assessing the need for, or the sufficiency of, a valuation allowance requires management to evaluate all available evidence. Based on future pre-tax net income projections and the planned execution of existing tax planning strategies, we believe that it is more likely than not that we will fully realize the benefits of our net deferred tax assets. However, our current assessment is based on assumptions and judgments that may or may not reflect actual future results. If a valuation allowance becomes necessary, it could have a material adverse effect on our consolidated results of operations and financial condition.

Maintaining or increasing our market share may depend on lowering prices and market acceptance of new products and services. Our success depends, in part, on our ability to adapt our products and services to evolving industry standards and customer demands. We face increasing pressure to provide products and services at lower prices, which can reduce our net interest margin and revenues from our fee-based products and services. In addition, the widespread adoption of new technologies, including internet and mobile banking services, could require us to make substantial expenditures to modify or adapt our existing products and services. Also, these and other capital investments in our business may not produce expected growth in earnings anticipated at the time of the expenditure. We may not be successful in introducing new products and services, achieving market acceptance of our products and services, or developing and maintaining loyal customers, which in turn, could adversely affect our results of operations and profitability.

Acts or threats of terrorism and political or military actions by the United States or other governments could adversely affect general economic industry conditions. Geopolitical conditions may affect our earnings. Acts or threats of terrorism and political actions taken by the United States or other governments in response to terrorism, or similar activity, could adversely affect general or industry conditions and, as a result, our consolidated financial condition and results of operations.

We operate in a highly regulated environment, and are subject to changes, which could increase our cost structure or have other negative impacts on our operations. The banking industry is extensively regulated at the federal and state levels. Insured depository institutions and their holding companies are subject to comprehensive regulation and supervision by financial regulatory authorities covering all aspects of their organization, management and operations. Specifically, the Dodd-Frank Wall Street Reform and Consumer Protection Act has resulted in the elimination of the Office of Thrift Supervision, tightening of capital standards, and the creation of the new Consumer Financial Protection Bureau. Moreover, it has resulted, or is likely to result, in new laws, regulations and regulatory supervisors that are expected to increase our cost of operations. In addition, the recent change to the Office of the Comptroller of the Currency (“OCC”) as our primary regulator may result in interpretations different than those formerly provided by the Office of Thrift Supervision. In addition to its regulatory powers, the OCC also has significant enforcement authority that it can use to address banking practices that it believes to be unsafe and unsound, violations of laws, and capital and operational deficiencies. Regulation includes, among other things, capital and reserve requirements, permissible investments and lines of business, dividend limitations, limitations on products and services offered, loan limits, geographical limits, consumer credit regulations, community reinvestment requirements and restrictions on transactions with affiliated parties. The system of supervision and regulation applicable to us establishes a comprehensive framework for our operations and is intended primarily for the protection of the Deposit Insurance Fund, our depositors and the public, rather than our stockholders. We are also subject to regulation by the SEC. Failure to comply with applicable laws,

8

regulations or policies could result in sanction by regulatory agencies, civil monetary penalties, and/or damage to our reputation, which could have a material adverse effect on our business, consolidated financial condition and results of operations. In addition, any change in government regulation could have a material adverse effect on our business.

We are subject to increases in FDIC insurance premiums and special assessments by the FDIC, which will adversely affect our earnings. During 2008 and continuing in 2009, higher levels of bank failures dramatically increased resolution costs of the FDIC and depleted the Deposit Insurance Fund. On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which, in part, permanently raised the current standard maximum deposit insurance amount to $250,000 per customer (up from $100,000). These programs placed additional stress on the Deposit Insurance Fund. In order to maintain a strong funding position and restore reserve ratios of the Deposit Insurance Fund, the FDIC increased assessment rates of the insured institutions. We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. If additional bank or financial institution failures increase, or if the cost of resolving prior failures exceeds expectations, we may be required to pay even higher FDIC premiums than the current levels. Any future increases or required prepayments of FDIC insurance premiums may adversely impact our earnings and financial condition.

Customers may decide not to use banks to complete their financial transactions, which could result in a loss of income to us. Technology and other changes are allowing customers to complete financial transactions that historically have involved banks at one or both ends of the transaction. For example, customers can now pay bills and transfer funds directly without going through a bank. The process of eliminating banks as intermediaries, known as disintermediation, could result in the loss of fee income, as well as the loss of customer deposits.

Our internal controls and procedures may fail or be circumvented. Management regularly reviews and updates our internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well-designed and operated, is based in part on certain assumptions and can provide only reasonable assurances that the objectives of the system are met. Any (a) failure or circumvention of our controls and procedures, (b) failure to adequately address any internal control deficiencies, or (c) failure to comply with regulations related to controls and procedures could have a material effect on our business, consolidated financial condition and results of operations. See Item 9A “Controls and Procedures” for further discussion of our internal controls.

We could experience an unexpected inability to obtain needed liquidity. Liquidity measures the ability to meet current and future cash flow needs as they become due. The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits, and to take advantage of interest rate market opportunities. The ability of a financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets and its access to alternative sources of funds. We seek to ensure our funding needs are met by maintaining an appropriate level of liquidity through asset/liability management. If we become unable to obtain funds when needed, it could have a material adverse effect on our business and, in turn, our consolidated financial condition and results of operations. Moreover, it could limit our ability to take advantage of what we believe to be good market opportunities for expanding our loan portfolio.

Future growth, operating results or regulatory requirements may require us to raise additional capital but that capital may not be available. We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. To the extent our future operating results erode capital or we elect to expand through loan growth or acquisition, we may be required to raise additional capital.

Our ability to raise capital will depend on conditions in the capital markets, which are outside of our control, and on our financial performance. Accordingly, we cannot be assured of our ability to raise capital when needed or on favorable terms. If we cannot raise additional capital when needed or if we are subject to material unfavorable terms for such capital, we may be subject to increased regulatory supervision and the imposition of restrictions on our growth and business. These actions could negatively impact our ability to operate or further expand our operations and may result in increases in operating expenses and reductions in revenues that could have a material adverse effect on our consolidated financial condition and results of operations.

We may not be able to attract or retain skilled people. Our success depends, in part, on our ability to attract and retain key people. Competition for the best people in most activities engaged in by us can be intense and we may not be able to hire people or retain them. The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of our local markets, years of industry experience and the difficulty of promptly finding qualified replacement personnel.

We continually encounter technological change. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology driven by new or modified products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to

9

provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations.

Our shares of common stock are thinly traded and our stock price may be more volatile. Because our common stock is thinly traded, its market price may fluctuate significantly more than the stock market in general or the stock prices of similar companies, which are exchanged, listed or quoted on the NASDAQ Stock Market. We believe there are 4,745,743 shares of our common stock held by nonaffiliates as of December 8, 2014. Thus, our common stock will be less liquid than the stock of companies with broader public ownership, and as a result, the trading prices for our shares of common stock may be more volatile. Among other things, trading of a relatively small volume of our common stock may have a greater impact on the trading price of our stock than would be the case if our public float were larger.

We rely on network and information systems and other technologies, and, as a result, we are subject to various Cybersecurity risks. Cybersecurity refers to the combination of technologies, processes and procedures established to protect information technology systems and data from unauthorized access, attack, or damage. Our business involves the storage and transmission of customers’ personal information. While we have internal policies and procedures designed to prevent or limit the effect of a failure, interruption or security breach of our information systems, as well as contracts and service agreements with applicable outside vendors, we cannot be assured that any such failures, interruptions or security breaches will not occur or, if they do, that they will be addressed adequately. Unauthorized disclosure of sensitive or confidential client or customer information, whether through a breach of our computer systems or otherwise, could severely harm our business. Although we have implemented measures to prevent security breaches, cyber incidents and other security threats, our facilities and systems, and those of third party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human error, or other similar events that could have a material adverse affect on our business. Furthermore, the storage and transmission of such data is regulated at the federal and state level. Privacy information security laws and regulation changes, and compliance therewith, may result in cost increases due to system changes and the development of new administrative processes. If we fail to comply with applicable laws and regulations or experience a data security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us or our vendors, our reputation could be damaged, possibly resulting in lost future business, and we could be subject to fines, penalties, administrative orders and other legal risks as a result of a breach or non-compliance.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

10

ITEM 2. PROPERTIES
		Lease	Net Book Value
	Owned or	Expiration	at September 30, 2014
Location	Leased	Date	(in thousands)
ADMINISTRATIVE OFFICES:
2174 EastRidge Center (5)	Lease	September 30, 2015
Eau Claire, WI 54701
BRANCH OFFICES
Appleton Branch (9)	Lease	January 31, 2019
3701 E Calumet Street
Appleton, WI 54915
Chippewa Falls Branch (4)	Lease	January 31, 2016
2786 Commercial Boulevard
Chippewa Falls, WI 54729
Gordy’s County Market (10)	Lease	October 4, 2015
3310 E Hamilton Ave
Eau Claire, WI 54701
Fairfax Branch	Owned	N/A	$	712
219 Fairfax Street
Altoona, WI 54720
Fond du Lac Branch (9)	Lease	January 31, 2019
377 N Rolling Meadows Dr
Fond du Lac, WI 54936
Mondovi Branch (6)	Lease	June 30, 2016
695 E Main Street
Mondovi, WI 54755
Oshkosh Branch (9)	Lease	January 31, 2019
351 S Washburn Street
Oshkosh, WI 54904
Rice Lake Branch (4) (8)	Lease	May 1, 2018
2501 West Avenue
Rice Lake, WI 54868

11

		Lease	Net Book Value
	Owned or	Expiration	at September 30, 2014
Location	Leased	Date	(in thousands)
Westside Branch	Owned	N/A	$	237
2125 Cameron Street
Eau Claire, WI 54703
Lake Orion Branch (1)	Lease	February 28, 2017
688 S. LaPeer Road
Lake Orion, MI 48362
Rochester Hills Branch	Owned	N/A	$	282
310 W Tienken Road
Rochester Hills, MI 48306
Brooklyn Park Branch	Lease	January 31, 2017
8000 Lakeland Avenue
Brooklyn Park, MN 55445
Faribault Branch (9)	Lease	January 31, 2019
150 Western Avenue
Faribault, MN 55021
Mankato Branch (7)	Lease	May 1, 2016
1901 Madison Ave East, Suite 410
Mankato, MN 56001
Oakdale Branch	Lease	September 30, 2017
7035 10th Street North
Oakdale, MN 55128
Red Wing Branch (9)	Lease	March 3, 2018
295 Tyler Road S
Red Wing, MN 55066
Winona Branch	Lease	January 31, 2018
955 Frontenac Drive
Winona, MN 55987
Menomonie Branch	Lease	March 4, 2016
180 Cedar Falls Road
Menomonie, WI 54751

12

		Lease	Net Book Value
	Owned or	Expiration	at September 30, 2014
Location	Leased	Date	(in thousands)
Neenah Branch (9)	Lease	March 31, 2019
1155 Winneconne Avenue
Neenah, WI 54956
Wisconsin Rapids Branch (2)	Lease	May 27, 2015
4331 8th Street S.
Wisconsin Rapids, WI 54494
Oak Park Heights Branch (3)	Lease	January 31, 2015
5865 Norell Avenue
Oak Park Heights, MN 55082
Plover Branch (2)	Lease	January 31, 2015
250 Crossroads Drive
Plover, WI 54467
Rice Lake Traditional Branch (11)	Lease	October 14, 2023
2850 Decker Drive
Rice Lake, WI 54868

(1) Effective March 1, 2007, Citizens Community Federal N.A. has a right to cancel this lease, with the cancellation to take effect 90 days after it exercises the right to cancel.

(2) Effective on or about January 8, 2015, the Wisconsin Rapids and Plover, Wisconsin Branch offices, each located within a Walmart store will close.

(3) Effective on or about January 7, 2015, the Oak Park Heights, Minnesota Branch office, located within a Walmart store will close.

(4) Leased WalMart locations each have a lessee option to extend the lease by up to two five-year periods, each at predetermined rent rates.

(5) Leased Eastridge Center location has a predetermined rent rate increase each year during the term starting in October 2012 for each of the two years remaining in the term and a right to renew for two additional periods of three years, each at negotiated conditions.

(6) Leased Mondovi location has a lessee annual termination right to cancel.

(7) Leased Mankato location has a lessee option to extend the lease for up to two five-year periods with the first extension at a predetermined rent rate and the second extension to be reevaluated at fair market rent at the time of extension. In fiscal 2015, the Bank plans to replace this branch office with a full-service traditional Branch in Mankato, Minnesota.

(8) Leased Rice Lake location has a predetermined rent rate increase each year starting in May 2013 for each of the five years remaining in the term.

(9) On October 18, 2013, the Bank exercised its first lessee option to extend these leases up to one five-year period, each at predetermined rent rates. Leased Walmart locations each have a lessee option to extend the lease by up to one, five-year period, each at predetermined rent rates.

(10) Leased Gordy's location has a lessee option to extend the lease by up to two five-year periods, each at predetermined rent rates.

(11) Leased Rice Lake traditional location has a lessee option to extend the lease by up to two five-year periods, each at predetermined rent rates.

ITEM 3. LEGAL PROCEEDINGS

13

In the normal course of business, the Company and/or the Bank occasionally become involved in various legal proceedings. In our opinion, any liability from such proceedings would not have a material adverse effect on the business or financial condition of the Company.

ITEM 4. MINE SAFETY DISCLOSURES

None

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Historically, trading in shares of our common stock has been limited. Citizens Community Bancorp, Inc. common stock is traded on the NASDAQ Global Market under the symbol “CZWI”.

The following table summarizes high and low bid prices and cash dividends declared for our common stock for the periods indicated. Bid prices are as provided by the Yahoo Finance System. The reported high and low prices represent interdealer bid prices, without retail mark-up, mark-downs or commission, and may not necessarily represent actual transactions.

	High		Low		Cash dividends per share
Fiscal 2014
First Quarter (three months ended December 31, 2013)	$	7.70	$	7.21	$	—
Second Quarter (three months ended March 31, 2014)	$	8.56	$	7.29	$	0.04
Third Quarter (three months ended June 30, 2014)	$	8.50	$	7.74	$	—
Fourth Quarter (three months ended September 30, 2014)	$	9.36	$	8.26	$	—
Fiscal 2013
First Quarter (three months ended December 31, 2012)	$	6.09	$	5.56	$	—
Second Quarter (three months ended March 31, 2013)	$	7.00	$	6.00	$	0.02
Third Quarter (three months ended June 30, 2013)	$	7.39	$	6.85	$	—
Fourth Quarter (three months ended September 30, 2013)	$	7.75	$	6.99	$	—

The closing price per share of Citizens Community Bancorp, Inc. common stock on September 30, 2014 (the last trading day of our fiscal year end) was $8.85.

We had approximately 373 stockholders of record at December 8, 2014. The number of stockholders does not separately reflect persons or entities that hold their stock in nominee or “street” name through various brokerage firms. We believe that the number of beneficial owners of our common stock on that date was substantially greater.

The holders of our common stock are entitled to receive such dividends when and as declared by our Board of Directors and approved by our regulators. In determining the payment of cash dividends, our Board of Directors considers our earnings, capital and debt servicing requirements, the financial ratio guidelines of our regulators, our financial condition and other relevant factors.

An annual cash dividend was paid in the fiscal year ended September 30, 2014 in the amount of $0.04 per share on March 27, 2014 to stockholders of record as of March 13, 2014. An annual cash dividend was paid in the fiscal year ended September 30, 2013 in the amount of $0.02 per share on April 18, 2013 to stockholders of record as of April 4, 2013. There were no cash dividends declared or paid in the fiscal year ended September 30, 2012.

14

ITEM 6. SELECTED FINANCIAL DATA
	Year ended September 30, (dollars in thousands, except per share data)
	2014			2013			2012			2011			2010
Selected Results of Operations Data:
Interest income	24,033			$	24,575		$	27,085		$	29,764		$	32,759
Interest expense	4,275			5,312			6,591			8,913			11,579
Net interest income	19,758			19,263			20,494			20,851			21,180
Provision for loan losses	1,910			3,143			4,440			5,864			6,901
Net interest income after provision for loan losses	17,848			16,120			16,054			14,987			14,279
Fees and service charges	2,868			2,584			2,068			1,913			1,876
Net impairment losses recognized in earnings	(78		)	(797		)	(1,332		)	(570		)	(2,261		)
Net (loss) gain on sale of available for sale securities	(168		)	552			243			659			—
Goodwill impairment	—			—			—			—			(5,593		)
Other non-interest income	794			712			693			615			623
Non-interest income (loss)	3,416			3,051			1,672			2,617			(5,355		)
Non-interest expense	18,434			17,489			17,359			17,274			16,970
Income (loss) before provision (benefit) for income taxes	2,830			1,682			367			330			(8,046		)
Income tax provision (benefit)	1,047			635			161			137			(955		)
Net income (loss)	$	1,783		$	1,047		$	206		$	193		$	(7,091	)
Per Share Data: (1)
Net income (loss) per share (basic) (1)	$	0.35		$	0.20		$	0.04		$	0.04		$	(1.39	)
Net income (loss) per share (diluted) (1)	$	0.34		$	0.20		$	0.04		$	0.04		$	(1.39	)
Cash dividends per common share	$	0.04		$	0.02		$	—		$	—		$	—
Book value per share at end of period	$	11.09		$	10.51		$	10.73		$	10.30		$	9.75

15

CITIZENS COMMUNITY BANCORP, INC.
FIVE YEAR SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
	Year ended September 30, (dollars in thousands, except per share data)
	2014			2013			2012			2011			2010
Selected Financial Condition Data:
Total assets	$	569,815		$	554,521		$	530,183		$	536,557		$	594,365
Investment securities	70,974			79,695			67,111			44,338			41,708
Total loans, net of deferred costs (fees)	470,366			440,863			427,789			431,746			456,232
Total deposits	449,767			447,398			422,058			448,973			476,302
Short-term borrowings (2)	20,000			7,500			22,100			16,000			33,800
Other borrowings (2)	38,891			42,500			27,150			14,400			64,200
Total shareholders’ equity	57,293			54,185			55,103			52,888			49,877
Performance Ratios:
Return on average assets	0.32		%	0.19		%	0.04		%	0.03		%	(1.21		)%
Return on average total shareholders’ equity	3.20		%	1.92		%	0.38		%	0.38		%	(13.48		)%
Net interest margin (3)	3.61		%	3.62		%	3.94		%	3.77		%	3.84		%
Net interest spread (3)
Average during period	3.54		%	3.51		%	3.81		%	3.64		%	3.70		%
End of period	3.58		%	3.69		%	3.84		%	4.09		%	4.39		%
Net overhead ratio (4)	2.67		%	2.66		%	2.94		%	2.59		%	3.82		%
Average loan-to-average deposit ratio	101.57		%	99.91		%	98.68		%	95.97		%	105.32		%
Average interest bearing assets to average interest bearing liabilities	109.35		%	109.92		%	109.99		%	107.91		%	106.51		%
Efficiency ratio (5)	79.28		%	75.67		%	73.87		%	71.86		%	71.67		%
Asset Quality Ratios:
Non-performing loans to total loans (6)	0.34		%	0.59		%	1.05		%	1.02		%	1.11		%
Allowance for loan losses to:
Total loans (net of unearned income)	1.38		%	1.40		%	1.34		%	1.13		%	0.91		%
Non-performing loans	410.47		%	236.96		%	127.44		%	111.32		%	81.53		%
Net charge-offs to average loans	0.35		%	0.62		%	0.84		%	1.15		%	1.03		%
Non-performing assets to total assets	0.46		%	0.66		%	0.95		%	1.07		%	0.93		%
Capital Ratios:
Shareholders’ equity to assets (7)	10.05		%	9.77		%	10.39		%	9.86		%	8.39		%
Average equity to average assets (7)	9.92		%	10.08		%	10.12		%	9.09		%	9.00		%
Tier 1 capital (leverage ratio) (8)	10.0		%	9.9		%	10.2		%	10.1		%	8.9		%
Total risk-based capital (8)	16.1		%	16.3		%	15.4		%	14.1		%	11.0		%

(1) Earnings per share are based on the weighted average number of shares outstanding for the period.

(2) Consists of Federal Home Loan Bank term notes.

(3) Net interest margin represents net interest income as a percentage of average interest earning assets, and net interest rate spread represents the difference between the weighted average yield on interest earning assets and the weighted average cost of interest bearing liabilities.

(4) Net overhead ratio represents the difference between non-interest expense and non-interest income, divided by average assets.

(5) Efficiency ratio represents non-interest expense, divided by the sum of net interest income and non-interest income, excluding impairment losses from OTTI and Goodwill.

(6) Non-performing loans are either 90+ days past due or nonaccrual. Non-performing assets consist of non-performing loans plus other real estate owned plus other collateral owned.

(7) Presented on a consolidated basis.

(8) Presented on a Bank (i.e. regulatory) basis.

16

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following discussion sets forth management’s discussion and analysis of our consolidated financial condition and results of operations that should be read in conjunction with our consolidated financial statements, related notes, the selected financial data and the statistical information presented elsewhere in this report for a more complete understanding of the following discussion and analysis. Unless otherwise noted, years refer to the Company’s fiscal years ended September 30, 2014, 2013 and 2012.

PERFORMANCE SUMMARY

The following is a brief summary of some of the significant factors that affected our operating results in 2014. See the remainder of this section for a more thorough discussion. We reported net income of $1,783 for the year ended September 30, 2014, compared to net income of $1,047 for the year ended September 30, 2013. Basic earnings per share were $0.35 for 2014 compared to $0.20 for the year ended September 30, 2013. Diluted earnings per share were $0.34 for 2014 compared to $0.20 for the year ended September 30, 2013. Return on average assets for the year ended September 30, 2014 was 0.32%, compared to 0.19% for the year ended September 30, 2013. The return on average equity was 3.20% for 2014 and 1.92% for 2013. An annual cash dividend in the amount of $0.04 per share and $0.02 per share was paid in the fiscal year ended September 30, 2014 and 2013, respectively.

Key factors behind these results were:

• Net interest income was $19,758 for 2014, an increase of $495, or 2.57% from $19,263 for 2013. Interest income decreased to $24,033 from $24,575, or 2.21% from 2014 to 2013. Meanwhile, interest expense decreased to $4,275 during 2014 from $5,312, or 19.52% from 2014 to 2013.

• The net interest margin for 2014 was 3.61% compared to 3.62% for 2013. The 1 bp decrease in net interest margin was mainly attributable to a 3 bp increase in interest rate spread resulting from a 22 bp decline in return on interest earning assets, which was offset by a 25 bp decrease in the cost of interest bearing liabilities during 2014. Yield on loans decreased 40 bps and average rates paid on deposits decreased 28 bps year over year, respectively, during these two periods. Yields on investment securities decreased 4 bps year over year.

• Loan charge-offs decreased from a year ago resulting in net charge-offs of $1,584 for 2014, a decrease of $1,124, or 41.51%, compared to $2,708 for 2013. Non-performing loans decreased from $2,608 to $1,585, a $1,023 or 39.23% decrease from 2013 to 2014. Net loan charge-offs represented 0.35% of average loans outstanding in 2014, compared to 0.62% in 2013.

• Provision for loan losses was reduced to $1,910 for fiscal 2014, compared to $3,143 for fiscal 2013, due to improved asset quality.

• Non-interest income, which includes OTTI valuation losses, was $3,416 for 2014 and $3,051 for 2013. OTTI losses on securities decreased from $797 in 2013 to $78 in 2014. We realized $552 of net gains on the sale of available for sale securities in 2013 and $168 in net losses on the sale of available for sale securities in 2014.

• Non-interest expense was $18,434 for 2014, an increase of $945 over 2013.

• We recognized a tax provision of $1,047 and $635 for 2014 and 2013, respectively.

• Total loans were $470,366 at September 30, 2014, an increase of $29,503, or 6.69% from their levels at September 30, 2013. Total deposits were $449,767 as of September 30, 2014, compared to $447,398 at September 30, 2013, an increase of $2,369, or 0.53% from their levels at September 30, 2013.

CRITICAL ACCOUNTING ESTIMATES

Our consolidated financial statements are prepared in accordance with Accounting Standards Generally Accepted in the United States of America ("GAAP") as applied in the United States. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amount of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. Some of these estimates are more critical than others. Below is a discussion of our critical accounting estimates.

17

Allowance for Loan Losses.

We maintain an allowance for loan losses to absorb probable incurred losses in our loan portfolio. The allowance is based on ongoing, quarterly assessments of the estimated probable incurred losses in our loan portfolio. In evaluating the level of the allowance for loan loss, we consider the types of loans and the amount of loans in our loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral and prevailing economic conditions. We follow all applicable regulatory guidance, including the “Interagency Policy Statement on the Allowance for Loan and Lease Losses,” issued by the Federal Financial Institutions Examination Council (FFIEC). We believe that the Bank’s Allowance for Loan Losses Policy conforms to all applicable regulatory requirements. However, based on periodic examinations by regulators, the amount of the allowance for loan losses recorded during a particular period may be adjusted.

Our determination of the allowance for loan losses is based on (1) specific allowances for specifically identified and evaluated impaired loans and their corresponding estimated loss based on likelihood of default, payment history, and net realizable value of underlying collateral; and (2) a general allowance on loans not specifically identified in (1) above, based on historical loss ratios which are adjusted for qualitative and general economic factors. We continue to refine our allowance for loan losses methodology, with an increased emphasis on historical performance adjusted for applicable economic and qualitative factors.

Assessing the allowance for loan losses is inherently subjective as it requires making material estimates, including the amount and timing of future cash flows expected to be received on impaired loans, any of which estimates may be susceptible to significant change. In our opinion, the allowance, when taken as a whole, reflects estimated probable loan losses in our loan portfolio.

Investment Securities.

Management determines the appropriate classification of investment securities at the time of purchase and reevaluates such designation as of each statement of financial position date. Securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Investment securities not classified as held to maturity are classified as available for sale. Securities classified as available for sale are carried at fair value, with unrealized gains and losses reported in other comprehensive income (loss). Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities.

We evaluate all investment securities on a quarterly basis, and more frequently when economic conditions warrant, to determine if other-than-temporary impairment exists. Management’s evaluation of the portfolio and determination of whether there is an impairment is based on the following three criteria: (1) Bonds with an unrealized loss greater than 10 percent of the bond’s book value, (2) bonds with an unrealized loss greater than 5 percent and less than 10 percent of book value with a greater than 5 percent unrealized loss for 12 consecutive months, and (3) bonds with an unrealized loss greater than 5 percent for less than 12 months.

Current authoritative guidance provides that some portion of unrealized losses may be other-than-temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. The credit loss component is recorded in earnings as a component of other-than-temporary impairment in the consolidated statements of operations, while the loss component related to other market factors is recognized in other comprehensive income (loss), provided the Bank does not intend to sell the underlying debt security and it is “more likely than not” that the Bank will not have to sell the debt security prior to recovery of the unrealized loss.

We consider the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:

• The length of time, and extent to which, the fair value has been less than the amortized cost.

• Adverse conditions specifically related to the security, industry or geographic area.

• The historical and implied volatility of the fair value of the security.

• The payment structure of the debt security and the likelihood of the issuer or underlying borrowers being able to make payments that may increase in the future.

• The failure of the issuer of the security or the underlying borrowers to make scheduled interest or principal payments.

• Any changes to the rating of the security by a rating agency.

• Recoveries or additional declines in fair value subsequent to the balance sheet date.

18

Interest income on securities for which other-than-temporary impairment has been recognized in earnings is recognized at a rate commensurate with the expected future cash flows and amortized cost basis of the securities after the impairment.

Gains and losses on the sale of securities are recorded on the trade date and determined using the specific-identification method.

To determine if other-than-temporary impairment exists on a debt security, the Bank first determines if (1) it intends to sell the security or (2) it is more likely than not that it will be required to sell the security before its anticipated recovery. If either of the foregoing conditions is met, the Bank will recognize other-than-temporary impairment in earnings equal to the difference between the security’s fair value and its adjusted cost basis. If neither of the foregoing conditions is met, the Bank determines (a) the amount of the impairment related to credit loss and (b) the amount of the impairment due to all other factors. The difference between the present values of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the amount of the other-than-temporary impairment that is recognized in earnings and is a reduction to the cost basis of the security. The amount of the total impairment related to all other factors (excluding credit loss) is included in other comprehensive income (loss).

We monitor our portfolio investments on an on-going basis and we have historically obtained quarterly independent valuations of our non-agency residential mortgage-backed securities. This analysis was utilized to ascertain whether any decline in market value was other-than-temporary. In determining whether an impairment is other-than-temporary, we consider the following factors: the length of time and the extent to which the market value has been below cost; recent events specific to the issuer including investment downgrades by rating agencies and economic conditions within the issuer’s industry; whether it is more likely than not that we will be required to sell the security before there would be a recovery in value; and the credit performance of the underlying collateral backing the securities, including delinquency rates, cumulative losses to date, and prepayment speed.

The independent valuation process included:

• Obtaining individual loan level data directly from servicers and trustees, and making assumptions regarding the frequency of foreclosure, loss severity and conditional prepayment rate (for both the entire pool and the loan group pertaining to the bond we hold).

• Projecting cash flows based on these assumptions and stressing the cash flows under different time periods and requirements based on the class structure and credit enhancement features of the bond we hold.

• Identifying various price/yield scenarios based on the Bank’s book value and valuations based on both hold-to-maturity and current free market trade scenarios. Discount rates were determined based on the volatility and complexity of the security and the yields demanded by buyers for these or similar securities in the market at the time of the valuation.

For securities that are considered other-than-temporarily impaired and for which we have the ability and intent to hold these securities until the recovery of our amortized cost basis, we recognize other-than-temporary impairment in accordance with accounting principles generally accepted in the United States. Under these principles, we separate the amount of the other-than-temporary impairment into the amount that is credit related and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of expected future cash flows. The amount due to other factors is recognized in other comprehensive income (loss).

Foreclosed and Repossessed Properties.

Foreclosed and repossessed properties acquired through or in lieu of loan foreclosures or repossessions are initially recorded at the lower of carrying cost or fair value, less estimated costs to sell, which establishes a new cost basis. Fair value is determined using a market valuation determined by third party appraisals or broker estimates. If fair value declines subsequent to foreclosure, a write-down is recorded through expense based on an updated third party appraisal less estimated selling costs.

Income Taxes.

Amounts provided for income tax expenses are based on income reported for financial statement purposes and do not necessarily represent amounts currently payable under tax laws. Deferred income taxes, which arise principally from temporary differences between the amounts reported in the financial statements and the tax basis of certain assets and liabilities, are included in the amounts provided for income taxes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and tax planning strategies which will create taxable income during the periods in which those temporary differences become deductible. Management considers the

19

scheduled reversal of deferred tax liabilities, projected future taxable income, and if necessary, tax planning strategies in making this assessment.

The assessment of tax assets and liabilities involves the use of estimates, assumptions, interpretations, and judgments concerning certain accounting pronouncements and application of specific provisions of federal and state tax codes. There can be no assurance that future events, such as court decisions or positions of federal and state taxing authorities, will not differ from management’s current assessment, the impact of which could be material to our consolidated results of our operations and reported earnings. We believe that the deferred tax assets and liabilities are adequate and properly recorded in the accompanying consolidated financial statements. As of September 30, 2014, management does not believe a valuation allowance related to the realizability of its deferred tax assets is necessary.

Intangible Assets.

Intangible assets consist primarily of core deposit intangibles resulting from several bank acquisitions. Core deposit intangibles are recorded as an asset on our consolidated balance sheets, and are amortized on a straight-line basis over their estimated remaining useful lives, which were initially determined at the time of acquisition. See Note 1; “Nature of Business and Summary of Significant Accounting Policies” and Note 6; “Intangible Assets” to our consolidated financial statements.

STATEMENT OF OPERATIONS ANALYSIS

2014 compared to 2013

Unless otherwise stated, all monetary amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, other than share, per share and capital ratio amounts, are stated in thousands.

Net Interest Income. Net interest income represents the difference between the dollar amount of interest earned on interest bearing assets and the dollar amount of interest paid on interest bearing liabilities. The interest income and expense of financial institutions are significantly affected by general economic conditions, competition, policies of regulatory authorities and other factors.

Interest rate spread and net interest margin are used to measure and explain changes in net interest income. Interest rate spread is the difference between the yield on interest earning assets and the rate paid for interest bearing liabilities that fund those assets. Net interest margin is expressed as the percentage of net interest income to average interest earning assets. Net interest margin exceeds interest rate spread because non-interest bearing sources of funds (“net free funds”), principally demand deposits and stockholders’ equity, also support interest earning assets. The narrative below discuses net interest income, interest rate spread, and net interest margin.

Net interest income was $19,758 for 2014, compared to $19,263 for 2013. The net interest margin for 2014 was 3.61% compared to 3.62% for 2013. The 1 bp decrease in net interest margin was mainly attributable to a 3 bp increase in interest rate spread resulting from a 22 bp decline in return on interest earning assets, which was offset by a 25 bp decrease in the cost of interest bearing liabilities during 2014. Prevailing market interest rates remain at historically low levels. As a result, on average, both our interest earning assets and interest bearing liabilities were repriced at lower interest rates during 2014.

As shown in the rate/volume analysis table below, positive volume changes resulted in a $1,048 increase in net interest income in 2014. Average loan volume increases were due to commercial real estate and indirect consumer loan growth in the current fiscal year over the prior fiscal year, arising from management's strategy to continue to diversify its credit portfolio. Interest bearing liabilities volume increases were primarily due to increases in FHLB advances, which represented the most cost efficient funding option for the afore-mentioned loan growth. The increase and changes in the composition of interest earning assets resulted in a $542 decrease in interest income for 2014, offset by a $1,037 decrease in interest expense due to the composition change in interest bearing liabilities. Rate changes on interest earning assets caused a decrease in interest income by $1,727, but were partially offset by rate changes on interest bearing liabilities that reduced interest expense by $1,174, for a net impact of a $553 decrease in net interest income due to changes in interest rates between 2014 and 2013.

For 2014, the yield on interest earning assets declined to 4.39% from 4.61% for 2013. This was caused primarily by a decrease of 40 bp in the loan yield and a 4 bp decline in the yield on investment securities, both reflecting sustained low market interest rates and a continued commitment to stronger credit quality. The average loan yield was 5.00% in 2014 and 5.40% in 2013, respectively. Competitive pricing on new and refinanced loans which resulted in loan growth at lower rates, as well as increased prepayments due to the current low rate environment, both contributed to reduced loan yields in 2014. Yields on securities decreased largely due to increases in holdings of lower risk and lower yielding securities, as well as volatility in prepayments.

20

For 2014, the cost of interest bearing liabilities decreased 25 bps from 1.10% in 2013, to 0.85%, resulting, in part, from a continuing decrease in interest rates, generally, in 2014. The combined average cost of interest bearing deposits was 0.82%, down 28 bp from 2013, primarily resulting from the continued low short-term interest rate environment during 2014. The average rate paid on FHLB advances increased to 1.10% in 2014 from 1.07% in 2013. The primary factor contributing to the increase in interest rate spread between the periods was an increase in the average balance of outstanding higher rate longer term FHLB borrowings.

We have remained liability sensitive in the short term during the most recent two fiscal years, in which interest rates have declined to historically low levels. However, continued low interest rates will likely reduce our net interest margin.

Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following table shows interest income from average interest earning assets, expressed in dollars and yields, and interest expense on average interest bearing liabilities, expressed in dollars and rates. Also presented is the weighted average yield on interest earning assets, rates paid on interest bearing liabilities and the resultant spread at September 30 for each of the last three fiscal years shown below. No tax equivalent adjustments were made. Non-accruing loans have been included in the table as loans carrying a zero yield.

Average interest earning assets were $546,835 in 2014 compared to $532,505 in 2013. Average loans outstanding increased to $451,933 in 2014 from $429,403 in 2013. Average loans to average interest bearing assets increased to 83% in 2014 from 81% in 2013. Interest income on loans decreased $589, of which $1,181 related to the increase in average outstanding balances and $1,770 related to a reduction in interest income due to lower yields on such loans. Increases in average loans outstanding in 2014 were the result of commercial real estate and indirect consumer loan growth. Balances of securities increased $1,569 on average between the periods due to market opportunities and liquidity reasons. Interest income on securities increased $28 from volume changes and decreased $29 from the impact of the rate environment, for a net $1 decrease in interest income on securities in our investment portfolio between 2014 and 2013.

Average interest bearing liabilities increased $15,620 in 2014 from their 2013 levels, while average net free funds (the total of non-interest bearing demand deposits, accrued expenses, other liabilities and stockholders’ equity less non-interest earning assets) increased $2,047. The increase in average interest bearing liabilities was primarily due to increases in demand deposits and FHLB advances. The increase in average net free funds was primarily due to a decrease in non-interest earning assets. Average interest bearing deposits increased $4,537, or 1.04% to $440,242. Interest expense on interest bearing deposits increased $15 during 2014 from the volume and mix changes and decreased $1,191 from the impact of the rate environment, resulting in an aggregate decrease of $1,176 in interest expense on interest bearing deposits.

21

	Year ended September 30, 2014						Year ended September 30, 2013						Year ended September 30, 2012
	Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate
Average interest earning assets:
Cash and cash equivalents	$	15,242	$	20	0.13	%	$	24,326	$	41	0.17	%	$	21,947	$	32	0.15	%
Loans receivable	451,933		22,612		5.00	%	429,403		23,201		5.40	%	429,727		25,579		5.95	%
Interest bearing deposits	551		6		1.09	%	1,781		15		0.84	%	3,955		29		0.73	%
Investment securities	75,072		1,306		1.74	%	73,503		1,307		1.78	%	60,159		1,435		2.39	%
Non-marketable equity securities, at cost	4,037		89		2.20	%	3,492		11		0.32	%	4,989		10		0.20	%
Total interest earning assets	$	546,835	$	24,033	4.39	%	$	532,505	$	24,575	4.61	%	$	520,777	$	27,085	5.20	%
Average interest bearing liabilities:
Savings accounts	$	25,814	$	19	0.07	%	$	24,550	$	14	0.06	%	$	24,278	$	19	0.08	%
Demand deposits	36,008		90		0.25	%	30,080		7		0.02	%	26,992		4		0.01	%
Money market accounts	142,116		542		0.38	%	146,640		775		0.53	%	147,760		854		0.58	%
CD’s	214,461		2,705		1.26	%	211,094		3,636		1.72	%	211,745		4,068		1.92	%
IRA’s	21,843		259		1.19	%	23,341		359		1.54	%	24,171		417		1.73	%
Total deposits	$	440,242	$	3,615	0.82	%	$	435,705	$	4,791	1.10	%	$	434,946	$	5,362	1.23	%
FHLB Advances	59,837		660		1.10	%	48,754		521		1.07	%	38,527		1,229		3.19	%
Total interest bearing liabilities	$	500,079	$	4,275	0.85	%	$	484,459	$	5,312	1.10	%	$	473,473	$	6,591	1.39	%
Net interest income			$	19,758					$	19,263					$	20,494
Interest rate spread					3.54	%					3.51	%					3.81	%
Net interest margin					3.61	%					3.62	%					3.94	%
Average interest earning assets to average interest bearing liabilities					109.35	%					109.92	%					109.99	%

22

Rate/Volume Analysis. The following table presents the dollar amount of changes in interest income and interest expense for the components of interest earning assets and interest bearing liabilities that are presented in the preceding table. For each category of interest earning assets and interest bearing liabilities, information is provided on changes attributable to: (1) changes in volume, which are changes in the average outstanding balances multiplied by the prior period rate (i.e. holding the initial rate constant); and (2) changes in rate, which are changes in average interest rates multiplied by the prior period volume (i.e. holding the initial balance constant). Changes due to both rate and volume which cannot be segregated have been allocated in proportion to the relationship of the dollar amounts of the change in each.

	Year ended September 30, 2014 v. 2013 Increase (decrease) due to									Year ended September 30, 2013 v. 2012 Increase (decrease) due to
	Volume (1)			Rate (1)			Total Increase / (Decrease)			Volume (1)			Rate (1)			Total Increase / (Decrease)
Interest income:
Cash and cash equivalents	$	(13	)	$	(8	)	$	(21	)	$	4		$	5		$	9
Loans receivable	1,181			(1,770		)	(589		)	(19		)	(2,359		)	(2,378		)
Interest bearing deposits	(13		)	4			(9		)	(18		)	4			(14		)
Investment securities	28			(29		)	(1		)	285			(413		)	(128		)
Non-marketable equity securities, at cost	2			76			78			(4		)	5			1
Total interest earning assets	$	1,185		$	(1,727	)	$	(542	)	$	248		$	(2,758	)	$	(2,510	)
Interest expense:
Savings accounts	$	1		$	4		$	5		$	—		$	(5	)	$	(5	)
Demand deposits	2			81			83			—			3			3
Money market accounts	(23		)	(210		)	(233		)	(6		)	(73		)	(79		)
CD’s	57			(988		)	(931		)	(12		)	(420		)	(432		)
IRA’s	(22		)	(78		)	(100		)	(14		)	(44		)	(58		)
Total deposits	15			(1,191		)	(1,176		)	(32		)	(539		)	(571		)
FHLB Advances	122			17			139			274			(982		)	(708		)
Total interest bearing liabilities	137			(1,174		)	(1,037		)	242			(1,521		)	(1,279		)
Net interest income (loss)	$	1,048		$	(553	)	$	495		$	6		$	(1,237	)	$	(1,231	)

(1) the change in interest due to both rate and volume has been allocated in proportion to the relationship to the dollar amounts of the change in each.

Provision for Loan Losses. We determine our provision for loan losses (“provision”, or “PLL”) based on our desire to provide an adequate allowance for loan losses (“ALL”) to reflect probable incurred credit losses in our loan portfolio. Based on increased historical charge off ratios and the negative influence of certain qualitative and historical factors discussed above under “Critical Accounting Estimates—Allowance for Loan Losses”, the provision for loan losses necessary to ensure an adequate allowance for loan losses continues to remain at elevated levels compared to industry averages.

Net loan charge-offs for the years ended September 30, 2014 and 2013 were $1,584 and $2,708, respectively. Net charge-offs to average loans were 0.35% for 2014 compared to 0.62% for 2013. For 2014, non-performing loans decreased by $1,023 to $1,585 from $2,608 at September 30, 2013. Refer to the “Risk Management and the Allowance for Loan Losses” section below for more information related to non-performing loans.

