Edgar Filing: Citizens Community Bancorp Inc.

As filed with the Securities and Exchange Commission on June 30, 2006

Registration No. 333-_________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________

REGISTRATION STATEMENT ON FORM SB-2
UNDER
THE SECURITIES ACT OF 1933
________________________

CITIZENS COMMUNITY BANCORP, INC.
(Exact name of small business issuer as specified in its charter)

Maryland

(State or other jurisdiction of
incorporation or organization)

6035

(Primary Standard Industrial
Classification Code Number)

20-5120010

(I.R.S. Employer Identification No.)

2174 EastRidge Center, Eau Claire, Wisconsin 54701
(715) 836-9994
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
________________________

James G. Cooley, President and Chief Executive Officer
Citizens Community Bancorp, Inc.
2174 EastRidge Center
Eau Claire, Wisconsin 54701
(715) 836-9994
(Name, address, including zip code, and telephone number, including area code, of agent for service)
________________________

Please send copies of all communications to:

Martin L. Meyrowitz, P.C.
Marianne E. Roche, Esq.
Beth A. Freedman, Esq.
SILVER, FREEDMAN & TAFF, L.L.P.
(a limited liability partnership including professional corporations)
1700 Wisconsin Avenue, NW
Washington, DC 20007
(202) 295-4500
________________________

Approximate date of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

       If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [   ]

       If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. [   ]

       If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. [   ]

       If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [   ]

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Unit	Proposed Maximum Aggregate Offering Price⁽¹⁾	Amount of Registration Fee
Common Stock, par value $.01 per share	7,116,519 shares	$10.00	$71,165,190	$7,614.68

_______________________
⁽¹⁾ Estimated solely for the purpose of calculating the registration fee.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

PROSPECTUS

CITIZENS COMMUNITY BANCORP, INC.

(Proposed Holding Company for Citizens Community Federal)

Up to 6,188,277 Shares of Common Stock

(Including up to 4,600,000 newly issued shares and up to 1,588,277 shares

to be exchanged for shares of Citizens Community Bancorp)

Citizens Community Bancorp, Inc. is offering common stock in connection with the Conversion of Citizens Community MHC from the mutual to the stock form of organization. The shares we are offering represent the 74% ownership interest in Citizens Community Bancorp currently owned by Citizens Community MHC, its mutual holding company parent. The remaining 26% ownership interest in Citizens Community Bancorp is owned by the public and will be exchanged for shares of Citizens Community Bancorp, Inc.'s common stock. If you are now a stockholder of Citizens Community Bancorp, your shares will be automatically exchanged for shares of Citizens Community Bancorp, Inc., and the number of shares you will receive will be based on an Exchange Ratio that is dependent upon the number of shares we sell in our Stock Offering. All shares being offered for sale will be sold at a price of $10.00 per share.

If you are a current or former depositor or borrower of Citizens Community Federal as of the eligibility dates:

You have rights to purchase shares of our common stock in the subscription offering.

If you are currently a stockholder of Citizens Community Bancorp:

Each of your shares will be exchanged automatically for between 1.22803 and 1.66145 shares of Citizens Community Bancorp, Inc. common stock.

After the exchange of shares, your percentage ownership will remain essentially equivalent to your current percentage ownership interest in Citizens Community Bancorp.

You will have priority to purchase additional shares in the community offering, to the extent shares remain available after orders are filled in the subscription offering.

If you are a participant in the Citizens Community Federal 401(k) Savings Plan:

You may direct that all or part of your current balances in that plan be invested in shares of Citizens Community Bancorp, Inc. common stock.

You will be receiving a separate supplement to this Prospectus that describes your rights under that plan.

If you fit none of the above categories:

You may have an opportunity to purchase shares of Citizens Community Bancorp, Inc. common stock in the community offering to the extent shares remain available after orders are filled in the subscription offering and after orders from current stockholders of CCB are filled in the community offering.