We recorded provisions for loan losses of $1,910 and $3,143 for the years ended September 30, 2014 and 2013, respectively. Management believes that the provision taken for the year ended September 30, 2014 is adequate in view of the present condition of the loan portfolio and the sufficiency of collateral supporting non-performing loans. We are continually monitoring non-performing loan relationships and will make provisions, as necessary, if the facts and circumstances change. In addition, a decline in the quality of our loan portfolio as a result of general economic conditions, factors affecting particular borrowers or our market areas, or otherwise, could all affect the adequacy of our ALL. If there are significant charge-offs against the ALL, or we otherwise determine that the ALL is inadequate, we will need to record an additional PLL in the future.

23

See Note 1 “Nature of Business and Summary of Significant Accounting Policies - Allowance for Loan Losses” to our consolidated financial statements for further analysis of the provision for loan losses.

Non-Interest Income. The following table reflects the various components of non-interest income for the years ended September 30, 2014, 2013 and 2012 respectively.

	Twelve months ended
	September 30,									Change:
	2014			2013			2012			2014 over 2013		2013 over 2012
Noninterest Income:
Net loss on available for sale securities	$	(246	)	$	(245	)	$	(1,089	)	(0.41	)%	77.50	%
Service charges on deposit accounts	1,964			1,820			1,529			7.91	%	19.03	%
Loan fees and service charges	904			768			621			17.71	%	23.67	%
Other	794			708			611			12.15	%	15.88	%
Total non-interest income	$	3,416		$	3,051		$	1,672		11.96	%	82.48	%

Non-interest income was $3,416 for the year ended September 30, 2014, an increase of $365 over the year ended September 30, 2013. During the year ended September 30, 2014, we recorded other-than-temporary impairment (“OTTI”) on available for sale securities of $78, compared to $797 of OTTI recorded during the year ended September 30, 2013, due to a smaller portfolio in our assets subject to OTTI arising from amortization and sale of the entire non-agency mortgage-backed securities portfolio during fiscal 2014. Further, we incurred a net realized loss on the sale of available for sale securities of $168 for the year ended September 30, 2014, compared to a net realized gain on the sale of available for sale securities in the amount of $552 for the year ended September 30, 2013. Service charges on deposit accounts increased during fiscal 2014 due to new deposit products and services. Loan fees and service charges increased due to origination and loan fees related to new commercial and agricultural loan products.

Non-Interest Expense. The following table reflects the various components of non-interest expense for the years ended September 30, 2014, 2013 and 2012, respectively.

	Years ended									Change:
	September 30,									2014 over		2013 over
	2014			2013			2012			2013		2012
Noninterest Expense:
Salaries and related benefits	$	9,287		$	9,068		$	8,502		2.42	%	6.66	%
Occupancy	2,631			2,493			2,453			5.54	%	1.63	%
Office	1,499			1,223			1,191			22.57	%	2.69	%
Data processing	1,531			1,657			1,499			(7.60	)%	10.54	%
Amortization of core deposit	57			56			209			1.79	%	(73.21	)%
Advertising, marketing and public relations	370			233			190			58.80	%	22.63	%
FDIC premium assessment	409			522			693			(21.65	)%	(24.68	)%
Professional services	552			707			1,187			(21.92	)%	(40.44	)%
Other	2,098			1,530			1,435			37.12	%	6.62	%
Total noninterest expense	$	18,434		$	17,489		$	17,359		5.40	%	0.75	%
Noninterest expense (annualized) / Average assets	3.28		%	3.22		%	3.25		%

Non-interest expense increased $945 or 5.40% to $18,434 for the year ended September 30, 2014 compared to $17,489 for the same period in 2013. The non-interest expense to average assets ratio was 3.28% for the year ended September 30, 2014 compared to 3.22% for the same period in 2013.

Advertising, marketing and public relations expense increased in the current fiscal year due to advertising costs for new deposit products and increased competition as well as advertising costs for the new traditional branch that was opened in

24

December 2013. Professional services expense decreased in the current fiscal year, primarily due to a legal settlement reimbursing us for legal fees incurred in a prior period. Other expenses increased in the current fiscal year due to modest increases in corporate expense accruals. Ongoing efforts to improve efficiency and cost-effectiveness in delivering banking products to our customers through a mix of traditional branch offices and online or mobile banking options is a priority of our board and management going forward.

Income Taxes. Income tax provision was $1,047 for the year ended September 30, 2014, compared to $635 for the year ended September 30, 2013. The increase in income tax provision resulted primarily from the income tax effects of income before income taxes of $2,830 for the year ended September 30, 2014 compared to income before income taxes of $1,682 for the same period in 2013.

See Note 1, “Nature of Business and Summary of Significant Accounting Policies” and Note 13, “Income Taxes” in the accompanying Notes to Consolidated Financial Statements for a further discussion of income tax accounting. Income tax expense recorded in the accompanying consolidated Statements of Operations involves interpretation and application of certain accounting pronouncements and federal and state tax codes and is, therefore, considered a critical accounting policy. We undergo examination by various taxing authorities. Such taxing authorities may require that changes in the amount of tax expense or the amount of the valuation allowance be recognized when their interpretations differ from those of management, based on their judgments about information available to them at the time of their examinations.

BALANCE SHEET ANALYSIS

Loans. Total loans outstanding, net of deferred loan fees and costs, increased to $470,366 at September 30, 2014, a 6.69% increase from their balance of $440,863 at September 30, 2013. The following table reflects the composition, or mix, of the loan portfolio at September 30, for the last five completed fiscal years:

	2014					2013					2012					2011					2010
	Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent
Real estate loans:
Consumer	$	223,025		47.4	%	$	252,958		57.4	%	$	272,441		63.7	%	$	275,149		63.7	%	$	262,495		57.5	%
Commercial/Agricultural	39,061			8.3	%	12,531			2.8	%	680			0.2	%	190			0.0	%	196			0.1	%
Total real estate loans	$	262,086		55.7	%	$	265,489		60.2	%	$	273,121		63.9	%	$	275,339		63.7	%	$	262,691		57.6	%
Consumer and other loans:
Automobile	12,810			2.7	%	12,662			2.9	%	13,932			3.3	%	15,716			3.6	%	18,542			4.1	%
Other secured personal loans	188,911			40.2	%	158,842			36.0	%	136,989			32.0	%	139,126			32.2	%	171,135			37.5	%
Unsecured personal loans	3,512			0.7	%	1,835			0.4	%	2,805			0.7	%	2,583			0.6	%	4,636			1.0	%
Total consumer and other loans	$	205,233		43.6	%	$	173,339		39.3	%	$	153,726		35.9	%	$	157,425		36.5	%	$	194,313		42.6	%
Gross loans	$	467,319				$	438,828				$	426,847				$	432,764				$	457,004
Net deferred loan costs (fees)	$	3,047		0.7	%	$	2,035		0.5	%	$	942		0.2	%	$	(1,018	)	(0.2	)%	$	(772	)	(0.2	)%
Total loans (net of unearned income and deferred expense)	$	470,366		100.0	%	$	440,863		100.0	%	$	427,789		100.0	%	$	431,746		100.0	%	$	456,232		100.0	%
Allowance for loan losses	$	(6,506	)			$	(6,180	)			$	(5,745	)			$	(4,898	)			$	(4,145	)
Total loans receivable, net	$	463,860				$	434,683				$	422,044				$	426,848				$	452,087

At September 30, 2014, real estate loans comprised $262,086, or 55.7% percent of total loans. These loans decreased $3,403 or 1.3% from their balance at September 30, 2013. Consumer real estate loans consist mainly of fixed-rate conventional home mortgages and home equity loans. In September 2014, the bank sold approximately $7.6 million in fixed rate longer term consumer real estate loans. Subsequent to the end of the fiscal year, the bank sold an additional $8.1 million in fixed rate longer term consumer real estate loans. Management believes these sale decisions better position the bank to increase profitability in a variety of interest rate scenarios. As of March 31, 2012, the Bank began offering consumer real estate balloon loans and as of September 30, 2014, there were $18,464 in outstanding balloon loan balances. In fiscal 2013, the Bank

25

expanded commercial real estate lending and as of September 30, 2014, commercial and agricultural real estate loans had increased to $39,061, secured primarily by residential one to four family and multi-family real estate.

Consumer and other loans (secured and unsecured) comprised $205,233, or 43.6% percent of total loans as of September 30, 2014. Consumer and other loans increased by $31,894, or 18.4% at September 30, 2014 from their 2013 fiscal year end balances. Consumer and other loans consist of short-term installment loans, direct and indirect personal property loans, and other personal, agricultural and C&I non-real estate loans. Increases in consumer and other loans resulted primarily from purchased and indirect consumer loans. Consumer loan demand in our local markets, generally, has remained slow, yet steady throughout 2014, and we anticipate this trend to continue into 2015.

Our loan portfolio is diversified by types of borrowers and industry groups within the market areas that we serve. Significant loan concentrations are considered to exist for a financial entity when the amounts of loans to multiple borrowers engaged in similar activities cause them to be similarly impacted by economic or other conditions. We have identified certain loan types within our loan portfolio, including one to four family real estate loans and recreational secured consumer loans that represent concentrations in our portfolio. At September 30, 2014, one to four family real estate loans totaled $223,025 or 47.4% of total loans, compared to $252,958 or 57.4% at September 30, 2013. At September 30, 2014, recreational secured consumer loans totaled $124,600 or 26.5% of total loans, compared to $105,156 or 23.9% of total loans at September 30, 2013. Management believes that no significant concentrations exist within our loan portfolio with respect to industry groups, borrower, geographic location or any other relevant factor. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” in our accompanying consolidated financial statements for tables and discussion regarding the composition of our loan portfolio.

The following table sets forth, for our last five fiscal years, fixed and adjustable rate loans in our loan portfolio:

	2014					2013					2012					2011					2010
	Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent
Fixed rate loans:
Real estate:
Consumer	$	219,977		46.8	%	$	250,718		56.9	%	$	269,368		63.0	%	$	272,073		63.0	%	$	259,468		56.9	%
Commercial/Agricultural	39,061			8.3	%	12,531			2.8	%	680			0.2	%	190			0.1	%	196			0.0	%
Total fixed rate real estate loans	259,038			55.1	%	263,249			59.7	%	270,048			63.2	%	272,263			63.1	%	259,664			56.9	%
Consumer and other loans	205,233			43.6	%	173,339			39.3	%	153,726			35.9	%	157,425			36.5	%	194,313			42.6	%
Total fixed rate loans	464,271			98.7	%	436,588			99.0	%	423,774			99.1	%	429,688			99.5	%	453,977			99.5	%
Adjustable rate loans:
Real estate:
Consumer	3,048			0.7	%	2,240			0.5	%	3,073			0.7	%	3,076			0.7	%	3,027			0.7	%
Commercial/Agricultural	—			0.0	%	—			0.0	%	—			0.0	%	—			0.0	%	—			0.0	%
Total adjustable rate real estate loans	3,048			0.7	%	2,240			0.5	%	3,073			0.7	%	3,076			0.7	%	3,027			0.7	%
Consumer and other loans	—			0.0	%	—			0.0	%	—			0.0	%	—			0.0	%	—			0.0	%
Total adjustable rate loans	3,048			0.7	%	2,240			0.5	%	3,073			0.7	%	3,076			0.7	%	3,027			0.7	%
Gross loans	467,319					438,828					426,847					432,764					457,004
Net deferred loan costs	3,047			0.6	%	2,035			0.5	%	942			0.2	%	(1,018		)	(0.2	)%	(772		)	(0.2	)%
Total loans (net of unearned income)	470,366			100.0	%	440,863			100.0	%	427,789			100.0	%	431,746			100.0	%	456,232			100.0	%
Allowance for loan losses	(6,506		)			(6,180		)			(5,745		)			(4,898		)			(4,145		)
Total loans receivable, net	$	463,860				$	434,683				$	422,044				$	426,848				$	452,087

26

Loan amounts and their contractual maturities for the years presented are as follows:

	Real estate								Consumer and other
	Consumer				Commercial/Agricultural				Automobile				Secured personal and other				Unsecured personal				Total
	Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate
2015 (1)	$	3,839	3.53	%	$	3,343	4.32	%	$	273	6.82	%	$	3,961	5.11	%	$	1,006	14.50	%	$	12,422	5.21	%
2016	1,840		4.75	%	—		—	%	1,455		6.56	%	2,805		7.59	%	571		8.08	%	6,671		6.62	%
2017	1,605		4.71	%	6,107		4.83	%	2,511		6.54	%	36,683		4.87	%	840		8.86	%	47,746		5.02	%
2018-2019	7,686		4.46	%	23,218		5.80	%	6,817		5.80	%	20,012		7.08	%	1,069		8.54	%	58,802		6.11	%
2020-2021	17,919		3.96	%	1,737		5.29	%	1,587		5.09	%	17,087		7.61	%	—		—	%	38,330		5.69	%
2022-2036	100,166		4.49	%	4,656		4.69	%	167		5.31	%	108,363		5.51	%	26		—	%	213,378		5.01	%
2037 and  after	89,970		5.11	%	—		—	%	—		—	%	—		—	%	—		—	%	89,970		5.11	%
	$	223,025	4.68	%	$	39,061	5.37	%	$	12,810	5.96	%	$	188,911	5.77	%	$	3,512	10.19	%	$	467,319	5.25	%

(1) Includes home equity lines of credit, loans having no stated maturity and overdraft loans.

Our management believes that the critical factors in the overall management of credit or loan quality are sound loan underwriting and administration, systematic monitoring of existing loans and commitments, effective loan review on an ongoing basis, recording an adequate allowance to provide for incurred loan losses, and reasonable non-accrual and charge-off policies.

Risk Management and the Allowance for Loan Losses. The loan portfolio is our primary asset subject to credit risk. To address this credit risk, we maintain an ALL for probable and inherent credit losses through periodic charges to our earnings. These charges are shown in our accompanying Consolidated Statements of Operations as Provision for Loan Losses. See “Provision for Loan Losses” above. We attempt to control, monitor and minimize credit risk through the use of prudent lending standards, a thorough review of potential borrowers prior to lending and ongoing and timely review of payment performance. Asset quality administration, including early identification of loans performing in a substandard manner, as well as timely and active resolution of problems, further enhances management of credit risk and minimization of loan losses. Any losses that occur and that are charged off against the ALL are periodically reviewed with specific efforts focused on achieving maximum recovery of both principal and interest on the affected loan.

At least quarterly, we review the adequacy of the ALL. Based on an estimate computed pursuant to the requirements of ASC 450-10, Accounting for Contingencies and ASC 310-10, Accounting by Creditors for Impairment of a Loan, the analysis of the ALL consists of three components: (i) specific credit allocation established for expected losses relating to specific individual loans for which the recorded investment in the loan exceeds its fair value; (ii) general portfolio allocation based on historical loan loss experience for significant loan categories; and (iii) general portfolio allocation based on qualitative factors such as economic conditions and other factors specific to the markets in which we operate. In addition, management continually evaluates our ALL methodology to assess whether modifications to our methodology are appropriate in light of market conditions, identifiable trends, regulatory pronouncements or other factors. We believe that any modifications or changes to the ALL methodology would be to enhance the reliability of the ALL.

The specific credit allocation for the ALL is based on a regular analysis of all loans that are considered impaired. In compliance with ASC 310-10, the fair value of the loan is determined based on either the present value of expected cash flows discounted at the loan’s effective interest rate, the market price of the loan, or, if the loan is collateral dependent, the fair value of the underlying loan collateral less the cost of sale. At September 30, 2014, we had 100 Troubled Debt Restructured (TDR) loans, all secured by real estate or personal property with an aggregate recorded investment of $5,581. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” of our accompanying consolidated financial statements for information on what we consider to be a TDR. The total for the 38 such individual TDR loans where estimated fair value was less than their book value (i.e. we deemed impairment to exist) was $2,809 for which $692 in specific ALL was recorded as of September 30, 2014. At September 30, 2014, there were 32 individual substandard loans, not considered TDRs, with an aggregate recorded investment of $120, where estimated fair value was less than their book value (i.e. we deemed impairment to exist). The total specific ALL recorded for the 32 such individual substandard loans was $40 as of September 30, 2014.

27

	9/30/2014		6/30/2014		Quarters ended 3/31/14		12/31/2013		9/30/2013
Component 1 - Specific credit allocation	$	732	818		904		1,051		$	983
Component 2 - General and unallocated allowance	5,774		5,520		5,392		5,234		5,197
Allowance for loan losses	$	6,506	$	6,338	$	6,296	$	6,285	$	6,180

At September 30, 2014, the allowance for loan losses was $6,506, or 1.38% of our total loan portfolio, compared to an allowance for loan losses of $6,180, or 1.40% of the total loan portfolio at September 30, 2013. This level was based on our analysis of the loan portfolio risk at each of September 30, 2014 and September 30, 2013, as discussed above.

During October 2012, the Bank entered into an agreement to purchase consumer loans from a third party on an ongoing basis. A Board of Director determinant was established to limit the purchase of these consumer loans under this arrangement, to a maximum of $40,000, which we expect to attain by June 2015. Pursuant to the ongoing loan purchase agreement, a restricted reserve account was established at 3% of the outstanding consumer loan balances purchased, up to a maximum of $1,000, with such percentage amount of the loans being deposited into a segregated reserve account. The funds in the reserve account are to be released to compensate the Bank for any purchased loans that are ultimately charged off. As of September 30, 2014, the balance of the consumer loans purchased was $32,812. The balance in the cash reserve account was $996, which is included in Deposits on the accompanying Consolidated Balance Sheet. The allowance for loan losses, less these third party loans, was 1.49% of total loans as of September 30, 2014.

All of the factors we take into account in determining the ALL in general categories are subject to change; thus the allocations are our best estimate of the loan loss categories in which the probable loss has occurred as of the date of our assessment. As loan balances and estimated losses in a particular loan type decrease or increase and as the factors and resulting allocations are monitored by management, changes in the risk profile of the various parts of the loan portfolio may be reflected in the allowance allocated. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. The unallocated portion of the ALL is intended to account for minor imprecision in the estimation process. In addition, management continues to refine the ALL estimation process as new information becomes available.

28

The following table identifies the various components of non-performing assets as of the dates indicated below:

	2014			2013			2012			2011			2010
Nonperforming assets:
Nonaccrual loans	$	1,184		$	2,125		$	4,508		$	4,400		$	5,084
Accruing loans past due 90 days or more	401			483			—			—			—
Total nonperforming loans (“NPLs”)	1,585			2,608			4,508			4,400			5,084
Other real estate owned	1,025			873			497			1,153			372
Other collateral owned	25			155			45			207			76
Total nonperforming assets (“NPAs”)	$	2,635		$	3,636		$	5,050		$	5,760		$	5,532
Troubled Debt Restructurings (“TDRs”)	$	5,581		$	8,618		$	8,135		$	6,662		$	2,714
Nonaccrual TDRs	$	249		$	1,108		$	1,329		$	2,206		$	—
Average outstanding loan balance	$	455,615		$	434,326		$	429,768		$	443,989		$	452,696
Loans, end of period (1)	470,366			440,863			427,789			431,746			456,232
Total assets, end of period	569,815			554,521			530,183			536,557			594,365
ALL, at beginning of period	6,180			5,745			4,898			4,145			1,925
Loans charged off:
Real estate loans	(1,238		)	(1,525		)	(1,984		)	(2,476		)	(1,168		)
Consumer loans	(689		)	(1,494		)	(1,965		)	(2,882		)	(3,608		)
Total loans charged off	(1,927		)	(3,019		)	(3,949		)	(5,358		)	(4,776		)
Recoveries of loans previously charged off:
Real estate loans	94			36			30			46			44
Consumer loans	249			275			326			201			51
Total recoveries of loans previously charged off:	343			311			356			247			95
Net loans charged off (“NCOs”)	(1,584		)	(2,708		)	(3,593		)	(5,111		)	(4,681		)
Additions to ALL via provision for loan losses charged to operations	1,910			3,143			4,440			5,864			6,901
ALL, at end of period	$	6,506		$	6,180		$	5,745		$	4,898		$	4,145
Ratios:
ALL to NCOs (annualized)	410.73		%	228.21		%	159.89		%	95.83		%	88.55		%
NCOs (annualized) to average loans	0.35		%	0.62		%	0.84		%	1.15		%	1.03		%
ALL to total loans	1.38		%	1.40		%	1.34		%	1.13		%	0.91		%
NPLs to total loans	0.34		%	0.59		%	1.05		%	1.02		%	1.11		%
NPAs to total assets	0.46		%	0.66		%	0.95		%	1.07		%	0.93		%
Total Assets:	$	569,815		$	554,521		$	530,183		$	536,557		$	594,365

(1) Total loans at September 30, 2014 include $32,413 in consumer and other loans purchased from a third party. See Note 3 in the accompanying Notes to Consolidated Financial Statements regarding the separate restricted reserve account established for these purchased consumer loans.

As the table above indicates, the ALL at September 30, 2014 was $6,506 compared with $6,180 at year-end 2013. Loans increased 6.69% in 2014, while the allowance as a percent of total loans was 1.38% at September 30, 2014 compared to 1.40% at year-end 2013. Loans 30 to 90 days past due decreased significantly during the year ended September 30, 2014 compared to the comparable prior year period, which management believes is indicative of a decreasing likelihood of loans migrating toward nonaccrual or nonperforming status in the future. We believe our improved credit and underwriting policies are supporting more effective lending decisions by the Bank, which increases the likelihood of improved loan quality going forward. Moreover, we believe the favorable trends noted in previous quarters regarding our nonperforming loans and nonperforming assets reflect our continued adherence to improved underwriting criteria and practices along with improvements in macroeconomic factors in our credit markets. The Bank increased its Commercial and Agricultural loan portfolios from last year as part of its strategic plan. The increased loan volume and introduction of new loan products carries an elevated level of

29

risk as the Bank doesn't have a long history in these business lines. However, we believe our current ALL is adequate to cover probable losses in our current loan portfolio.

For fiscal 2014, net real estate loan charge-offs represented 72% of the total net charge-offs and consumer and other loan charge-offs represented 28% of the total net-charge-offs. Net loan charge-offs were at lower levels in 2014 compared to 2013. Due to lower net charge offs, management believes that it is prudent to provide for loan losses at the same level as net loan charge offs. Certain external factors may result in higher future losses but are not readily determinable at this time, including, but not limited to: unemployment rates, increased taxes and continuing increased regulatory expectations with respect to ALL levels. As a result, our analysis may show a need to increase our ALL as a percentage of total loans and nonperforming loans for the near future. Loans charged-off are subject to periodic review and specific efforts are taken to achieve maximum recovery of principal, accrued interest and related expenses on the loans charged off.

Nonperforming Loans, Potential Problem Loans and Foreclosed Properties. We employ early identification of non-accrual and problem loans in order to minimize the risk of loss. Non-performing loans are defined as either 90 days or more past due or non-accrual. The accrual of interest income is discontinued according to the following schedules:

• Commercial Loans, including Agricultural and C&I loans, past due 90 days or more;

• Closed end consumer loans past due 120 days or more; and

• Real estate loans and open ended consumer loans past due 180 days or more.

When interest accruals are discontinued, interest credited to income is reversed. If collection is in doubt, cash receipts on non-accrual loans are used to reduce principal rather than recorded as interest income. Restructuring a loan typically involves the granting of some concession to the borrower involving a loan modification, such as modifying the payment schedule or making interest rate changes. Restructured loans may involve loans that have had a charge-off taken against the loan to reduce the carrying amount of the loan to fair market value as determined pursuant to ASC 310-10. Restructured loans that comply with the restructured terms are considered performing loans.

Non-performing loans decreased $1,023 (39.2%) during the year ended September 30, 2014 from their balances at 2013 fiscal year end. The non-performing loan relationships are secured primarily by collateral including residential real estate or the consumer assets financed by the loans.

Non-performing assets include non-performing loans, other real estate owned and other collateral owned. Our non-performing assets were $2,635 at September 30, 2014, or 0.46% of total assets. This represented a decrease from $3,636, or 0.66% of total assets, at September 30, 2013. The decrease since September 30, 2013 was primarily due to a decrease in non-performing loans as a result of overall credit quality improvement within our loan portfolio.

Other real estate owned and other collateral owned is comprised of foreclosed collateral assets held by the Bank until sold. Other real estate owned (OREO) increased by $152 and other collateral owned decreased by $130 during the year ended September 30, 2014 from their balances as of September 30, 2013. We continue to aggressively liquidate our OREO and other collateral owned as part of our overall credit risk strategy.

Investment Securities. We manage our securities portfolio in an effort to improve interest rate risk, enhance income, and provide liquidity. Our Investment portfolio is comprised of securities available for sale and securities held to maturity.

Securities held to maturity were $8,785 at September 30, 2014, compared with $0 at September 30, 2013. Securities available for sale, which represent the majority of our investment portfolio, were $62,189 at September 30, 2014, compared with $79,695 at September 30, 2013. The securities that comprised our non-agency residential mortgage-backed securities (MBS) portfolio were originally purchased throughout 2007 and early 2008 and were generally secured by prime 1-4 family residential mortgage loans. These securities were all rated “AAA” or the equivalent by major credit rating agencies at the time of their original purchase, but had been downgraded from investment grade to below investment grade in recent years. During the quarter ended March 31, 2014, the entire remaining book value of our non-agency residential MBS portfolio, which consisted of two remaining securities and totaled $1,504, was sold. The market for these securities recently improved due to general economic conditions. Taking into consideration these developments and other factors, we determined that it was still likely the Bank would not collect all amounts due according to the contractual terms of these securities. Therefore, the remaining non-agency residential MBS portfolio was sold at a loss of $183, which loss is included in net (loss) gain on sale of available for sale securities in the total non-interest income section of our accompanying Consolidated Statements of Operations during the year ended September 30, 2014. As part of our asset and liability management activities, we had previously reviewed our non-agency MBS portfolio on a quarterly basis. The results of our quarterly analysis indicated fair value adjustments and other-than-temporary impairment (“OTTI”) totaling $78 for the year ended September 30, 2014, compared to $1,412 for the year ended September 30, 2013.

30

As noted above, during the year ended September 30, 2014, the two remaining non-agency MBS securities, for which other-than-temporary impairment had been previously recorded, were sold. The following table is a roll forward of the amount of other-than-temporary impairment, related to credit losses, recognized in earnings during the year ended September 30, 2014.

September 30, 2013, balance of OTTI related to credit losses	$	1,250
Credit portion of OTTI on securities for which OTTI was not previously recognized	91
Cash payments received on a security in excess of the security’s book value adjusted for the previously recognized credit portion of OTTI	(13		)
Credit portion of OTTI on securities in default for which OTTI was previously recognized	—
Credit portion of OTTI previously recognized on securities sold during the period	(1,328		)
September 30, 2014, balance of OTTI related to credit losses	$	—

The amortized cost and market values of our investment securities by asset categories as of the dates indicated below were as follows:

Available for sale securities	Amortized Cost		Fair Value
September 30, 2014
U.S. government agency obligations	$	23,076	$	22,103
Obligations of states and political subdivisions	11,432		11,194
Mortgage-backed securities	29,058		28,827
Federal Agricultural Mortgage Corporation	71		65
Total available for sale securities	$	63,637	$	62,189
September 30, 2013
U.S. government agency obligations	$	29,702	$	27,866
Obligations of states and political subdivisions	11,647		10,970
Mortgage-backed securities	40,378		39,633
Non-agency mortgage-backed securities	1,842		1,226
Total available for sale securities	$	83,569	$	79,695

Held to maturity securities	Amortized Cost		Fair Value
September 30, 2014
Obligations of states and political subdivisions	$	1,465	$	1,464
Mortgage-backed securities	7,320		7,344
Total held to maturity securities	$	8,785	$	8,808
September 30, 2013
Obligations of states and political subdivisions	$	—	$	—
Mortgage-backed securities	—		—
Total held to maturity securities	$	—	$	—

The following tables show the fair value and gross unrealized losses of securities with unrealized losses at September 30, 2014 and 2013, respectively, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position:

31

	Less than 12 Months				12 Months or More				Total
Available for sale securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2014:
U.S. government agency obligations	$	—	$	—	$	22,103	$	973	$	22,103	$	973
Obligations of states and political subdivisions	574		1		8,817		254		9,391		255
Mortgage-backed securities	8,167		66		12,518		303		20,685		369
Federal Agricultural Mortgage Corporation	65		6		—		—		65		6
Total available for sale securities	$	8,806	$	73	$	43,438	$	1,530	$	52,244	$	1,603
September 30, 2013:
U.S. government agency obligations	$	27,866	$	1,836	$	—	$	—	$	27,866	$	1,836
Obligations of states and political subdivisions	9,320		585		1,650		92		10,970		677
Mortgage-backed securities	27,690		885		—		—		27,690		885
Non-agency mortgage-backed securities	—		—		1,226		616		1,226		616
Total available for sale securities	$	64,876	$	3,306	$	2,876	$	708	$	67,752	$	4,014

	Less than 12 Months				12 Months or More				Total
Held to maturity securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2014:
Obligations of states and political subdivisions	$	345	$	5	$	—	$	—	$	345	$	5
Mortgage-backed securities	3,364		9		—		—		3,364		9
Total held to maturity securities	$	3,709	$	14	$	—	$	—	$	3,709	$	14
September 30, 2013:
Obligations of states and political subdivisions	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—		—		—
Total held to maturity securities	$	—	$	—	$	—	$	—	$	—	$	—

The composition of our investment securities portfolio by credit rating as of the periods indicated below was as follows:

32

	September 30,
	2014				2013
Available for sale securities	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Agency	$	52,134	$	50,930	$	70,080	$	67,499
AAA	602		586		1,441		1,342
AA	9,553		9,343		8,685		8,196
A	919		905		1,192		1,119
BBB	—		—		—		—
Below investment grade	—		—		1,842		1,226
Non-rated	429		425		329		313
Total available for sale securities	$	63,637	$	62,189	$	83,569	$	79,695

	September 30,
	2014				2013
Held to maturity securities	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Agency	$	7,320	$	7,344	$	—	$	—
AAA	—		—		—		—
AA	880		882		—		—
A	235		237		—		—
BBB	—		—		—		—
Below investment grade	—		—		—		—
Non-rated	350		345		—		—
Total held to maturity securities	$	8,785	$	8,808	$	—	$	—

At September 30, 2014, securities in the amount of $4,606 were pledged against a line of credit with the Federal Reserve Bank of Minneapolis. As of September 30, 2014, this line of credit had a zero balance. The Bank has also pledged certain of its U.S. Government Agency securities as collateral against specific municipal deposits.

Intangible Assets. We have other intangibles of $161, comprised of core deposit intangible assets arising from various acquisitions from 2002 through 2008. Amortization expense, calculated on a straight line basis, was $57 and $56 for each of the years ended September 30, 2014 and 2013, respectively. Annually, we assess the reasonableness of the remaining useful life assumptions assigned to each core deposit intangible asset. No changes were made during 2014 in the remaining useful lives of our core deposit intangibles, which originally ranged from approximately 7 to 15 years.

Deposits. Deposits are our largest source of funds. Average total deposits for 2014 were $440,242, an increase of 1.04% from the level of average total deposits for 2013. Deposits increased to $449,767 at September 30, 2014, from $447,398 at September 30, 2013, due primarily to an increase in commercial and municipal deposits, mostly offset by the sale of deposits and branch closures. During the quarter ended June 30, 2013, we began offering money market accounts as an alternative deposit opportunity for municipalities within our branch network. Through the municipal deposit account relationships, we believe the Bank has become more visible within the communities we serve, while allowing a low cost funding opportunity and deposit portfolio diversification. As of September 30, 2014, the balance in the municipal money market accounts was approximately $16,187 and the balance in municipal certificate of deposit accounts was approximately $13,398.

Our objective is to grow core deposits and build customer relationships with convenience, customer service, and by expanding our deposit product offerings with competitive pricing. Management expects to continue to place emphasis on both retaining and generating additional core deposits in 2015 through competitive pricing of deposit products and through the branch delivery systems that we have already established.

Institutional certificates of deposit as a funding source increased $4,842 from their balance as of September 30, 2013. Institutional certificates of deposit remain an important part of our deposit mix, as we continue to pursue funding sources to lower the Bank's cost of funds. Brokered deposits, included in institutional certificates of deposit, were $11,960 at both September 30, 2014 and September 30, 2013. Brokered deposit levels are within all regulatory directives thereon.

33

Federal Home Loan Bank (FHLB) advances (borrowings). FHLB advances increased from $50,000 as of September 30, 2013, to $58,891 as of September 30, 2014, as we continue to utilize these advances, as necessary, to supplement core deposits to meet our funding and liquidity needs, and as we evaluate all options to lower the Bank's cost of funds.

Stockholders’ Equity. Total stockholders’ equity was $57,293 at September 30, 2014, versus $54,185 at September 30, 2013. The increase resulted from net income of $1,783 for the year ended September 30, 2014, along with an increase in other comprehensive income related to: (a) unrealized losses on available for sale securities, net of tax, of $1,509; (b) changes in unrealized gain, resulting from sale of available for sale securities, net of tax, of $101; and (c) changes for realized losses on available for sale securities for the OTTI write-down, net of tax, of $47.

Liquidity and Asset / Liability Management. Liquidity management refers to our ability to ensure cash is available in a timely manner to meet loan demand and depositors’ needs, and meet other financial obligations as they become due without undue cost, risk or disruption to normal operating activities. We manage and monitor our short-term and long-term liquidity positions and needs through a regular review of maturity profiles, funding sources, and loan and deposit forecasts to minimize funding risk. A key metric we monitor is our liquidity ratio, calculated as cash and investments with maturities less than one-year divided by deposits with maturities less than or equal to one-year. At September 30, 2014, our liquidity ratio was 9.91 percent, which was slightly below our targeted liquidity ratio of 10 percent.

Our primary sources of funds are: deposits; amortization, prepayments and maturities of outstanding loans; other short-term investments; and funds provided from operations. We use our sources of funds primarily to meet ongoing commitments, to pay maturing certificates of deposit and savings withdrawals, and to fund loan commitments. While scheduled payments from the amortization of loans and maturing short-term investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. Although $80,381 of our $246,459 (32.6%) CD portfolio will mature within the next 12 months, we have historically retained over 70 percent of our maturing CD’s. However, due to strategic pricing decisions regarding rate matching, our retention rate may decrease in the future due to our philosophy of building customer relationships – not just deposit accounts. Through new deposit product offerings to our branch customers, we are currently attempting to strengthen customer relationships while lengthening deposit maturities. In our present interest rate environment, and based on maturing yields, this should also improve our cost of funds. While we believe some of our in-store branches attract core deposits and enhance long-term liquidity, a key component to our broader liquidity management strategy, we will continue to analyze the profitability of our branch network and focus our resources on our most productive markets to enhance profitability and expand market share.

We maintain access to additional sources of funds including FHLB borrowings and lines of credit with the Federal Reserve Bank, US Bank and Bankers’ Bank. We utilize FHLB borrowings to leverage our capital base, to provide funds for our lending and investment activities, and to manage our interest rate risk. Our borrowing arrangement with the FHLB calls for pledging certain qualified real estate loans, and borrowing up to 75% of the value of those loans, not to exceed 35% of the Bank’s total assets. Currently, we have approximately $82,000 available under this arrangement. We also maintain lines of credit of $3,700 with the Federal Reserve Bank, $5,000 with US Bank and $13,500 with Bankers’ Bank as part of our contingency funding plan.

In reviewing our adequacy of liquidity, we review and evaluate historical financial information, including information regarding general economic conditions, current ratios, management goals and the resources available to meet our anticipated liquidity needs. Management believes that our liquidity is adequate and, to management’s knowledge, there are no known events or uncertainties that will result or are likely to reasonably result in a material increase or decrease in our liquidity.

Off-Balance Sheet Liabilities. Some of our financial instruments have off-balance sheet risk. These instruments include unused commitments for lines of credit, overdraft protection lines of credit and home equity lines of credit, as well as commitments to extend credit. As of September 30, 2014, the Company had approximately $16,119 in unused commitments, compared to approximately $12,678 in unused commitments as of September 30, 2013.

Capital Resources. As of September 30, 2014, our Tier 1 and Risk-based capital levels exceeded levels necessary to be considered “Well Capitalized” under Prompt Corrective Action provisions. Below are the amounts and ratios for our capital levels as of the dates noted below.

34

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action  Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio
As of September 30, 2014 (Audited)
Total capital (to risk weighted assets)	$	62,116,000	16.1	%	$	30,793,000	> =	8.0	%	$	38,491,000	> =	10.0	%
Tier 1 capital (to risk weighted assets)	57,283,000		14.9	%	15,396,000		> =	4.0	%	23,095,000		> =	6.0	%
Tier 1 capital (to adjusted total assets)	57,283,000		10.0	%	22,991,000		> =	4.0	%	28,739,000		> =	5.0	%
As of September 30, 2013 (Audited)
Total capital (to risk weighted assets)	$	59,297,000	16.3	%	$	29,182,000	> =	8.0	%	$	36,478,000	> =	10.0	%
Tier 1 capital (to risk weighted assets)	54,717,000		15.0	%	14,591,000		> =	4.0	%	21,887,000		> =	6.0	%
Tier 1 capital (to adjusted total assets)	54,717,000		9.9	%	22,220,000		> =	4.0	%	27,775,000		> =	5.0	%

At September 30, 2014, the Bank was categorized as "Well Capitalized" under Prompt Corrective Action Provisions, as determined by the OCC, our primary regulator.

35

Selected Quarterly Financial Data

The following is selected financial data summarizing the results of operations for each quarter in the years ended September 30, 2014 and 2013:

Year ended September 30, 2014:

	December 31,		March 31,		June 30,		September 30,
Interest income	$	6,083	$	5,874	$	5,970	$	6,106
Interest expense	1,103		1,042		1,046		1,084
Net interest income	4,980		4,832		4,924		5,022
Provision for loan losses	600		480		455		375
Net interest income after provision for loan losses	4,380		4,352		4,469		4,647
Non-interest income	876		632		921		987
Non-interest expense	4,781		4,479		4,498		4,676
Income before income tax expense	475		505		892		958
Provision for income tax	172		184		334		357
Net income	$	303	$	321	$	558	$	601
Basic earnings per share	$	0.06	$	0.06	$	0.11	$	0.12
Diluted earnings per share	$	0.06	$	0.06	$	0.11	$	0.11
Dividends paid	$	—	$	0.04	$	—	$	—

Year ended September 30, 2013:

	December 31,		March 31,		June 30,		September 30,
Interest income	$	6,370	$	6,098	$	5,973	$	6,134
Interest expense	1,409		1,329		1,298		1,276
Net interest income	4,961		4,769		4,675		4,858
Provision for loan losses	900		765		750		728
Net interest income after provision for loan losses	4,061		4,004		3,925		4,130
Non-interest income	760		696		689		906
Non-interest expense	4,392		4,157		4,359		4,581
Income before income tax expense	429		543		255		455
Provision for income tax	169		210		89		167
Net income	$	260	$	333	$	166	$	288
Basic earnings per share	$	0.05	$	0.06	$	0.03	$	0.06
Diluted earnings per share	$	0.05	$	0.06	$	0.03	$	0.06
Dividends paid	$	—	$	0.02	$	—	$	—

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our Risk When Interest Rates Change. The rates of interest we earn on assets and pay on liabilities generally are established contractually for a period of time. Market interest rates change over time and are not predictable or controllable. Accordingly, our results of operations, like those of other financial institutions, are impacted by changes in interest rates and the interest rate sensitivity of our assets and liabilities. Like other financial institutions, our interest income and interest expense are affected by general economic conditions and policies of regulatory authorities, including the monetary policies of the Federal Reserve. The risk associated with changes in interest rates and our ability to adapt to these changes is known as interest rate risk and is our most significant market risk.

How We Measure Our Risk of Interest Rate Changes. As part of our attempt to manage our exposure to changes in interest rates and comply with applicable regulations, we monitor our interest rate risk through several means including through the use of third party reporting software. In monitoring interest rate risk we continually analyze and manage assets and liabilities based on their payment streams and interest rates, the timing of their maturities, and their sensitivity to actual or potential changes in market interest rates.

36

In order to manage the potential for adverse effects of material and prolonged increases in interest rates on our results of operations, we adopted asset and liability management policies to better align the maturities and re-pricing terms of our interest earning assets and interest bearing liabilities. These policies are implemented by our Asset and Liability Management Committee. The Asset and Liability Management Committee is comprised of members of the Bank's senior management and the Bank's Board of Directors. The Asset and Liability Management Committee establishes guidelines for and monitors the volume and mix of our assets and funding sources, taking into account relative costs and spreads, interest rate sensitivity and liquidity needs. The Committee’s objectives are to manage assets and funding sources to produce results that are consistent with liquidity, cash flow, capital adequacy, growth, risk and profitability goals for the Bank. The Asset and Liability Management Committee meets on a regularly scheduled basis to review, among other things, economic conditions and interest rate outlook, current and projected liquidity needs and capital position, anticipated changes in the volume and mix of assets and liabilities and interest rate risk exposure limits versus current projections pursuant to net present value of portfolio equity analysis. At each meeting, the Committee recommends strategy changes, as appropriate, based on this review. The Committee is responsible for reviewing and reporting on the effects of the policy implementations and strategies to the Bank’s Board of Directors on a regularly scheduled basis.

In order to manage our assets and liabilities and achieve desired levels of liquidity, credit quality, cash flow, interest rate risk, profitability and capital targets, we have focused our strategies on:

• originating shorter-term secured consumer and commercial loans;

• managing our funding needs by utilizing core deposits, institutional certificates of deposits and borrowings as appropriate to extend terms and lock in fixed interest rates;

• reducing non-interest expense and managing our efficiency ratio by implementing technologies to enhance customer service and increase employee productivity;

• realigning supervision and control of our branch network by modifying their configuration, staffing, locations and reporting structure to focus resources on our most productive markets;

• managing our exposure to changes in interest rates, including, but not limited to the sale of longer term fixed rate consumer loans. In September 2014, the bank sold approximately $7.6 million in fixed rate longer term consumer real estate loans to lessen our exposure to changes in interest rates. Subsequent to the end of the fiscal year, the bank sold an additional $8.1 million in fixed rate longer term consumer real estate loans. Additional loan sales may occur in the future if the analysis proves advantageous to the Bank; and

• originating balloon mortgage loans with a term of 7 years or less to minimize the impact of sudden rate changes.

At times, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market conditions and competitive factors, the Asset and Liability Management Committee may determine to increase the Bank’s interest rate risk position somewhat in order to maintain or improve its net interest margin.

The following table sets forth, at September 30, 2014 (the most recent date available), an analysis of our interest rate risk as measured by the estimated changes in Economic Value of Equity (EVE) resulting from an immediate and permanent shift in the yield curve (up 300 basis points and down 100 basis points). As of September 30, 2014, due to the current level of interest rates, EVE estimates for decreases in interest rates greater than 100 basis points are not meaningful.

Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1)	Economic Value of Equity (EVE)							EVE Ratio (EVE as a % of Assets)
	Amount		Change			% Change		EVE Ratio		Change
	(Dollars in thousands)
+300 bp	$	22,109	$	(50,199	)	(69	)%	4.37	%	(812	)	bp
+200 bp	42,829		(29,479		)	(41	)%	8.04	%	(445	)
+100 bp	59,966		(12,342		)	(17	)%	10.75	%	(174	)
0 bp	72,308		—			—	%	12.49	%	—
-100 bp	78,457		6,149			9	%	13.19	%	70

(1) Assumes an immediate and parallel shift in the yield curve at all maturities.

Our overall interest rate sensitivity is demonstrated by net interest income shock analysis which measures the change in net interest income in the event of hypothetical changes in interest rates. This analysis assesses the risk of change in our net interest income over the next 12 months in the event of an immediate and parallel shift in the yield curve (up 300 basis points and down 100 basis points). The table below presents our projected change in net interest income for the various rate shock levels at September 30, 2014 (the most recent date available).

37

Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1)	Dollar Change in Net Interest Income (in thousands)			Percentage Change in Net Interest Income
+300 bp	$	(2,183	)	(10.06	)%
+200 bp	(1,050		)	(4.84	)%
+100 bp	(476		)	(2.19	)%
0 bp	(291		)	(1.34	)%
-100 bp	(380		)	(1.75	)%

(1) Assumes an immediate and parallel shift in the yield curve at all maturities.

As shown above, at September 30, 2014, the effect of an immediate 300 bp increase in interest rates would decrease our net interest income by $2,183 or 10.06%. The effect of an immediate 100 bp reduction in rates would decrease our net interest income by $380.

The assumptions used to measure and assess interest rate risk include interest rates, loan prepayment rates, deposit decay (runoff) rates, and the market values of certain assets under differing interest rate scenarios. Actual values may differ from those projections set forth above should market conditions vary from the assumptions used in preparing the analysis. Further, the computations do not contemplate any actions we may undertake in response to changes in interest rates.

38

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT BY CITIZENS COMMUNITY BANCORP, INC.’S MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining an effective system of internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. The Company’s system of internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. There are inherent limitations in the effectiveness of any system of internal control over financial reporting, including the possibility of human error and circumvention or overriding of controls. Accordingly, even an effective system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the polices or procedures may deteriorate.

Management assessed the Company’s systems of internal control over financial reporting as of September 30, 2014. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework Issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that as of September 30, 2014, the Company maintained effective internal control over financial reporting based on those criteria.

39

CITIZENS COMMUNITY BANCORP, INC.

December 8, 2014

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders, Audit Committee and Board of Directors

Citizens Community Bancorp, Inc. and Subsidiary

Eau Claire, WI

We have audited the accompanying consolidated balance sheets of Citizens Community Bancorp, Inc. and Subsidiary (the "company") as of September 30, 2014 and 2013, and the related consolidated statements of income, other comprehensive income (loss), changes in stockholders’ equity and cash flows for the years ended September 30, 2014, 2013 and 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of its internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Citizens Community Bancorp, Inc. and Subsidiary as of September 30, 2014 and 2013 and the results of their operations and cash flows for the years ended September 30, 2014, 2013 and 2012, in conformity with U.S. generally accepted accounting principles.

/s/ Baker Tilly Virchow Krause, LLP

Minneapolis, MN

December 8, 2014

40

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Balance Sheets

September 30, 2014 and September 30, 2013

(in thousands, except share data)

	September 30, 2014			September 30, 2013
Assets
Cash and cash equivalents	$	11,434		$	17,601
Other interest bearing deposits	245			1,988
Investment securities (at fair value of $70,997 and $79,695)	70,974			79,695
Non-marketable equity securities, at cost	5,515			3,300
Loans receivable	470,366			440,863
Allowance for loan losses	(6,506		)	(6,180		)
Loans receivable, net	463,860			434,683
Office properties and equipment, net	3,725			4,835
Accrued interest receivable	1,478			1,469
Intangible assets	161			218
Foreclosed and repossessed assets, net	1,050			1,028
Other assets	11,373			9,704
TOTAL ASSETS	$	569,815		$	554,521
Liabilities and Stockholders’ Equity
Liabilities:
Deposits	$	449,767		$	447,398
Federal Home Loan Bank advances	58,891			50,000
Other liabilities	3,864			2,938
Total liabilities	512,522			500,336
Stockholders’ equity:
Common stock—$0.01 par value, authorized 30,000,000; 5,167,061 and 5,154,891 shares issued and outstanding, respectively	52			51
Additional paid-in capital	54,257			54,116
Retained earnings	4,049			2,473
Unearned deferred compensation	(223		)	(169		)
Accumulated other comprehensive loss	(842		)	(2,286		)
Total stockholders’ equity	57,293			54,185
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	569,815		$	554,521

See accompanying notes to audited consolidated financial statements.

41

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Operations

Years Ended September 30, 2014, 2013 and 2012

(in thousands, except per share data)

	2014			2013			2012
Interest and dividend income:
Interest and fees on loans	$	22,612		$	23,201		$	25,579
Interest and dividends on investments	1,421			1,374			1,506
Total interest and dividend income	24,033			24,575			27,085
Interest expense:
Interest on deposits	3,615			4,791			5,362
Interest on borrowed funds	660			521			1,229
Total interest expense	4,275			5,312			6,591
Net interest income before provision for loan losses	19,758			19,263			20,494
Provision for loan losses	1,910			3,143			4,440
Net interest income after provision for loan losses	17,848			16,120			16,054
Non-interest income:
Total fair value adjustments and other-than-temporary impairment	(78		)	(1,412		)	461
Portion of loss recognized in other comprehensive income loss (gain) (before tax)	—			615			(1,793		)
Net (loss) gain on sale of available for sale securities	(168		)	552			243
Net loss on available for sale securities	(246		)	(245		)	(1,089		)
Service charges on deposit accounts	1,964			1,820			1,529
Loan fees and service charges	904			768			621
Other	794			708			611
Total non-interest income	3,416			3,051			1,672
Non-interest expense:
Salaries and related benefits	9,287			9,068			8,502
Occupancy	2,631			2,493			2,453
Office	1,499			1,223			1,191
Data processing	1,531			1,657			1,499
Amortization of core deposit intangible	57			56			209
Advertising, marketing and public relations	370			233			190
FDIC premium assessment	409			522			693
Professional services	552			707			1,187
Other	2,098			1,530			1,435
Total non-interest expense	18,434			17,489			17,359
Income before provision for income tax	2,830			1,682			367
Provision for income taxes	1,047			635			161
Net income attributable to common stockholders	$	1,783		$	1,047		$	206
Per share information:
Basic earnings	$	0.35		$	0.20		$	0.04
Diluted earnings	$	0.34		$	0.20		$	0.04
Cash dividends paid	$	0.04		$	0.02		$	—

See accompanying notes to audited consolidated financial statements.

42

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Other Comprehensive Income (Loss)

Years ended September 30, 2014, 2013 and 2012

(in thousands, except per share data)

	2014			2013			2012
Net income attributable to common stockholders	$	1,783		$	1,047		$	206
Other comprehensive income (loss), net of tax:
Securities available for sale
Net unrealized gains (losses) arising during period	1,509			(2,793		)	823
Reclassification adjustment for (losses) gains included in net income	(101		)	332			146
Change for realized losses on securities available for sale for other-than-temporary impairment (OTTI) write-down	47			478			799
Unrealized gains (losses) on securities	1,455			(1,983		)	1,768
Defined benefit plans:
Amortization of unrecognized prior service costs and net (losses) gains	(11		)	49			198
Total other comprehensive income (loss), net of tax	1,444			(1,934		)	1,966
Comprehensive income (loss)	$	3,227		$	(887	)	$	2,172

Reclassifications out of accumulated other comprehensive income (loss) for the twelve months ended September 30, 2014 were as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)			(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	(168	)		Net (loss) gain on sale of available for sale securities
Realized losses on securities available for sale for OTTI write-down	(78		)		Total fair value adjustments and other-than-temporary impairment
	(246		)
	98				Provision for income taxes
Total reclassifications for the period	$	(148	)		Net income attributable to common shareholders

(1)    Amounts in parentheses indicate decreases to profit/loss.

See accompanying notes to audited consolidated financial statements.

43

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statement of Changes in Stockholders’ Equity

Years Ended September 30, 2014, 2013 and 2012

(in thousands, except Shares)

					Additional Paid-In Capital			Retained Earnings			Unearned Deferred Compensation			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
	Common Stock
	Shares		Amount
Balance, October 1, 2011	5,133,570		$	51	$	53,934		$	1,323		$	(102	)	$	(2,318	)	52,888
Net income								206									206
Other comprehensive income, net of tax														1,966			1,966
Forfeiture of unvested shares - 520 shares	(520	)															—
Common stock awarded under recognition and retention plan - 2,500 shares	2,500				14						(14		)				—
Stock option expense					21												21
Amortization of restricted stock											22						22
Balance, September 30, 2012	5,135,550		$	51	$	53,969		$	1,529		$	(94	)	$	(352	)	$	55,103
Net income								1,047									1,047
Other comprehensive loss, net of tax														(1,934		)	(1,934		)
Forfeiture of unvested shares - 503 shares	(503	)															—
Surrender of vested shares - 639 shares	(639	)			(4		)										(4		)
Common stock awarded under recognition and retention plan - 20,483 shares	20,483				120						(120		)				—
Stock option expense					31												31
Amortization of restricted stock											45						45
Cash dividends ($0.02 per share)								(103		)							(103		)
Balance, September 30, 2013	5,154,891		$	51	$	54,116		$	2,473		$	(169	)	$	(2,286	)	$	54,185
Net income								1,783									1,783
Other comprehensive income, net of tax														1,444			1,444
Surrender of vested shares - 2,830 shares	(2,830	)			(22		)										(22		)
Common stock awarded under the equity incentive plan	15,000		1		120						(120		)				1
Stock option expense					43												43
Amortization of restricted stock											66						66
Cash dividends ($0.04 per share)								(207		)							(207		)
Balance, September 30, 2014	5,167,061		$	52	$	54,257		$	4,049		$	(223	)	$	(842	)	$	57,293

See accompanying notes to audited consolidated financial statements.

44

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Cash Flows

Years Ended September 30, 2014, 2013 and 2012

(in thousands, except per share data)

	2014			2013			2012
Cash flows from operating activities:
Net income attributable to common stockholders	$	1,783		$	1,047		$	206
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of premium/discount on securities	1,024			1,008			988
Depreciation	1,116			1,079			1,043
Provision for loan losses	1,910			3,143			4,440
Net realized loss (gain) on sale of securities	168			(552		)	(243		)
Other-than-temporary impairment on mortgage-backed securities	78			797			1,332
Amortization of core deposit intangible	57			56			209
Amortization of restricted stock	66			45			22
Stock based compensation expense	43			31			21
Loss on sale of office properties	323			168			134
Benefit (provision) for deferred income taxes	943			182			(1,829		)
Net gains from disposals of foreclosed properties	(94		)	(96		)	(64		)
Provision for valuation allowance on foreclosed properties	74			76			271
(Increase) decrease in accrued interest receivable and other assets	(474		)	488			2,874
Increase (decrease) in other liabilities	926			(834		)	(326		)
Total adjustments	6,160			5,591			8,872
Net cash provided by operating activities	7,943			6,638			9,078
Cash flows from investing activities:
Purchase of investment securities	(20,506		)	(71,544		)	(59,114		)
Purchase of bank owned life insurance	(3,000		)	(3,000		)	—
Net decrease (increase) in interest-bearing deposits	1,743			(1,988		)	9,543
Proceeds from sale of securities available for sale	23,491			44,780			27,065
Principal payments on investment securities	6,892			9,621			10,146
Proceeds from sale of non-marketable equity securities	—			500			1,987
Purchase of non-marketable equity securities	(2,215		)	—			—
Proceeds from sale of foreclosed properties	1,856			1,818			2,067
Net increase in loans	(33,076		)	(17,917		)	(1,203		)
Net capital expenditures	(485		)	(549		)	(473		)
Net cash received from sale of office properties	159			—			465
Net cash used in investing activities	(25,141		)	(38,279		)	(9,517		)
Cash flows from financing activities:
Net increase in Federal Home Loan Bank advances	8,891			750			18,850
Net increase (decrease) in deposits	2,369			25,340			(26,915		)
Surrender of restricted shares of common stock	(22		)	(4		)	—
Cash dividends paid	(207		)	(103		)	—
Net cash provided by (used in) financing activities	11,031			25,983			(8,065		)
Net decrease in cash and cash equivalents	(6,167		)	(5,658		)	(8,504		)
Cash and cash equivalents at beginning of period	17,601			23,259			31,763
Cash and cash equivalents at end of period	$	11,434		$	17,601		$	23,259
Supplemental cash flow information:
Cash paid during the year for:
Interest on deposits	$	3,612		$	3,667		$	5,360
Interest on borrowings	$	646		$	543		$	1,273
Income taxes	$	86		$	790		$	281
Supplemental noncash disclosure:
Transfers from loans receivable to foreclosed and repossessed assets	$	1,989		$	2,173		$	1,617

See accompanying notes to audited consolidated financial statements.

45

CITIZENS COMMUNITY BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of Citizens Community Federal N.A. (the “Bank”) included herein have been included by its parent company, Citizens Community Bancorp, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Citizens Community Bancorp (“CCB”) was a successor to Citizens Community Federal as a result of a regulatory restructuring into the mutual holding company form, which was effective on March 29, 2004. Originally, Citizens Community Federal was a credit union. In December 2001, Citizens Community Federal converted to a federal mutual savings bank. In 2004, Citizens Community Federal reorganized into the mutual holding company form of organization. In 2006, Citizens Community Bancorp completed its second-step mutual to stock conversion.

On April 16, 2014, the U.S. Office of the Comptroller of the Currency (the "OCC"), the primary federal regulator for

Citizens Community Bancorp, Inc. and Citizens Community Federal, provided written notice to the Bank of the OCC's approval for the Bank to convert to a national banking association (a "National Bank") and operate under the title of Citizens Community Federal National Association ("Citizens Community Federal N.A."). The consummation of the conversion to a National Bank was effective as of May 31, 2014.

On April 18, 2014, Citizens Community Bancorp, Inc. received written notice from the Federal Reserve Bank of

Minneapolis (the "FRB") notifying the Company of the FRB's approval of the Company becoming a bank holding company as

a result of the conversion of the Bank from a federally-chartered savings bank to a National Bank, which approval

was also effective as of May 31, 2014.

The consolidated income of the Company is principally derived from the income of the Bank, the Company’s wholly owned subsidiary. The Bank originates residential, commercial, agricultural, consumer and commercial and industrial (C&I) loans and accepts deposits from customers, primarily in Wisconsin, Minnesota and Michigan. The Bank operates 23 full-service offices; eight stand-alone locations and 15 branches, predominantly located inside Walmart Supercenters. In October 2014, we announced the closing of three in-store branches, effective January 2015; and the relocation of the Mankato, Minnesota branch to a new full-service traditional branch in Mankato, MN in 2015. We intend to review our branch network to deploy assets and capital to growth markets and exit markets where we have limited growth opportunities. Through all of our branch locations in Wisconsin, Minnesota and Michigan, we provide a variety of commercial and consumer banking products and services to customers, including online and mobile banking options.

The Bank is subject to competition from other financial institutions and non-financial institutions providing financial products. Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred through December 8, 2014, the date on which the financial statements were available to be issued. As of December 8, 2014, there were no subsequent events which required recognition or disclosure.

Unless otherwise stated, all monetary amounts in these Notes to Consolidated Financial Statements, other than share, per share and capital ratio amounts, are stated in thousands.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Citizens Community Federal N.A. All significant inter-company accounts and transactions have been eliminated.

Use of Estimates—Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, valuation of acquired intangible assets, useful lives for depreciation and amortization, indefinite-lived intangible assets and long-lived assets, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: those items described under the caption “Risk Factors” in Item 1A of the accompanying annual report on Form 10-K for the year ended September 30, 2014 and external market factors such as market interest rates and employment rates, changes to operating policies and procedures, and changes in applicable banking regulations. Actual results may ultimately differ from

46

estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period.

Cash and Cash Equivalents—For purposes of reporting cash flows in the consolidated financial statements, cash and cash equivalents include cash, due from banks, and interest bearing deposits with original maturities of three months or less.

Investment Securities; Held to Maturity and Available for Sale – Management determines the appropriate classification of investment securities at the time of purchase and reevaluates such designation as of the date of each statement of financial position date. Securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Investment securities not classified as held to maturity are classified as available for sale. Available for sale securities are stated at fair value, with unrealized holding gains and losses deemed other than temporarily impaired due to non-credit issues being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s earnings in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities. Gains and losses on sales of investment securities are recorded on the trade date and are determined using the specific identification method.

Declines in the fair value of securities below their cost that are other than temporary due to credit issues are reflected as “Net (loss) gain on available for sale securities” in the accompanying Consolidated Statement of Operations. In estimating other-than-temporary impairment (OTTI), management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value. The difference between the present values of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the portion of OTTI that is recognized in operations and is a reduction to the cost basis of the security. The portion of other-than-temporary impairment related to all other factors is included in other comprehensive income (loss), net of the related tax effect.

Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, and deferred loan fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments.

Interest income on commercial, mortgage and consumer loans is discontinued according to the following schedules:

•Commercial loans, including Agricultural and C&I loans, past due 90 days or more;

•Closed end consumer loans past due 120 days or more; and

•Real estate loans and open ended consumer loans past due 180 days or more.

Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account current with the contractual term of the loan and a 6 month payment history has been established. Interest on impaired loans considered troubled debt restructurings (“TDRs”) or substandard, less than 90 days delinquent, is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment. Substandard loans, as defined by the OCC, our primary banking regulator, are loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.

Real estate loans and open ended consumer loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. Closed end consumer loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 120 days or more. Commercial loans, including Agricultural and C&I loans, are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 90 days or more.

Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in our loan portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the required ALL balance taking into account the following factors: past loan loss experience; the nature, volume and composition of the loan

47

portfolio; known and inherent risks in the portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors determined by management. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the loan terms is not expected. Impaired loans consist of all TDRs, as well as individual substandard loans not considered a TDR, when full payment under the loan terms is not expected. All TDRs are individually evaluated for impairment. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for more information on what we consider to be a TDR. If a TDR or substandard loan is deemed to be impaired, a specific ALL allocation is established so that the loan is reported, net, at either (a) the present value of estimated future cash flows using the loan’s existing rate; or (b) at the fair value of any collateral less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 90+ days past due, and certain TDRs that are less than 90+ days delinquent, the likelihood of the loan migrating to over 90 days past due is also taken into account when determining the specific ALL allocation. Large groups of smaller balance homogeneous loans, such as non-TDR commercial, consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Non-marketable Equity Securities — Non-marketable equity securities are comprised of Federal Home Loan Bank (FHLB) stock and Federal Reserve Bank (FRB) stock, and are carried at cost in the amounts of $3,820 and $1,695 respectively.

The Bank is a member of the FHLB system. Members are required to own a certain amount of FHLB stock based on the Bank’s level of borrowings from the FHLB and other factors, and may invest in additional amounts of FHLB stock. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on the ultimate recovery of par value. The determination of whether a decline affects the ultimate recovery is influenced by criteria such as: (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount and length of time a decline has persisted; (2) the impact of legislative and regulatory changes on the FHLB; and (3) the liquidity position of the FHLB. Both cash and stock dividends are reported as income.

FHLB stock is evaluated quarterly for impairment. Quarterly cash dividends were paid in November 2013 and in February 2014 at an annualized dividend rate of 0.30%. Quarterly cash dividends were paid in May 2014 and in August 2014 at an annualized dividend rate of 0.50% per share. Based on management’s quarterly evaluation, no impairment has been recorded on these securities.

As a National Banking Association, the Bank must be a member of the Federal Reserve system. Each member bank is required to subscribe to Federal Reserve Stock in an amount equal to 6 percent of its capital and surplus. Although the par value of the stock is $100 per share, banks (including the Bank) pay only $50 per share at the time of purchase, with the understanding that the other half of the subscription amount is subject to call at any time. Dividends are paid at the statutory rate of 6 percent per annum, or $1.50 per share semi-annually on the last business day of June and December.

Foreclosed and Repossessed Assets, net – Assets acquired through foreclosure or repossession, are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a valuation allowance is recorded through expense. Costs incurred after acquisition are expensed, and are included in "non-interest expense, other" on the accompanying Consolidated Statements of Operations. Foreclosed and repossessed asset balances were $1,050 and $1,028 at September 30, 2014 and September 30, 2013, respectively.

Office Properties and Equipment—Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of office properties and equipment are reflected in income. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 10 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line (or accelerated) method with useful lives ranging from 3 to 10 years. Leasehold improvements are depreciated using the straight-line (or accelerated) method with useful lives based on the lesser of (a) the estimated life of the lease, or (b) the estimated useful life of the leasehold improvement.

Intangible Assets—Intangible assets consist of core deposit intangible assets arising from branch acquisitions. They were initially measured at fair value and amortized over their estimated useful lives, ranging from 7 to 15 years. The balance of core deposit intangible assets, were $161 and $218 at September 30, 2014 and 2013, respectively. Amortization expense related to these core deposit intangible assets was $57, $56 and $209 for the years ended September 30, 2014, 2013 and 2012, respectively. Accumulated amortization on core deposit intangible assets was $2,360 and $2,303, at September 30, 2014 and 2013, respectively.

48

Interest Bearing Deposits—Other interest bearing deposits mature within one year and are carried at cost, which approximates their fair value.

Advertising, Marketing and Public Relations Expense—The Company expenses all advertising, marketing and public relations costs as they are incurred. Total costs for the years ended September 30, 2014, 2013, and 2012 were $370, $233, and $190, respectively.

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. See Note 13, "Income Taxes" for details on the Company’s income taxes.

The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carry forward periods, any experience with utilization of operating loss and tax credit carry forwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans.

Loss Contingencies—Loss contingencies, including claims and legal actions arising in the normal course of business, are recorded as liabilities when the likelihood of loss is probable and an amount of loss can be reasonably estimated.

Off-Balance-Sheet Financial Instruments—In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit and commitments under lines of credit arrangements, issued to meet customer financial needs. Such financial instruments are recorded in the financial statements when they become payable.

Other Comprehensive Income (Loss)—Accumulated and other comprehensive income or loss is comprised of the unrealized and realized losses on securities available for sale and pension liability adjustments, net of tax, and is shown on the accompanying Consolidated Statements of Other Comprehensive Income (Loss).

Operating Segments—While the chief decision makers monitor the revenue streams of the various banking products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment.

Reclassifications – Certain items previously reported were reclassified for consistency with the current presentation.

Adoption of New Accounting Standards - In August, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU") 2014-14 - "Receivables; Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure". ASU 2014-14 is intended to improve accounting and disclosure consistency related to how creditors classify government-guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure. For public entities, ASU 2014-09 is effective on a prospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company expects the adoption of ASU 2014-14 to have no material effect on the Company's results of operations, financial position or cash flows.

In May, 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09 - "Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is intended to clarify and simplify revenue recognition principles, develop a common revenue standard across industries and accounting frameworks, and improve the usefulness and consistency of revenue

49

reporting. For public entities, ASU 2014-09 is effective on a retrospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is not permitted. The Company expects the adoption of ASU 2014-09 to have no material effect on the Company's results of operations, financial position or cash flows.

In January, 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-04 - "Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force)". ASU 2014-04 is intended to improve consistency among reporting entities by clarifying when an in substance foreclosure occurs, that is, when a creditor should derecognize a loan and recognize the corresponding real estate collateral as a separate asset. For public entities, ASU 2014 is effective for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company expects the adoption of ASU 2014-04 to have no material effect on the Company's results of operations, financial position or cash flows.

NOTE 2 – FAIR VALUE ACCOUNTING

ASC Topic 820-10, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The statement describes three levels of inputs that may be used to measure fair value:

Level 1- Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

Level 2- Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3- Significant unobservable inputs that reflect the Company’s assumptions about the factors that market participants would use in pricing an asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the fair value measurement.

Assets Measured on a Recurring Basis

The fair value of securities available for sale is determined by obtaining market price quotes from independent third parties wherever such quotes are available. Where such quotes are not available, we utilize independent third party valuation analysis to support our own estimates and judgments in determining fair value. The following table presents, for the periods shown below, the Company's fair value of securities available for sale in accordance with the fair value hierarchy described above.

50

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2014
Investment securities:
U.S. government agency obligations	$	22,103	$	—	$	22,103	$	—
Obligations of states and political
subdivisions	12,658		—		12,658		—
Mortgage-backed securities	36,171		—		36,171		—
Federal Agricultural Mortgage Corporation	65		—		65		—
Total	$	70,997	$	—	$	70,997	$	—
September 30, 2013
Investment securities:
U.S. government agency obligations	$	27,866	$	—	$	27,866	$	—
Obligations of states and political
subdivisions	10,970		—		10,970		—
Mortgage-backed securities	39,633		—		39,633		—
Non-agency mortgage-backed securities	1,226		—		—		1,226
Total	$	79,695	$	—	$	78,469	$	1,226

The following table presents a reconciliation of non-agency mortgage-backed securities held by the Bank measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for each of the twelve months endedSeptember 30, 2014 and 2013:

	Twelve Months Ended
	September 30, 2014			September 30, 2013
Balance beginning of period	$	1,226		$	6,586
Total gains or losses (realized/unrealized):
Included in earnings	(274		)	(797		)
Included in other comprehensive income (loss)	615			1,322
Sales	(1,321		)	(3,802		)
Payments, accretion and amortization	(246		)	(2,083		)
Balance end of period	$	—		$	1,226

Assets Measured on a Nonrecurring Basis

Fair value of foreclosed assets is determined, initially, by a third-party appraisal. Subsequent to foreclosure, valuations are periodically performed by management to identify potential changes in fair value. Fair value of loans restructured in a troubled debt restructuring is based on the value of the underlying collateral at the time of the restructuring, which is determined by either a third-party appraisal for real estate loans, or a third party price quote on secured consumer loans. The following table presents, for the periods shown below, the Company's fair value for foreclosed and repossessed assets and TDRs in accordance with the fair value hierarchy described above.

51

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
September 30, 2014
Foreclosed and repossessed assets, net	$	1,050	$	—	$	—	$	1,050
Loans restructured in a TDR	5,581		—		—		5,581
Total	$	6,631	$	—	$	—	$	6,631
September 30, 2013
Foreclosed and repossessed assets, net	$	1,028	$	—	$	—	$	1,028
Loans restructured in a TDR	8,618		—		—		8,618
Total	$	9,646	$	—	$	—	$	9,646

The fair value of TDRs was determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting TDRs.

The fair value of foreclosed and repossessed assets was determined by obtaining market price quotes from independent third parties wherever such quotes were available. Where such quotes are not available, the Company utilized independent third party appraisals to support the Company’s estimates and judgments in determining fair value.

Fair Values of Financial Instruments

ASC 825-10 and ASC 270-10, Interim Disclosures about Fair Value Financial Instruments, require disclosures about fair value financial instruments and significant assumptions used to estimate fair value. The estimated fair values of financial instruments not previously disclosed are determined as follows:

Cash and Cash Equivalents

Due to their short-term nature, the carrying amounts of cash and cash equivalents are considered to be a reasonable estimate of fair value.

Other interest bearing Deposits

Fair value of interest bearing deposits is estimated based on their carrying amounts.

Non-marketable Equity Securities, at cost

Non-marketable equity securities are comprised of Federal Home Loan Bank stock and Federal Reserve Bank stock carried at cost in the amounts of $3,820 and $1,695 respectively, which is its redeemable fair value since the market for each category of this stock is restricted.

Loans Receivable, net

Fair value is estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as real estate, commercial and consumer. The fair value of loans is calculated by discounting scheduled cash flows through the estimated maturity date using market discount rates reflecting the credit and interest rate risk inherent in the applicable loan. The estimate of maturity is based on the Bank’s repayment schedules for each loan classification.

Accrued Interest Receivable and Payable

Due to their short-term nature, the carrying amounts of accrued interest receivable and payable, respectively, are considered to be a reasonable estimate of fair value.

Deposits

The fair value of deposits with no stated maturity, such as demand deposits, savings accounts, and money market accounts, is the amount payable on demand at the reporting date. The fair value of fixed rate certificate accounts is calculated by using discounted cash flows applying interest rates currently being offered on similar certificates.

52

Federal Home Loan Bank Advances

The fair value of long-term borrowed funds is estimated using discounted cash flows based on the Bank’s current incremental borrowing rates for similar borrowing arrangements. The carrying value of short-term borrowed funds approximates its fair value.

Off-Balance-Sheet Instruments

The fair value of off-balance sheet commitments would be estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the customers. Since this amount is immaterial to the Company’s consolidated financial statements, no amounts for fair value are presented.

The carrying amount and estimated fair value of financial instruments as of the dates indicated were as follows:

	September 30, 2014				September 30, 2013
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	11,434	$	11,434	$	17,601	$	17,601
Interest-bearing deposits	245		245		1,988		1,988
Investment securities	70,974		70,997		79,695		79,695
Non-marketable equity securities, at cost	5,515		5,515		3,300		3,300
Loans receivable, net	463,860		479,961		434,683		448,846
Accrued interest receivable	1,478		1,478		1,469		1,469
Financial liabilities:
Deposits	$	449,767	$	454,170	$	447,398	$	451,225
FHLB advances	58,891		59,331		50,000		49,676
Accrued interest payable	13		13		11		11

53

NOTE 3 – LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

Major classifications of loans as of September 30, 2014 and 2013, respectively, were as follows:

	September 30, 2014			September 30, 2013
Real estate loans:
Consumer	$	223,025		$	252,958
Commercial	39,061			12,531
Total real estate loans	262,086			265,489
Consumer and other loans:
Automobile	12,810			12,662
Secured personal and other	188,911			158,842
Unsecured personal	3,512			1,835
Total consumer and other loans	205,233			173,339
Gross loans	467,319			438,828
Less:
Deferred loan origination fees, net of costs	3,047			2,035
Allowance for loan losses	(6,506		)	(6,180		)
Loans receivable, net	$	463,860		$	434,683

Certain directors and executive officers of the Company and the Bank are defined as related parties. These related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during 2014 and 2013. A summary of the changes in those loans during the last two fiscal years is as follows:

	September 30,
	2014			2013
Balance—beginning of year	$	131		$	138
New loan originations	17			33
Repayments	(19		)	(40		)
Balance—end of year	$	129		$	131
Available and unused lines of credit	$	18		$	18

Allowance for Loan Losses—The ALL represents management’s estimate of probable and inherent credit losses in the Bank’s loan portfolio. Estimating the amount of the ALL requires the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may be susceptible to significant change.

There are many factors affecting the ALL; some are quantitative, while others require qualitative judgment. The process for determining the ALL (which management believes adequately considers potential factors which result in probable credit losses), includes subjective elements and, therefore, may be susceptible to significant change. To the extent actual outcomes differ from management estimates, additional provision for loan losses could be required that could adversely affect the Company’s earnings or financial position in future periods. Allocations of the ALL may be made for specific loans but the entire ALL is available for any loan that, in management’s judgment, should be charged-off or for which an actual loss is realized.

54

Changes in the ALL by loan type for the periods presented below were as follows:

	Real Estate			Consumer and Other			Total
Year Ended September 30, 2014:
Allowance for Loan Losses:
Beginning balance, October 1, 2013	$	2,541		$	3,639		$	6,180
Charge-offs	(1,238		)	(689		)	(1,927		)
Recoveries	94			249			343
Provision	1,362			548			1,910
Ending balance, September 30, 2014	$	2,759		$	3,747		$	6,506
Allowance for Loan Losses at September 30, 2014:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	525		$	207		$	732
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	2,234		$	3,540		$	5,774
Loans Receivable as of September 30, 2014:
Ending balance	$	261,315		$	209,051		$	470,366
Ending balance: individually evaluated for impairment	$	2,197		$	732		$	2,929
Ending balance: collectively evaluated for impairment	$	259,118		$	208,319		$	467,437

	Real Estate			Consumer and Other			Total
Year ended September 30, 2013
Allowance for Loan Losses:
Beginning balance, October 1, 2012	$	2,287		$	3,458		$	5,745
Charge-offs	(1,525		)	(1,494		)	(3,019		)
Recoveries	36			275			311
Provision	1,743			1,400			3,143
Ending balance, September 30, 2013	$	2,541		$	3,639		$	6,180
Allowance for Loan Losses at September 30, 2013:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	667		$	316		$	983
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	1,874		$	3,323		$	5,197
Loans Receivable as of September 30, 2013:
Ending balance	$	264,388		$	176,475		$	440,863
Ending balance: individually evaluated for impairment	$	3,659		$	907		$	4,566
Ending balance: collectively evaluated for impairment	$	260,729		$	175,568		$	436,297

The Bank has originated substantially all loans currently recorded on the Company’s consolidated balance sheet, except as noted below.

During October 2012, the Bank entered into an agreement to purchase short term consumer loans from a third party on an ongoing basis. A Board of Director determinant was established to limit the purchase of these consumer loans under this arrangement, to a maximum of $40,000, which we expect to attain by June 2015. Pursuant to the ongoing loan purchase agreement, a restricted reserve account was established at 3% of the outstanding consumer loan balances purchased up to a maximum of $1,000, with such percentage amount of the loans being deposited into a segregated reserve account. The funds in the reserve account are to be released to compensate the Bank for any purchased loans that are ultimately charged off. As of September 30, 2014, the balance of the consumer loans purchased was $32,812. The balance in the cash reserve account was $996, which is included in Deposits on the accompanying Consolidated Balance Sheet. To date, none of the purchased loans have been charged off.

55

Loans receivable by loan type as of the end of the periods shown below were as follows:

	Real Estate Loans				Consumer and Other Loans				Total Loans
	September 30, 2014		September 30, 2013		September 30, 2014		September 30, 2013		September 30, 2014		September 30, 2013
Performing loans
Performing TDR loans	$	4,535	$	6,254	$	797	$	1,101	$	5,332	$	7,355
Performing loans other	255,564		255,951		207,885		174,949		463,449		430,900
Total performing loans	260,099		262,205		208,682		176,050		468,781		438,255
Nonperforming loans (1)
Nonperforming TDR loans	202		1,187		47		76		249		1,263
Nonperforming loans other	1,014		996		322		349		1,336		1,345
Total nonperforming loans	$	1,216	$	2,183	$	369	$	425	$	1,585	$	2,608
Total loans	$	261,315	$	264,388	$	209,051	$	176,475	$	470,366	$	440,863

(1) Nonperforming loans are either 90+ days past due or nonaccrual.

An aging analysis of the Company’s real estate and consumer and other loans as of September 30, 2014 and September 30, 2013, respectively, was as follows:

	1 Month Past Due		2 Months Past Due		Greater Than 3 Months		Total Past Due		Current		Total Loans		Recorded Investment > 3 months and Accruing
September 30, 2014
Real estate loans	$	678	$	80	$	989	$	1,747	$	259,568	$	261,315	$	228
Consumer and other loans	354		73		178		605		175,634		176,239		99
Purchased third party loans	190		136		73		399		32,413		32,812		74
Total	$	1,222	$	289	$	1,240	$	2,751	$	467,615	$	470,366	$	401
September 30, 2013
Real estate loans	$	2,057	$	351	$	1,905	$	4,313	$	260,075	$	264,388	$	371
Consumer and other loans	746		121		214		1,081		155,416		156,497		80
Purchased third party loans	112		66		32		210		19,768		19,978		32
Total	$	2,915	$	538	$	2,151	$	5,604	$	435,259	$	440,863	$	483

56

At September 30, 2014, the Company has identified $5,581 of TDR loans and $2,228 of substandard loans as impaired, totaling $7,809, which includes$5,332 of performing TDR loans. A loan is identified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Performing TDRs consist of loans that have been modified and are performing in accordance with the modified terms for a sufficient length of time, generally six months, or loans that were modified on a proactive basis. A summary of the Company’s impaired loans as of September 30, 2014 and September 30, 2013 was as follows:

	With No Related Allowance Recorded						With An Allowance Recorded						Totals
	Real Estate		Consumer and Other		Total		Real Estate		Consumer and Other		Total		Real Estate		Consumer and Other		Total
Recorded investment at September 30, 2014	$	4,345	$	535	$	4,880	$	2,197	$	732	$	2,929	$	6,542	$	1,267	$	7,809
Unpaid balance at September 30, 2014	4,345		535		4,880		2,197		732		2,929		6,542		1,267		7,809
Recorded investment at September 30, 2013	5,349		771		6,120		3,659		907		4,566		9,008		1,678		10,686
Unpaid balance at September 30, 2013	5,349		771		6,120		3,659		907		4,566		9,008		1,678		10,686
Average recorded investment; twelve months ended September 30, 2014	4,722		614		5,336		3,137		823		3,960		7,859		1,437		9,296
Average recorded investment; twelve months ended September 30, 2013	4,185		609		4,794		4,197		993		5,190		8,382		1,602		9,984
Interest income received; twelve months ended September 30, 2014	149		32		181		68		24		92		217		56		273
Interest income received; twelve months ended September 30, 2013	202		71		273		69		40		109		271		111		382

57

Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty and the Bank grants a concession to that borrower that the Bank would not otherwise consider except for the borrower’s financial difficulties. Concessions include an extension of loan terms, renewals of existing balloon loans, reductions in interest rates and consolidating existing Bank loans at modified terms. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status. There were 4 delinquent TDRs, greater than 60 days past due, with a recorded investment of $191 at September 30, 2014, compared to 11 such loans with a recorded investment of $1,102 at September 30, 2013. A summary of loans by loan type modified in a troubled debt restructuring as of September 30, 2014 and September 30, 2013, and during each of the twelve months then ended, was as follows:

	Real Estate			Consumer and Other			Total
September 30, 2014 and
Twelve Months then Ended:
Accruing / Performing:
Beginning balance	$	6,254		$	1,101		$	7,355
Principal payments	(757		)	(258		)	(1,015		)
Charge-offs	(11		)	(30		)	(41		)
Advances	7			—			7
New restructured (1)	40			24			64
Class transfers (2)	(60		)	—			(60		)
Transfers between accrual/non-accrual	(938		)	(40		)	(978		)
Ending balance	$	4,535		$	797		$	5,332
Non-accrual / Non-performing:
Beginning balance	$	1,187		$	76		$	1,263
Principal payments	(1,515		)	(38		)	(1,553		)
Charge-offs	(426		)	(52		)	(478		)
Advances	3			—			3
New restructured (1)	—			16			16
Class transfers (2)	15			5			20
Transfers between accrual/non-accrual	938			40			978
Ending balance	$	202		$	47		$	249
Totals:
Beginning balance	$	7,441		$	1,177		$	8,618
Principal payments	(2,272		)	(296		)	(2,568		)
Charge-offs	(437		)	(82		)	(519		)
Advances	10			—			10
New restructured (1)	40			40			80
Class transfers (2)	(45		)	5			(40		)
Transfers between accrual/non-accrual	—			—			—
Ending balance	$	4,737		$	844		$	5,581

(1) “New restructured” represent loans restructured during the current period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

58

	Real Estate			Consumer and Other			Total
September 30, 2013 and
Twelve Months then Ended:
Accruing / Performing:
Beginning balance	$	5,751		$	1,055		$	6,806
Principal payments	(397		)	(388		)	(785		)
Charge-offs	(131		)	(42		)	(173		)
Advances	21			7			28
New restructured (1)	181			191			372
Class transfers (2)	1,294			263			1,557
Transfers between accrual/non-accrual	(465		)	15			(450		)
Ending balance	$	6,254		$	1,101		$	7,355
Non-accrual / Non-performing:
Beginning balance	$	1,259		$	70		$	1,329
Principal payments	(557		)	(86		)	(643		)
Charge-offs	(248		)	(24		)	(272		)
Advances	13			3			16
New restructured (1)	—			1			1
Class transfers (2)	255			127			382
Transfers between accrual/non-accrual	465			(15		)	450
Ending balance	$	1,187		$	76		$	1,263
Totals:
Beginning balance	$	7,010		$	1,125		$	8,135
Principal payments	(954		)	(474		)	(1,428		)
Charge-offs	(379		)	(66		)	(445		)
Advances	34			10			44
New restructured (1)	181			192			373
Class transfers (2)	1,549			390			1,939
Transfers between accrual/non-accrual	—			—			—
Ending balance	$	7,441		$	1,177		$	8,618

(1) “New restructured” represent loans restructured during the current period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	September 30, 2014			September 30, 2013
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Real estate	47	$	4,737	62	$	7,441
Consumer and other	53	844		90	1,177
	100	$	5,581	152	$	8,618

As an integral part of their examination process, various regulatory agencies review the Bank’s ALL. Such agencies may require that changes in the ALL be recognized when such regulators’ credit evaluations differ from those of our management based on information available to the regulators at the time of their examinations.

59

NOTE 4 – INVESTMENT SECURITIES

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of September 30, 2014 and September 30, 2013, respectively, were as follows:

Available for sale securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2014
U.S. government agency obligations	$	23,076	$	—	$	973	$	22,103
Obligations of states and political subdivisions	11,432		17		255		11,194
Mortgage-backed securities	29,058		138		369		28,827
Federal Agricultural Mortgage Corporation	71		—		6		65
Total available for sale securities	$	63,637	$	155	$	1,603	$	62,189
September 30, 2013
U.S. government agency obligations	$	29,702	$	—	$	1,836	$	27,866
Obligations of states and political subdivisions	11,647		—		677		10,970
Mortgage-backed securities	40,378		140		885		39,633
Non-agency mortgage-backed securities	1,842		—		616		1,226
Total available for sale securities	$	83,569	$	140	$	4,014	$	79,695

Held to maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2014
Obligations of states and political subdivisions	$	1,465	$	4	$	5	$	1,464
Mortgage-backed securities	7,320		33		9		7,344
Total held to maturity securities	$	8,785	$	37	$	14	$	8,808
September 30, 2013
Obligations of states and political subdivisions	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—
Total held to maturity securities	$	—	$	—	$	—	$	—

The estimated fair value of securities at September 30, 2014, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities on mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Expected maturities may differ from contractual maturities on certain agency and municipal securities due to the call feature.