We are offering for sale up to 4,600,000 shares of common stock; however, we may sell up to 5,290,000 shares because of changes in the market and general financial and economic conditions without notifying prospective purchasers. We must sell a minimum of 3,400,000 shares in order to complete the Conversion and Stock Offering. The minimum purchase is 25 shares. The Stock Offering is expected to terminate on __________, 2006 at 12:00 noon, Eau Claire, Wisconsin time. We may extend this termination date without notice to you until _________, 2006. Once submitted, orders are irrevocable, unless the Stock Offering is terminated or extended beyond __________, 2006. In no event may the Stock Offering be extended beyond _________, 2008. Funds received prior to completion of the Stock Offering up to the minimum of the offering range will be held by Citizens Community Federal. Funds received in excess of the minimum of the offering range may be maintained at Citizens Community Federal, or, at our discretion, at an independent insured depository institution. However, in no event shall we maintain more than one escrow account. All subscriptions received will earn interest at our TYME passbook savings account rate. In the event the Stock Offering is terminated, these funds will be promptly returned with interest.

Citizens Community Bancorp's stock is currently quoted on the OTC Bulletin Board under the symbol "CZWI.OB." We have applied for approval from Nasdaq to have our common stock quoted on the Nasdaq Global Market under the symbol "CZWI."

Keefe, Bruyette & Woods, Inc. will use its best efforts to assist us in our selling efforts. Keefe, Bruyette & Woods, Inc. is not required to purchase any of the common stock that is being offered.

This investment involves risk, including the possible loss of principal. Please read "Risk Factors" beginning at page ___.

	Minimum	Maximum	Maximum, as Adjusted
Number of Newly Issued Shares	3,400,000	4,600,000	5,290,000
Gross Stock Offering Proceeds	$34,000,000	$46,000,000	$52,900,000
Underwriting Commissions and Expenses⁽¹⁾	$494,370	$645,912	$773,049
Other Stock Offering and Conversion Expenses	$670,000	$670,000	$670,000
Net Proceeds	$32,845,632	$44,694,090	$51,506,954
Net Proceeds Per Share	$9.66	$9.72	$9.74

__________

(1)	For information regarding the compensation to be received by Keefe, Bruyette & Woods, Inc., see “The Stock Offering - Plan of Distribution/Marketing Agreements.”

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.

Neither the Securities and Exchange Commission, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, nor any state securities regulator has approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

For assistance, please contact the stock information center at (715) _____-_________.

Keefe, Bruyette & Woods

The date of this Prospectus is _________________, 2006.

TABLE OF CONTENTS

SUMMARY	1
RISK FACTORS	14
SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA	18
HOW WE INTEND TO USE THE PROCEEDS OF THE STOCK OFFERING	20
OUR POLICY REGARDING DIVIDENDS	21
MARKET FOR THE COMMON STOCK	22
CAPITALIZATION	23
PRO FORMA DATA	24
WE EXCEED ALL REGULATORY CAPITAL REQUIREMENTS	30
THE CONVERSION	31
THE STOCK OFFERING	40
PROPOSED PURCHASES BY MANAGEMENT	57
A WARNING ABOUT FORWARD-LOOKING STATEMENTS	59
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	60
BUSINESS OF CITIZENS COMMUNITY BANCORP, INC.	75
BUSINESS OF CITIZENS COMMUNITY FEDERAL	76
HOW WE ARE REGULATED	97
TAXATION	102
MANAGEMENT	103
STOCK OWNERSHIP OF CCB COMMON STOCK	113
COMPARISON OF RIGHTS OF CITIZENS COMMUNITY BANCORP, INC.’S AND CCB’S STOCKHOLDERS	115
RESTRICTIONS ON ACQUISITIONS OF CITIZENS COMMUNITY BANCORP, INC. AND CITIZENS COMMUNITY FEDERAL	123
DESCRIPTION OF CAPITAL STOCK	127
TRANSFER AGENT AND REGISTRAR	129
LEGAL AND TAX OPINIONS	129
EXPERTS	129
REGISTRATION REQUIREMENTS	129
WHERE YOU CAN FIND ADDITIONAL INFORMATION	129
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	F-1
APPENDIX A - OTS Regulation 552.14 - Dissenter and Appraisal Rights

SUMMARY

This summary highlights selected information from this document and may not contain all the information that is important to you. To better understand the Conversion and Stock Offering, you should read this entire document carefully, including the consolidated financial statements and the notes thereto beginning at page F-1 of this document.

Citizens Community Bancorp, Inc.

Citizens Community Bancorp, Inc. is a newly formed Maryland corporation. Its principal executive offices are located at 2174 EastRidge Center, Eau Claire, Wisconsin 54701 and the telephone number is (715) 836-9994.