Available for sale securities	Amortized Cost		Estimated Fair Value
Due after one year through five years	$	1,106	$	1,114
Due after five years through ten years	11,326		11,018
Due after ten years	51,205		50,057
Total available for sale securities	$	63,637	$	62,189

Held to maturity securities	Amortized Cost		Estimated Fair Value
Due after one year through five years	$	—	$	—
Due after five years through ten years	585		582
Due after ten years	8,200		8,226
Total held to maturity securities	$	8,785	$	8,808

60

Securities with unrealized losses at September 30, 2014 and 2013, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

	Less than 12 Months				12 Months or More				Total
Available for sale securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
2014
U.S. government agency obligations	$	—	$	—	$	22,103	$	973	$	22,103	$	973
Obligations of states and political subdivisions	574		1		8,817		254		9,391		255
Mortgage-backed securities	8,167		66		12,518		303		20,685		369
Federal Agricultural Mortgage Corporation	65		6		—		—		65		6
Total temporarily impaired	$	8,806	$	73	$	43,438	$	1,530	$	52,244	$	1,603
2013
U.S. government agency obligations	$	27,866	$	1,836	$	—	$	—	$	27,866	$	1,836
Obligations of states and political subdivisions	9,320		585		1,650		92		10,970		677
Mortgage-backed securities	27,690		885		—		—		27,690		885
Non-agency mortgage-backed securities	—		—		1,226		616		1,226		616
Total temporarily impaired	$	64,876	$	3,306	$	2,876	$	708	$	67,752	$	4,014

	Less than 12 Months				12 Months or More				Total
Held to maturity securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
2014
Obligations of states and political subdivisions	$	345	$	5	$	—	$	—	$	345	$	5
Mortgage-backed securities	3,364		9		—		—		3,364		9
Total temporarily impaired	$	3,709	$	14	$	—	$	—	$	3,709	$	14
2013
Obligations of states and political subdivisions	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—		—		—
Total temporarily impaired	$	—	$	—	$	—	$	—	$	—	$	—

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuers are assessed. Significant inputs used to measure the amount related to credit loss include, but are not limited to, default and delinquency rates of underlying collateral, remaining credit support, and historical loss severities. Adjustments to market value that are considered temporary are recorded as separate components of equity, net of tax. If an impairment of a security is identified as other-than-temporary based on information available, such as the decline in the credit worthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists. If there is a credit loss, it will be recorded in the Company's consolidated statement of operations. Losses other than credit will continue to be recognized in other comprehensive income (loss), net of tax. Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary. Management has determined that more likely than not, the Company neither intends to sell, nor will it be required to sell the debt security before its anticipated recovery.

At September 30, 2014, there were no holdings of securities of any one private issuer in an amount greater than 10% of the Company’s stockholders’ equity.

61

A summary of the amount of other-than-temporary impairment related to credit losses on available for sale securities that have been recognized in earnings as of each of the most recent two fiscal year ends was as follows:

	2014			2013
Beginning balance of the amount of OTTI related to credit losses	$	1,250		$	3,740
Credit portion of OTTI on securities for which OTTI was not previously recognized	91			867
Cash payments received on a security in excess of the security’s book value adjusted for the previously recognized credit portion of OTTI	(13		)	(70		)
Credit portion of OTTI on securities in default for which OTTI was previously recognized	—			(2,184		)
Credit portion of OTTI previously recognized on securities sold during the period	(1,328		)	(1,103		)
Ending balance of the amount of OTTI related to credit losses	$	—		$	1,250

During the fiscal year ended September 30, 2014, the Bank recognized $78 of other-than-temporary impairment in earnings on the remaining balance of the non-agency mortgage-backed security portfolio compared to $790 for the same period in the prior year.

The Bank has pledged certain of its U.S. Agency securities as collateral against a borrowing line with the Federal Reserve Bank. However, as of September 30, 2014, there were no borrowings outstanding on the Federal Reserve Bank line of credit. The Bank has also pledged certain of its U.S. Agency securities as collateral against specific municipal deposits.

NOTE 5—OFFICE PROPERTIES AND EQUIPMENT

Office properties and equipment at September 30 for each of the years shown below consisted of the following:

	2014			2013
Land	$	510		$	510
Buildings	2,284			2,161
Furniture, equipment, and vehicles	7,672			9,930
Subtotals	10,466			12,601
Less—Accumulated depreciation	(6,741		)	(7,766		)
Office properties and equipment—net	$	3,725		$	4,835

Depreciation expense was $1,116, $1,079 and $1,043 for the years ended September 30, 2014, 2013 and 2012, respectively.

62

NOTE 6—INTANGIBLE ASSETS

Intangible assets consist of core deposit intangibles arising from various bank acquisitions. A summary of core deposit intangibles and related amortization for the periods shown below follows:

	2014			2013
Balance at beginning of year	$	218		$	274
Capitalized	—			—
Amortization	(57		)	(56		)
Balance at end of year	$	161		$	218

The estimated future aggregate amortization expense for the core deposit intangibles is as follows:

2015	$	57
2016	57
2017	31
2018	15
After 2018	1
Total	$	161

NOTE 7—DEPOSITS

The following is a summary of deposits by type at September 30, 2014 and 2013, respectively:

	2014		2013
Non-interest bearing demand deposits	$	19,669	$	22,926
interest bearing demand deposits	17,696		11,075
Savings accounts	29,277		28,259
Money market accounts	136,666		154,639
Certificate accounts	246,459		230,499
Total deposits	$	449,767	$	447,398
Brokered certificates of deposit included above:	$	11,960	$	11,960

At September 30, 2014, the scheduled maturities of time deposits were as follows:

2015	$	80,381
2016	71,638
2017	52,843
2018	23,960
2019	17,637
After 2019	—
Total	$	246,459

Deposits from the Company’s directors, executive officers, principal stockholders and their affiliates held by the Bank at September 30, 2014 and 2013 amounted to $696 and $584, respectively.

63

NOTE 8 – FEDERAL HOME LOAN BANK ADVANCES

A summary of Federal Home Loan Bank advances at September 30, 2014 and 2013 were as follows:

			Weighted Average Rate				Weighted Average Rate
Maturing during the fiscal year
Ended September 30,	2014				2013
2015	$	15,000	0.67	%	$	7,500	0.27	%
2016	16,100		0.88	%	15,000		0.67	%
2017	12,961		1.57	%	11,600		1.01	%
2018	6,100		2.24	%	12,300		1.60	%
2019	3,730		1.87	%	3,600		2.81	%
Total fixed rate maturity	$	53,891			$	50,000
Variable rate open line of credit	5,000		0.30	%	—		—
Total	$	58,891			$	50,000

At September 30, 2014, the Bank’s available and unused portion of this borrowing arrangement was approximately $81,930.

Maximum month-end amounts outstanding were $75,891 and $52,950 during the twelve months endedSeptember 30, 2014 and 2013, respectively.

Each advance is payable at the maturity date, with a prepayment penalty for fixed rate advances. Federal Home Loan Bank advances are secured by $232,512 of real estate mortgage loans.

At September 30, 2014, the Bank has pledged FHLB Letters of Credit to collateralize certain municipal deposits in the amount of $23,100 due to ample liquidity.

NOTE 9—CAPITAL MATTERS

Banks are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. As of September 30, 2014, the OCC categorized the Bank as “Well Capitalized”, under the regulatory framework for prompt corrective action.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2014 and 2013, respectively, are presented below:

64

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action  Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio
As of September 30, 2014 (Audited)
Total capital (to risk weighted assets)	$	62,116,000	16.1	%	$	30,793,000	> =	8.0	%	$	38,491,000	> =	10.0	%
Tier 1 capital (to risk weighted assets)	57,283,000		14.9	%	15,396,000		> =	4.0	%	23,095,000		> =	6.0	%
Tier 1 capital (to adjusted total assets)	57,283,000		10.0	%	22,991,000		> =	4.0	%	28,739,000		> =	5.0	%
As of September 30, 2013 (Audited)
Total capital (to risk weighted assets)	$	59,297,000	16.3	%	$	29,182,000	> =	8.0	%	$	36,478,000	> =	10.0	%
Tier 1 capital (to risk weighted assets)	54,717,000		15.0	%	14,591,000		> =	4.0	%	21,887,000		> =	6.0	%
Tier 1 capital (to adjusted total assets)	54,717,000		9.9	%	22,220,000		> =	4.0	%	27,775,000		> =	5.0	%

NOTE 10—COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance-Sheet Risk—The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include off-balance-sheet credit instruments consisting of commitments to make loans. The face amounts for these items represent the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contract or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Set forth below are the balances of the Company’s off-balance-sheet credit instruments consisting of commitments to make loans as of September 30, 2014 and 2013, respectively.

	Contract or Notional Amount at September 30,
	2014		2013
Commitments to extend credit:
Consumer - fixed rate 3.30% - 11.99% in 2014, and 3.13% - 11.49% in 2013	$	2,820	$	2,475
Commercial - Fixed rate 3.25% - 5.50% in 2014, and 4.30% - 6.25% in 2013	7,172		7,791
Commercial standby letter of credit	20		—
Unused lines of credit:
Home equity lines of credit	1,622		1,035
Kwik cash and lines of credit	1,227		1,235
Consumer construction	119		—
Commercial construction	947		—
Commercial lines of credit	2,192		142
Totals	$	16,119	$	12,678

Loss Contingencies—Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.

65

Leases—The Company leases certain branch facilities and its administrative offices under operating leases. Rent expense under these operating leases was $1,186, $1,138, and $1,142 for the years ended September 30, 2014, 2013 and 2012, respectively. None of the Company’s leases contain contingent rental payment, purchase option, escalation or any other significant terms, conditions or restrictions that would affect the future minimum lease payments disclosed below.

Future minimum lease payments by year and in the aggregate under the original terms of the non-cancellable operating leases consist of the following:

2015	$	1,211
2016	849
2017	689
2018	535
2019	291
After 2019	540
Total	$	4,115

NOTE 11—RETIREMENT PLANS    

401(k) Plan—The Company sponsors a 401(k) profit sharing plan that covers all employees who qualify based on minimum age and length of service requirements. Employees may make pretax voluntary contributions to the plan, which are matched, in part, by the Company. Employer matching contributions to the plan were $193, $189, and $172 for 2014, 2013 and 2012, respectively.

Supplemental Executive Retirement Plan—The Company maintained an unfunded Supplemental Executive Retirement Plan (SERP) providing retirement benefits for key employees designated by the Board of Directors. Benefits under the SERP generally were based on the key employees’ years of service and compensation during the years preceding retirement. In May 2009, any additional accrual of benefits under the SERP was suspended. The remaining SERP liability relates to former Executive Management.

Director Retirement Plan—The Company also maintains an unfunded Directors’ Retirement Plan. The benefit amounts are determined by individual director agreements. The remaining Director Retirement Plan liability relates to current and former Directors.

The components of the SERP and Directors’ Retirement plans’ cost at September 30, 2014, 2013 and 2012, respectively, are summarized as follows:

	2014			2013			2012
Beginning accrued benefit cost	$	1,181		$	2,363		$	2,659
Service cost	—			—			—
Interest cost	51			45			126
Amortization of prior service costs	1			1			6
Net periodic benefit cost	52			46			132
Benefits paid	(79		)	(1,228		)	(66		)
Curtailment and settlement	—			—			(362		)
Ending accrued benefit cost	$	1,154		$	1,181		$	2,363

The following table sets forth for the SERP and Directors’ Retirement plans the change in projected benefit obligation, the change in plan assets, the funded status of the plans, and the net liability recognized in the Company’s balance sheet at September 30, 2014, 2013 and 2012, respectively:

66

	2014			2013			2012
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	1,117		$	2,381		$	3,008
Service cost	—			—			—
Interest cost	51			45			126
Curtailment and settlement	—			—			(755		)
Actuarial loss (gain)	20			(81		)	68
Benefits paid	(79		)	(1,228		)	(66		)
Projected benefit obligation, end of year	$	1,109		$	1,117		$	2,381
Change in plan assets:
Plan assets at fair value, beginning of year	$	—		$	—		$	—
Actual return on plan assets	—			—			—
Company contributions	79			1,228			66
Benefits paid	(79		)	(1,228		)	(66		)
Plan assets at fair value, end of year	$	—		$	—		$	—

Weighted average assumptions used in determining the benefit obligation and net pension costs as of September 30, 2014, 2013 and 2012, (in actual dollars) were as follows:

	2014		2013		2012
Benefit obligation actuarial assumptions:
Discount Rate	4.25	%	4.75	%	3.75	%
Rate of compensation increase	N/A		N/A		N/A
Net pension cost actuarial assumption
Discount rate	4.25	%	4.75	%	4.25	%
Expected long-term rate of return on plan assets	N/A		N/A		N/A
Rate of compensation increase	N/A		N/A		N/A

Estimated future benefit payments as of September 30, 2014, which reflect expected future service, as appropriate, are as follows:

2015	$	81
2016	$	104
2017	$	111
2018	$	118
2019	$	111
2020-2024	$	591

67

NOTE 12 - STOCK-BASED COMPENSATION

In February 2005, the Company’s stockholders approved the Company’s 2004 Recognition and Retention Plan. This plan provides for the grant of up to 113,910 shares of the Company’s common stock to eligible participants under this plan. As of September 30, 2014, 113,910 restricted shares under this plan were issued and 101,103 restricted shares under this plan were outstanding. Restricted shares previously granted were awarded at no cost to the employee and have a five-year vesting period from the grant date. The fair value of these previously granted restricted shares on the date of award was $7.04 per share for 63,783 shares, $6.18 for 6,832 shares, $5.24 for 20,312 shares, $5.65 for 2,500 shares and $5.84 for 20,483 shares. During the twelve months ended September 30, 2013, 20,483 shares, respectively, were granted to eligible participants under this plan at a weighted average fair value of $5.84 per share. No shares were granted to eligible participants under this plan during the twelve months ended September 30, 2014.

There were no previously awarded shares under the 2004 Recognition and Retention Plan that were forfeited in either of the twelve months endedSeptember 30, 2014 or 2013, respectively. There were 639 shares of the Company's common stock surrendered during the twelve months ended September 30, 2013 and 2,830 shares of the Company's common stock surrendered during the twelve months ended September 30, 2014, in each case to satisfy the withholding taxes due upon the vesting of certain previously awarded shares.

In February 2005, the Company’s stockholders also approved the Company’s 2004 Stock Option and Incentive Plan. This plan provides for the grant of nonqualified and incentive stock options and stock appreciation rights to eligible participants under the plan. The plan provides for the grant of awards for up to 284,778 shares of the Company’s common stock. At September 30, 2014, 284,778 options had been granted under this plan to eligible participants at a weighted-average exercise price of $6.57 per share. Options granted vest over a five-year period from the grant date. Unexercised, nonqualified stock options expire within 15 years of the grant date and unexercised incentive stock options expire within 10 years of the grant date. Through September 30, 2014, since the plan’s inception, options for 91,203 shares of the Company’s common stock were vested, options for 45,489 shares were unvested, options for 143,528 shares were forfeited and options for 4,558 shares were exercised. Of the 284,778 options granted, 136,692 remained outstanding as of September 30, 2014.

In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan. The aggregate number of shares of common stock reserved and available for issuance under the 2008 Equity Incentive Plan is 597,605 shares. Under the Plan, the Compensation Committee may grant stock options and stock appreciation rights that, upon exercise, result in the issuance of 426,860 shares of the Company’s common stock. The Committee may also grant shares of restricted stock and restricted stock units for an aggregate of 170,745 shares of Company common stock under this plan.

As of September 30, 2014 and September 30, 2013, 15,000 and 0 restricted shares under the 2008 Equity Incentive plan were issued and outstanding, respectively. Restricted shares granted were awarded at no cost to the employee and vest pro rata over a five-year period from the grant date. During the twelve months ended September 30, 2014, 15,000 shares were granted to eligible participants under this plan at a weighted average fair value of $8.00 per share.

Compensation expense related to restricted stock awards from both the 2004 Recognition and Retention Plan and the 2008 Equity Incentive Plan were $66, $45 and $22 for the years ended September 30, 2014, 2013 and 2012, respectively.

As of September 30, 2014 and September 30, 2013, 45,000 and 0 common stock options under the 2008 Equity Incentive plan were issued respectively. During the twelve months ended September 30, 2014, 45,000 options were granted under this plan to eligible participants at a weighted-average exercise price of $8.00 per share and 2,500 options were forfeited. Options granted vest pro rata over a five-year period from the grant date. Unexercised, nonqualified stock options expire within 15 years of the grant date and unexercised incentive stock options expire within 10 years of the grant date. Through September 30, 2014, since the plan’s inception, options for 0 shares of the Company’s common stock were vested, options for 42,500 shares were unvested, options for 2,500 shares were forfeited and options for 0 shares were exercised. Of the 45,000 options granted, 42,500 remained outstanding as of September 30, 2014.

The Company accounts for stock-based employee compensation related to the Company’s 2004 Stock Option and Incentive Plan and the 2008 Equity Incentive Plan using the fair-value-based method. Accordingly, management records compensation expense based on the value of the award as measured on the grant date and then the Company recognizes that cost over the vesting period for the award. The compensation cost recognized for stock-based employee compensation from both plans for the years ended September 30, 2014, 2013 and 2012 was $43, $31 and $21, respectively.

68

	Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
2014
Outstanding at beginning of year	150,932		$	6.15
Granted	45,000		8.00
Exercised	—
Forfeited or expired	(16,740	)
Outstanding at end of year	179,192		$	6.52	6.96	$	—
Exercisable at end of year	91,203		$	6.35	5.52
Fully vested and expected to vest	179,192		$	6.52	6.96
2013
Outstanding at beginning of year	124,789		$	6.26
Granted	26,143		5.62
Exercised	—
Forfeited or expired	—
Outstanding at end of year	150,932		$	6.15	7.06	$	—
Exercisable at end of year	88,927		$	6.63	6.07
Fully vested and expected to vest	150,932		$	6.15	7.06
2012
Outstanding at beginning of year	160,353		$	6.70
Granted	10,000		5.65
Exercised	—
Forfeited or expired	(45,564	)
Outstanding at end of year	124,789		$	6.26	7.65	$	—
Exercisable at end of year	77,639		$	6.82	6.78
Fully vested and expected to vest	124,789		$	6.26	7.65

Information related to the 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan during each year follows:

	2014		2013		2012
Intrinsic value of options exercised	$	—	$	—	$	—
Cash received from options exercised	$	—	$	—	$	—
Tax benefit realized from options exercised	$	—	$	—	$	—

Set forth below is a table showing relevant assumptions used in calculating stock option expense related to the Company’s 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan:

	2014		2013		2012
Dividend yield	0	%	0	%	0	%
Risk-free interest rate	2.7	%	1.7	%	1.6	%
Weighted average expected life (years)	10		10		10
Expected volatility	3	%	14	%	19	%

69

NOTE 13 – INCOME TAXES

Income tax expense (benefit) for each of the periods shown below consisted of the following:

	2014		2013		2012
Current tax provision
Federal	$	97	$	227	$	1,708
State	7		17		240
	104		244		1,948
Deferred tax provision (benefit)
Federal	798		322		(1,567		)
State	145		69		(220		)
	943		391		(1,787		)
Total	$	1,047	$	635	$	161

The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income as result of the following differences:

	2014					2013					2012
	Amount			Rate		Amount			Rate		Amount			Rate
Tax expense at statutory rate	$	962		34.00	%	$	572		34.00	%	$	124		34.00	%
State income taxes net of federal	152			5.37	%	86			5.10	%	20			5.37	%
Tax exempt interest	(46		)	(1.64	)%	(31		)	(1.87	)%	(2		)	(0.51	)%
Other	(21		)	(0.73	)%	8			0.51	%	19			4.99	%
Total	$	1,047		37.00	%	$	635		37.74	%	$	161		43.85	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company’s deferred tax assets and liabilities as of September 30, 2014 and September 30, 2013, respectively:

	2014			2013
Deferred tax assets:
Allowance for loan losses	$	2,562		$	2,433
Deferred loan costs/fees	217			308
Director/officer compensation plans	551			564
Net unrealized loss on securities available for sale	579			1,549
Impairment loss	—			1,306
Other	233			182
Deferred tax assets	$	4,142		$	6,342
Deferred tax liabilities:
Office properties and equipment	(397		)	(677		)
Other	(111		)	(125		)
Deferred tax liabilities	(508		)	(802		)
Net deferred tax assets	$	3,634		$	5,540

The Company regularly reviews the carrying amount of its deferred tax assets to determine if the establishment of a valuation allowance is necessary, as further discussed in Note 1 “Nature of Business and Summary of Significant Accounting

70

Policies,” above. At September 30, 2014 and September 30, 2013, respectively, management determined that no valuation allowance was necessary.

The Company’s income tax returns are subject to review and examination by federal, state and local government authorities. As of September 30, 2014, years open to examination by the U.S. Internal Revenue Service include taxable years ended September 30, 2011 to present. The years open to examination by state and local government authorities varies by jurisdiction.

The tax effects from uncertain tax positions can be recognized in the financial statements, provided the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company applied the foregoing accounting standard to all of its tax positions for which the statute of limitations remained open as of the date of the accompanying consolidated financial statements.

The Company’s policy is to recognize interest and penalties related to income tax issues as components of other noninterest expense. During the twelve months endedSeptember 30, 2014, 2013 and 2012, the Company recognized interest expense in the amount of $0, $22 and $41, respectively, related to income tax issues in its statements of operations. The Company had no recorded accrual or liability for the payment of interest and penalties related to income tax issues as of September 30, 2014 or September 30, 2013.

NOTE 14—EARNINGS PER SHARE

Earnings per share is based on the weighted average number of shares outstanding for the year. A reconciliation of the basic and diluted earnings per share for the last three fiscal years is as follows:

	2014		2013		2012
Basic
Net income	$	1,783	$	1,047	$	206
Weighted average common shares outstanding	5,163,373		5,151,413		5,133,707
Basic earnings per share	$	0.35	$	0.20	$	0.04
Diluted
Net income	$	1,783	$	1,047	$	206
Weighted average common shares outstanding	5,163,373		5,151,413		5,133,707
for basic earnings per share
Add: Dilutive stock options outstanding	33,333		11,767		—
Average shares and dilutive potential common shares	5,196,706		5,163,180		5,133,707
Diluted earnings per share	$	0.34	$	0.20	$	0.04
Additional common stock option shares that have not been included due to their antidilutive effect	145,859		139,165		124,789

71

NOTE 15 – OTHER COMPREHENSIVE INCOME (LOSS)

On October 1, 2011, the Company adopted ASU 2011-05, “Presentation of Comprehensive Income”. In addition to presenting the Consolidated Statements of Other Comprehensive Income (Loss) herein, the following table shows the tax effects allocated to each component of other comprehensive income (loss) for the years ended September 30, 2014, 2013 and 2012:

	2014									2013									2012
	Before-Tax Amount			Tax Expense			Net-of-Tax Amount			Before-Tax Amount			Tax Expense			Net-of-Tax Amount			Before-Tax Amount		Tax Expense			Net-of-Tax Amount
Unrealized gains (losses) on securities:
Net unrealized gains (losses) arising during the period	$	2,515		(1,006		)	$	1,509		$	(4,654	)	$	1,861		$	(2,793	)	$	1,372	$	(549	)	$	823
Less: reclassification adjustment for gains included in net income	(168		)	67			(101		)	552			(220		)	332			243		(97		)	146
Changes for realized losses on securities available for sale for OTTI write-down	78			(31		)	47			797			(319		)	478			1,332		(533		)	799
Defined benefit plans:
Amortization of unrecognized prior service costs and net gains (losses)	(18		)	7			(11		)	82			(33		)	49			330		(132		)	198
Other comprehensive income (loss)	$	2,407		$	(963	)	$	1,444		$	(3,223	)	$	1,289		$	(1,934	)	$	3,277	$	(1,311	)	$	1,966

The changes in the accumulated balances for each component of other comprehensive income (loss) for the years ended September 30, 2014 and 2013 were as follows:

	Unrealized Gains  (Losses) on Securities			Defined Benefit Plans			Other Comprehensive Income (Loss)
Balance, October 1, 2012	$	(341	)	$	(11	)	$	(352	)
Current year-to-date other comprehensive income (loss), net of tax	(1,983		)	49			(1,934		)
Ending balance, September 30, 2013	$	(2,324	)	$	38		$	(2,286	)
Current year-to-date other comprehensive income (loss), net of tax	1,455			(11		)	1,444
Ending balance, September 30, 2014	$	(869	)	$	27		$	(842	)

72

NOTE 16—CONDENSED FINANCIAL INFORMATION – PARENT COMPANY ONLY

The following condensed balance sheets as of September 30, 2014 and 2013, and condensed statements of operations and cash flows for each of the years in the three-year period ended September 30, 2014, for Citizens Community Bancorp, Inc. should be read in conjunction with the accompanying consolidated financial statements and the notes thereto.

CONDENSED BALANCE SHEETS

September 30,

	2014		2013
ASSETS
Cash and cash equivalents	$	235	$	230
Investment in subsidiary	57,058		53,955
Total assets	$	57,293	$	54,185
STOCKHOLDERS’ EQUITY
Total stockholders’ equity	$	57,293	$	54,185

STATEMENTS OF OPERATIONS

	2014			2013			2012
Income—interest and dividends	$	—		$	—		$	—
Expenses—other	182			107			320
Loss before provision for income taxes and equity in
undistributed net income (loss) of subsidiary	(182		)	(107		)	(320		)
Benefit for income taxes	(73		)	(43		)	(128		)
Loss before equity in undistributed net income (loss) of
subsidiary	(109		)	(64		)	(192		)
Equity in undistributed net income of subsidiary	1,892			1,111			398
Net income	$	1,783		$	1,047		$	206

STATEMENTS OF CASH FLOWS

	2014			2013			2012
Decrease in cash and cash equivalents:
Cash flows from operating activities:
Net income	$	1,783		$	1,047		$	206
Stock based compensation expense	43			31			21
Adjustments to reconcile net income to net cash provided by operating activities - Equity in undistributed income of subsidiary	(1,892		)	(1,111		)	(398		)
Net cash used in operating activities	(66		)	(33		)	(171		)
Cash flows from financing activities:
Surrendered vested shares of common stock	(22		)	(5		)	—
Cash dividend from Bank to Holding Company	300			—			—
Cash dividends paid	(207		)	(103		)	—
Net cash provided by (used in) financing activities	71			(108		)	—
Net increase (decrease) in cash and cash equivalents	5			(141		)	(171		)
Cash and cash equivalents at beginning of year	230			371			542
Cash and cash equivalents at end of year	$	235		$	230		$	371

73

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that the information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have designed our disclosure controls and procedures to reach a level of reasonable assurance of achieving the desired control objectives. We carried out an evaluation as of September 30, 2014, under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2014 at reaching a level of reasonable assurance.

The report of management required under this Item 9A is included under Item 8 of this report along with the Company’s consolidated financial statements under the heading “Report by Citizens Community Bancorp, Inc.’s Management on Internal Control over Financial Reporting” and is incorporated herein by reference.

This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firms pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to this item is incorporated herein by reference to the discussion under the heading “Proposal 1: Election of Directors,” “Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Corporate Governance – Director Nominations”, “Audit Committee Matters – Audit Committee Financial Expert”, and “Corporate Governance Matters – Code of Business Conduct and Ethics” in the Company’s Proxy Statement for the 2015 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission on or before January 28, 2015.

The Audit Committee of the Company’s Board of Directors is an “audit committee” for purposes of Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the Audit Committee consist of the following three outside independent directors: David Westrate (Chairman), Richard McHugh and Brian Schilling.

74

ITEM 11. EXECUTIVE COMPENSATION

The information with respect to this item is incorporated herein by reference to the discussion under the headings “Directors’ Meetings and Committees – Compensation Committee”, “Director Compensation” and “Executive Compensation” in the Company’s Proxy Statement for the 2015 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission on or before January 28, 2015.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information with respect to this item is incorporated herein by reference to the discussion under the heading “Security Ownership” in the Company’s Proxy Statement for the 2015 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission on or before January 28, 2015.

Equity Compensation Plan Information

The following table sets forth information as of September 30, 2014, with respect to compensation plans under which shares of common stock were issued or available to be issued:

	Number of Common Shares to Be Issued Upon Exercise of Outstanding Options,	Weighted-average Exercise Price of Outstanding Options,		Number of Common Shares Available for Future Issuance Under Equity
Plan Category	Warrants and Rights	Warrants and Rights		Compensation Plans
Equity compensation plans approved by security holders	179,192	$	6.52	537,605
Equity compensation plans not approved by security holders	—	—		—
Total	179,192	$	6.52	537,605

75

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information with respect to this item is incorporated herein by reference to the discussion under the headings “Transactions with Related Persons” and “Corporate Governance Matters – Director Independence” in the Company’s Proxy Statement for the 2015 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission on or before January 28, 2015.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to this item is incorporated herein by reference to the discussion under the heading “Audit Committee Matters – Fees of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the 2015 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission on or before January 28, 2015.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements:

The following financial statements of the Company are included in Item 8 of this Form 10-K annual report:

Report of Independent Registered Public Accounting Firm (Baker Tilly Virchow Krause, LLP)

Consolidated Balance Sheets as of September 30, 2014 and 2013

Consolidated Statements of Operations for the Years Ended September 30, 2014, 2013 and 2012

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended September 30, 2014, 2013 and 2012

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended September 30, 2014, 2013 and 2012

Consolidated Statements of Cash Flows for the Years Ended September 30, 2014, 2013 and 2012

Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedules:

All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable or has otherwise been included in the financial statements or notes hereto.

(a)(3) Exhibits

3.1	Articles of Incorporation of the Registrant. (Filed as an exhibit to the Company’s registration statement filed on June 30, 2006 (File No. 333-135527) pursuant to Section 5 of the Securities Act of 1933 and incorporated herein by reference.)
3.2	Articles of Amendment to the Articles of Incorporation of the Registrant. (Filed as Exhibit 3.1 to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2012 and incorporated herein by reference.)
3.3	Bylaws of the Registrant. (Filed as an exhibit to the Company’s registration statement filed on June 30, 2006 (File No. 333-135527) pursuant to Section 5 of the Securities Act of 1933 and incorporated herein by reference.)
3.4	Amendment to the Bylaws of the Registrant. (Filed as an exhibit to the Company's Form 8-K dated December 20, 2013, filed on December 26, 2013 and incorporated herein by reference.)
10.1+	Citizens Community Bancorp, Inc. 2004 Stock Option Plan. (Filed as an exhibit to the Company’s registration statement filed on June 30, 2006 (File No. 333-135527) pursuant to Section 5 of the Securities Act of 1933 and incorporated herein by reference.)
10.2+	Citizens Community Bancorp, Inc. 2004 Recognition and Retention Plan. (Filed as an exhibit to the Company’s registration statement filed on June 30, 2006 (File No. 333-135527) pursuant to Section 5 of the Securities Act of 1933 and incorporated herein by reference.)
10.3+	Citizens Community Bancorp, Inc. Supplemental Executive Retirement Plan. (Filed as an exhibit to the Company’s registration statement filed on June 30, 2006 (File No. 333-135527) pursuant to Section 5 of the Securities Act of 1933 and incorporated herein by reference.)

76

10.4	Citizens Community Bancorp, Inc. Tax Allocation Agreement. (Filed as an exhibit to the Company’s annual report on Form 10-KSB for the fiscal year ended September 30, 2004 and incorporated herein by reference.)
10.5+	Citizens Community Bancorp, Inc. 2008 Equity Incentive Plan. (Filed as an exhibit to the Company’s registration statement on Form S-8 filed on August 28, 2013 (File No. 333-190877) and incorporated herein by reference.)
10.6+	Employment Agreement by and between Edward H. Schaefer and Citizens Community Federal dated effective as of October 28, 2013. (Filed as Exhibit 99.1 to the Company's current report on Form 8-K dated as of November 1, 2013 and incorporated herein by reference.)
10.7+	Employment Agreement by and between Mark C. Oldenberg and Citizens Community Federal dated effective as of October 28, 2013. (Filed as Exhibit 99.2 to the Company's current report on Form 8-K dated as of November 1, 2013 and incorporated herein by reference.)
10.8+	Form of Restricted Stock Grant Agreement under the Citizens Community Bancorp, Inc. 2004 Recognition and Retention Plan. (Filed as Exhibit 10.7 to the Company’s annual report on Form 10-K for the fiscal year ended as of September 30, 2010 and incorporated herein by reference.)
10.9+	Form of Incentive Stock Option Agreement under the Citizens Community Bancorp, Inc. 2004 Stock Option and Incentive Plan. (Filed as Exhibit 10.8 to the Company’s annual report on Form 10-K for the fiscal year ended as of September 30, 2010 and incorporated herein by reference.)
10.10	Agreement of Dismissal dated as of September 30, 2012 between James Cooley and Citizens Community Federal. (Filed as Exhibit 99.1 to the Company’s current report on Form 8-K dated as of October 3, 2012 and incorporated herein by reference.)
10.11	Settlement Agreement dated as of September 30, 2012 between James Cooley and Citizens Community Federal. (Filed as Exhibit 99.2 to the Company’s current report on Form 8-K dated as of October 3, 2012 and incorporated herein by reference.)
10.12+	Form of Restricted Stock Grant Agreement under the Citizens Community Bancorp, Inc. 2008 Equity Incentive Plan.
10.13+	Form of Stock Option Agreement under the Citizens Community Bancorp, Inc. 2008 Equity Incentive Plan.
14	Citizens Community Bancorp, Inc. Code of Conduct and Ethics. (Filed as Exhibit 14 to the Company’s annual report on Form 10-K for the fiscal year ended as of September 30, 2010 and incorporated herein by reference.)
21	Subsidiaries of the Company as of September 30, 2014. (Filed as Exhibit 21 to the Company’s annual report on Form 10-K for the fiscal year ended as of September 30, 2010 and incorporated herein by reference.)
23	Consent of Independent Registered Public Accounting Firm (Baker Tilly Virchow Krause, LLP).
31.1	Rule 13a-15(e) Certification of the Company’s Chief Executive Officer
31.2	Rule 13a-15(e) Certification of the Company’s Chief Financial Officer
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
101	The following materials from Citizens Community Bancorp, Inc.’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014 formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Changes in Stockholders’ Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements.

+	A management contract or compensatory plan or arrangement
*	This certification is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

77

SIGNATURES

Pursuant to the requirements of Section13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CITIZENS COMMUNITY BANCORP, INC.
Date: December 8, 2014	By:	/s/ Edward H. Schaefer
		Edward H. Schaefer
		Chief Executive Officer
Date: December 8, 2014	By:	/s/ Mark C. Oldenberg
		Mark C. Oldenberg
		Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: December 8, 2014	By:	/s/ Richard McHugh
		Richard McHugh Chairman of the Board
Date: December 8, 2014	By:	/s/ Edward H. Schaefer
		Edward H. Schaefer Chief Executive Officer (Principal Executive Officer)
Date: December 8, 2014	By:	/s/ Michael L. Swenson
		Michael L. Swenson Director
Date: December 8, 2014	By:	/s/ James R. Lang
		James R. Lang Director
Date: December 8, 2014	By:	/s/ Brian R. Schilling
		Brian R. Schilling Director and Treasurer
Date: December 8, 2014	By:	/s/ David B. Westrate
		David B. Westrate Director
Date: December 8, 2014	By:	/s/ Timothy A. Nettesheim
		Timothy A. Nettesheim Vice Chairman of the Board
Date: December 8, 2014	By:	/s/ Mark C. Oldenberg
		Mark C. Oldenberg Chief Financial Officer (Principal Accounting Officer)

78

EX-10.12

Exhibit 10.12+

CITIZENS COMMUNITY BANCORP, INC.

2008 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

RS No. 13

Shares of Restricted Stock are hereby awarded on ___________, by Citizens Community Bancorp Inc., a Maryland corporation (the "Corporation"), to _____________ (the "Grantee"), in accordance with the following terms and conditions:

1. Share Award. The Corporation hereby awards to the Grantee _______ shares ("Shares") of Common stock of the Corporation ("Common Stock") pursuant to the Citizens Community Bancorp, Inc. 2008 Equity Incentive Plan, as the same may be amended from time to time (the "Plan"), and upon the terms and conditions and subject to the restrictions in the Plan and as hereinafter set forth. A copy of the Plan, as currently in effect, is incorporated herein by reference and is attached hereto.

2. Restrictions on Transfer and Restricted Period. During the period (the "Restricted Period") commencing on the date of this Award Agreement and terminating on ___________, Shares with respect to which the Restricted Period has not lapsed may not be sold, assigned, transferred, pledged, or otherwise encumbered by the Grantee except, in the event of the death of the Grantee, by will or the laws of descent and distribution or pursuant to a "domestic relations order," as defined in Section 414(P)(1)(B) the Code, or as hereinafter provided. Shares with respect to which the Restricted Period has lapsed shall sometimes be referred to herein as "Vested."

Provided that the Grantee does not incur a Termination of Service, Shares shall become vested in accordance with the following schedule:

Date of Vesting Number of Shares Vested

Except to the extent prohibited by OCC regulations, the Committee referred to in Section 3 of the Plan shall have the authority, in its discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to any Shares or to remove any or all of such restrictions, whenever the Committee may determine that such action is appropriate by reason of changes in applicable tax or other laws, changes in circumstances occurring after the commencement of the Restricted Period, or any other reason.

3. Termination of Service. Except as provided in Section 8 below, if the Grantee incurs a Termination of Service for any reason (other than death or disability), all Shares which are not vested at the time of such Termination of Service shall upon such Termination of Service be forfeited to the Corporation. If the Grantee incurs a

Termination of Service by reason of death or disability, all Shares awarded pursuant to this Award Agreement shall become vested at the time of such Termination, and the Shares shall not thereafter be forfeited.

4. Certificates for the Shares. The Corporation shall issue five certificates in respect of the Shares in the name of the Grantee, and shall hold such certificates for the benefit of the Grantee until the Shares represented thereby become vested. Such certificates shall bear the following legend:

"The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in the Citizens Community Bancorp, Inc. 2008 Equity Incentive Plan. Copies of such Plan are on file in the office of the Secretary of Citizens Community Bancorp, Inc., 2174 EastRidge Center, Eau Claire, Wisconsin 54701."

The Grantee further agrees that simultaneously with the execution of this Award Agreement, the Grantee shall execute stock powers in favor of the Corporation with respect to the Shares and that the Grantee shall promptly deliver such stock powers to the Corporation.

5. Grantee's Rights. Subject to all limitations provided in this Award Agreement, the Grantee, as owner of the Shares during the Restricted Period, shall have all the rights of a stockholder, including, but not limited to, the right to receive all dividends paid on the Shares and the right to vote such Shares.

6. Expiration of Restricted Period. Upon the lapse or expiration of the Restricted Period with respect to a portion of the Shares, the Corporation shall deliver to the Grantee (or in the case of a deceased Grantee, to his legal representative) the certificate in respect of such Shares and the related stock power held by the Corporation pursuant to Section 4 above. The Shares as to which the Restricted Period shall have lapsed or expired shall be free of the restrictions referred to in Section 2 above, and such certificate shall not bear the legend provided for in Section 4 above.

7. Adjustments for Changes in Capitalization of the Corporation In the event of any change in the outstanding shares of Common Stock by reason of any reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation, or any change in the corporate structure of the Corporation or in the shares of Common Stock, the number and class of Shares covered by this Award Agreement shall be appropriately adjusted by the Committee, whose determination shall be conclusive. Any shares of Common Stock or other securities received, as a result of the foregoing, by the Grantee with respect to Shares subject to the restrictions contained in Section 2 above shall also be subject to such restrictions, and the certificate or other instruments representing or evidencing such shares or securities shall be legended and deposited with the Corporation in the manner provided in Section 4 above.

8. Effect of Change in Control. If a tender offer or exchange offer for shares of the Corporation (other than such an offer by the Corporation) is commenced, or if a change in control (as defined in the Plan) shall occur, all previously unvested Shares shall vest in full upon the happening of such events; provided, however, that no Shares which have previously been forfeited shall thereafter become Vested.

9. Delivery and Registration of Shares of Common Stock. The Corporation's obligation to deliver Shares hereunder shall, if the Committee so requests, be conditioned upon the Grantee's compliance with the terms and provisions of Section 10 of the Plan.

10. Plan and Plan Interpretations as Controlling. The Shares hereby awarded and the terms and conditions herein set forth are subject in all respects to the terms and conditions of the Plan, which are controlling. Capitalized

terms used herein which are not defined in this Award Agreement shall have the meaning ascribed to such terms in the Plan. All determinations and interpretations made in the discretion of the Committee shall be binding and conclusive upon the Grantee or his legal representatives with regard to any question arising hereunder or under the Plan.

11. Grantee Service. Nothing in this Award Agreement shall limit the right of the Corporation or any of its Affiliates to terminate the Grantee's service as a director, advisory director, or employee, or otherwise impose upon the Corporation or any of its Affiliates any obligation to employ or accept the services of the Grantee.

12. Withholding Tax. Upon the termination of the Restricted Period with respect to any Shares (or at any such earlier time, if any, that an election is made by the Grantee under Section 83(b) of the Code, or any successor thereto), the Corporation may withhold from any payment or distribution made under the Plan sufficient Shares to cover any applicable withholding and employment taxes. The Corporation shall have the right to deduct from all dividends paid with respect to Shares the amount of any taxes which the Corporation is required to withhold with respect to such dividend payments.

13. Amendment. The Committee may waive any conditions of or rights of the Corporation or modify or amend the terms of this Award Agreement; provided, however, that the Committee may not amend, alter, suspend, discontinue or terminate any provision hereof which may adversely affect the Grantee without the Grantee's (or his legal representative's) written consent.

14. Grantee Acceptance. The Grantee shall signify his acceptance of the terms and conditions of this Award Agreement by signing in the space provided below, by signing the attached stock powers, and by returning a signed copy hereof and of the attached stock powers to the Corporation.

IN WITNESS WHEREOF, the parties hereto have caused this Award Agreement to be executed as of the date first above written.

CITIZENS COMMUNITY BANCORP, INC.

By: _________________________________

Chairman, Board of Directors

ACCEPTED:

By: _________________________________

Grantee Name

_________________________________

(Street Address)

_________________________________

                                (City, State and Zip Code)

EX-10.13

Exhibit 10.13+

CITIZENS COMMUNITY BANCORP, INC.

2008 EQUITY INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT

ISO NO. 11

This Option is granted on ______________, (“the Grant Date"), by Citizens Community Bancorp, Inc., a Maryland corporation (the "Corporation"), to _____________ (the "Optionee"), in accordance with the following terms and conditions:

1. Option Grant and Exercise Period. The Corporation hereby grants to the Optionee an Incentive Stock Option ("Option") to purchase, pursuant to the Citizens Community Bancorp, Inc. 2008 Equity Incentive Plan, as the same may be amended from time to time (the "Plan"), and upon the terms and conditions therein and hereinafter set forth, an aggregate of ________ shares (the "Option Shares") of the common stock of the Corporation ("Common Stock") at the price of _______ per share (the "Exercise Price"). A copy of the Plan, as currently in effect, is incorporated herein by reference and is attached to this Award Agreement.

This Option shall be exercisable only during the period (the "Exercise Period") commencing on the dates set forth in Section 2 below, and ending at 5:00 p.m., Eau Claire, Wisconsin time, on the date ten years after the Grant Date, such later time and date being hereinafter referred to as the "Expiration Date," subject to earlier expiration in accordance with Section 5 in the event of a Termination of Service. The aggregate Market Value (as determined on the Grant Date) of the Option Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee in any calendar year shall not exceed One Hundred Thousand Dollars ($100,000.00). To the extent that this Option does not qualify as an Incentive Stock Option for any reason, it shall be deemed ab initio to be a Non-Qualified Stock Option.

2. Method of Exercise of This Option. This Option may be exercised during the Exercise Period, with respect to not more than the cumulative number of Option Shares set forth below on or after the dates indicated, by giving written notice to the Corporation as hereinafter provided specifying the number of Option Shares to be purchased. The number of Option Shares that are exercisable on a particular date pursuant to this Section 2 shall not be accelerated by the Committee (as defined in the Plan) except in connection with a change in control as set forth in Section 9 of this Award Agreement, or in the event of the death or disability of the Optionee or the allowance of such acceleration by applicable OCC regulations.

Number of Option Shares Exercisable Date

The notice of exercise of this Option shall be in the form prescribed by the Committee referred to in Section 3 of the Plan and directed to the address set forth in Section 12 below. The date of exercise is the date on which such notice is received by the Corporation. Such notice shall be accompanied by payment in full of the Exercise Price for the Option Shares to be purchased upon such exercise. Payment shall be made (i) in cash, which may be in the form of a check, money order, cashier's check or certified check, payable to the Corporation, or (ii) by delivering shares of Common Stock already owned by the Optionee having a Market Value equal to the Exercise Price, or (iii) a combination of cash and such shares. Promptly after such payment,

subject to Section 3 below, the Corporation shall issue and deliver to the Optionee or other person exercising this Option a certificate or certificates representing the shares of Common Stock so purchased, registered in the name of the Optionee (or such other person), or, upon request, in the name of the Optionee (or such other person) and in the name of another in such form of joint ownership as requested by the Optionee (or such other person) pursuant to applicable state law.

3. Delivery and Registration of Shares of Common Stock The Corporation's obligation to deliver shares of Common Stock hereunder shall, if the Committee so requests, be conditioned upon the Optionee's compliance with the terms and provisions of Section 11 of the Plan.

4. Nontransferability of This Option. This Option may not be assigned, encumbered, transferred, pledged or hypothecated except, in the event of the death of the Optionee, by will or the applicable laws of descent and distribution to the extent provided in Section 5 below. This Option is exercisable during the Optionee's lifetime only by the Optionee or a person acting with the legal authority of the Optionee. The provisions of this Option shall be binding upon, inure to the benefit of and be enforceable by the parties hereto, the successors and assigns of the Corporation and any person acting with the legal authority of the Optionee or to whom this Option is transferred by will or by the laws of descent and distribution.

5. Termination of Service or Death of the Optionee. Except as provided in this Section 5 and Section 9 below, and notwithstanding any other provision of this Option to the contrary, this Option shall be exercisable only if the Optionee has not incurred a Termination of Service at the time of such exercise.

If the Optionee incurs a Termination of Service for any reason excluding death and Termination of Service for Cause, the Optionee may, but only within the period of three months (or one year in the case of disability, as defined in Section 22(e) (3) of the Code) immediately succeeding such Termination of Service and in no event after the Expiration Date, exercise this Option to the extent the Optionee was entitled to exercise this Option on the date of Termination of Service. If the Optionee incurs a Termination of Service for Cause, all rights under this Option shall expire immediately upon the giving to the Optionee of notice of his termination, except as provided in Section 9 below.

In the event of the death of the Optionee prior to the Optionee's Termination of Service or during the three-month period referred to in the immediately preceding paragraph, the person or persons to whom the Option has been transferred by will or by the laws of descent and distribution may, but only to the extent the Optionee was entitled to exercise this Option on the date of the Optionee's death, exercise this Option at any time within one year following the death of the Optionee, but in no event after the Expiration Date. Following the death of the Optionee, the Committee may, in its sale discretion, as an alternative means of settlement of this Option, elect to pay to the person to whom this Option is transferred by will or by the laws of descent and distribution, the amount by which the Market Value per share of Common Stock on the date of exercise of this Option shall exceed the Exercise Price per Option Share, multiplied by the number of Option Shares with respect to which this Option is properly exercised. Any such settlement of this Option shall be considered an exercise of this Option for all purposes of this Option and of the Plan.

6. Notice of Sale. The Optionee or any person to whom the Option Shares shall have been transferred shall promptly give notice to the Corporation in the event of the sale or other disposition of Option Shares within the later of (i) two years from the Grant Date or (ii) one year from the date of exercise of this Option. Such notice shall specify the number of Option Shares sold or otherwise disposed of and be directed to the address set forth in Section 12 below.

7. Adjustments for Changes in Capitalization of the Corporation. In the event of any change in the outstanding shares of Common Stock by reason of any recapitalization, stock split, reverse stock split, stock dividend, reorganization, consolidation, combination or exchange of shares, merger, or any other change in the corporate structure of the Corporation or in the shares of Common Stock, the number and class of shares covered by this Option and the Exercise Price shall be appropriately adjusted by the Committee, whose determination shall be conclusive.

8. Effect of Merger or Other Reorganization. In the event of any merger, consolidation or combination of the Corporation with or into another corporation (other than a merger, consolidation or combination in which the Corporation is the continuing

corporation and which does not result in the outstanding shares of Common Stock being converted into or exchanged for different securities, cash or other property, or any combination thereof), the Optionee shall have the right (subject to the provisions of the Plan and the limitations contained herein), thereafter and during the Exercise Period, to receive upon exercise of this Option an amount equal to the excess of the Market Value on the date of such exercise of the securities, cash or other property, or combination thereof, receivable upon such merger, consolidation or combination in respect of a share of Common Stock over the Exercise Price, multiplied by the number of Option Shares with respect to which this Option shall have been exercised. Such amount may be payable fully in cash, fully in one or more of the kind or kinds of property payable in such merger, consolidation or combination, or partly in cash and partly in one or more of such kind or kinds of property, all in the discretion of the Committee.

9. Effect of Change in Control. If a tender offer or exchange offer for shares of the Corporation (other than such an offer by the Corporation) is commenced, or if a Change in Control shall occur, this Option shall (to the extent it is not then exercisable) become exercisable in full upon the happening of such events; provided, however, that this Option shall not become exercisable to the extent that it has previously been exercised or otherwise terminated.

10. Stockholder Rights Not Granted by This Option. The Optionee is not entitled by virtue hereof to any rights of a stockholder of the Corporation or to notice of meetings of stockholders or to notice of any other proceedings of the Corporation.

11. Withholding Tax. Where the Optionee or another person is entitled to receive Option Shares pursuant to the exercise of this Option, the Corporation shall have the right to require the Optionee or such other person to pay to the Corporation the amount of any taxes which the Corporation or any of its Affiliates is required to withhold with respect to such Option Shares, or, in lieu thereof, to retain, or sell without notice, a sufficient number of such shares to cover the amount required to be withheld, or in lieu of any of the foregoing, to withhold a sufficient sum from the Optionee's compensation payable by the Corporation to satisfy the Corporation's tax withholding requirements.

12. Notices. All notices to the Corporation shall be delivered or mailed to it addressed to the Secretary of Citizens Community Bancorp, Inc., 2174 EastRidge Center, Eau Claire, Wisconsin 54701. Any notices hereunder to the Optionee shall be delivered personally or mailed to the Optionee's address noted below. Such addresses for the service of notices may be changed at any time provided written notice of the change is furnished in advance to the Corporation or to the Optionee, as the case may be.

13. Plan and Plan Interpretations as Controlling. This Option and the terms and conditions herein set forth are subject in all respects to the terms and conditions of the Plan, which are controlling. Capitalized terms used herein which are not defined in this Award Agreement shall have the meaning ascribed to such terms in the Plan. All determinations and interpretations made in the discretion of the Committee shall be final and conclusive upon the Optionee or his legal representatives with regard to any question arising hereunder or under the Plan.

14. Optionee Service. Nothing in this Option shall limit the right of the Corporation or any of its Affiliates to terminate the Optionee's service as a director, advisory director, or employee, or otherwise impose upon the Corporation or any of its Affiliates any obligation to employ or accept the services of the Optionee.

15. Amendment. Except as prohibited by OCC regulations, the Committee may waive any conditions of or rights of the Corporation or modify or amend the terms of this Award Agreement; provided, however, that the Committee may not amend, alter, suspend, discontinue or terminate any provision hereof which may adversely affect the Optionee without the Optionee's (or his legal representative's) written consent.

16. Optionee Acceptance. The Optionee shall signify his acceptance of the terms and conditions of this Option by signing in the space provided below and returning a signed copy here of to the Corporation at the address set forth in Section 12 above.

IN WITNESS WHEREOF, the parties hereto have caused this Award Agreement to be executed as of the date first above written.

CITIZENS COMMUNITY BANCORP, INC.

By: _________________________________

Chairman, Board of Directors

ACCEPTED:

By: _________________________________

Optionee Name

_________________________________

(Street Address)

_________________________________

                                (City, State and Zip Code)

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S‑8 (File Nos. 333‑127996 and 333‑128252 and 333-190877) of Citizens Community Bancorp, Inc. of our report datedDecember 8, 2014, relating to the consolidated financial statements, which appears on page 40 of this annual report on Form 10‑K for the year ended September 30, 2014.

/s/ BAKER TILLY VIRCHOW KRAUSE, LLP

Minneapolis, Minnesota

December 8, 2014

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Edward H. Schaefer, certify that:

1) I have reviewed this annual report on Form 10-K of Citizens Community Bancorp, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 8, 2014	By:	/s/ Edward H. Schaefer
		Edward H. Schaefer
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEFFINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark C. Oldenberg, certify that:

1) I have reviewed this annual report on Form 10-K of Citizens Community Bancorp, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 8, 2014	By:	/s/ Mark C. Oldenberg
		Mark C. Oldenberg
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PERIODIC FINANCIAL REPORT

PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Citizens Community Bancorp, Inc. (the “Company”) certifies that the Annual Report of the Company on Form 10-K for the fiscal year ended September 30, 2014, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such report.

Date:  December 8, 2014	By:	/s/ Edward H. Schaefer
		Edward H. Schaefer
		Chief Executive Officer

Date:  December 8, 2014	By:	/s/ Mark C. Oldenberg
		Mark C. Oldenberg
		Chief Financial Officer

The above certifications are made solely for the purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

XML

Earnings Per Share (Tables)

12 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Reconciliation of the basic and diluted earnings per share

Earnings per share is based on the weighted average number of shares outstanding for the year. A reconciliation of the basic and diluted earnings per share for the last three fiscal years is as follows:

	2014		2013		2012
Basic
Net income	$	1,783	$	1,047	$	206
Weighted average common shares outstanding	5,163,373		5,151,413		5,133,707
Basic earnings per share	$	0.35	$	0.20	$	0.04
Diluted
Net income	$	1,783	$	1,047	$	206
Weighted average common shares outstanding	5,163,373		5,151,413		5,133,707
for basic earnings per share
Add: Dilutive stock options outstanding	33,333		11,767		—
Average shares and dilutive potential common shares	5,196,706		5,163,180		5,133,707
Diluted earnings per share	$	0.34	$	0.20	$	0.04
Additional common stock option shares that have not been included due to their antidilutive effect	145,859		139,165		124,789

XML

Loans, Allowance for Loan Losses and Impaired Loans (Details 6) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014		Sep. 30, 2013
Troubled Debt Restructuring
Beginning balance	$ 8,618		$ 8,135
Principal payments	(2,568)		(1,428)
Charge-offs	(519)		(445)
Advances	10		44
New restructured	80	[1]	373	[1]
Class Transfers	(40)	[2]	1,939	[2]
Transfers between accrual/non-accrual	0		0
Ending balance	5,581		8,618
Real Estate
Troubled Debt Restructuring
Beginning balance	7,441		7,010
Principal payments	(2,272)		(954)
Charge-offs	(437)		(379)
Advances	10		34
New restructured	40	[1]	181	[1]
Class Transfers	(45)	[2]	1,549	[2]
Transfers between accrual/non-accrual	0		0
Ending balance	4,737		7,441
Consumer and Other Loans
Troubled Debt Restructuring
Beginning balance	1,177		1,125
Principal payments	(296)		(474)
Charge-offs	(82)		(66)
Advances	0		10
New restructured	40	[1]	192	[1]
Class Transfers	5	[2]	390	[2]
Transfers between accrual/non-accrual	0		0
Ending balance	844		1,177
Performing loans
Troubled Debt Restructuring
Beginning balance	7,355		6,806
Principal payments	(1,015)		(785)
Charge-offs	(41)		(173)
Advances	7		28
New restructured	64	[1]	372	[1]
Class Transfers	(60)	[2]	1,557	[2]
Transfers between accrual/non-accrual	(978)		(450)
Ending balance	5,332		7,355
Performing loans | Real Estate
Troubled Debt Restructuring
Beginning balance	6,254		5,751
Principal payments	(757)		(397)
Charge-offs	(11)		(131)
Advances	7		21
New restructured	40	[1]	181	[1]
Class Transfers	(60)	[2]	1,294	[2]
Transfers between accrual/non-accrual	(938)		(465)
Ending balance	4,535		6,254
Performing loans | Consumer and Other Loans
Troubled Debt Restructuring
Beginning balance	1,101		1,055
Principal payments	(258)		(388)
Charge-offs	(30)		(42)
Advances	0		7
New restructured	24	[1]	191	[1]
Class Transfers	0	[2]	263	[2]
Transfers between accrual/non-accrual	(40)		15
Ending balance	797		1,101
Non Performing Loans
Troubled Debt Restructuring
Beginning balance	1,263		1,329
Principal payments	(1,553)		(643)
Charge-offs	(478)		(272)
Advances	3		16
New restructured	16	[1]	1	[1]
Class Transfers	20	[2]	382	[2]
Transfers between accrual/non-accrual	978		450
Ending balance	249		1,263
Non Performing Loans | Real Estate
Troubled Debt Restructuring
Beginning balance	1,187		1,259
Principal payments	(1,515)		(557)
Charge-offs	(426)		(248)
Advances	3		13
New restructured	0	[1]	0	[1]
Class Transfers	15	[2]	255	[2]
Transfers between accrual/non-accrual	938		465
Ending balance	202		1,187
Non Performing Loans | Consumer and Other Loans
Troubled Debt Restructuring
Beginning balance	76		70
Principal payments	(38)		(86)
Charge-offs	(52)		(24)
Advances	0		3
New restructured	16	[1]	1	[1]
Class Transfers	5	[2]	127	[2]
Transfers between accrual/non-accrual	40		(15)
Ending balance	$ 47		$ 76

[1] “New restructured” represent loans restructured during the current period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

[2] “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

XML

Loans, Allowance for Loan Losses and Impaired Loans (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Mortgage Loans on Real Estate [Line Items]
Loans And Leases Receivable Gross	$ 467,319	$ 438,828
Deferred loan origination fees, net of costs	3,047	2,035
Allowance for loan losses	(6,506)	(6,180)	(5,745)
Loans receivable, net	463,860	434,683
Real estate loans:
Mortgage Loans on Real Estate [Line Items]
Loans And Leases Receivable Gross	262,086	265,489
Real estate loans: | Consumer
Mortgage Loans on Real Estate [Line Items]
Loans And Leases Receivable Gross	223,025	252,958
Real estate loans: | Commercial
Mortgage Loans on Real Estate [Line Items]
Loans And Leases Receivable Gross	39,061	12,531
Consumer and other loans:
Mortgage Loans on Real Estate [Line Items]
Loans And Leases Receivable Gross	205,233	173,339
Consumer and other loans: | Automobile
Mortgage Loans on Real Estate [Line Items]
Loans And Leases Receivable Gross	12,810	12,662
Consumer and other loans: | Secured personal and other
Mortgage Loans on Real Estate [Line Items]
Loans And Leases Receivable Gross	188,911	158,842
Consumer and other loans: | Unsecured personal
Mortgage Loans on Real Estate [Line Items]
Loans And Leases Receivable Gross	$ 3,512	$ 1,835

XML

Deposits (Details Textual) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Deposits held from various parties	$ 696	$ 584

XML

Loans, Allowance for Loan Losses and Impaired Loans (Details 7) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014 Contract	Sep. 30, 2013 Contract	Sep. 30, 2012
Troubled Debt Restructuring
Number of Modifications	100	152
Recorded Investment	$ 5,581	$ 8,618	$ 8,135
Real Estate
Troubled Debt Restructuring
Number of Modifications	47	62
Recorded Investment	4,737	7,441	7,010
Consumer and Other Loans
Troubled Debt Restructuring
Number of Modifications	53	90
Recorded Investment	$ 844	$ 1,177	$ 1,125

XML

Retirement Plans (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Projected benefit obligation, beginning of year	$ 1,117	$ 2,381	$ 3,008
Service cost	0	0	0
Interest cost	51	45	126
Curtailment and settlement	0	0	(755)
Actuarial loss (gain)	20	(81)	68
Benefits paid	(79)	(1,228)	(66)
Projected benefit obligation, end of year	1,109	1,117	2,381
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Projected benefit obligation, end of year	0	0	0
Actual return on plan assets	0	0	0
Company contributions	79	1,228	66
Benefits paid	(79)	(1,228)	(66)
Projected benefit obligation, end of year	$ 0	$ 0	$ 0

XML

Fair Value Accounting (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Financial assets:
Cash and cash equivalents, Carrying Amount	$ 11,434	$ 17,601	$ 23,259	$ 31,763
Cash and cash equivalents, Fair Value	11,434	17,601
Interest Bearing Deposits Carrying Value	245	1,988
Interest Bearing Deposits, Fair Value	245	1,988
Investment securities, Carrying Amount	70,974	79,695
Investment securities, Estimated Fair Value	70,997	79,695
Non-marketable equity securities, at cost, Carrying Amount	5,515	3,300
Non-marketable equity securities, at cost, Estimated Fair Value	5,515	3,300
Loans receivable Carrying Amount	463,860	434,683
Loans receivable, Fair Value	479,961	448,846
Accrued interest receivable Carrying Amount	1,478	1,469
Accrued Interest Receivables, Fair Value	1,478	1,469
Financial liabilities:
Deposits, Carrying Amount	449,767	447,398
Deposits, Fair Value	454,170	451,225
FHLB advances, Carrying Amount	58,891	50,000
FHLB advances, Fair Value	59,331	49,676
Accrued Interest Payable, Carrying Amount	13	11
Accrued Interest Payable, Fair Value	$ 13	$ 11

XML

Federal Home Loan Bank Advances (Tables)

12 Months Ended

Sep. 30, 2014

Banking and Thrift [Abstract]

A summary of Federal Home Loan Bank advances

A summary of Federal Home Loan Bank advances at September 30, 2014 and 2013 were as follows:

			Weighted Average Rate				Weighted Average Rate
Maturing during the fiscal year
Ended September 30,	2014				2013
2015	$	15,000	0.67	%	$	7,500	0.27	%
2016	16,100		0.88	%	15,000		0.67	%
2017	12,961		1.57	%	11,600		1.01	%
2018	6,100		2.24	%	12,300		1.60	%
2019	3,730		1.87	%	3,600		2.81	%
Total fixed rate maturity	$	53,891			$	50,000
Variable rate open line of credit	5,000		0.30	%	—		—
Total	$	58,891			$	50,000

XML

Retirement Plans (Details 2)	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Regulatory Liabilities [Line Items]
Discount Rate	4.25%	4.75%	3.75%
Pension Cost [Member]
Regulatory Liabilities [Line Items]
Discount rate	4.25%	4.75%	4.25%

XML

Capital Matters (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Total capital (to risk weighted assets), Actual, Amount	$ 62,116	$ 59,297
Total capital (to risk weighted assets), Actual, Ratio	16.10%	16.30%
Total capital (to risk weighted assets), For Capital Adequacy Purposes, Amount	30,793	29,182
Total capital (to risk weighted assets), For Capital Adequacy Purposes, Ratio	8.00%	8.00%
Total capital (to risk weighted assets), To Be Well Capitalized, Amount	38,491	36,478
Total capital (to risk weighted assets), To Be Well Capitalized, Ratio	10.00%	10.00%
Tier 1 capital (to risk weighted assets), Actual, Amount	57,283	54,717
Tier 1 capital (to risk weighted assets), Actual, Ratio	14.90%	15.00%
Tier 1 capital (to risk weighted assets), For Capital Adequacy Purposes, Amount	15,396	14,591
Tier 1 capital (to risk weighted assets), For Capital Adequacy Purposes, Ratio	4.00%	4.00%
Tier 1 capital (to risk weighted assets), To Be Well Capitalized, Amount	23,095	21,887
Tier 1 capital (to risk weighted assets), To Be Well Capitalized, Ratio	6.00%	6.00%
Tier 1 capital (to adjusted total assets), Actual, Amount	57,283	54,717
Tier 1 capital (to adjusted total assets), Actual, Ratio	10.00%	9.90%
Tier 1 capital (to adjusted total assets), For Capital Adequacy Purposes, Amount	22,991	22,220
Tier 1 capital (to adjusted total assets), For Capital Adequacy Purposes, Ratio	4.00%	4.00%
Tier 1 capital (to adjusted total assets), To Be Well Capitalized, Amount	$ 28,739	$ 27,775
Tier 1 capital (to adjusted total assets), To Be Well Capitalized, Ratio	5.00%	5.00%

XML

Income Taxes (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Deferred tax assets:
Allowance for loan losses	$ 2,562	$ 2,433
Deferred loan costs/fees	217	308
Director/officer compensation plans	551	564
Net unrealized loss on securities available for sale	579	1,549
Impairment loss	0	1,306
Other	233	182
Deferred tax assets	4,142	6,342
Deferred tax liabilities:
Office properties and equipment	(397)	(677)
Other	(111)	(125)
Deferred tax liabilities	(508)	(802)
Net deferred tax assets	$ 3,634	$ 5,540

XML

Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	$ 63,637	$ 83,569
Gross Unrealized Gains	155	140
Gross Unrealized Losses	1,603	4,014
Estimated Fair Value	62,189	79,695
U.S. government agency obligations
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	23,076	29,702
Gross Unrealized Gains	0	0
Gross Unrealized Losses	973	1,836
Estimated Fair Value	22,103	27,866
Obligations of states and political subdivisions
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	11,432	11,647
Gross Unrealized Gains	17	0
Gross Unrealized Losses	255	677
Estimated Fair Value	11,194	10,970
Mortgage-backed securities
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	29,058	40,378
Gross Unrealized Gains	138	140
Gross Unrealized Losses	369	885
Estimated Fair Value	28,827	39,633
Federal Agricultural Mortgage Corporation
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	71
Gross Unrealized Gains	0
Gross Unrealized Losses	6
Estimated Fair Value	65
Non-agency mortgage-backed securities
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost		1,842
Gross Unrealized Gains		0
Gross Unrealized Losses		616
Estimated Fair Value		$ 1,226

XML

Commitments and Contingencies (Details Textual) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Commitments and Contingencies (Textual) [Abstract]
Rent expense under operating leases	$ 1,186	$ 1,138	$ 1,142

XML

Stock Based Compensation (Details 2)	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Dividend yield	0.00%	0.00%	0.00%
Risk-free interest rate	2.70%	1.70%	1.60%
Weighted average expected life (years)	10 years	10 years	10 years
Expected volatility	3.00%	14.00%	19.00%

XML

Retirement Plans (Details Textual) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Asset Retirement Obligation Disclosure [Abstract]
Employer matching contributions	$ 193	$ 189	$ 172

XML

Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Current tax provision
Federal	$ 97	$ 227	$ 1,708
State	7	17	240
Current Income Tax Expense (Benefit), Total	104	244	1,948
Deferred tax provision (benefit)
Federal	798	322	(1,567)
State	145	69	(220)
Deferred Income Tax Expense (Benefit), Total	943	391	(1,787)
Total	$ 1,047	$ 635	$ 161

XML

Retirement Plans (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Projected benefit obligation, beginning of year	$ 1,117	$ 2,381	$ 3,008
Service cost	0	0	0
Interest cost	51	45	126
Benefits paid	(79)	(1,228)	(66)
Projected benefit obligation, end of year	1,109	1,117	2,381
Defined Benefit Plan [Member]
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Projected benefit obligation, beginning of year	1,181	2,363	2,659
Service cost	0	0	0
Interest cost	51	45	126
Amortization of prior service costs	1	1	6
Net periodic benefit cost	52	46	132
Benefits paid	(79)	(1,228)	(66)
Curtailment and settlement	0	0	(362)
Projected benefit obligation, end of year	$ 1,154	$ 1,181	$ 2,363

XML

Federal Home Loan Bank Advances (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Summary of Federal Home Loan Bank advances
Maturing during 2015	$ 15,000	$ 7,500
Maturing during 2016	16,100	15,000
Maturing during 2017	12,961	11,600
Maturing during 2018	6,100	12,300
Maturing during 2019	3,730	3,600
Weighted Average Rate 2015	0.67%	0.27%
Weighted Average Rate 2016	0.88%	0.67%
Weighted Average Rate 2017	1.57%	1.01%
Weighted Average Rate 2018	2.24%	1.60%
Weighted Average Rate 2019	1.87%	2.81%
Total fixed rate maturity	53,891	50,000
Variable rate open line of credit	5,000	0
Total	$ 58,891	$ 50,000
Federal Home Loan Bank Advances [Member]
Summary of Federal Home Loan Bank advances
Variable rate open line of credit, Weighted Average Rate	0.30%	0.00%

XML

Condensed Financial Information - Parent Company Only (Notes)

12 Months Ended

Sep. 30, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY

CONDENSED FINANCIAL INFORMATION – PARENT COMPANY ONLY

The following condensed balance sheets as of September 30, 2014 and 2013, and condensed statements of operations and cash flows for each of the years in the three-year period ended September 30, 2014, for Citizens Community Bancorp, Inc. should be read in conjunction with the accompanying consolidated financial statements and the notes thereto.

CONDENSED BALANCE SHEETS

September 30,

	2014		2013
ASSETS
Cash and cash equivalents	$	235	$	230
Investment in subsidiary	57,058		53,955
Total assets	$	57,293	$	54,185
STOCKHOLDERS’ EQUITY
Total stockholders’ equity	$	57,293	$	54,185

STATEMENTS OF OPERATIONS

	2014			2013			2012
Income—interest and dividends	$	—		$	—		$	—
Expenses—other	182			107			320
Loss before provision for income taxes and equity in
undistributed net income (loss) of subsidiary	(182		)	(107		)	(320		)
Benefit for income taxes	(73		)	(43		)	(128		)
Loss before equity in undistributed net income (loss) of
subsidiary	(109		)	(64		)	(192		)
Equity in undistributed net income of subsidiary	1,892			1,111			398
Net income	$	1,783		$	1,047		$	206

STATEMENTS OF CASH FLOWS

	2014			2013			2012
Decrease in cash and cash equivalents:
Cash flows from operating activities:
Net income	$	1,783		$	1,047		$	206
Stock based compensation expense	43			31			21
Adjustments to reconcile net income to net cash provided by operating activities - Equity in undistributed income of subsidiary	(1,892		)	(1,111		)	(398		)
Net cash used in operating activities	(66		)	(33		)	(171		)
Cash flows from financing activities:
Surrendered vested shares of common stock	(22		)	(5		)	—
Cash dividend from Bank to Holding Company	300			—			—
Cash dividends paid	(207		)	(103		)	—
Net cash provided by (used in) financing activities	71			(108		)	—
Net increase (decrease) in cash and cash equivalents	5			(141		)	(171		)
Cash and cash equivalents at beginning of year	230			371			542
Cash and cash equivalents at end of year	$	235		$	230		$	371

XML

Loans, Allowance for Loan Losses and Impaired Loans (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Allowance for Loan Losses:
Beginning balance	$ 6,180	$ 5,745
Charge-offs	(1,927)	(3,019)
Recoveries	343	311
Provision	1,910	3,143	4,440
Ending balance	6,506	6,180	5,745
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	732	983
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	5,774	5,197
Loans Receivable:
Ending balance	470,366	440,863
Ending balance: individually evaluated for impairment	2,929	4,566
Ending balance: collectively evaluated for impairment	467,437	436,297
Real Estate
Allowance for Loan Losses:
Beginning balance	2,541	2,287
Charge-offs	(1,238)	(1,525)
Recoveries	94	36
Provision	1,362	1,743
Ending balance	2,759	2,541
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	525	667
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	2,234	1,874
Loans Receivable:
Ending balance	261,315	264,388
Ending balance: individually evaluated for impairment	2,197	3,659
Ending balance: collectively evaluated for impairment	259,118	260,729
Consumer and Other
Allowance for Loan Losses:
Beginning balance	3,639	3,458
Charge-offs	(689)	(1,494)
Recoveries	249	275
Provision	548	1,400
Ending balance	3,747	3,639
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	207	316
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	3,540	3,323
Loans Receivable:
Ending balance	209,051	176,475
Ending balance: individually evaluated for impairment	732	907
Ending balance: collectively evaluated for impairment	$ 208,319	$ 175,568

XML

Nature of Business and Summary of Significant Accounting Policies (Details Textual) (USD $) In Thousands, unless otherwise specified	1 Months Ended				12 Months Ended						12 Months Ended									1 Months Ended
	Aug. 31, 2014	May 31, 2014	Feb. 28, 2014	Nov. 30, 2013	Sep. 30, 2014 Location Service_Office	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2014 Core Deposits [Member]	Sep. 30, 2013 Core Deposits [Member]	Sep. 30, 2012 Core Deposits [Member]	Sep. 30, 2014 Minimum [Member] Core Deposits [Member]	Sep. 30, 2014 Maximum [Member] Core Deposits [Member]	Sep. 30, 2014 Buildings and Components [Member] Minimum [Member]	Sep. 30, 2014 Buildings and Components [Member] Maximum [Member]	Sep. 30, 2014 Furniture Fixtures and Equipment [Member] Minimum [Member]	Sep. 30, 2014 Furniture Fixtures and Equipment [Member] Maximum [Member]	Sep. 30, 2014 Commercial Loan [Member]	Sep. 30, 2014 Closed End Consumer Loan [Member]	Sep. 30, 2014	Jan. 31, 2015 Scenario, Forecast [Member] Location
Property, Plant and Equipment [Line Items]
Repossessed Assets					$ 1,050	$ 1,028
Useful lives assets													10 years	40 years	3 years	10 years
Finite-Lived Intangible Asset, Useful Life											7 years	15 years
Intangible assets					161	218		161	218	274
Amortization					57	56	209	57	56
Finite-Lived Intangible Assets, Accumulated Amortization								2,360	2,303
Nature of Business and Summary of Significant Accounting Policies (Textual) [Abstract]
Total number of service offices					23
Number of stand-alone locations					8
Number of in-store branch locations					15
Number of in-store branches closing																				3
Cash Equivalents Maturity Period Description					three months or less
Interest income discontinued over delinquent days																	90 days	120 days	180 days
Interest income recognized debt past due not more than days					90 days
Loans charged off past due more than days					180 days
Closed end loan charged off past due more than days					120 days
Federal Home Loan Bank stock					3,820
Federal Reserve Bank stock					1,695
Percentage of Dividend Rate	0.50%	0.50%	0.30%	0.30%
Advertising Expense					$ 370	$ 233	$ 190

XML

Commitments and Contingencies (Details1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
2015	$ 1,211
2016	849
2017	689
2018	535
2019	291
After 2019	540
Total	$ 4,115

XML

Stock Based Compensation (Tables)

12 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of stock option activity

	Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
2014
Outstanding at beginning of year	150,932		$	6.15
Granted	45,000		8.00
Exercised	—
Forfeited or expired	(16,740	)
Outstanding at end of year	179,192		$	6.52	6.96	$	—
Exercisable at end of year	91,203		$	6.35	5.52
Fully vested and expected to vest	179,192		$	6.52	6.96
2013
Outstanding at beginning of year	124,789		$	6.26
Granted	26,143		5.62
Exercised	—
Forfeited or expired	—
Outstanding at end of year	150,932		$	6.15	7.06	$	—
Exercisable at end of year	88,927		$	6.63	6.07
Fully vested and expected to vest	150,932		$	6.15	7.06
2012
Outstanding at beginning of year	160,353		$	6.70
Granted	10,000		5.65
Exercised	—
Forfeited or expired	(45,564	)
Outstanding at end of year	124,789		$	6.26	7.65	$	—
Exercisable at end of year	77,639		$	6.82	6.78
Fully vested and expected to vest	124,789		$	6.26	7.65

Information related to stock option plan

Information related to the 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan during each year follows:

	2014		2013		2012
Intrinsic value of options exercised	$	—	$	—	$	—
Cash received from options exercised	$	—	$	—	$	—
Tax benefit realized from options exercised	$	—	$	—	$	—

Assumptions used in calculating stock option expense

Set forth below is a table showing relevant assumptions used in calculating stock option expense related to the Company’s 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan:

	2014		2013		2012
Dividend yield	0	%	0	%	0	%
Risk-free interest rate	2.7	%	1.7	%	1.6	%
Weighted average expected life (years)	10		10		10
Expected volatility	3	%	14	%	19	%

XML

Loans, Allowance for Loan Losses and Impaired Loans (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Aging analysis of the Bank's real estate and consumer loans
1 Month Past Due	$ 1,222	$ 2,915
2 Months Past Due	289	538
Greater Than 3 Months	1,240	2,151
Total Past Due	2,751	5,604
Current	467,615	435,259
Total Loans	470,366	440,863
Recorded Investment 3 months and Accruing	401	483
Real estate loans
Aging analysis of the Bank's real estate and consumer loans
1 Month Past Due	678	2,057
2 Months Past Due	80	351
Greater Than 3 Months	989	1,905
Total Past Due	1,747	4,313
Current	259,568	260,075
Total Loans	261,315	264,388
Recorded Investment 3 months and Accruing	228	371
Consumer and other loans
Aging analysis of the Bank's real estate and consumer loans
1 Month Past Due	354	746
2 Months Past Due	73	121
Greater Than 3 Months	178	214
Total Past Due	605	1,081
Current	175,634	155,416
Total Loans	176,239	156,497
Recorded Investment 3 months and Accruing	99	80
Purchased third party loans
Aging analysis of the Bank's real estate and consumer loans
1 Month Past Due	190	112
2 Months Past Due	136	66
Greater Than 3 Months	73	32
Total Past Due	399	210
Current	32,413	19,768
Total Loans	32,812	19,978
Recorded Investment 3 months and Accruing	$ 74	$ 32

XML

Intangible Assets (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
2015	$ 57
2016	57
2017	31
2018	15
After 2018	1
Total	$ 161	$ 218

XML

Investment Securities (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair Value, Less than 12 months	$ 3,709	$ 0
Fair Value, 12 Months or More	0	0
Fair Value, Total	3,709	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] [Abstract]
Unrealized Loss, Less than 12 Months	14	0
Unrealized Loss, 12 Months or More	0	0
Unrealized Loss, Total	14	0
Obligations of states and political subdivisions
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair Value, Less than 12 months	345	0
Fair Value, 12 Months or More	0	0
Fair Value, Total	345	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] [Abstract]
Unrealized Loss, Less than 12 Months	5	0
Unrealized Loss, 12 Months or More	0	0
Unrealized Loss, Total	5	0
Mortgage-backed securities
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair Value, Less than 12 months	3,364	0
Fair Value, 12 Months or More	0	0
Fair Value, Total	3,364	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] [Abstract]
Unrealized Loss, Less than 12 Months	9	0
Unrealized Loss, 12 Months or More	0	0
Unrealized Loss, Total	$ 9	$ 0

XML

Fair Value Accounting (Details Textual) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Fair Value Accounting [Abstract]
Other-than-temporary impairment on mortgage-backed securities	$ 78	$ 797	$ 1,332
Federal Home Loan Bank stock	3,820
Federal Reserve Bank stock	$ 1,695

XML

Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net income attributable to common stockholders	$ 1,783	$ 1,047	$ 206
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of premium/discount on securities	1,024	1,008	988
Depreciation	1,116	1,079	1,043
Provision for loan losses	1,910	3,143	4,440
Net realized loss (gain) on sale of securities	168	(552)	(243)
Other-than-temporary impairment on mortgage-backed securities	78	797	1,332
Amortization of core deposit intangible	57	56	209
Amortization of restricted stock	66	45	22
Stock based compensation expense	43	31	21
Loss on sale of office properties	323	168	134
Benefit (provision) for deferred income taxes	943	182	(1,829)
Net gains from disposals of foreclosed properties	(94)	(96)	(64)
Provision for valuation allowance on foreclosed properties	74	76	271
(Increase) decrease in accrued interest receivable and other assets	(474)	488	2,874
Increase (decrease) in other liabilities	926	(834)	(326)
Total adjustments	6,160	5,591	8,872
Net cash provided by operating activities	7,943	6,638	9,078
Cash flows from investing activities:
Purchase of investment securities	(20,506)	(71,544)	(59,114)
Purchase of bank owned life insurance	(3,000)	(3,000)	0
Net decrease (increase) in interest-bearing deposits	1,743	(1,988)	9,543
Proceeds from sale of securities available for sale	23,491	44,780	27,065
Principal payments on investment securities	6,892	9,621	10,146
Proceeds from sale of non-marketable equity securities	0	500	1,987
Purchase of non-marketable equity securities	(2,215)	0	0
Proceeds from sale of foreclosed properties	1,856	1,818	2,067
Net increase in loans	(33,076)	(17,917)	(1,203)
Net capital expenditures	(485)	(549)	(473)
Net cash received from sale of office properties	159	0	465
Net cash used in investing activities	(25,141)	(38,279)	(9,517)
Cash flows from financing activities:
Net increase in Federal Home Loan Bank advances	8,891	750	18,850
Net increase (decrease) in deposits	2,369	25,340	(26,915)
Surrender of restricted shares of common stock	(22)	(4)	0
Cash dividends paid	(207)	(103)	0
Net cash provided by (used in) financing activities	11,031	25,983	(8,065)
Net decrease in cash and cash equivalents	(6,167)	(5,658)	(8,504)
Cash and cash equivalents at beginning of period	17,601	23,259	31,763
Cash and cash equivalents at end of period	11,434	17,601	23,259
Cash paid during the year for:
Interest on deposits	3,612	3,667	5,360
Interest on borrowings	646	543	1,273
Income taxes	86	790	281
Supplemental noncash disclosure:
Transfers from loans receivable to foreclosed and repossessed assets	$ 1,989	$ 2,173	$ 1,617

XML

Investment Securities (Details 5) (Available-for-sale securities [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Available-for-sale securities [Member]
Summary of amount of other-than-temporary impairment related to credit losses on available-for-sale securities
Beginning balance of the amount of OTTI related to credit losses	$ 1,250	$ 3,740
Credit portion of OTTI on securities for which OTTI was not previously recognized	91	867
Cash payments received on a security in excess of the security’s book value adjusted for the previously recognized credit portion of OTTI	(13)	(70)
Credit portion of OTTI on securities in default for which OTTI was previously recognized	0	(2,184)
Credit portion of OTTI previously recognized on securities sold during the period	(1,328)	(1,103)
Ending balance of the amount of OTTI related to credit losses	$ 0	$ 1,250

XML

Fair Value Accounting (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Assets Measured on a Recurring Basis
Estimated Fair Value	$ 62,189	$ 79,695
U.S. government agency obligations
Assets Measured on a Recurring Basis
Estimated Fair Value	22,103	27,866
Federal Agricultural Mortgage Corporation
Assets Measured on a Recurring Basis
Estimated Fair Value	65
Non-agency mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value		1,226
Fair Value, Measurements, Recurring [Member]
Assets Measured on a Recurring Basis
Estimated Fair Value	70,997	79,695
Fair Value, Measurements, Recurring [Member] | U.S. government agency obligations
Assets Measured on a Recurring Basis
Estimated Fair Value	22,103	27,866
Fair Value, Measurements, Recurring [Member] | Obligations of states and political subdivisions
Assets Measured on a Recurring Basis
Estimated Fair Value	12,658	10,970
Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value	36,171
Fair Value, Measurements, Recurring [Member] | Federal Agricultural Mortgage Corporation
Assets Measured on a Recurring Basis
Estimated Fair Value	65
Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value		39,633
Fair Value, Measurements, Recurring [Member] | Non-agency mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value		1,226
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Estimated Fair Value	0	0
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) | U.S. government agency obligations
Assets Measured on a Recurring Basis
Estimated Fair Value	0	0
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Obligations of states and political subdivisions
Assets Measured on a Recurring Basis
Estimated Fair Value	0	0
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value	0
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Federal Agricultural Mortgage Corporation
Assets Measured on a Recurring Basis
Estimated Fair Value	0
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value		0
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Non-agency mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value		0
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Estimated Fair Value	70,997	78,469
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) | U.S. government agency obligations
Assets Measured on a Recurring Basis
Estimated Fair Value	22,103	27,866
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) | Obligations of states and political subdivisions
Assets Measured on a Recurring Basis
Estimated Fair Value	12,658	10,970
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) | Mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value	36,171
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) | Federal Agricultural Mortgage Corporation
Assets Measured on a Recurring Basis
Estimated Fair Value	65
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) | Mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value		39,633
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) | Non-agency mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Estimated Fair Value	0	1,226
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) | U.S. government agency obligations
Assets Measured on a Recurring Basis
Estimated Fair Value
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) | Obligations of states and political subdivisions
Assets Measured on a Recurring Basis
Estimated Fair Value	0	0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) | Mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value	0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) | Federal Agricultural Mortgage Corporation
Assets Measured on a Recurring Basis
Estimated Fair Value
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) | Mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value		0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) | Non-agency mortgage-backed securities
Assets Measured on a Recurring Basis
Estimated Fair Value		$ 1,226

XML

Investment Securities (Tables)

12 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of September 30, 2014 and September 30, 2013, respectively, were as follows:

Available for sale securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2014
U.S. government agency obligations	$	23,076	$	—	$	973	$	22,103
Obligations of states and political subdivisions	11,432		17		255		11,194
Mortgage-backed securities	29,058		138		369		28,827
Federal Agricultural Mortgage Corporation	71		—		6		65
Total available for sale securities	$	63,637	$	155	$	1,603	$	62,189
September 30, 2013
U.S. government agency obligations	$	29,702	$	—	$	1,836	$	27,866
Obligations of states and political subdivisions	11,647		—		677		10,970
Mortgage-backed securities	40,378		140		885		39,633
Non-agency mortgage-backed securities	1,842		—		616		1,226
Total available for sale securities	$	83,569	$	140	$	4,014	$	79,695

Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities held to maturity

Held to maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2014
Obligations of states and political subdivisions	$	1,465	$	4	$	5	$	1,464
Mortgage-backed securities	7,320		33		9		7,344
Total held to maturity securities	$	8,785	$	37	$	14	$	8,808
September 30, 2013
Obligations of states and political subdivisions	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—
Total held to maturity securities	$	—	$	—	$	—	$	—

The estimated fair value of securities by contractual maturity

The estimated fair value of securities at September 30, 2014, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities on mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Expected maturities may differ from contractual maturities on certain agency and municipal securities due to the call feature.

Available for sale securities	Amortized Cost		Estimated Fair Value
Due after one year through five years	$	1,106	$	1,114
Due after five years through ten years	11,326		11,018
Due after ten years	51,205		50,057
Total available for sale securities	$	63,637	$	62,189

Held to maturity securities	Amortized Cost		Estimated Fair Value
Due after one year through five years	$	—	$	—
Due after five years through ten years	585		582
Due after ten years	8,200		8,226
Total held to maturity securities	$	8,785	$	8,808

Available for sale securities with unrealized losses

Securities with unrealized losses at September 30, 2014 and 2013, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

	Less than 12 Months				12 Months or More				Total
Available for sale securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
2014
U.S. government agency obligations	$	—	$	—	$	22,103	$	973	$	22,103	$	973
Obligations of states and political subdivisions	574		1		8,817		254		9,391		255
Mortgage-backed securities	8,167		66		12,518		303		20,685		369
Federal Agricultural Mortgage Corporation	65		6		—		—		65		6
Total temporarily impaired	$	8,806	$	73	$	43,438	$	1,530	$	52,244	$	1,603
2013
U.S. government agency obligations	$	27,866	$	1,836	$	—	$	—	$	27,866	$	1,836
Obligations of states and political subdivisions	9,320		585		1,650		92		10,970		677
Mortgage-backed securities	27,690		885		—		—		27,690		885
Non-agency mortgage-backed securities	—		—		1,226		616		1,226		616
Total temporarily impaired	$	64,876	$	3,306	$	2,876	$	708	$	67,752	$	4,014

Held to maturity securities with unrealized losses

	Less than 12 Months				12 Months or More				Total
Held to maturity securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
2014
Obligations of states and political subdivisions	$	345	$	5	$	—	$	—	$	345	$	5
Mortgage-backed securities	3,364		9		—		—		3,364		9
Total temporarily impaired	$	3,709	$	14	$	—	$	—	$	3,709	$	14
2013
Obligations of states and political subdivisions	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—		—		—
Total temporarily impaired	$	—	$	—	$	—	$	—	$	—	$	—

Summary of amount of other-than-temporary impairment related to credit losses on available-for-sale securities

A summary of the amount of other-than-temporary impairment related to credit losses on available for sale securities that have been recognized in earnings as of each of the most recent two fiscal year ends was as follows:

	2014			2013
Beginning balance of the amount of OTTI related to credit losses	$	1,250		$	3,740
Credit portion of OTTI on securities for which OTTI was not previously recognized	91			867
Cash payments received on a security in excess of the security’s book value adjusted for the previously recognized credit portion of OTTI	(13		)	(70		)
Credit portion of OTTI on securities in default for which OTTI was previously recognized	—			(2,184		)
Credit portion of OTTI previously recognized on securities sold during the period	(1,328		)	(1,103		)
Ending balance of the amount of OTTI related to credit losses	$	—		$	1,250

XML

Loans, Allowance for Loan Losses and Impaired Loans (Tables)

12 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Major classifications of loans

Major classifications of loans as of September 30, 2014 and 2013, respectively, were as follows:

	September 30, 2014			September 30, 2013
Real estate loans:
Consumer	$	223,025		$	252,958
Commercial	39,061			12,531
Total real estate loans	262,086			265,489
Consumer and other loans:
Automobile	12,810			12,662
Secured personal and other	188,911			158,842
Unsecured personal	3,512			1,835
Total consumer and other loans	205,233			173,339
Gross loans	467,319			438,828
Less:
Deferred loan origination fees, net of costs	3,047			2,035
Allowance for loan losses	(6,506		)	(6,180		)
Loans receivable, net	$	463,860		$	434,683

A summary of the changes in loans

Certain directors and executive officers of the Company and the Bank are defined as related parties. These related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during 2014 and 2013. A summary of the changes in those loans during the last two fiscal years is as follows:

	September 30,
	2014			2013
Balance—beginning of year	$	131		$	138
New loan originations	17			33
Repayments	(19		)	(40		)
Balance—end of year	$	129		$	131
Available and unused lines of credit	$	18		$	18

Changes in a specific component on impaired loans and a general component for non-impaired loans for the periods

Changes in the ALL by loan type for the periods presented below were as follows:

	Real Estate			Consumer and Other			Total
Year Ended September 30, 2014:
Allowance for Loan Losses:
Beginning balance, October 1, 2013	$	2,541		$	3,639		$	6,180
Charge-offs	(1,238		)	(689		)	(1,927		)
Recoveries	94			249			343
Provision	1,362			548			1,910
Ending balance, September 30, 2014	$	2,759		$	3,747		$	6,506
Allowance for Loan Losses at September 30, 2014:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	525		$	207		$	732
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	2,234		$	3,540		$	5,774
Loans Receivable as of September 30, 2014:
Ending balance	$	261,315		$	209,051		$	470,366
Ending balance: individually evaluated for impairment	$	2,197		$	732		$	2,929
Ending balance: collectively evaluated for impairment	$	259,118		$	208,319		$	467,437

	Real Estate			Consumer and Other			Total
Year ended September 30, 2013
Allowance for Loan Losses:
Beginning balance, October 1, 2012	$	2,287		$	3,458		$	5,745
Charge-offs	(1,525		)	(1,494		)	(3,019		)
Recoveries	36			275			311
Provision	1,743			1,400			3,143
Ending balance, September 30, 2013	$	2,541		$	3,639		$	6,180
Allowance for Loan Losses at September 30, 2013:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	667		$	316		$	983
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	1,874		$	3,323		$	5,197
Loans Receivable as of September 30, 2013:
Ending balance	$	264,388		$	176,475		$	440,863
Ending balance: individually evaluated for impairment	$	3,659		$	907		$	4,566
Ending balance: collectively evaluated for impairment	$	260,729		$	175,568		$	436,297

Loans receivable

Loans receivable by loan type as of the end of the periods shown below were as follows:

	Real Estate Loans				Consumer and Other Loans				Total Loans
	September 30, 2014		September 30, 2013		September 30, 2014		September 30, 2013		September 30, 2014		September 30, 2013
Performing loans
Performing TDR loans	$	4,535	$	6,254	$	797	$	1,101	$	5,332	$	7,355
Performing loans other	255,564		255,951		207,885		174,949		463,449		430,900
Total performing loans	260,099		262,205		208,682		176,050		468,781		438,255
Nonperforming loans (1)
Nonperforming TDR loans	202		1,187		47		76		249		1,263
Nonperforming loans other	1,014		996		322		349		1,336		1,345
Total nonperforming loans	$	1,216	$	2,183	$	369	$	425	$	1,585	$	2,608
Total loans	$	261,315	$	264,388	$	209,051	$	176,475	$	470,366	$	440,863

(1) Nonperforming loans are either 90+ days past due or nonaccrual.

Aging analysis of the Bank real estate and consumer loans

An aging analysis of the Company’s real estate and consumer and other loans as of September 30, 2014 and September 30, 2013, respectively, was as follows:

	1 Month Past Due		2 Months Past Due		Greater Than 3 Months		Total Past Due		Current		Total Loans		Recorded Investment > 3 months and Accruing
September 30, 2014
Real estate loans	$	678	$	80	$	989	$	1,747	$	259,568	$	261,315	$	228
Consumer and other loans	354		73		178		605		175,634		176,239		99
Purchased third party loans	190		136		73		399		32,413		32,812		74
Total	$	1,222	$	289	$	1,240	$	2,751	$	467,615	$	470,366	$	401
September 30, 2013
Real estate loans	$	2,057	$	351	$	1,905	$	4,313	$	260,075	$	264,388	$	371
Consumer and other loans	746		121		214		1,081		155,416		156,497		80
Purchased third party loans	112		66		32		210		19,768		19,978		32
Total	$	2,915	$	538	$	2,151	$	5,604	$	435,259	$	440,863	$	483

Bank impaired loans

A summary of the Company’s impaired loans as of September 30, 2014 and September 30, 2013 was as follows:

	With No Related Allowance Recorded						With An Allowance Recorded						Totals
	Real Estate		Consumer and Other		Total		Real Estate		Consumer and Other		Total		Real Estate		Consumer and Other		Total
Recorded investment at September 30, 2014	$	4,345	$	535	$	4,880	$	2,197	$	732	$	2,929	$	6,542	$	1,267	$	7,809
Unpaid balance at September 30, 2014	4,345		535		4,880		2,197		732		2,929		6,542		1,267		7,809
Recorded investment at September 30, 2013	5,349		771		6,120		3,659		907		4,566		9,008		1,678		10,686
Unpaid balance at September 30, 2013	5,349		771		6,120		3,659		907		4,566		9,008		1,678		10,686
Average recorded investment; twelve months ended September 30, 2014	4,722		614		5,336		3,137		823		3,960		7,859		1,437		9,296
Average recorded investment; twelve months ended September 30, 2013	4,185		609		4,794		4,197		993		5,190		8,382		1,602		9,984
Interest income received; twelve months ended September 30, 2014	149		32		181		68		24		92		217		56		273
Interest income received; twelve months ended September 30, 2013	202		71		273		69		40		109		271		111		382

Troubled Debt Restructuring

A summary of loans by loan type modified in a troubled debt restructuring as of September 30, 2014 and September 30, 2013, and during each of the twelve months then ended, was as follows:

	Real Estate			Consumer and Other			Total
September 30, 2014 and
Twelve Months then Ended:
Accruing / Performing:
Beginning balance	$	6,254		$	1,101		$	7,355
Principal payments	(757		)	(258		)	(1,015		)
Charge-offs	(11		)	(30		)	(41		)
Advances	7			—			7
New restructured (1)	40			24			64
Class transfers (2)	(60		)	—			(60		)
Transfers between accrual/non-accrual	(938		)	(40		)	(978		)
Ending balance	$	4,535		$	797		$	5,332
Non-accrual / Non-performing:
Beginning balance	$	1,187		$	76		$	1,263
Principal payments	(1,515		)	(38		)	(1,553		)
Charge-offs	(426		)	(52		)	(478		)
Advances	3			—			3
New restructured (1)	—			16			16
Class transfers (2)	15			5			20
Transfers between accrual/non-accrual	938			40			978
Ending balance	$	202		$	47		$	249
Totals:
Beginning balance	$	7,441		$	1,177		$	8,618
Principal payments	(2,272		)	(296		)	(2,568		)
Charge-offs	(437		)	(82		)	(519		)
Advances	10			—			10
New restructured (1)	40			40			80
Class transfers (2)	(45		)	5			(40		)
Transfers between accrual/non-accrual	—			—			—
Ending balance	$	4,737		$	844		$	5,581

(1) “New restructured” represent loans restructured during the current period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	Real Estate			Consumer and Other			Total
September 30, 2013 and
Twelve Months then Ended:
Accruing / Performing:
Beginning balance	$	5,751		$	1,055		$	6,806
Principal payments	(397		)	(388		)	(785		)
Charge-offs	(131		)	(42		)	(173		)
Advances	21			7			28
New restructured (1)	181			191			372
Class transfers (2)	1,294			263			1,557
Transfers between accrual/non-accrual	(465		)	15			(450		)
Ending balance	$	6,254		$	1,101		$	7,355
Non-accrual / Non-performing:
Beginning balance	$	1,259		$	70		$	1,329
Principal payments	(557		)	(86		)	(643		)
Charge-offs	(248		)	(24		)	(272		)
Advances	13			3			16
New restructured (1)	—			1			1
Class transfers (2)	255			127			382
Transfers between accrual/non-accrual	465			(15		)	450
Ending balance	$	1,187		$	76		$	1,263
Totals:
Beginning balance	$	7,010		$	1,125		$	8,135
Principal payments	(954		)	(474		)	(1,428		)
Charge-offs	(379		)	(66		)	(445		)
Advances	34			10			44
New restructured (1)	181			192			373
Class transfers (2)	1,549			390			1,939
Transfers between accrual/non-accrual	—			—			—
Ending balance	$	7,441		$	1,177		$	8,618

(1) “New restructured” represent loans restructured during the current period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	September 30, 2014			September 30, 2013
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Real estate	47	$	4,737	62	$	7,441
Consumer and other	53	844		90	1,177
	100	$	5,581	152	$	8,618

XML

Loans, Allowance for Loan Losses and Impaired Loans (Details Textual) (USD $)					12 Months Ended				12 Months Ended
	Sep. 30, 2014 TDR	Sep. 30, 2013 TDR	Oct. 31, 2012	Sep. 30, 2012	Sep. 30, 2014 Non Performing Loans	Sep. 30, 2013 Non Performing Loans	Sep. 30, 2012 Non Performing Loans	Sep. 30, 2014 Substandard [Member]	Sep. 30, 2014 TDR Loans [Member]	Sep. 30, 2014 Performing loans	Sep. 30, 2013 Performing loans	Sep. 30, 2012 Performing loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Board of Director limit on purchase of loans under loan purchase agreement			$ 40,000,000
Percentage of loan amounts deposited into cash reserve account			3.00%
Maximum restricted reserve account balance			1,000,000
Loans and lease receivable, gross, consumer	32,812,000
Cash reserve account balance	996,000
Loans allowance for loan losses and impaired loans (Textual) [Abstract]
Past due period & nonaccruing					90+ days				90+ days
Past due, minimum period									90 days
Impaired TDR loans	5,581,000	8,618,000		8,135,000	249,000	1,263,000	1,329,000	2,228,000		5,332,000	7,355,000	6,806,000
Total impaired loans	7,809,000	10,686,000
Number of delinquent TDR	4	11
Recorded investment in delinquent TDR	$ 191,000	$ 1,102,000

XML

Fair Value Accounting (Details 1) (Asset-backed Securities [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Asset-backed Securities [Member]
Reconciliation of residential mortgage-backed securities
Balance beginning of period	$ 1,226	$ 6,586
Total gains or losses (realized/unrealized):
Included in earnings	(274)	(797)
Included in other comprehensive income (loss)	615	1,322
Sales	(1,321)	(3,802)
Payments, accretion and amortization	(246)	(2,083)
Balance end of period	$ 0	$ 1,226

XML

Office Properties and Equipment (Tables)

12 Months Ended

Sep. 30, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Office properties and equipment at September 30 for each of the years shown below consisted of the following:

	2014			2013
Land	$	510		$	510
Buildings	2,284			2,161
Furniture, equipment, and vehicles	7,672			9,930
Subtotals	10,466			12,601
Less—Accumulated depreciation	(6,741		)	(7,766		)
Office properties and equipment—net	$	3,725		$	4,835

XML

Intangible Assets (Tables)

12 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of core deposit intangibles and related amortization

Intangible assets consist of core deposit intangibles arising from various bank acquisitions. A summary of core deposit intangibles and related amortization for the periods shown below follows:

	2014			2013
Balance at beginning of year	$	218		$	274
Capitalized	—			—
Amortization	(57		)	(56		)
Balance at end of year	$	161		$	218

Estimated future aggregate amortization expense

The estimated future aggregate amortization expense for the core deposit intangibles is as follows:

2015	$	57
2016	57
2017	31
2018	15
After 2018	1
Total	$	161

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parenthetical) (USD $)	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Statement of Stockholders' Equity [Abstract]
Cash dividend dollars per share	$ 0.04	$ 0.02	$ 0

XML

Deposits (Tables)

12 Months Ended

Sep. 30, 2014

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Summary of deposits by type

The following is a summary of deposits by type at September 30, 2014 and 2013, respectively:

	2014		2013
Non-interest bearing demand deposits	$	19,669	$	22,926
interest bearing demand deposits	17,696		11,075
Savings accounts	29,277		28,259
Money market accounts	136,666		154,639
Certificate accounts	246,459		230,499
Total deposits	$	449,767	$	447,398
Brokered certificates of deposit included above:	$	11,960	$	11,960

Scheduled maturities of time deposits

At September 30, 2014, the scheduled maturities of time deposits were as follows:

2015	$	80,381
2016	71,638
2017	52,843
2018	23,960
2019	17,637
After 2019	—
Total	$	246,459

XML

Stock Based Compensation (Details Textual) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended				3 Months Ended	12 Months Ended			12 Months Ended	116 Months Ended		12 Months Ended		80 Months Ended	12 Months Ended		116 Months Ended	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2014 2005 Recognition and Retention Plan [Member]	Sep. 30, 2014 2005 Recognition and Retention Plan [Member]	Sep. 30, 2013 2005 Recognition and Retention Plan [Member]	Feb. 28, 2005 2005 Recognition and Retention Plan [Member]	Sep. 30, 2014 2004 Stock Option and Incentive Plan [Member]	Sep. 30, 2014 2004 Stock Option and Incentive Plan [Member]	Feb. 28, 2005 2004 Stock Option and Incentive Plan [Member]	Sep. 30, 2014 2008 Equity Incentive Plan [Member]	Sep. 30, 2013 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 Restricted shares [Member] 2005 Recognition and Retention Plan [Member]	Sep. 30, 2013 Restricted shares [Member] 2005 Recognition and Retention Plan [Member]	Sep. 30, 2014 Restricted shares [Member] 2005 Recognition and Retention Plan [Member]	Sep. 30, 2014 Restricted shares [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2013 Restricted shares [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 Restricted shares [Member] 2004 Recognition and Retention Plan and 2008 Equity incentive Plan [Member]	Sep. 30, 2013 Restricted shares [Member] 2004 Recognition and Retention Plan and 2008 Equity incentive Plan [Member]	Sep. 30, 2012 Restricted shares [Member] 2004 Recognition and Retention Plan and 2008 Equity incentive Plan [Member]	Sep. 30, 2014 Stock Options [Member] 2004 Stock Option and Incentive Plan [Member]	Sep. 30, 2014 Stock Options [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 Stock Options [Member] 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan [Member]	Sep. 30, 2013 Stock Options [Member] 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan [Member]	Sep. 30, 2012 Stock Options [Member] 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 Unexercised Nonqualified Stock Options [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 Unexercised Incentive Stock Options [Member] 2008 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant of awards company's common stock								113,910			284,778
Restricted shares issued																	113,910	15,000	15,000
Restricted shares outstanding					101,103	101,103												0	0
Vesting period of awards granted															5 years			5 years					5 years	5 years
Fair value of the restricted shares on the date of award, first grant															$ 7.04		$ 7.04
Number of restricted shares on date of award, first grant															63,783		63,783
Fair value of the restricted shares on the date of award, second grant															$ 6.18		$ 6.18
Number of restricted shares on the date of award, second grant															6,832		6,832
Fair value of the restricted shares on the date of award, third grant															$ 5.24		$ 5.24
Number of restricted shares on the date of award, third grant															20,312		20,312
Fair value of the restricted shares on the date of award, fourth grant															$ 5.65		$ 5.65
Number of restricted shares on the date of award, fourth grant															2,500		2,500
Fair value of the restricted shares on the date of award, fifth grant															$ 5.84		$ 5.84
Number of restricted shares on the date of award, fifth grant															20,483		20,483
Shares granted to eligible participants															0	20,483		15,000
Weighted Average Fair value	$ 8.00	$ 5.62	$ 5.65						$ 6.57							$ 5.84
Previously awarded shares forfeited					0		0
Shares Paid for Tax Withholding for Share Based Compensation						2,830	639
Options granted	45,000	26,143	10,000							284,778		45,000	0	45,000
Expiry period of unexercised and nonqualified stock options									15 years
Expiry period of unexercised incentive stock options									10 years
Options for shares of the Company's common stock vested										91,203				0
Options for shares of the Company's common stock unvested										45,489				42,500
Number of shares forfeited under options in the plan	16,740	0	45,564							143,528		2,500		2,500
Number of options exercised under the plan	0	0	0							4,558				0
Number of options remained outstanding under the plan	179,192	150,932	124,789	160,353					136,692	136,692		42,500		42,500
Number of shares reserved and available for issuance under the 2008 Equity Incentive Plan												597,605		597,605
Prospective issuance of shares of the Company's common stock under the 2008 Equity Incentive Plan												426,860
Aggregate stock which may be granted for restricted stock and units under the 2008 Equity Incentive Plan												170,745
Weighted average grant date fair value (in dollars per share)																		$ 8.00
Compensation expense related to awards																				$ 66	$ 45	$ 22			$ 43	$ 31	$ 21
Weighted average exercise price (in dollars per share)												$ 8.00
Award expiration period																												15 years	10 years

XML

Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Sep. 30, 2014

Equity [Abstract]

Tax Effects Allocated to Each Component of Other Comprehensive Income

In addition to presenting the Consolidated Statements of Other Comprehensive Income (Loss) herein, the following table shows the tax effects allocated to each component of other comprehensive income (loss) for the years ended September 30, 2014, 2013 and 2012:

	2014									2013									2012
	Before-Tax Amount			Tax Expense			Net-of-Tax Amount			Before-Tax Amount			Tax Expense			Net-of-Tax Amount			Before-Tax Amount		Tax Expense			Net-of-Tax Amount
Unrealized gains (losses) on securities:
Net unrealized gains (losses) arising during the period	$	2,515		(1,006		)	$	1,509		$	(4,654	)	$	1,861		$	(2,793	)	$	1,372	$	(549	)	$	823
Less: reclassification adjustment for gains included in net income	(168		)	67			(101		)	552			(220		)	332			243		(97		)	146
Changes for realized losses on securities available for sale for OTTI write-down	78			(31		)	47			797			(319		)	478			1,332		(533		)	799
Defined benefit plans:
Amortization of unrecognized prior service costs and net gains (losses)	(18		)	7			(11		)	82			(33		)	49			330		(132		)	198
Other comprehensive income (loss)	$	2,407		$	(963	)	$	1,444		$	(3,223	)	$	1,289		$	(1,934	)	$	3,277	$	(1,311	)	$	1,966

Changes in the accumulated balances for each component of other comprehensive income

The changes in the accumulated balances for each component of other comprehensive income (loss) for the years ended September 30, 2014 and 2013 were as follows:

	Unrealized Gains  (Losses) on Securities			Defined Benefit Plans			Other Comprehensive Income (Loss)
Balance, October 1, 2012	$	(341	)	$	(11	)	$	(352	)
Current year-to-date other comprehensive income (loss), net of tax	(1,983		)	49			(1,934		)
Ending balance, September 30, 2013	$	(2,324	)	$	38		$	(2,286	)
Current year-to-date other comprehensive income (loss), net of tax	1,455			(11		)	1,444
Ending balance, September 30, 2014	$	(869	)	$	27		$	(842	)

XML

Loans, Allowance for Loan Losses and Impaired Loans (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Bank impaired loans
With no related allowance recorded, Recorded investment	$ 4,880	$ 6,120
With an allowance recorded, Recorded investment	2,929	4,566
Recorded investment, Total	7,809	10,686
With no related allowance recorded, unpaid principal balance	4,880	6,120
With an allowance recorded, unpaid principal balance	2,929	4,566
Unpaid principal balance, Total	7,809	10,686
With no related allowance recorded, Average recorded investment	5,336	4,794
With an allowance recorded, Average recorded investment	3,960	5,190
Average recorded investment, Total	9,296	9,984
With no related allowance recorded, Interest income recognized	181	273
With an allowance recorded, Interest income recognized	92	109
Interest income recognized, Total	273	382
Real Estate
Bank impaired loans
With no related allowance recorded, Recorded investment	4,345	5,349
With an allowance recorded, Recorded investment	2,197	3,659
Recorded investment, Total	6,542	9,008
With no related allowance recorded, unpaid principal balance	4,345	5,349
With an allowance recorded, unpaid principal balance	2,197	3,659
Unpaid principal balance, Total	6,542	9,008
With no related allowance recorded, Average recorded investment	4,722	4,185
With an allowance recorded, Average recorded investment	3,137	4,197
Average recorded investment, Total	7,859	8,382
With no related allowance recorded, Interest income recognized	149	202
With an allowance recorded, Interest income recognized	68	69
Interest income recognized, Total	217	271
Consumer and Other
Bank impaired loans
With no related allowance recorded, Recorded investment	535	771
With an allowance recorded, Recorded investment	732	907
Recorded investment, Total	1,267	1,678
With no related allowance recorded, unpaid principal balance	535	771
With an allowance recorded, unpaid principal balance	732	907
Unpaid principal balance, Total	1,267	1,678
With no related allowance recorded, Average recorded investment	614	609
With an allowance recorded, Average recorded investment	823	993
Average recorded investment, Total	1,437	1,602
With no related allowance recorded, Interest income recognized	32	71
With an allowance recorded, Interest income recognized	24	40
Interest income recognized, Total	$ 56	$ 111

XML

Federal Home Loan Bank Advances (Details Textual) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Federal Home Loan Bank advances	$ 58,891	$ 50,000
Federal Home Loan Bank Advances (Textual) [Abstract]
Banks available and unused portion of borrowing agreement	81,930
Maximum month-end amounts outstanding	75,891	52,950
FHLB Letters of Credit pledged	23,100
Mortgage Loans on Real Estate [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Federal Home Loan Bank advances	$ 232,512

XML

Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Assets
Cash and cash equivalents	$ 11,434	$ 17,601
Other interest-bearing deposits	245	1,988
Investment securities (at fair value of $70,997 and $79,695)	70,974	79,695
Non-marketable equity securities, at cost	5,515	3,300
Loans receivable	470,366	440,863
Allowance for loan losses	(6,506)	(6,180)
Loans receivable, net	463,860	434,683
Office properties and equipment, net	3,725	4,835
Accrued interest receivable	1,478	1,469
Intangible assets	161	218
Foreclosed and repossessed assets, net	1,050	1,028
Other assets	11,373	9,704
TOTAL ASSETS	569,815	554,521
Liabilities:
Deposits	449,767	447,398
Federal Home Loan Bank advances	58,891	50,000
Other liabilities	3,864	2,938
Total liabilities	512,522	500,336
Stockholders’ equity:
Common stock—$0.01 par value, authorized 30,000,000; 5,167,061 and 5,154,891 shares issued and outstanding, respectively	52	51
Additional paid-in capital	54,257	54,116
Retained earnings	4,049	2,473
Unearned deferred compensation	(223)	(169)
Accumulated other comprehensive loss	(842)	(2,286)
Total stockholders’ equity	57,293	54,185
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 569,815	$ 554,521

XML

Fair Value Accounting (Details 2) (Fair Value, Measurements, Nonrecurring [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Assets Measured on a Nonrecurring Basis
Foreclosed and repossessed assets, net	$ 1,050	$ 1,028
Loans restructured in a TDR	5,581	8,618
Total	6,631	9,646
Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Nonrecurring Basis
Foreclosed and repossessed assets, net	0
Loans restructured in a TDR	0
Total	0
Significant Other Observable Inputs (Level 2)
Assets Measured on a Nonrecurring Basis
Foreclosed and repossessed assets, net	0	0
Loans restructured in a TDR	0	0
Total	0	0
Significant Unobservable Inputs (Level 3)
Assets Measured on a Nonrecurring Basis
Foreclosed and repossessed assets, net	1,050	1,028
Loans restructured in a TDR	5,581	8,618
Total	$ 6,631	$ 9,646

XML

Condensed Financial Information - Parent Company Only (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net Income	$ 1,783	$ 1,047	$ 206
Stock based compensation expense	43	31	21
Net cash provided by operating activities	7,943	6,638	9,078
Cash flows from financing activities:
Surrendered vested shares of common stock	(22)	(4)	0
Cash dividends paid	(207)	(103)	0
Net cash provided by (used in) financing activities	11,031	25,983	(8,065)
Net decrease in cash and cash equivalents	(6,167)	(5,658)	(8,504)
Cash and cash equivalents at beginning of period	17,601	23,259	31,763
Cash and cash equivalents at end of period	11,434	17,601	23,259
Parent Company [Member]
Cash flows from operating activities:
Net Income	1,783	1,047	206
Stock based compensation expense	43	31	21
Adjustments to reconcile net income to net cash provided by operating activities - Equity in undistributed income of subsidiary	(1,892)	(1,111)	(398)
Net cash provided by operating activities	(66)	(33)	(171)
Cash flows from financing activities:
Surrendered vested shares of common stock	(22)	(5)	0
Cash dividend from Bank to Holding Company	300	0	0
Cash dividends paid	(207)	(103)	0
Net cash provided by (used in) financing activities	71	(108)	0
Net decrease in cash and cash equivalents	5	(141)	(171)
Cash and cash equivalents at beginning of period	230	371	542
Cash and cash equivalents at end of period	$ 235	$ 230	$ 371

XML

Consolidated Statements of Other Comprehensive Income (Unaudited) - Reclassifications Out of Accumulated Other Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
Net (loss) gain on sale of available for sale securities	$ (168)
Income (loss) before provision for income tax	2,830
Provision for income taxes	(1,047)
Net income attributable to common stockholders	1,783
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
Net (loss) gain on sale of available for sale securities	(168)	[1]
Total fair value adjustments and other-than-temporary impairment	(78)	[1]
Income (loss) before provision for income tax	(246)	[1]
Provision for income taxes	98	[1]
Net income attributable to common stockholders	$ (148)	[1]

[1] Amounts in parentheses indicate decreases to profit/loss.

XML

Condensed Financial Information - Parent Company Only (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
ASSETS
Cash and cash equivalents	$ 11,434	$ 17,601	$ 23,259	$ 31,763
TOTAL ASSETS	569,815	554,521
STOCKHOLDERS’ EQUITY
Total stockholders’ equity	57,293	54,185	55,103	52,888
Parent Company [Member]
ASSETS
Cash and cash equivalents	235	230	371	542
Investment in subsidiary	57,058	53,955
TOTAL ASSETS	57,293	54,185
STOCKHOLDERS’ EQUITY
Total stockholders’ equity	$ 57,293	$ 54,185

XML

Investment Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Amortized Cost, Due after one year through five years	$ 1,106
Amortized Cost, Due after five years through ten years	11,326
Amortized Cost, Due after ten years	51,205
Amortized Cost	63,637	83,569
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Estimated Fair Value, Due after one year through five years	1,114
Estimated Fair Value, Due after five years through ten years	11,018
Estimated Fair Value, Due after ten years	50,057
Estimated Fair Value, Total available for sale securities	62,189
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Amortized Cost, Due after one year through five years	0
Amortized Cost, Due after ten years	8,200
Amortized Cost, Due after five years through ten years	585
Amortized Cost, Total held to maturity securities	8,785
Held-to-maturity Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Estimated Fair Value, Due after one year through five years	0
Estimated Fair Value, Due after five years through ten years	582
Estimated Fair Value, Due after ten years	8,226
Estimated Fair Value, Total held to maturity securities	$ 8,808	$ 0

XML

Commitments and Contingencies (Tables)

12 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Summary of commitment off balance sheets credit

Set forth below are the balances of the Company’s off-balance-sheet credit instruments consisting of commitments to make loans as of September 30, 2014 and 2013, respectively.

	Contract or Notional Amount at September 30,
	2014		2013
Commitments to extend credit:
Consumer - fixed rate 3.30% - 11.99% in 2014, and 3.13% - 11.49% in 2013	$	2,820	$	2,475
Commercial - Fixed rate 3.25% - 5.50% in 2014, and 4.30% - 6.25% in 2013	7,172		7,791
Commercial standby letter of credit	20		—
Unused lines of credit:
Home equity lines of credit	1,622		1,035
Kwik cash and lines of credit	1,227		1,235
Consumer construction	119		—
Commercial construction	947		—
Commercial lines of credit	2,192		142
Totals	$	16,119	$	12,678

Summary of non cancelable operating leases

Future minimum lease payments by year and in the aggregate under the original terms of the non-cancellable operating leases consist of the following:

2015	$	1,211
2016	849
2017	689
2018	535
2019	291
After 2019	540
Total	$	4,115

XML

Office Properties and Equipment Textual (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 1,116	$ 1,079	$ 1,043

XML

Income Taxes

12 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income tax expense (benefit) for each of the periods shown below consisted of the following:

	2014		2013		2012
Current tax provision
Federal	$	97	$	227	$	1,708
State	7		17		240
	104		244		1,948
Deferred tax provision (benefit)
Federal	798		322		(1,567		)
State	145		69		(220		)
	943		391		(1,787		)
Total	$	1,047	$	635	$	161

The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income as result of the following differences:

	2014					2013					2012
	Amount			Rate		Amount			Rate		Amount			Rate
Tax expense at statutory rate	$	962		34.00	%	$	572		34.00	%	$	124		34.00	%
State income taxes net of federal	152			5.37	%	86			5.10	%	20			5.37	%
Tax exempt interest	(46		)	(1.64	)%	(31		)	(1.87	)%	(2		)	(0.51	)%
Other	(21		)	(0.73	)%	8			0.51	%	19			4.99	%
Total	$	1,047		37.00	%	$	635		37.74	%	$	161		43.85	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company’s deferred tax assets and liabilities as of September 30, 2014 and September 30, 2013, respectively:

	2014			2013
Deferred tax assets:
Allowance for loan losses	$	2,562		$	2,433
Deferred loan costs/fees	217			308
Director/officer compensation plans	551			564
Net unrealized loss on securities available for sale	579			1,549
Impairment loss	—			1,306
Other	233			182
Deferred tax assets	$	4,142		$	6,342
Deferred tax liabilities:
Office properties and equipment	(397		)	(677		)
Other	(111		)	(125		)
Deferred tax liabilities	(508		)	(802		)
Net deferred tax assets	$	3,634		$	5,540

The Company regularly reviews the carrying amount of its deferred tax assets to determine if the establishment of a valuation allowance is necessary, as further discussed in Note 1 “Nature of Business and Summary of Significant Accounting Policies,” above. At September 30, 2014 and September 30, 2013, respectively, management determined that no valuation allowance was necessary.

The Company’s income tax returns are subject to review and examination by federal, state and local government authorities. As of September 30, 2014, years open to examination by the U.S. Internal Revenue Service include taxable years ended September 30, 2011 to present. The years open to examination by state and local government authorities varies by jurisdiction.

The tax effects from uncertain tax positions can be recognized in the financial statements, provided the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company applied the foregoing accounting standard to all of its tax positions for which the statute of limitations remained open as of the date of the accompanying consolidated financial statements.

The Company’s policy is to recognize interest and penalties related to income tax issues as components of other noninterest expense. During the twelve months endedSeptember 30, 2014, 2013 and 2012, the Company recognized interest expense in the amount of $0, $22 and $41, respectively, related to income tax issues in its statements of operations. The Company had no recorded accrual or liability for the payment of interest and penalties related to income tax issues as of September 30, 2014 or September 30, 2013.

XML

Retirement Plans (Tables)

12 Months Ended

Sep. 30, 2014

Asset Retirement Obligation Disclosure [Abstract]

Components of Retirement plans

The components of the SERP and Directors’ Retirement plans’ cost at September 30, 2014, 2013 and 2012, respectively, are summarized as follows:

	2014			2013			2012
Beginning accrued benefit cost	$	1,181		$	2,363		$	2,659
Service cost	—			—			—
Interest cost	51			45			126
Amortization of prior service costs	1			1			6
Net periodic benefit cost	52			46			132
Benefits paid	(79		)	(1,228		)	(66		)
Curtailment and settlement	—			—			(362		)
Ending accrued benefit cost	$	1,154		$	1,181		$	2,363

Change in projected benefit obligation and change in plan assets

The following table sets forth for the SERP and Directors’ Retirement plans the change in projected benefit obligation, the change in plan assets, the funded status of the plans, and the net liability recognized in the Company’s balance sheet at September 30, 2014, 2013 and 2012, respectively:

	2014			2013			2012
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	1,117		$	2,381		$	3,008
Service cost	—			—			—
Interest cost	51			45			126
Curtailment and settlement	—			—			(755		)
Actuarial loss (gain)	20			(81		)	68
Benefits paid	(79		)	(1,228		)	(66		)
Projected benefit obligation, end of year	$	1,109		$	1,117		$	2,381
Change in plan assets:
Plan assets at fair value, beginning of year	$	—		$	—		$	—
Actual return on plan assets	—			—			—
Company contributions	79			1,228			66
Benefits paid	(79		)	(1,228		)	(66		)
Plan assets at fair value, end of year	$	—		$	—		$	—

Weighted average assumptions used in determining the benefit obligation and net pension costs

Weighted average assumptions used in determining the benefit obligation and net pension costs as of September 30, 2014, 2013 and 2012, (in actual dollars) were as follows:

	2014		2013		2012
Benefit obligation actuarial assumptions:
Discount Rate	4.25	%	4.75	%	3.75	%
Rate of compensation increase	N/A		N/A		N/A
Net pension cost actuarial assumption
Discount rate	4.25	%	4.75	%	4.25	%
Expected long-term rate of return on plan assets	N/A		N/A		N/A
Rate of compensation increase	N/A		N/A		N/A

Estimated future benefit payments

Estimated future benefit payments as of September 30, 2014, which reflect expected future service, as appropriate, are as follows:

2015	$	81
2016	$	104
2017	$	111
2018	$	118
2019	$	111
2020-2024	$	591

XML

Other Comprehensive Income (Loss)

12 Months Ended

Sep. 30, 2014

Equity [Abstract]

OTHER COMPREHENSIVE INCOME (LOSS)

OTHER COMPREHENSIVE INCOME (LOSS)

On October 1, 2011, the Company adopted ASU 2011-05, “Presentation of Comprehensive Income”. In addition to presenting the Consolidated Statements of Other Comprehensive Income (Loss) herein, the following table shows the tax effects allocated to each component of other comprehensive income (loss) for the years ended September 30, 2014, 2013 and 2012:

	2014									2013									2012
	Before-Tax Amount			Tax Expense			Net-of-Tax Amount			Before-Tax Amount			Tax Expense			Net-of-Tax Amount			Before-Tax Amount		Tax Expense			Net-of-Tax Amount
Unrealized gains (losses) on securities:
Net unrealized gains (losses) arising during the period	$	2,515		(1,006		)	$	1,509		$	(4,654	)	$	1,861		$	(2,793	)	$	1,372	$	(549	)	$	823
Less: reclassification adjustment for gains included in net income	(168		)	67			(101		)	552			(220		)	332			243		(97		)	146
Changes for realized losses on securities available for sale for OTTI write-down	78			(31		)	47			797			(319		)	478			1,332		(533		)	799
Defined benefit plans:
Amortization of unrecognized prior service costs and net gains (losses)	(18		)	7			(11		)	82			(33		)	49			330		(132		)	198
Other comprehensive income (loss)	$	2,407		$	(963	)	$	1,444		$	(3,223	)	$	1,289		$	(1,934	)	$	3,277	$	(1,311	)	$	1,966

The changes in the accumulated balances for each component of other comprehensive income (loss) for the years ended September 30, 2014 and 2013 were as follows:

	Unrealized Gains  (Losses) on Securities			Defined Benefit Plans			Other Comprehensive Income (Loss)
Balance, October 1, 2012	$	(341	)	$	(11	)	$	(352	)
Current year-to-date other comprehensive income (loss), net of tax	(1,983		)	49			(1,934		)
Ending balance, September 30, 2013	$	(2,324	)	$	38		$	(2,286	)
Current year-to-date other comprehensive income (loss), net of tax	1,455			(11		)	1,444
Ending balance, September 30, 2014	$	(869	)	$	27		$	(842	)

XML

Deposits (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Non-interest bearing demand deposits	$ 19,669	$ 22,926
interest bearing demand deposits	17,696	11,075
Savings accounts	29,277	28,259
Money market accounts	136,666	154,639
Certificate accounts	246,459	230,499
Total deposits	449,767	447,398
Brokered certificates of deposit included above:	$ 11,960	$ 11,960

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Unearned Deferred Compensation	Accumulated Other Comprehensive Income (Loss)
Beginning balance at Sep. 30, 2011	$ 52,888	$ 51	$ 53,934	$ 1,323	$ (102)	$ (2,318)
Beginning balance, shares at Sep. 30, 2011		5,133,570
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	206			206
Other comprehensive loss	1,966					1,966
Forfeiture of unvested shares, shares		(520)
Forfeiture of unvested shares, value	0
Common stock awarded under recognition and retention plan, shares		2,500
Common stock awarded under recognition and retention plan, value	0		14		(14)
Stock option expense	21		21
Amortization of restricted stock	22				22
Ending balance at Sep. 30, 2012	55,103	51	53,969	1,529	(94)	(352)
Ending balance, shares at Sep. 30, 2012		5,135,550
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	1,047			1,047
Other comprehensive loss	(1,934)					(1,934)
Forfeiture of unvested shares, shares		(503)
Forfeiture of unvested shares, value	0
Surrender of vested shares, shares		(639)
Surrender of vested shares, value	(4)		(4)
Common stock awarded under recognition and retention plan, shares		20,483
Common stock awarded under recognition and retention plan, value	0		120		(120)
Stock option expense	31		31
Amortization of restricted stock	45				45
Cash dividends	(103)			(103)
Ending balance at Sep. 30, 2013	54,185	51	54,116	2,473	(169)	(2,286)
Ending balance, shares at Sep. 30, 2013		5,154,891
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	1,783			1,783
Other comprehensive loss	1,444					1,444
Surrender of vested shares, shares		(2,830)
Surrender of vested shares, value	(22)		(22)
Common stock awarded under recognition and retention plan, shares		15,000
Common stock awarded under recognition and retention plan, value	1	1	120		(120)
Stock option expense	43		43
Amortization of restricted stock	66				66
Cash dividends	(207)			(207)
Ending balance at Sep. 30, 2014	$ 57,293	$ 52	$ 54,257	$ 4,049	$ (223)	$ (842)
Ending balance, shares at Sep. 30, 2014		5,167,061

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Statement of Financial Position [Abstract]
Investment securities at fair value	$ 70,997	$ 79,695
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	5,167,061	5,154,891
Common stock, shares outstanding	5,167,061	5,154,891

XML

Federal Home Loan Bank Advances

12 Months Ended

Sep. 30, 2014

Banking and Thrift [Abstract]

FEDERAL HOME LOAN BANK ADVANCES

FEDERAL HOME LOAN BANK ADVANCES

A summary of Federal Home Loan Bank advances at September 30, 2014 and 2013 were as follows:

			Weighted Average Rate				Weighted Average Rate
Maturing during the fiscal year
Ended September 30,	2014				2013
2015	$	15,000	0.67	%	$	7,500	0.27	%
2016	16,100		0.88	%	15,000		0.67	%
2017	12,961		1.57	%	11,600		1.01	%
2018	6,100		2.24	%	12,300		1.60	%
2019	3,730		1.87	%	3,600		2.81	%
Total fixed rate maturity	$	53,891			$	50,000
Variable rate open line of credit	5,000		0.30	%	—		—
Total	$	58,891			$	50,000

At September 30, 2014, the Bank’s available and unused portion of this borrowing arrangement was approximately $81,930.

Maximum month-end amounts outstanding were $75,891 and $52,950 during the twelve months endedSeptember 30, 2014 and 2013, respectively.

Each advance is payable at the maturity date, with a prepayment penalty for fixed rate advances. Federal Home Loan Bank advances are secured by $232,512 of real estate mortgage loans.

At September 30, 2014, the Bank has pledged FHLB Letters of Credit to collateralize certain municipal deposits in the amount of $23,100 due to ample liquidity.

XML

Other Comprehensive Income (Loss) (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Changes in the accumulated balances for each component of other comprehensive income
Beginning Balance	$ (2,286)	$ (352)
Current period other comprehensive income (loss), net of tax	1,444	(1,934)	1,966
Ending Balance	(842)	(2,286)	(352)
Unrealized Gains Losses on Securities [Member]
Changes in the accumulated balances for each component of other comprehensive income
Beginning Balance	(2,324)	(341)
Current period other comprehensive income (loss), net of tax	1,455	(1,983)
Ending Balance	(869)	(2,324)
Defined Benefit Plans [Member]
Changes in the accumulated balances for each component of other comprehensive income
Beginning Balance	38	(11)
Current period other comprehensive income (loss), net of tax	(11)	49
Ending Balance	$ 27	$ 38

XML

Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Basic
Net Income	$ 1,783	$ 1,047	$ 206
Weighted average common shares outstanding (in shares)	5,163,373	5,151,413	5,133,707
Basic earnings per share (in dollars per share)	$ 0.35	$ 0.20	$ 0.04
Diluted
Net Income	$ 1,783	$ 1,047	$ 206
Weighted average common shares outstanding (in shares)	5,163,373	5,151,413	5,133,707
Add: Dilutive stock options outstanding	33,333	11,767	0
Average shares and dilutive potential common shares (in shares)	5,196,706	5,163,180	5,133,707
Diluted earnings per share (in dollars per share)	$ 0.34	$ 0.20	$ 0.04
Additional common stock option shares that have not been included due to their antidilutive effect (in shares)	145,859	139,165	124,789

XML

Document and Entity Information (USD $)	12 Months Ended
	Sep. 30, 2014	Dec. 08, 2014	Mar. 31, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Citizens Community Bancorp Inc.
Entity Central Index Key	0001367859
Document Type	10-K
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 38,337,492
Entity Common Stock, Shares Outstanding		5,184,323

XML

Capital Matters (Notes)

12 Months Ended

Sep. 30, 2014

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

CAPITAL MATTERS

CAPITAL MATTERS

Banks are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. As of September 30, 2014, the OCC categorized the Bank as “Well Capitalized”, under the regulatory framework for prompt corrective action.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2014 and 2013, respectively, are presented below:

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action  Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio
As of September 30, 2014 (Audited)
Total capital (to risk weighted assets)	$	62,116,000	16.1	%	$	30,793,000	> =	8.0	%	$	38,491,000	> =	10.0	%
Tier 1 capital (to risk weighted assets)	57,283,000		14.9	%	15,396,000		> =	4.0	%	23,095,000		> =	6.0	%
Tier 1 capital (to adjusted total assets)	57,283,000		10.0	%	22,991,000		> =	4.0	%	28,739,000		> =	5.0	%
As of September 30, 2013 (Audited)
Total capital (to risk weighted assets)	$	59,297,000	16.3	%	$	29,182,000	> =	8.0	%	$	36,478,000	> =	10.0	%
Tier 1 capital (to risk weighted assets)	54,717,000		15.0	%	14,591,000		> =	4.0	%	21,887,000		> =	6.0	%
Tier 1 capital (to adjusted total assets)	54,717,000		9.9	%	22,220,000		> =	4.0	%	27,775,000		> =	5.0	%

XML

Retirement Plans (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Asset Retirement Obligation Disclosure [Abstract]
2015	$ 81
2016	104
2017	111
2018	118
2019	111
2020-2024	$ 591

XML

Income Taxes (Details Textual) (USD $)	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Income Taxes (Textual) [Abstract]
Valuation allowance	$ 0	$ 0
Examination by the Internal Revenue Service	years open to examination by the U.S. Internal Revenue Service include taxable years ended September 30, 2011 to present.
Percentage of likelihood	50.00%
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense	0	22,000	41,000
Accrual for the payments of interest and penalties related to income tax issues	$ 0	$ 0

XML

Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Interest and dividend income:
Interest and fees on loans	$ 22,612	$ 23,201	$ 25,579
Interest on investments	1,421	1,374	1,506
Total interest and dividend income	24,033	24,575	27,085
Interest expense:
Interest on deposits	3,615	4,791	5,362
Interest on borrowed funds	660	521	1,229
Total interest expense	4,275	5,312	6,591
Net interest income	19,758	19,263	20,494
Provision for loan losses	1,910	3,143	4,440
Net interest income after provision for loan losses	17,848	16,120	16,054
Non-interest income:
Total fair value adjustments and other-than-temporary impairment	(78)	(1,412)	461
Portion of loss recognized in other comprehensive income (loss) (before tax)	0	615	(1,793)
Net (loss) gain on sale of available for sale securities	(168)	552	243
Net loss on available for sale securities	(246)	(245)	(1,089)
Service charges on deposit accounts	1,964	1,820	1,529
Loan fees and service charges	904	768	621
Other	794	708	611
Total non-interest income	3,416	3,051	1,672
Non-interest expense:
Salaries and related benefits	9,287	9,068	8,502
Occupancy	2,631	2,493	2,453
Office	1,499	1,223	1,191
Data processing	1,531	1,657	1,499
Amortization of core deposit intangible	57	56	209
Advertising, marketing and public relations	370	233	190
FDIC premium assessment	409	522	693
Professional services	552	707	1,187
Other	2,098	1,530	1,435
Total non-interest expense	18,434	17,489	17,359
Income (loss) before provision for income tax	2,830	1,682	367
Provision (benefit) for income taxes	1,047	635	161
Net income attributable to common stockholders	$ 1,783	$ 1,047	$ 206
Per share information:
Basic earnings (in dollars per share)	$ 0.35	$ 0.20	$ 0.04
Diluted earnings (in dollars per share)	$ 0.34	$ 0.20	$ 0.04
Cash dividends paid (in dollars per share)	$ 0.04	$ 0.02	$ 0

XML

Loans, Allowance for Loan Losses and Impaired Loans

12 Months Ended

Sep. 30, 2014

Receivables [Abstract]

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

Major classifications of loans as of September 30, 2014 and 2013, respectively, were as follows:

	September 30, 2014			September 30, 2013
Real estate loans:
Consumer	$	223,025		$	252,958
Commercial	39,061			12,531
Total real estate loans	262,086			265,489
Consumer and other loans:
Automobile	12,810			12,662
Secured personal and other	188,911			158,842
Unsecured personal	3,512			1,835
Total consumer and other loans	205,233			173,339
Gross loans	467,319			438,828
Less:
Deferred loan origination fees, net of costs	3,047			2,035
Allowance for loan losses	(6,506		)	(6,180		)
Loans receivable, net	$	463,860		$	434,683

Certain directors and executive officers of the Company and the Bank are defined as related parties. These related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during 2014 and 2013. A summary of the changes in those loans during the last two fiscal years is as follows:

	September 30,
	2014			2013
Balance—beginning of year	$	131		$	138
New loan originations	17			33
Repayments	(19		)	(40		)
Balance—end of year	$	129		$	131
Available and unused lines of credit	$	18		$	18

Allowance for Loan Losses—The ALL represents management’s estimate of probable and inherent credit losses in the Bank’s loan portfolio. Estimating the amount of the ALL requires the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may be susceptible to significant change.

There are many factors affecting the ALL; some are quantitative, while others require qualitative judgment. The process for determining the ALL (which management believes adequately considers potential factors which result in probable credit losses), includes subjective elements and, therefore, may be susceptible to significant change. To the extent actual outcomes differ from management estimates, additional provision for loan losses could be required that could adversely affect the Company’s earnings or financial position in future periods. Allocations of the ALL may be made for specific loans but the entire ALL is available for any loan that, in management’s judgment, should be charged-off or for which an actual loss is realized.

Changes in the ALL by loan type for the periods presented below were as follows:

	Real Estate			Consumer and Other			Total
Year Ended September 30, 2014:
Allowance for Loan Losses:
Beginning balance, October 1, 2013	$	2,541		$	3,639		$	6,180
Charge-offs	(1,238		)	(689		)	(1,927		)
Recoveries	94			249			343
Provision	1,362			548			1,910
Ending balance, September 30, 2014	$	2,759		$	3,747		$	6,506
Allowance for Loan Losses at September 30, 2014:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	525		$	207		$	732
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	2,234		$	3,540		$	5,774
Loans Receivable as of September 30, 2014:
Ending balance	$	261,315		$	209,051		$	470,366
Ending balance: individually evaluated for impairment	$	2,197		$	732		$	2,929
Ending balance: collectively evaluated for impairment	$	259,118		$	208,319		$	467,437

	Real Estate			Consumer and Other			Total
Year ended September 30, 2013
Allowance for Loan Losses:
Beginning balance, October 1, 2012	$	2,287		$	3,458		$	5,745
Charge-offs	(1,525		)	(1,494		)	(3,019		)
Recoveries	36			275			311
Provision	1,743			1,400			3,143
Ending balance, September 30, 2013	$	2,541		$	3,639		$	6,180
Allowance for Loan Losses at September 30, 2013:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	667		$	316		$	983
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	1,874		$	3,323		$	5,197
Loans Receivable as of September 30, 2013:
Ending balance	$	264,388		$	176,475		$	440,863
Ending balance: individually evaluated for impairment	$	3,659		$	907		$	4,566
Ending balance: collectively evaluated for impairment	$	260,729		$	175,568		$	436,297

The Bank has originated substantially all loans currently recorded on the Company’s consolidated balance sheet, except as noted below.

During October 2012, the Bank entered into an agreement to purchase short term consumer loans from a third party on an ongoing basis. A Board of Director determinant was established to limit the purchase of these consumer loans under this arrangement, to a maximum of $40,000, which we expect to attain by June 2015. Pursuant to the ongoing loan purchase agreement, a restricted reserve account was established at 3% of the outstanding consumer loan balances purchased up to a maximum of $1,000, with such percentage amount of the loans being deposited into a segregated reserve account. The funds in the reserve account are to be released to compensate the Bank for any purchased loans that are ultimately charged off. As of September 30, 2014, the balance of the consumer loans purchased was $32,812. The balance in the cash reserve account was $996, which is included in Deposits on the accompanying Consolidated Balance Sheet. To date, none of the purchased loans have been charged off.

Loans receivable by loan type as of the end of the periods shown below were as follows:

	Real Estate Loans				Consumer and Other Loans				Total Loans
	September 30, 2014		September 30, 2013		September 30, 2014		September 30, 2013		September 30, 2014		September 30, 2013
Performing loans
Performing TDR loans	$	4,535	$	6,254	$	797	$	1,101	$	5,332	$	7,355
Performing loans other	255,564		255,951		207,885		174,949		463,449		430,900
Total performing loans	260,099		262,205		208,682		176,050		468,781		438,255
Nonperforming loans (1)
Nonperforming TDR loans	202		1,187		47		76		249		1,263
Nonperforming loans other	1,014		996		322		349		1,336		1,345
Total nonperforming loans	$	1,216	$	2,183	$	369	$	425	$	1,585	$	2,608
Total loans	$	261,315	$	264,388	$	209,051	$	176,475	$	470,366	$	440,863

(1) Nonperforming loans are either 90+ days past due or nonaccrual.

An aging analysis of the Company’s real estate and consumer and other loans as of September 30, 2014 and September 30, 2013, respectively, was as follows:

	1 Month Past Due		2 Months Past Due		Greater Than 3 Months		Total Past Due		Current		Total Loans		Recorded Investment > 3 months and Accruing
September 30, 2014
Real estate loans	$	678	$	80	$	989	$	1,747	$	259,568	$	261,315	$	228
Consumer and other loans	354		73		178		605		175,634		176,239		99
Purchased third party loans	190		136		73		399		32,413		32,812		74
Total	$	1,222	$	289	$	1,240	$	2,751	$	467,615	$	470,366	$	401
September 30, 2013
Real estate loans	$	2,057	$	351	$	1,905	$	4,313	$	260,075	$	264,388	$	371
Consumer and other loans	746		121		214		1,081		155,416		156,497		80
Purchased third party loans	112		66		32		210		19,768		19,978		32
Total	$	2,915	$	538	$	2,151	$	5,604	$	435,259	$	440,863	$	483

At September 30, 2014, the Company has identified $5,581 of TDR loans and $2,228 of substandard loans as impaired, totaling $7,809, which includes$5,332 of performing TDR loans. A loan is identified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Performing TDRs consist of loans that have been modified and are performing in accordance with the modified terms for a sufficient length of time, generally six months, or loans that were modified on a proactive basis. A summary of the Company’s impaired loans as of September 30, 2014 and September 30, 2013 was as follows:

	With No Related Allowance Recorded						With An Allowance Recorded						Totals
	Real Estate		Consumer and Other		Total		Real Estate		Consumer and Other		Total		Real Estate		Consumer and Other		Total
Recorded investment at September 30, 2014	$	4,345	$	535	$	4,880	$	2,197	$	732	$	2,929	$	6,542	$	1,267	$	7,809
Unpaid balance at September 30, 2014	4,345		535		4,880		2,197		732		2,929		6,542		1,267		7,809
Recorded investment at September 30, 2013	5,349		771		6,120		3,659		907		4,566		9,008		1,678		10,686
Unpaid balance at September 30, 2013	5,349		771		6,120		3,659		907		4,566		9,008		1,678		10,686
Average recorded investment; twelve months ended September 30, 2014	4,722		614		5,336		3,137		823		3,960		7,859		1,437		9,296
Average recorded investment; twelve months ended September 30, 2013	4,185		609		4,794		4,197		993		5,190		8,382		1,602		9,984
Interest income received; twelve months ended September 30, 2014	149		32		181		68		24		92		217		56		273
Interest income received; twelve months ended September 30, 2013	202		71		273		69		40		109		271		111		382

Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty and the Bank grants a concession to that borrower that the Bank would not otherwise consider except for the borrower’s financial difficulties. Concessions include an extension of loan terms, renewals of existing balloon loans, reductions in interest rates and consolidating existing Bank loans at modified terms. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status. There were 4 delinquent TDRs, greater than 60 days past due, with a recorded investment of $191 at September 30, 2014, compared to 11 such loans with a recorded investment of $1,102 at September 30, 2013. A summary of loans by loan type modified in a troubled debt restructuring as of September 30, 2014 and September 30, 2013, and during each of the twelve months then ended, was as follows:

	Real Estate			Consumer and Other			Total
September 30, 2014 and
Twelve Months then Ended:
Accruing / Performing:
Beginning balance	$	6,254		$	1,101		$	7,355
Principal payments	(757		)	(258		)	(1,015		)
Charge-offs	(11		)	(30		)	(41		)
Advances	7			—			7
New restructured (1)	40			24			64
Class transfers (2)	(60		)	—			(60		)
Transfers between accrual/non-accrual	(938		)	(40		)	(978		)
Ending balance	$	4,535		$	797		$	5,332
Non-accrual / Non-performing:
Beginning balance	$	1,187		$	76		$	1,263
Principal payments	(1,515		)	(38		)	(1,553		)
Charge-offs	(426		)	(52		)	(478		)
Advances	3			—			3
New restructured (1)	—			16			16
Class transfers (2)	15			5			20
Transfers between accrual/non-accrual	938			40			978
Ending balance	$	202		$	47		$	249
Totals:
Beginning balance	$	7,441		$	1,177		$	8,618
Principal payments	(2,272		)	(296		)	(2,568		)
Charge-offs	(437		)	(82		)	(519		)
Advances	10			—			10
New restructured (1)	40			40			80
Class transfers (2)	(45		)	5			(40		)
Transfers between accrual/non-accrual	—			—			—
Ending balance	$	4,737		$	844		$	5,581

(1) “New restructured” represent loans restructured during the current period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	Real Estate			Consumer and Other			Total
September 30, 2013 and
Twelve Months then Ended:
Accruing / Performing:
Beginning balance	$	5,751		$	1,055		$	6,806
Principal payments	(397		)	(388		)	(785		)
Charge-offs	(131		)	(42		)	(173		)
Advances	21			7			28
New restructured (1)	181			191			372
Class transfers (2)	1,294			263			1,557
Transfers between accrual/non-accrual	(465		)	15			(450		)
Ending balance	$	6,254		$	1,101		$	7,355
Non-accrual / Non-performing:
Beginning balance	$	1,259		$	70		$	1,329
Principal payments	(557		)	(86		)	(643		)
Charge-offs	(248		)	(24		)	(272		)
Advances	13			3			16
New restructured (1)	—			1			1
Class transfers (2)	255			127			382
Transfers between accrual/non-accrual	465			(15		)	450
Ending balance	$	1,187		$	76		$	1,263
Totals:
Beginning balance	$	7,010		$	1,125		$	8,135
Principal payments	(954		)	(474		)	(1,428		)
Charge-offs	(379		)	(66		)	(445		)
Advances	34			10			44
New restructured (1)	181			192			373
Class transfers (2)	1,549			390			1,939
Transfers between accrual/non-accrual	—			—			—
Ending balance	$	7,441		$	1,177		$	8,618

(1) “New restructured” represent loans restructured during the current period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	September 30, 2014			September 30, 2013
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Real estate	47	$	4,737	62	$	7,441
Consumer and other	53	844		90	1,177
	100	$	5,581	152	$	8,618

As an integral part of their examination process, various regulatory agencies review the Bank’s ALL. Such agencies may require that changes in the ALL be recognized when such regulators’ credit evaluations differ from those of our management based on information available to the regulators at the time of their examinations.

XML

Fair Value Accounting

12 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE ACCOUNTING

FAIR VALUE ACCOUNTING

ASC Topic 820-10, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The statement describes three levels of inputs that may be used to measure fair value:

Level 1- Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

Level 2- Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3- Significant unobservable inputs that reflect the Company’s assumptions about the factors that market participants would use in pricing an asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the fair value measurement.

Assets Measured on a Recurring Basis

The fair value of securities available for sale is determined by obtaining market price quotes from independent third parties wherever such quotes are available. Where such quotes are not available, we utilize independent third party valuation analysis to support our own estimates and judgments in determining fair value. The following table presents, for the periods shown below, the Company's fair value of securities available for sale in accordance with the fair value hierarchy described above.

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2014
Investment securities:
U.S. government agency obligations	$	22,103	$	—	$	22,103	$	—
Obligations of states and political
subdivisions	12,658		—		12,658		—
Mortgage-backed securities	36,171		—		36,171		—
Federal Agricultural Mortgage Corporation	65		—		65		—
Total	$	70,997	$	—	$	70,997	$	—
September 30, 2013
Investment securities:
U.S. government agency obligations	$	27,866	$	—	$	27,866	$	—
Obligations of states and political
subdivisions	10,970		—		10,970		—
Mortgage-backed securities	39,633		—		39,633		—
Non-agency mortgage-backed securities	1,226		—		—		1,226
Total	$	79,695	$	—	$	78,469	$	1,226

The following table presents a reconciliation of non-agency mortgage-backed securities held by the Bank measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for each of the twelve months endedSeptember 30, 2014 and 2013:

	Twelve Months Ended
	September 30, 2014			September 30, 2013
Balance beginning of period	$	1,226		$	6,586
Total gains or losses (realized/unrealized):
Included in earnings	(274		)	(797		)
Included in other comprehensive income (loss)	615			1,322
Sales	(1,321		)	(3,802		)
Payments, accretion and amortization	(246		)	(2,083		)
Balance end of period	$	—		$	1,226

Assets Measured on a Nonrecurring Basis

Fair value of foreclosed assets is determined, initially, by a third-party appraisal. Subsequent to foreclosure, valuations are periodically performed by management to identify potential changes in fair value. Fair value of loans restructured in a troubled debt restructuring is based on the value of the underlying collateral at the time of the restructuring, which is determined by either a third-party appraisal for real estate loans, or a third party price quote on secured consumer loans. The following table presents, for the periods shown below, the Company's fair value for foreclosed and repossessed assets and TDRs in accordance with the fair value hierarchy described above.

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
September 30, 2014
Foreclosed and repossessed assets, net	$	1,050	$	—	$	—	$	1,050
Loans restructured in a TDR	5,581		—		—		5,581
Total	$	6,631	$	—	$	—	$	6,631
September 30, 2013
Foreclosed and repossessed assets, net	$	1,028	$	—	$	—	$	1,028
Loans restructured in a TDR	8,618		—		—		8,618
Total	$	9,646	$	—	$	—	$	9,646

The fair value of TDRs was determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting TDRs.

The fair value of foreclosed and repossessed assets was determined by obtaining market price quotes from independent third parties wherever such quotes were available. Where such quotes are not available, the Company utilized independent third party appraisals to support the Company’s estimates and judgments in determining fair value.

Fair Values of Financial Instruments

ASC 825-10 and ASC 270-10, Interim Disclosures about Fair Value Financial Instruments, require disclosures about fair value financial instruments and significant assumptions used to estimate fair value. The estimated fair values of financial instruments not previously disclosed are determined as follows:

Cash and Cash Equivalents

Due to their short-term nature, the carrying amounts of cash and cash equivalents are considered to be a reasonable estimate of fair value.

Other interest bearing Deposits

Fair value of interest bearing deposits is estimated based on their carrying amounts.

Non-marketable Equity Securities, at cost

Non-marketable equity securities are comprised of Federal Home Loan Bank stock and Federal Reserve Bank stock carried at cost in the amounts of $3,820 and $1,695 respectively, which is its redeemable fair value since the market for each category of this stock is restricted.

Loans Receivable, net

Fair value is estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as real estate, commercial and consumer. The fair value of loans is calculated by discounting scheduled cash flows through the estimated maturity date using market discount rates reflecting the credit and interest rate risk inherent in the applicable loan. The estimate of maturity is based on the Bank’s repayment schedules for each loan classification.

Accrued Interest Receivable and Payable

Due to their short-term nature, the carrying amounts of accrued interest receivable and payable, respectively, are considered to be a reasonable estimate of fair value.

Deposits

The fair value of deposits with no stated maturity, such as demand deposits, savings accounts, and money market accounts, is the amount payable on demand at the reporting date. The fair value of fixed rate certificate accounts is calculated by using discounted cash flows applying interest rates currently being offered on similar certificates.

Federal Home Loan Bank Advances

The fair value of long-term borrowed funds is estimated using discounted cash flows based on the Bank’s current incremental borrowing rates for similar borrowing arrangements. The carrying value of short-term borrowed funds approximates its fair value.

Off-Balance-Sheet Instruments

The fair value of off-balance sheet commitments would be estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the customers. Since this amount is immaterial to the Company’s consolidated financial statements, no amounts for fair value are presented.

The carrying amount and estimated fair value of financial instruments as of the dates indicated were as follows:

	September 30, 2014				September 30, 2013
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	11,434	$	11,434	$	17,601	$	17,601
Interest-bearing deposits	245		245		1,988		1,988
Investment securities	70,974		70,997		79,695		79,695
Non-marketable equity securities, at cost	5,515		5,515		3,300		3,300
Loans receivable, net	463,860		479,961		434,683		448,846
Accrued interest receivable	1,478		1,478		1,469		1,469
Financial liabilities:
Deposits	$	449,767	$	454,170	$	447,398	$	451,225
FHLB advances	58,891		59,331		50,000		49,676
Accrued interest payable	13		13		11		11

XML

Earnings Per Share (Notes)

12 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Earnings per share is based on the weighted average number of shares outstanding for the year. A reconciliation of the basic and diluted earnings per share for the last three fiscal years is as follows:

	2014		2013		2012
Basic
Net income	$	1,783	$	1,047	$	206
Weighted average common shares outstanding	5,163,373		5,151,413		5,133,707
Basic earnings per share	$	0.35	$	0.20	$	0.04
Diluted
Net income	$	1,783	$	1,047	$	206
Weighted average common shares outstanding	5,163,373		5,151,413		5,133,707
for basic earnings per share
Add: Dilutive stock options outstanding	33,333		11,767		—
Average shares and dilutive potential common shares	5,196,706		5,163,180		5,133,707
Diluted earnings per share	$	0.34	$	0.20	$	0.04
Additional common stock option shares that have not been included due to their antidilutive effect	145,859		139,165		124,789

XML

Commitments and Contingencies (Notes)

12 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance-Sheet Risk—The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include off-balance-sheet credit instruments consisting of commitments to make loans. The face amounts for these items represent the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contract or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Set forth below are the balances of the Company’s off-balance-sheet credit instruments consisting of commitments to make loans as of September 30, 2014 and 2013, respectively.

	Contract or Notional Amount at September 30,
	2014		2013
Commitments to extend credit:
Consumer - fixed rate 3.30% - 11.99% in 2014, and 3.13% - 11.49% in 2013	$	2,820	$	2,475
Commercial - Fixed rate 3.25% - 5.50% in 2014, and 4.30% - 6.25% in 2013	7,172		7,791
Commercial standby letter of credit	20		—
Unused lines of credit:
Home equity lines of credit	1,622		1,035
Kwik cash and lines of credit	1,227		1,235
Consumer construction	119		—
Commercial construction	947		—
Commercial lines of credit	2,192		142
Totals	$	16,119	$	12,678

Loss Contingencies—Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.

Leases—The Company leases certain branch facilities and its administrative offices under operating leases. Rent expense under these operating leases was $1,186, $1,138, and $1,142 for the years ended September 30, 2014, 2013 and 2012, respectively. None of the Company’s leases contain contingent rental payment, purchase option, escalation or any other significant terms, conditions or restrictions that would affect the future minimum lease payments disclosed below.

Future minimum lease payments by year and in the aggregate under the original terms of the non-cancellable operating leases consist of the following:

2015	$	1,211
2016	849
2017	689
2018	535
2019	291
After 2019	540
Total	$	4,115

XML

Stock Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning or year, shares	150,932	124,789	160,353
Granted, shares	45,000	26,143	10,000
Exercised, shares	0	0	0
Forfeited or expired, shares	(16,740)	0	(45,564)
Outstanding at end of year, shares	179,192	150,932	124,789
Exercisable at end of year, shares	91,203	88,927	77,639
Fully vested and expected to vest, shares	179,192	150,932	124,789
Weighted Average Exercise Price, Outstanding at beginning of year	$ 6.52	$ 6.15	$ 6.26	$ 6.70
Weighted Average Exercise Price, Granted	$ 8.00	$ 5.62	$ 5.65
Weighted Average Exercise Price, Exercisable at end of year	$ 6.35	$ 6.63	$ 6.82
Weighted Average Exercise Price, Fully vested and expected to vest	$ 6.52	$ 6.15	$ 6.26
Weighted Average Remaining Contractual Term, Outstanding at end of year	6 years 11 months 16 days	7 years 22 days	7 years 7 months 25 days
Weighted Average Remaining Contractual Term, Exercisable at end of year	5 years 6 months 7 days	6 years 25 days	6 years 9 months 11 days
Weighted Average Remaining Contractual Term, Fully vested and expected to vest	6 years 11 months 16 days	7 years 22 days	7 years 7 months 25 days
Aggregate Intrinsic Value, Outstanding at end of year	$ 0	$ 0	$ 0

XML

Intangible Assets (Notes)

12 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

INTANGIBLE ASSETS

Intangible assets consist of core deposit intangibles arising from various bank acquisitions. A summary of core deposit intangibles and related amortization for the periods shown below follows:

	2014			2013
Balance at beginning of year	$	218		$	274
Capitalized	—			—
Amortization	(57		)	(56		)
Balance at end of year	$	161		$	218

The estimated future aggregate amortization expense for the core deposit intangibles is as follows:

2015	$	57
2016	57
2017	31
2018	15
After 2018	1
Total	$	161

XML

Investment Securities (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair Value, Less than 12 months	$ 8,806	$ 64,876
Fair Value, 12 Months or More	43,438	2,876
Fair Value, Total	52,244	67,752
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] [Abstract]
Unrealized Loss, Less than 12 Months	73	3,306
Unrealized Loss, 12 Months or More	1,530	708
Unrealized Loss, Total	1,603	4,014
U.S. government agency obligations
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair Value, Less than 12 months	0	27,866
Fair Value, 12 Months or More	22,103	0
Fair Value, Total	22,103	27,866
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] [Abstract]
Unrealized Loss, Less than 12 Months	0	1,836
Unrealized Loss, 12 Months or More	973	0
Unrealized Loss, Total	973	1,836
Obligations of states and political subdivisions
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair Value, Less than 12 months	574	9,320
Fair Value, 12 Months or More	8,817	1,650
Fair Value, Total	9,391	10,970
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] [Abstract]
Unrealized Loss, Less than 12 Months	1	585
Unrealized Loss, 12 Months or More	254	92
Unrealized Loss, Total	255	677
Mortgage-backed securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair Value, Less than 12 months	8,167	27,690
Fair Value, 12 Months or More	12,518	0
Fair Value, Total	20,685	27,690
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] [Abstract]
Unrealized Loss, Less than 12 Months	66	885
Unrealized Loss, 12 Months or More	303	0
Unrealized Loss, Total	369	885
Federal Agricultural Mortgage Corporation
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair Value, Less than 12 months	65
Fair Value, 12 Months or More	0
Fair Value, Total	65
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] [Abstract]
Unrealized Loss, Less than 12 Months	6
Unrealized Loss, 12 Months or More	0
Unrealized Loss, Total	6
Non-agency mortgage-backed securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair Value, Less than 12 months		0
Fair Value, 12 Months or More		1,226
Fair Value, Total		1,226
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] [Abstract]
Unrealized Loss, Less than 12 Months		0
Unrealized Loss, 12 Months or More		616
Unrealized Loss, Total		$ 616

XML

Investment Securities

12 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

INVESTMENT SECURITIES

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of September 30, 2014 and September 30, 2013, respectively, were as follows:

Available for sale securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2014
U.S. government agency obligations	$	23,076	$	—	$	973	$	22,103
Obligations of states and political subdivisions	11,432		17		255		11,194
Mortgage-backed securities	29,058		138		369		28,827
Federal Agricultural Mortgage Corporation	71		—		6		65
Total available for sale securities	$	63,637	$	155	$	1,603	$	62,189
September 30, 2013
U.S. government agency obligations	$	29,702	$	—	$	1,836	$	27,866
Obligations of states and political subdivisions	11,647		—		677		10,970
Mortgage-backed securities	40,378		140		885		39,633
Non-agency mortgage-backed securities	1,842		—		616		1,226
Total available for sale securities	$	83,569	$	140	$	4,014	$	79,695

Held to maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2014
Obligations of states and political subdivisions	$	1,465	$	4	$	5	$	1,464
Mortgage-backed securities	7,320		33		9		7,344
Total held to maturity securities	$	8,785	$	37	$	14	$	8,808
September 30, 2013
Obligations of states and political subdivisions	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—
Total held to maturity securities	$	—	$	—	$	—	$	—

The estimated fair value of securities at September 30, 2014, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities on mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Expected maturities may differ from contractual maturities on certain agency and municipal securities due to the call feature.

Available for sale securities	Amortized Cost		Estimated Fair Value
Due after one year through five years	$	1,106	$	1,114
Due after five years through ten years	11,326		11,018
Due after ten years	51,205		50,057
Total available for sale securities	$	63,637	$	62,189

Held to maturity securities	Amortized Cost		Estimated Fair Value
Due after one year through five years	$	—	$	—
Due after five years through ten years	585		582
Due after ten years	8,200		8,226
Total held to maturity securities	$	8,785	$	8,808

Securities with unrealized losses at September 30, 2014 and 2013, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

	Less than 12 Months				12 Months or More				Total
Available for sale securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
2014
U.S. government agency obligations	$	—	$	—	$	22,103	$	973	$	22,103	$	973
Obligations of states and political subdivisions	574		1		8,817		254		9,391		255
Mortgage-backed securities	8,167		66		12,518		303		20,685		369
Federal Agricultural Mortgage Corporation	65		6		—		—		65		6
Total temporarily impaired	$	8,806	$	73	$	43,438	$	1,530	$	52,244	$	1,603
2013
U.S. government agency obligations	$	27,866	$	1,836	$	—	$	—	$	27,866	$	1,836
Obligations of states and political subdivisions	9,320		585		1,650		92		10,970		677
Mortgage-backed securities	27,690		885		—		—		27,690		885
Non-agency mortgage-backed securities	—		—		1,226		616		1,226		616
Total temporarily impaired	$	64,876	$	3,306	$	2,876	$	708	$	67,752	$	4,014

	Less than 12 Months				12 Months or More				Total
Held to maturity securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
2014
Obligations of states and political subdivisions	$	345	$	5	$	—	$	—	$	345	$	5
Mortgage-backed securities	3,364		9		—		—		3,364		9
Total temporarily impaired	$	3,709	$	14	$	—	$	—	$	3,709	$	14
2013
Obligations of states and political subdivisions	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—		—		—
Total temporarily impaired	$	—	$	—	$	—	$	—	$	—	$	—

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuers are assessed. Significant inputs used to measure the amount related to credit loss include, but are not limited to, default and delinquency rates of underlying collateral, remaining credit support, and historical loss severities. Adjustments to market value that are considered temporary are recorded as separate components of equity, net of tax. If an impairment of a security is identified as other-than-temporary based on information available, such as the decline in the credit worthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists. If there is a credit loss, it will be recorded in the Company's consolidated statement of operations. Losses other than credit will continue to be recognized in other comprehensive income (loss), net of tax. Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary. Management has determined that more likely than not, the Company neither intends to sell, nor will it be required to sell the debt security before its anticipated recovery.

At September 30, 2014, there were no holdings of securities of any one private issuer in an amount greater than 10% of the Company’s stockholders’ equity.

A summary of the amount of other-than-temporary impairment related to credit losses on available for sale securities that have been recognized in earnings as of each of the most recent two fiscal year ends was as follows:

	2014			2013
Beginning balance of the amount of OTTI related to credit losses	$	1,250		$	3,740
Credit portion of OTTI on securities for which OTTI was not previously recognized	91			867
Cash payments received on a security in excess of the security’s book value adjusted for the previously recognized credit portion of OTTI	(13		)	(70		)
Credit portion of OTTI on securities in default for which OTTI was previously recognized	—			(2,184		)
Credit portion of OTTI previously recognized on securities sold during the period	(1,328		)	(1,103		)
Ending balance of the amount of OTTI related to credit losses	$	—		$	1,250

During the fiscal year ended September 30, 2014, the Bank recognized $78 of other-than-temporary impairment in earnings on the remaining balance of the non-agency mortgage-backed security portfolio compared to $790 for the same period in the prior year.

The Bank has pledged certain of its U.S. Agency securities as collateral against a borrowing line with the Federal Reserve Bank. However, as of September 30, 2014, there were no borrowings outstanding on the Federal Reserve Bank line of credit. The Bank has also pledged certain of its U.S. Agency securities as collateral against specific municipal deposits.

XML

Office Properties and Equipment

12 Months Ended

Sep. 30, 2014

Property, Plant and Equipment [Abstract]

OFFICE PROPERTIES AND EQUIPMENT

OFFICE PROPERTIES AND EQUIPMENT

Office properties and equipment at September 30 for each of the years shown below consisted of the following:

	2014			2013
Land	$	510		$	510
Buildings	2,284			2,161
Furniture, equipment, and vehicles	7,672			9,930
Subtotals	10,466			12,601
Less—Accumulated depreciation	(6,741		)	(7,766		)
Office properties and equipment—net	$	3,725		$	4,835

Depreciation expense was $1,116, $1,079 and $1,043 for the years ended September 30, 2014, 2013 and 2012, respectively.

XML

Deposits (Notes)

12 Months Ended

Sep. 30, 2014

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

DEPOSITS

DEPOSITS

The following is a summary of deposits by type at September 30, 2014 and 2013, respectively:

	2014		2013
Non-interest bearing demand deposits	$	19,669	$	22,926
interest bearing demand deposits	17,696		11,075
Savings accounts	29,277		28,259
Money market accounts	136,666		154,639
Certificate accounts	246,459		230,499
Total deposits	$	449,767	$	447,398
Brokered certificates of deposit included above:	$	11,960	$	11,960

At September 30, 2014, the scheduled maturities of time deposits were as follows:

2015	$	80,381
2016	71,638
2017	52,843
2018	23,960
2019	17,637
After 2019	—
Total	$	246,459

Deposits from the Company’s directors, executive officers, principal stockholders and their affiliates held by the Bank at September 30, 2014 and 2013 amounted to $696 and $584, respectively.

XML

Office Properties and Equipment (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Office Properties and Equipment
Office properties and equipment, gross	$ 10,466	$ 12,601
Less—Accumulated depreciation	(6,741)	(7,766)
Office properties and equipment—net	3,725	4,835
Land
Office Properties and Equipment
Office properties and equipment, gross	510	510
Buildings
Office Properties and Equipment
Office properties and equipment, gross	2,284	2,161
Furniture, equipment, and vehicles
Office Properties and Equipment
Office properties and equipment, gross	$ 7,672	$ 9,930

XML

Stock Based Compensation (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Intrinsic value of options exercised	$ 0	$ 0	$ 0
Cash received from options exercised	0	0	0
Tax benefit realized from options exercised	$ 0	$ 0	$ 0

XML

Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Finite-lived Intangible Assets [Roll Forward]
Balance at beginning of year	$ 218
Amortization	(57)	(56)	(209)
Balance at end of year	161	218
Core Deposits [Member]
Finite-lived Intangible Assets [Roll Forward]
Balance at beginning of year	218	274
Capitalized	0	0
Amortization	(57)	(56)
Balance at end of year	$ 161	$ 218

XML

Investment Securities (Details Textual) (USD $)	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Schedule of Available-for-sale Securities [Line Items]
Debt Or Equity Investment in Single Issuer as Percentage of Shareholders Equity	10.00%
Federal Reserve Bank [Member]
Schedule of Available-for-sale Securities [Line Items]
Borrowings outstanding under line of credit facility	$ 0
Non-agency mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
OTTI impairment recognized in earnings	$ 78,000	$ 790,000

XML

Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Unrealized gains (losses) on securities:
Unrealized holding losses arising during period Before- Tax Amount	$ 2,515	$ (4,654)	$ 1,372
Unrealized holding losses arising during period Tax Expense	(1,006)	1,861	(549)
Net unrealized gains (losses) arising during the period, Net-of-Tax Amount	1,509	(2,793)	823
Less: reclassification adjustment for gains (losses)realized in net income Before- Tax Amount	(168)	552	243
Less: reclassification adjustment for gains (losses)realized in net income Tax Expense	67	(220)	(97)
Less: reclassification adjustment for gains (losses)realized in net income Net of Tax Amount	(101)	332	146
Changes for realized losses on securities available for sale for OTTI write-down Before- Tax Amount	78	797	1,332
Changes for realized losses on securities available for sale for OTTI write-down Tax Expense	(31)	(319)	(533)
Changes for realized losses on securities available for sale for OTTI write-down Tax Expense, Net of Tax Amount	47	478	799
Defined benefit plans:
Other Comprehensive Income (Loss), Amortization, Pension and Other Postretirement Benefit Plans, Net Prior Service Cost Recognized in Net Periodic Benefit Cost, before Tax	(18)	82	330
Other Comprehensive Income (Loss), Amortization, Pension and Other Postretirement Benefit Plans, Net Prior Service Cost Recognized in Net Periodic Pension Cost, Tax	7	(33)	(132)
Other Comprehensive Income (Loss), Amortization, Pension and Other Postretirement Benefit Plans, Net Prior Service Cost Recognized in Net Periodic Pension Cost, Net of Tax	(11)	49	198
Other comprehensive income (loss) Before- Tax Amount	2,407	(3,223)	3,277
Other comprehensive income (loss) Tax Expense	(963)	1,289	(1,311)
Total other comprehensive income (loss), net of tax	$ 1,444	$ (1,934)	$ 1,966

XML

Capital Matters (Tables)

12 Months Ended

Sep. 30, 2014

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Bank's Tier 1 (leverage) and risk-based capital ratios

The Bank’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2014 and 2013, respectively, are presented below:

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action  Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio
As of September 30, 2014 (Audited)
Total capital (to risk weighted assets)	$	62,116,000	16.1	%	$	30,793,000	> =	8.0	%	$	38,491,000	> =	10.0	%
Tier 1 capital (to risk weighted assets)	57,283,000		14.9	%	15,396,000		> =	4.0	%	23,095,000		> =	6.0	%
Tier 1 capital (to adjusted total assets)	57,283,000		10.0	%	22,991,000		> =	4.0	%	28,739,000		> =	5.0	%
As of September 30, 2013 (Audited)
Total capital (to risk weighted assets)	$	59,297,000	16.3	%	$	29,182,000	> =	8.0	%	$	36,478,000	> =	10.0	%
Tier 1 capital (to risk weighted assets)	54,717,000		15.0	%	14,591,000		> =	4.0	%	21,887,000		> =	6.0	%
Tier 1 capital (to adjusted total assets)	54,717,000		9.9	%	22,220,000		> =	4.0	%	27,775,000		> =	5.0	%

XML

Loans, Allowance for Loan Losses and Impaired Loans (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014		Sep. 30, 2013
Loans receivable
Loans receivable, net	$ 470,366		$ 440,863
Real Estate Loans
Loans receivable
Loans receivable, net	261,315		264,388
Consumer and Other Loans
Loans receivable
Loans receivable, net	209,051		176,475
Performing loans
Loans receivable
TDR loans	5,332		7,355
Other loans	463,449		430,900
Loans receivable, net	468,781		438,255
Performing loans | Real Estate Loans
Loans receivable
TDR loans	4,535		6,254
Other loans	255,564		255,951
Loans receivable, net	260,099		262,205
Performing loans | Consumer and Other Loans
Loans receivable
TDR loans	797		1,101
Other loans	207,885		174,949
Loans receivable, net	208,682		176,050
Nonperforming loans
Loans receivable
TDR loans	249	[1]	1,263	[1]
Other loans	1,336	[1]	1,345	[1]
Loans receivable, net	1,585	[1]	2,608	[1]
Nonperforming loans | Real Estate Loans
Loans receivable
TDR loans	202	[1]	1,187	[1]
Other loans	1,014	[1]	996	[1]
Loans receivable, net	1,216	[1]	2,183	[1]
Nonperforming loans | Consumer and Other Loans
Loans receivable
TDR loans	47	[1]	76	[1]
Other loans	322	[1]	349	[1]
Loans receivable, net	$ 369	[1]	$ 425	[1]

[1] Nonperforming loans are either 90+ days past due or nonaccrual.

XML

Stock Based Compensation

12 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

In February 2005, the Company’s stockholders approved the Company’s 2004 Recognition and Retention Plan. This plan provides for the grant of up to 113,910 shares of the Company’s common stock to eligible participants under this plan. As of September 30, 2014, 113,910 restricted shares under this plan were issued and 101,103 restricted shares under this plan were outstanding. Restricted shares previously granted were awarded at no cost to the employee and have a five-year vesting period from the grant date. The fair value of these previously granted restricted shares on the date of award was $7.04 per share for 63,783 shares, $6.18 for 6,832 shares, $5.24 for 20,312 shares, $5.65 for 2,500 shares and $5.84 for 20,483 shares. During the twelve months ended September 30, 2013, 20,483 shares, respectively, were granted to eligible participants under this plan at a weighted average fair value of $5.84 per share. No shares were granted to eligible participants under this plan during the twelve months ended September 30, 2014.

There were no previously awarded shares under the 2004 Recognition and Retention Plan that were forfeited in either of the twelve months endedSeptember 30, 2014 or 2013, respectively. There were 639 shares of the Company's common stock surrendered during the twelve months ended September 30, 2013 and 2,830 shares of the Company's common stock surrendered during the twelve months ended September 30, 2014, in each case to satisfy the withholding taxes due upon the vesting of certain previously awarded shares.

In February 2005, the Company’s stockholders also approved the Company’s 2004 Stock Option and Incentive Plan. This plan provides for the grant of nonqualified and incentive stock options and stock appreciation rights to eligible participants under the plan. The plan provides for the grant of awards for up to 284,778 shares of the Company’s common stock. At September 30, 2014, 284,778 options had been granted under this plan to eligible participants at a weighted-average exercise price of $6.57 per share. Options granted vest over a five-year period from the grant date. Unexercised, nonqualified stock options expire within 15 years of the grant date and unexercised incentive stock options expire within 10 years of the grant date. Through September 30, 2014, since the plan’s inception, options for 91,203 shares of the Company’s common stock were vested, options for 45,489 shares were unvested, options for 143,528 shares were forfeited and options for 4,558 shares were exercised. Of the 284,778 options granted, 136,692 remained outstanding as of September 30, 2014.

In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan. The aggregate number of shares of common stock reserved and available for issuance under the 2008 Equity Incentive Plan is 597,605 shares. Under the Plan, the Compensation Committee may grant stock options and stock appreciation rights that, upon exercise, result in the issuance of 426,860 shares of the Company’s common stock. The Committee may also grant shares of restricted stock and restricted stock units for an aggregate of 170,745 shares of Company common stock under this plan.

As of September 30, 2014 and September 30, 2013, 15,000 and 0 restricted shares under the 2008 Equity Incentive plan were issued and outstanding, respectively. Restricted shares granted were awarded at no cost to the employee and vest pro rata over a five-year period from the grant date. During the twelve months ended September 30, 2014, 15,000 shares were granted to eligible participants under this plan at a weighted average fair value of $8.00 per share.

Compensation expense related to restricted stock awards from both the 2004 Recognition and Retention Plan and the 2008 Equity Incentive Plan were $66, $45 and $22 for the years ended September 30, 2014, 2013 and 2012, respectively.

As of September 30, 2014 and September 30, 2013, 45,000 and 0 common stock options under the 2008 Equity Incentive plan were issued respectively. During the twelve months ended September 30, 2014, 45,000 options were granted under this plan to eligible participants at a weighted-average exercise price of $8.00 per share and 2,500 options were forfeited. Options granted vest pro rata over a five-year period from the grant date. Unexercised, nonqualified stock options expire within 15 years of the grant date and unexercised incentive stock options expire within 10 years of the grant date. Through September 30, 2014, since the plan’s inception, options for 0 shares of the Company’s common stock were vested, options for 42,500 shares were unvested, options for 2,500 shares were forfeited and options for 0 shares were exercised. Of the 45,000 options granted, 42,500 remained outstanding as of September 30, 2014.

The Company accounts for stock-based employee compensation related to the Company’s 2004 Stock Option and Incentive Plan and the 2008 Equity Incentive Plan using the fair-value-based method. Accordingly, management records compensation expense based on the value of the award as measured on the grant date and then the Company recognizes that cost over the vesting period for the award. The compensation cost recognized for stock-based employee compensation from both plans for the years ended September 30, 2014, 2013 and 2012 was $43, $31 and $21, respectively.

	Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
2014
Outstanding at beginning of year	150,932		$	6.15
Granted	45,000		8.00
Exercised	—
Forfeited or expired	(16,740	)
Outstanding at end of year	179,192		$	6.52	6.96	$	—
Exercisable at end of year	91,203		$	6.35	5.52
Fully vested and expected to vest	179,192		$	6.52	6.96
2013
Outstanding at beginning of year	124,789		$	6.26
Granted	26,143		5.62
Exercised	—
Forfeited or expired	—
Outstanding at end of year	150,932		$	6.15	7.06	$	—
Exercisable at end of year	88,927		$	6.63	6.07
Fully vested and expected to vest	150,932		$	6.15	7.06
2012
Outstanding at beginning of year	160,353		$	6.70
Granted	10,000		5.65
Exercised	—
Forfeited or expired	(45,564	)
Outstanding at end of year	124,789		$	6.26	7.65	$	—
Exercisable at end of year	77,639		$	6.82	6.78
Fully vested and expected to vest	124,789		$	6.26	7.65

Information related to the 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan during each year follows:

	2014		2013		2012
Intrinsic value of options exercised	$	—	$	—	$	—
Cash received from options exercised	$	—	$	—	$	—
Tax benefit realized from options exercised	$	—	$	—	$	—

Set forth below is a table showing relevant assumptions used in calculating stock option expense related to the Company’s 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan:

	2014		2013		2012
Dividend yield	0	%	0	%	0	%
Risk-free interest rate	2.7	%	1.7	%	1.6	%
Weighted average expected life (years)	10		10		10
Expected volatility	3	%	14	%	19	%

XML

Nature of Business and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Citizens Community Federal N.A. All significant inter-company accounts and transactions have been eliminated.

Use of Estimates

Use of Estimates—Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, valuation of acquired intangible assets, useful lives for depreciation and amortization, indefinite-lived intangible assets and long-lived assets, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: those items described under the caption “Risk Factors” in Item 1A of the accompanying annual report on Form 10-K for the year ended September 30, 2014 and external market factors such as market interest rates and employment rates, changes to operating policies and procedures, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period.

Cash and Cash Equivalents

Cash and Cash Equivalents—For purposes of reporting cash flows in the consolidated financial statements, cash and cash equivalents include cash, due from banks, and interest bearing deposits with original maturities of three months or less.

Investment Securities; Held to Maturity and Available for Sale

Investment Securities; Held to Maturity and Available for Sale – Management determines the appropriate classification of investment securities at the time of purchase and reevaluates such designation as of the date of each statement of financial position date. Securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Investment securities not classified as held to maturity are classified as available for sale. Available for sale securities are stated at fair value, with unrealized holding gains and losses deemed other than temporarily impaired due to non-credit issues being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s earnings in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities. Gains and losses on sales of investment securities are recorded on the trade date and are determined using the specific identification method.

Declines in the fair value of securities below their cost that are other than temporary due to credit issues are reflected as “Net (loss) gain on available for sale securities” in the accompanying Consolidated Statement of Operations. In estimating other-than-temporary impairment (OTTI), management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value. The difference between the present values of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the portion of OTTI that is recognized in operations and is a reduction to the cost basis of the security. The portion of other-than-temporary impairment related to all other factors is included in other comprehensive income (loss), net of the related tax effect.

Loans

Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, and deferred loan fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments.

Interest income on commercial, mortgage and consumer loans is discontinued according to the following schedules:

•Commercial loans, including Agricultural and C&I loans, past due 90 days or more;

•Closed end consumer loans past due 120 days or more; and

•Real estate loans and open ended consumer loans past due 180 days or more.

Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account current with the contractual term of the loan and a 6 month payment history has been established. Interest on impaired loans considered troubled debt restructurings (“TDRs”) or substandard, less than 90 days delinquent, is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment. Substandard loans, as defined by the OCC, our primary banking regulator, are loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.

Real estate loans and open ended consumer loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. Closed end consumer loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 120 days or more. Commercial loans, including Agricultural and C&I loans, are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 90 days or more.

Allowance for Loan Losses

Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in our loan portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the required ALL balance taking into account the following factors: past loan loss experience; the nature, volume and composition of the loan portfolio; known and inherent risks in the portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors determined by management. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the loan terms is not expected. Impaired loans consist of all TDRs, as well as individual substandard loans not considered a TDR, when full payment under the loan terms is not expected. All TDRs are individually evaluated for impairment. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for more information on what we consider to be a TDR. If a TDR or substandard loan is deemed to be impaired, a specific ALL allocation is established so that the loan is reported, net, at either (a) the present value of estimated future cash flows using the loan’s existing rate; or (b) at the fair value of any collateral less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 90+ days past due, and certain TDRs that are less than 90+ days delinquent, the likelihood of the loan migrating to over 90 days past due is also taken into account when determining the specific ALL allocation. Large groups of smaller balance homogeneous loans, such as non-TDR commercial, consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Non-marketable Equity Securities

Non-marketable Equity Securities — Non-marketable equity securities are comprised of Federal Home Loan Bank (FHLB) stock and Federal Reserve Bank (FRB) stock, and are carried at cost in the amounts of $3,820 and $1,695 respectively.

The Bank is a member of the FHLB system. Members are required to own a certain amount of FHLB stock based on the Bank’s level of borrowings from the FHLB and other factors, and may invest in additional amounts of FHLB stock. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on the ultimate recovery of par value. The determination of whether a decline affects the ultimate recovery is influenced by criteria such as: (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount and length of time a decline has persisted; (2) the impact of legislative and regulatory changes on the FHLB; and (3) the liquidity position of the FHLB. Both cash and stock dividends are reported as income.

FHLB stock is evaluated quarterly for impairment. Quarterly cash dividends were paid in November 2013 and in February 2014 at an annualized dividend rate of 0.30%. Quarterly cash dividends were paid in May 2014 and in August 2014 at an annualized dividend rate of 0.50% per share. Based on management’s quarterly evaluation, no impairment has been recorded on these securities.

As a National Banking Association, the Bank must be a member of the Federal Reserve system. Each member bank is required to subscribe to Federal Reserve Stock in an amount equal to 6 percent of its capital and surplus. Although the par value of the stock is $100 per share, banks (including the Bank) pay only $50 per share at the time of purchase, with the understanding that the other half of the subscription amount is subject to call at any time. Dividends are paid at the statutory rate of 6 percent per annum, or $1.50 per share semi-annually on the last business day of June and December.

Foreclosed and Repossessed Assets, net

Foreclosed and Repossessed Assets, net – Assets acquired through foreclosure or repossession, are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a valuation allowance is recorded through expense. Costs incurred after acquisition are expensed, and are included in "non-interest expense, other" on the accompanying Consolidated Statements of Operations. Foreclosed and repossessed asset balances were $1,050 and $1,028 at September 30, 2014 and September 30, 2013, respectively.

Office Properties and Equipment

Office Properties and Equipment—Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of office properties and equipment are reflected in income. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 10 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line (or accelerated) method with useful lives ranging from 3 to 10 years. Leasehold improvements are depreciated using the straight-line (or accelerated) method with useful lives based on the lesser of (a) the estimated life of the lease, or (b) the estimated useful life of the leasehold improvement.

Intangible Assets

Intangible Assets—Intangible assets consist of core deposit intangible assets arising from branch acquisitions. They were initially measured at fair value and amortized over their estimated useful lives, ranging from 7 to 15 years. The balance of core deposit intangible assets, were $161 and $218 at September 30, 2014 and 2013, respectively. Amortization expense related to these core deposit intangible assets was $57, $56 and $209 for the years ended September 30, 2014, 2013 and 2012, respectively. Accumulated amortization on core deposit intangible assets was $2,360 and $2,303, at September 30, 2014 and 2013, respectively.

Interest Bearing Deposits

Interest Bearing Deposits—Other interest bearing deposits mature within one year and are carried at cost, which approximates their fair value.

Advertising Costs, Marketing and Public Relations Expense

Advertising, Marketing and Public Relations Expense—The Company expenses all advertising, marketing and public relations costs as they are incurred. Total costs for the years ended September 30, 2014, 2013, and 2012 were $370, $233, and $190, respectively.

Income Taxes

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. See Note 13, "Income Taxes" for details on the Company’s income taxes.

The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carry forward periods, any experience with utilization of operating loss and tax credit carry forwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

Earnings Per Share

Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans.

Loss Contingencies

Loss Contingencies—Loss contingencies, including claims and legal actions arising in the normal course of business, are recorded as liabilities when the likelihood of loss is probable and an amount of loss can be reasonably estimated.

Off-Balance-Sheet Financial Instruments

Off-Balance-Sheet Financial Instruments—In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit and commitments under lines of credit arrangements, issued to meet customer financial needs. Such financial instruments are recorded in the financial statements when they become payable.

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)—Accumulated and other comprehensive income or loss is comprised of the unrealized and realized losses on securities available for sale and pension liability adjustments, net of tax, and is shown on the accompanying Consolidated Statements of Other Comprehensive Income (Loss).

Operating Segments

Operating Segments—While the chief decision makers monitor the revenue streams of the various banking products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment.

Reclassifications

Reclassifications – Certain items previously reported were reclassified for consistency with the current presentation.

Adoption of New Accounting Standards

Adoption of New Accounting Standards - In August, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU") 2014-14 - "Receivables; Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure". ASU 2014-14 is intended to improve accounting and disclosure consistency related to how creditors classify government-guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure. For public entities, ASU 2014-09 is effective on a prospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company expects the adoption of ASU 2014-14 to have no material effect on the Company's results of operations, financial position or cash flows.

In May, 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09 - "Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is intended to clarify and simplify revenue recognition principles, develop a common revenue standard across industries and accounting frameworks, and improve the usefulness and consistency of revenue reporting. For public entities, ASU 2014-09 is effective on a retrospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is not permitted. The Company expects the adoption of ASU 2014-09 to have no material effect on the Company's results of operations, financial position or cash flows.

In January, 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-04 - "Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force)". ASU 2014-04 is intended to improve consistency among reporting entities by clarifying when an in substance foreclosure occurs, that is, when a creditor should derecognize a loan and recognize the corresponding real estate collateral as a separate asset. For public entities, ASU 2014 is effective for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company expects the adoption of ASU 2014-04 to have no material effect on the Company's results of operations, financial position or cash flows.

XML

Condensed Financial Information - Parent Company Only (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Condensed Financial Statements, Captions [Line Items]
Income—interest and dividends	$ 24,033	$ 24,575	$ 27,085
Expenses—other	2,098	1,530	1,435
Loss before provision for income taxes and equity in undistributed net income (loss) of subsidiary	2,830	1,682	367
Benefit for income taxes	1,047	635	161
Net income attributable to common stockholders	1,783	1,047	206
Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Income—interest and dividends	0	0	0
Expenses—other	182	107	320
Loss before provision for income taxes and equity in undistributed net income (loss) of subsidiary	(182)	(107)	(320)
Benefit for income taxes	(73)	(43)	(128)
Loss before equity in undistributed net income (loss) of subsidiary	(109)	(64)	(192)
Equity in undistributed net income of subsidiary	1,892	1,111	398
Net income attributable to common stockholders	$ 1,783	$ 1,047	$ 206

XML

Loans, Allowance for Loan Losses and Impaired Loans (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Loans and Leases Receivable, Related Parties [Roll Forward]
Balance—beginning of year	$ 129	$ 131	$ 138
New loan originations	17	33
Repayments	(19)	(40)
Balance—end of year	129	131	138
Available and unused lines of credit	$ 18	$ 18

XML

Condensed Financial Information - Parent Company Only (Tables)

12 Months Ended

Sep. 30, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Balance Sheets

CONDENSED BALANCE SHEETS

September 30,

	2014		2013
ASSETS
Cash and cash equivalents	$	235	$	230
Investment in subsidiary	57,058		53,955
Total assets	$	57,293	$	54,185
STOCKHOLDERS’ EQUITY
Total stockholders’ equity	$	57,293	$	54,185

Statements of Operations

STATEMENTS OF OPERATIONS

	2014			2013			2012
Income—interest and dividends	$	—		$	—		$	—
Expenses—other	182			107			320
Loss before provision for income taxes and equity in
undistributed net income (loss) of subsidiary	(182		)	(107		)	(320		)
Benefit for income taxes	(73		)	(43		)	(128		)
Loss before equity in undistributed net income (loss) of
subsidiary	(109		)	(64		)	(192		)
Equity in undistributed net income of subsidiary	1,892			1,111			398
Net income	$	1,783		$	1,047		$	206

Statements of Cash flows

STATEMENTS OF CASH FLOWS

	2014			2013			2012
Decrease in cash and cash equivalents:
Cash flows from operating activities:
Net income	$	1,783		$	1,047		$	206
Stock based compensation expense	43			31			21
Adjustments to reconcile net income to net cash provided by operating activities - Equity in undistributed income of subsidiary	(1,892		)	(1,111		)	(398		)
Net cash used in operating activities	(66		)	(33		)	(171		)
Cash flows from financing activities:
Surrendered vested shares of common stock	(22		)	(5		)	—
Cash dividend from Bank to Holding Company	300			—			—
Cash dividends paid	(207		)	(103		)	—
Net cash provided by (used in) financing activities	71			(108		)	—
Net increase (decrease) in cash and cash equivalents	5			(141		)	(171		)
Cash and cash equivalents at beginning of year	230			371			542
Cash and cash equivalents at end of year	$	235		$	230		$	371

XML

Consolidated Statements of Other Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Statement of Comprehensive Income [Abstract]
Net income attributable to common stockholders	$ 1,783	$ 1,047	$ 206
Securities available for sale
Net unrealized gains (losses) arising during period	1,509	(2,793)	823
Reclassification adjustment for (losses) gains included in net income	(101)	332	146
Change for realized losses on securities available for sale for other-than-temporary impairment (OTTI) write-down	47	478	799
Unrealized gains (losses) on securities	1,455	(1,983)	1,768
Defined benefit plans:
Amortization of unrecognized prior service costs and net (losses) gains	(11)	49	198
Total other comprehensive income (loss), net of tax	1,444	(1,934)	1,966
Comprehensive income (loss)	$ 3,227	$ (887)	$ 2,172

XML

Income Taxes (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income
Tax expense at statutory rate	$ 962	$ 572	$ 124
State income taxes net of exception	152	86	20
Tax exempt interest	(46)	(31)	(2)
Other	(21)	8	19
Total	$ 1,047	$ 635	$ 161
Tax expense at statutory rate in percent	34.00%	34.00%	34.00%
State income taxes net of exception in percent	5.37%	5.10%	5.37%
Tax exempt interest in percent	(1.64%)	(1.87%)	(0.51%)
Other in percent	(0.73%)	0.51%	4.99%
Total, in percent	37.00%	37.74%	43.85%

XML

Nature of Business and Summary of Significant Accounting Policies

12 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of Citizens Community Federal N.A. (the “Bank”) included herein have been included by its parent company, Citizens Community Bancorp, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Citizens Community Bancorp (“CCB”) was a successor to Citizens Community Federal as a result of a regulatory restructuring into the mutual holding company form, which was effective on March 29, 2004. Originally, Citizens Community Federal was a credit union. In December 2001, Citizens Community Federal converted to a federal mutual savings bank. In 2004, Citizens Community Federal reorganized into the mutual holding company form of organization. In 2006, Citizens Community Bancorp completed its second-step mutual to stock conversion.

On April 16, 2014, the U.S. Office of the Comptroller of the Currency (the "OCC"), the primary federal regulator for

Citizens Community Bancorp, Inc. and Citizens Community Federal, provided written notice to the Bank of the OCC's approval for the Bank to convert to a national banking association (a "National Bank") and operate under the title of Citizens Community Federal National Association ("Citizens Community Federal N.A."). The consummation of the conversion to a National Bank was effective as of May 31, 2014.

On April 18, 2014, Citizens Community Bancorp, Inc. received written notice from the Federal Reserve Bank of

Minneapolis (the "FRB") notifying the Company of the FRB's approval of the Company becoming a bank holding company as

a result of the conversion of the Bank from a federally-chartered savings bank to a National Bank, which approval

was also effective as of May 31, 2014.

The consolidated income of the Company is principally derived from the income of the Bank, the Company’s wholly owned subsidiary. The Bank originates residential, commercial, agricultural, consumer and commercial and industrial (C&I) loans and accepts deposits from customers, primarily in Wisconsin, Minnesota and Michigan. The Bank operates 23 full-service offices; eight stand-alone locations and 15 branches, predominantly located inside Walmart Supercenters. In October 2014, we announced the closing of three in-store branches, effective January 2015; and the relocation of the Mankato, Minnesota branch to a new full-service traditional branch in Mankato, MN in 2015. We intend to review our branch network to deploy assets and capital to growth markets and exit markets where we have limited growth opportunities. Through all of our branch locations in Wisconsin, Minnesota and Michigan, we provide a variety of commercial and consumer banking products and services to customers, including online and mobile banking options.

The Bank is subject to competition from other financial institutions and non-financial institutions providing financial products. Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred through December 8, 2014, the date on which the financial statements were available to be issued. As of December 8, 2014, there were no subsequent events which required recognition or disclosure.

Unless otherwise stated, all monetary amounts in these Notes to Consolidated Financial Statements, other than share, per share and capital ratio amounts, are stated in thousands.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Citizens Community Federal N.A. All significant inter-company accounts and transactions have been eliminated.

Use of Estimates—Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, valuation of acquired intangible assets, useful lives for depreciation and amortization, indefinite-lived intangible assets and long-lived assets, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: those items described under the caption “Risk Factors” in Item 1A of the accompanying annual report on Form 10-K for the year ended September 30, 2014 and external market factors such as market interest rates and employment rates, changes to operating policies and procedures, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period.

Cash and Cash Equivalents—For purposes of reporting cash flows in the consolidated financial statements, cash and cash equivalents include cash, due from banks, and interest bearing deposits with original maturities of three months or less.

Investment Securities; Held to Maturity and Available for Sale – Management determines the appropriate classification of investment securities at the time of purchase and reevaluates such designation as of the date of each statement of financial position date. Securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Investment securities not classified as held to maturity are classified as available for sale. Available for sale securities are stated at fair value, with unrealized holding gains and losses deemed other than temporarily impaired due to non-credit issues being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s earnings in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities. Gains and losses on sales of investment securities are recorded on the trade date and are determined using the specific identification method.

Declines in the fair value of securities below their cost that are other than temporary due to credit issues are reflected as “Net (loss) gain on available for sale securities” in the accompanying Consolidated Statement of Operations. In estimating other-than-temporary impairment (OTTI), management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value. The difference between the present values of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the portion of OTTI that is recognized in operations and is a reduction to the cost basis of the security. The portion of other-than-temporary impairment related to all other factors is included in other comprehensive income (loss), net of the related tax effect.

Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, and deferred loan fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments.

Interest income on commercial, mortgage and consumer loans is discontinued according to the following schedules:

•Commercial loans, including Agricultural and C&I loans, past due 90 days or more;

•Closed end consumer loans past due 120 days or more; and

•Real estate loans and open ended consumer loans past due 180 days or more.

Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account current with the contractual term of the loan and a 6 month payment history has been established. Interest on impaired loans considered troubled debt restructurings (“TDRs”) or substandard, less than 90 days delinquent, is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment. Substandard loans, as defined by the OCC, our primary banking regulator, are loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.

Real estate loans and open ended consumer loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. Closed end consumer loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 120 days or more. Commercial loans, including Agricultural and C&I loans, are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 90 days or more.

Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in our loan portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the required ALL balance taking into account the following factors: past loan loss experience; the nature, volume and composition of the loan portfolio; known and inherent risks in the portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors determined by management. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the loan terms is not expected. Impaired loans consist of all TDRs, as well as individual substandard loans not considered a TDR, when full payment under the loan terms is not expected. All TDRs are individually evaluated for impairment. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for more information on what we consider to be a TDR. If a TDR or substandard loan is deemed to be impaired, a specific ALL allocation is established so that the loan is reported, net, at either (a) the present value of estimated future cash flows using the loan’s existing rate; or (b) at the fair value of any collateral less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 90+ days past due, and certain TDRs that are less than 90+ days delinquent, the likelihood of the loan migrating to over 90 days past due is also taken into account when determining the specific ALL allocation. Large groups of smaller balance homogeneous loans, such as non-TDR commercial, consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Non-marketable Equity Securities — Non-marketable equity securities are comprised of Federal Home Loan Bank (FHLB) stock and Federal Reserve Bank (FRB) stock, and are carried at cost in the amounts of $3,820 and $1,695 respectively.

The Bank is a member of the FHLB system. Members are required to own a certain amount of FHLB stock based on the Bank’s level of borrowings from the FHLB and other factors, and may invest in additional amounts of FHLB stock. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on the ultimate recovery of par value. The determination of whether a decline affects the ultimate recovery is influenced by criteria such as: (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount and length of time a decline has persisted; (2) the impact of legislative and regulatory changes on the FHLB; and (3) the liquidity position of the FHLB. Both cash and stock dividends are reported as income.

FHLB stock is evaluated quarterly for impairment. Quarterly cash dividends were paid in November 2013 and in February 2014 at an annualized dividend rate of 0.30%. Quarterly cash dividends were paid in May 2014 and in August 2014 at an annualized dividend rate of 0.50% per share. Based on management’s quarterly evaluation, no impairment has been recorded on these securities.

As a National Banking Association, the Bank must be a member of the Federal Reserve system. Each member bank is required to subscribe to Federal Reserve Stock in an amount equal to 6 percent of its capital and surplus. Although the par value of the stock is $100 per share, banks (including the Bank) pay only $50 per share at the time of purchase, with the understanding that the other half of the subscription amount is subject to call at any time. Dividends are paid at the statutory rate of 6 percent per annum, or $1.50 per share semi-annually on the last business day of June and December.

Foreclosed and Repossessed Assets, net – Assets acquired through foreclosure or repossession, are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a valuation allowance is recorded through expense. Costs incurred after acquisition are expensed, and are included in "non-interest expense, other" on the accompanying Consolidated Statements of Operations. Foreclosed and repossessed asset balances were $1,050 and $1,028 at September 30, 2014 and September 30, 2013, respectively.

Office Properties and Equipment—Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of office properties and equipment are reflected in income. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 10 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line (or accelerated) method with useful lives ranging from 3 to 10 years. Leasehold improvements are depreciated using the straight-line (or accelerated) method with useful lives based on the lesser of (a) the estimated life of the lease, or (b) the estimated useful life of the leasehold improvement.

Intangible Assets—Intangible assets consist of core deposit intangible assets arising from branch acquisitions. They were initially measured at fair value and amortized over their estimated useful lives, ranging from 7 to 15 years. The balance of core deposit intangible assets, were $161 and $218 at September 30, 2014 and 2013, respectively. Amortization expense related to these core deposit intangible assets was $57, $56 and $209 for the years ended September 30, 2014, 2013 and 2012, respectively. Accumulated amortization on core deposit intangible assets was $2,360 and $2,303, at September 30, 2014 and 2013, respectively.

Interest Bearing Deposits—Other interest bearing deposits mature within one year and are carried at cost, which approximates their fair value.

Advertising, Marketing and Public Relations Expense—The Company expenses all advertising, marketing and public relations costs as they are incurred. Total costs for the years ended September 30, 2014, 2013, and 2012 were $370, $233, and $190, respectively.

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. See Note 13, "Income Taxes" for details on the Company’s income taxes.

The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carry forward periods, any experience with utilization of operating loss and tax credit carry forwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans.

Loss Contingencies—Loss contingencies, including claims and legal actions arising in the normal course of business, are recorded as liabilities when the likelihood of loss is probable and an amount of loss can be reasonably estimated.

Off-Balance-Sheet Financial Instruments—In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit and commitments under lines of credit arrangements, issued to meet customer financial needs. Such financial instruments are recorded in the financial statements when they become payable.

Other Comprehensive Income (Loss)—Accumulated and other comprehensive income or loss is comprised of the unrealized and realized losses on securities available for sale and pension liability adjustments, net of tax, and is shown on the accompanying Consolidated Statements of Other Comprehensive Income (Loss).

Operating Segments—While the chief decision makers monitor the revenue streams of the various banking products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment.

Reclassifications – Certain items previously reported were reclassified for consistency with the current presentation.

Adoption of New Accounting Standards - In August, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU") 2014-14 - "Receivables; Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure". ASU 2014-14 is intended to improve accounting and disclosure consistency related to how creditors classify government-guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure. For public entities, ASU 2014-09 is effective on a prospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company expects the adoption of ASU 2014-14 to have no material effect on the Company's results of operations, financial position or cash flows.

In May, 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09 - "Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is intended to clarify and simplify revenue recognition principles, develop a common revenue standard across industries and accounting frameworks, and improve the usefulness and consistency of revenue reporting. For public entities, ASU 2014-09 is effective on a retrospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is not permitted. The Company expects the adoption of ASU 2014-09 to have no material effect on the Company's results of operations, financial position or cash flows.

In January, 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-04 - "Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force)". ASU 2014-04 is intended to improve consistency among reporting entities by clarifying when an in substance foreclosure occurs, that is, when a creditor should derecognize a loan and recognize the corresponding real estate collateral as a separate asset. For public entities, ASU 2014 is effective for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company expects the adoption of ASU 2014-04 to have no material effect on the Company's results of operations, financial position or cash flows.

XML

Investment Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 8,785	$ 0
Gross Unrealized Gains	37	0
Gross Unrealized Losses	14	0
Estimated Fair Value	8,808	0
Obligations of states and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	1,465	0
Gross Unrealized Gains	4	0
Gross Unrealized Losses	5	0
Estimated Fair Value	1,464	0
Mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	7,320	0
Gross Unrealized Gains	33	0
Gross Unrealized Losses	9	0
Estimated Fair Value	$ 7,344	$ 0

XML

Retirement Plans Parenthetical (Details)	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Asset Retirement Obligation Disclosure [Abstract]
Rate of compensation increase	0.00%	0.00%	0.00%
Expected long-term rate of return on plan assets	0.00%	0.00%	0.00%
Rate of compensation increase	0.00%	0.00%	0.00%

XML

Deposits (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
2015	$ 80,381
2016	71,638
2017	52,843
2018	23,960
2019	17,637
After 2019	0
Total	$ 246,459

XML

Fair Value Accounting (Tables)

12 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Assets Measured on a Recurring Basis

The following table presents, for the periods shown below, the Company's fair value of securities available for sale in accordance with the fair value hierarchy described above.

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2014
Investment securities:
U.S. government agency obligations	$	22,103	$	—	$	22,103	$	—
Obligations of states and political
subdivisions	12,658		—		12,658		—
Mortgage-backed securities	36,171		—		36,171		—
Federal Agricultural Mortgage Corporation	65		—		65		—
Total	$	70,997	$	—	$	70,997	$	—
September 30, 2013
Investment securities:
U.S. government agency obligations	$	27,866	$	—	$	27,866	$	—
Obligations of states and political
subdivisions	10,970		—		10,970		—
Mortgage-backed securities	39,633		—		39,633		—
Non-agency mortgage-backed securities	1,226		—		—		1,226
Total	$	79,695	$	—	$	78,469	$	1,226

Reconciliation of residential mortgage-backed securities

The following table presents a reconciliation of non-agency mortgage-backed securities held by the Bank measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for each of the twelve months endedSeptember 30, 2014 and 2013:

	Twelve Months Ended
	September 30, 2014			September 30, 2013
Balance beginning of period	$	1,226		$	6,586
Total gains or losses (realized/unrealized):
Included in earnings	(274		)	(797		)
Included in other comprehensive income (loss)	615			1,322
Sales	(1,321		)	(3,802		)
Payments, accretion and amortization	(246		)	(2,083		)
Balance end of period	$	—		$	1,226

Assets Measured on a Nonrecurring Basis

The following table presents, for the periods shown below, the Company's fair value for foreclosed and repossessed assets and TDRs in accordance with the fair value hierarchy described above.

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
September 30, 2014
Foreclosed and repossessed assets, net	$	1,050	$	—	$	—	$	1,050
Loans restructured in a TDR	5,581		—		—		5,581
Total	$	6,631	$	—	$	—	$	6,631
September 30, 2013
Foreclosed and repossessed assets, net	$	1,028	$	—	$	—	$	1,028
Loans restructured in a TDR	8,618		—		—		8,618
Total	$	9,646	$	—	$	—	$	9,646

Carrying amount and estimated fair value of financial instruments

The carrying amount and estimated fair value of financial instruments as of the dates indicated were as follows:

	September 30, 2014				September 30, 2013
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	11,434	$	11,434	$	17,601	$	17,601
Interest-bearing deposits	245		245		1,988		1,988
Investment securities	70,974		70,997		79,695		79,695
Non-marketable equity securities, at cost	5,515		5,515		3,300		3,300
Loans receivable, net	463,860		479,961		434,683		448,846
Accrued interest receivable	1,478		1,478		1,469		1,469
Financial liabilities:
Deposits	$	449,767	$	454,170	$	447,398	$	451,225
FHLB advances	58,891		59,331		50,000		49,676
Accrued interest payable	13		13		11		11

XML

Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off Balance Sheet Instruments Contractual Amount	$ 16,119	$ 12,678
Commitments to extend credit | Consumer
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off Balance Sheet Instruments Contractual Amount	2,820	2,475
Commitments to extend credit | Commercial
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off Balance Sheet Instruments Contractual Amount	7,172	7,791
Standby letter of credit | Commercial
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off Balance Sheet Instruments Contractual Amount	20	0
Unused lines of credit | Home equity lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off Balance Sheet Instruments Contractual Amount	1,622	1,035
Unused lines of credit | Kwik cash and lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off Balance Sheet Instruments Contractual Amount	1,227	1,235
Unused lines of credit | Consumer construction
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off Balance Sheet Instruments Contractual Amount	119	0
Unused lines of credit | Commercial construction
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off Balance Sheet Instruments Contractual Amount	947	0
Unused lines of credit | Commercial lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off Balance Sheet Instruments Contractual Amount	$ 2,192	$ 142
Minimum [Member] | Commitments to extend credit | Consumer
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fixed interest rate	3.30%	3.13%
Minimum [Member] | Commitments to extend credit | Commercial
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fixed interest rate	3.25%	4.30%
Maximum [Member] | Commitments to extend credit | Consumer
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fixed interest rate	11.99%	11.49%
Maximum [Member] | Commitments to extend credit | Commercial
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fixed interest rate	5.50%	6.25%

XML

Income Taxes (Tables)

12 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Income tax expense (benefit)

Income tax expense (benefit) for each of the periods shown below consisted of the following:

	2014		2013		2012
Current tax provision
Federal	$	97	$	227	$	1,708
State	7		17		240
	104		244		1,948
Deferred tax provision (benefit)
Federal	798		322		(1,567		)
State	145		69		(220		)
	943		391		(1,787		)
Total	$	1,047	$	635	$	161

The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income

The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income as result of the following differences:

	2014					2013					2012
	Amount			Rate		Amount			Rate		Amount			Rate
Tax expense at statutory rate	$	962		34.00	%	$	572		34.00	%	$	124		34.00	%
State income taxes net of federal	152			5.37	%	86			5.10	%	20			5.37	%
Tax exempt interest	(46		)	(1.64	)%	(31		)	(1.87	)%	(2		)	(0.51	)%
Other	(21		)	(0.73	)%	8			0.51	%	19			4.99	%
Total	$	1,047		37.00	%	$	635		37.74	%	$	161		43.85	%

Deferred Tax Assets and Liabilities

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities as of September 30, 2014 and September 30, 2013, respectively:

	2014			2013
Deferred tax assets:
Allowance for loan losses	$	2,562		$	2,433
Deferred loan costs/fees	217			308
Director/officer compensation plans	551			564
Net unrealized loss on securities available for sale	579			1,549
Impairment loss	—			1,306
Other	233			182
Deferred tax assets	$	4,142		$	6,342
Deferred tax liabilities:
Office properties and equipment	(397		)	(677		)
Other	(111		)	(125		)
Deferred tax liabilities	(508		)	(802		)
Net deferred tax assets	$	3,634		$	5,540

XML

Retirement Plans (Notes)

12 Months Ended

Sep. 30, 2014

Asset Retirement Obligation Disclosure [Abstract]

RETIREMENT PLANS

RETIREMENT PLANS    

401(k) Plan—The Company sponsors a 401(k) profit sharing plan that covers all employees who qualify based on minimum age and length of service requirements. Employees may make pretax voluntary contributions to the plan, which are matched, in part, by the Company. Employer matching contributions to the plan were $193, $189, and $172 for 2014, 2013 and 2012, respectively.

Supplemental Executive Retirement Plan—The Company maintained an unfunded Supplemental Executive Retirement Plan (SERP) providing retirement benefits for key employees designated by the Board of Directors. Benefits under the SERP generally were based on the key employees’ years of service and compensation during the years preceding retirement. In May 2009, any additional accrual of benefits under the SERP was suspended. The remaining SERP liability relates to former Executive Management.

Director Retirement Plan—The Company also maintains an unfunded Directors’ Retirement Plan. The benefit amounts are determined by individual director agreements. The remaining Director Retirement Plan liability relates to current and former Directors.

The components of the SERP and Directors’ Retirement plans’ cost at September 30, 2014, 2013 and 2012, respectively, are summarized as follows:

	2014			2013			2012
Beginning accrued benefit cost	$	1,181		$	2,363		$	2,659
Service cost	—			—			—
Interest cost	51			45			126
Amortization of prior service costs	1			1			6
Net periodic benefit cost	52			46			132
Benefits paid	(79		)	(1,228		)	(66		)
Curtailment and settlement	—			—			(362		)
Ending accrued benefit cost	$	1,154		$	1,181		$	2,363

The following table sets forth for the SERP and Directors’ Retirement plans the change in projected benefit obligation, the change in plan assets, the funded status of the plans, and the net liability recognized in the Company’s balance sheet at September 30, 2014, 2013 and 2012, respectively:

	2014			2013			2012
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	1,117		$	2,381		$	3,008
Service cost	—			—			—
Interest cost	51			45			126
Curtailment and settlement	—			—			(755		)
Actuarial loss (gain)	20			(81		)	68
Benefits paid	(79		)	(1,228		)	(66		)
Projected benefit obligation, end of year	$	1,109		$	1,117		$	2,381
Change in plan assets:
Plan assets at fair value, beginning of year	$	—		$	—		$	—
Actual return on plan assets	—			—			—
Company contributions	79			1,228			66
Benefits paid	(79		)	(1,228		)	(66		)
Plan assets at fair value, end of year	$	—		$	—		$	—

Weighted average assumptions used in determining the benefit obligation and net pension costs as of September 30, 2014, 2013 and 2012, (in actual dollars) were as follows:

	2014		2013		2012
Benefit obligation actuarial assumptions:
Discount Rate	4.25	%	4.75	%	3.75	%
Rate of compensation increase	N/A		N/A		N/A
Net pension cost actuarial assumption
Discount rate	4.25	%	4.75	%	4.25	%
Expected long-term rate of return on plan assets	N/A		N/A		N/A
Rate of compensation increase	N/A		N/A		N/A

Estimated future benefit payments as of September 30, 2014, which reflect expected future service, as appropriate, are as follows:

2015	$	81
2016	$	104
2017	$	111
2018	$	118
2019	$	111
2020-2024	$	591