Citizens Community Bancorp, Inc. is conducting this Stock Offering in connection with the Conversion of Citizens Community MHC from the mutual to the stock form of organization. The shares of common stock of Citizens Community Bancorp, Inc. to be sold represent the 74% ownership interest in Citizens Community Bancorp, a federally chartered mid-tier stock holding company, which is currently owned by Citizens Community MHC, a federally chartered mutual holding company. The remaining 26% ownership interest in Citizens Community Bancorp is currently owned by public stockholders and will be exchanged for shares of Citizens Community Bancorp, Inc.'s common stock based on an Exchange Ratio, which is dependent upon the number of shares of Citizens Community Bancorp, Inc. common stock sold in the Stock Offering.

Citizens Community Federal

Citizens Community Federal is currently a wholly owned subsidiary of Citizens Community Bancorp and, upon completion of the Conversion and Stock Offering, it will become a wholly owned subsidiary of Citizens Community Bancorp, Inc.

Citizens Community Federal was originally a federal credit union. It became a federal mutual savings bank in December 2001. In 2004, Citizens Community Federal reorganized into the mutual holding company form of organization and became a federal stock savings bank. During 2005, it acquired Community Plus Savings Bank with its two office locations in Michigan, which are operated as the Community Plus Division of Citizens Community Federal.

Citizens Community Federal operates as a traditional community bank, attracting and retaining retail deposits in order to fund a variety of mortgage and consumer loan products. To a lesser extent, it also invests in Federal Home Loan Bank of Chicago stock and deposits at other insured depository institutions and the Federal Home Loan Bank of Chicago. In 2005, as part of the Community Plus Savings Bank acquisition, it obtained an investment portfolio of corporate notes, mortgage-backed securities and mutual funds. Going forward, we will continue our core business of offering retail banking services, one- to four-family residential mortgage loans, home equity loans and lines of credit and consumer loans in our market areas in Wisconsin, Minnesota and Michigan.

Citizens Community MHC

Citizens Community MHC is currently the federally chartered mutual holding company parent for Citizens Community Bancorp. Citizens Community MHC's sole business activity consists of its ownership of 2,768,669 shares of Citizens Community Bancorp's common stock, which represents 74% of its outstanding shares. At the conclusion of the Conversion and Stock Offering, Citizens Community MHC will cease to exist.

Citizens Community Bancorp

Citizens Community Bancorp (referred to as “CCB” hereafter to distinguish it from Citizens Community Bancorp, Inc.) is currently the middle-tier federal stock holding company and sole stockholder of Citizens Community Federal. CCB was formed in March 2004 in connection with the mutual holding company reorganization of Citizens Community Federal. In connection with that reorganization, CCB issued 68% of its common stock to Citizens Community MHC and issued the remaining 32% of its common stock to the public. In 2005, in connection with its acquisition of Community Plus Savings Bank, CCB issued additional shares of its common stock to Citizens Community MHC, increasing its percentage ownership to 74%. Currently, CCB has 3,724,628 shares of common stock issued and outstanding. Citizens Community MHC owns 2,768,669, or 74%, of these shares. The remaining 26% of the shares of common stock of CCB are held by the public. At March 31, 2006, CCB had total consolidated assets of $256.6 million, total deposits of $188.3 million and total stockholders' equity of $29.8 million. At the conclusion of the Conversion and Stock Offering, Citizens Community Bancorp will cease to exist and each outstanding share of CCB, other than those held by Citizens Community MHC, will be exchanged automatically for between 1.22803 and 1.66145 shares of CCB, Inc. common stock. The exact Exchange Ratio will depend upon the number of shares of Citizens Community Bancorp, Inc. common stock sold in the Stock Offering.

Our Business Strategy

Our current business strategy is to operate as a well-capitalized, profitable and community-oriented savings bank dedicated to providing quality customer service. We intend to make primarily one- to four-family residential mortgages and consumer loans in our market areas. Subject to our capital levels and our ability to continue to grow in a reasonable and prudent manner, we may open or acquire additional branches in Wisconsin, Minnesota and Michigan as opportunities arise.

How Our Ownership Structure Will Change After the Conversion

The following chart shows our current structure, commonly referred to as a "two-tier" mutual holding company structure:

Citizens Community MHC		CCB Minority Stockholders
\| 74%		\| 26%

CCB

| 100%

Citizens Community Federal

The following chart shows our ownership structure after the Conversion and Stock Offering:

Public Stockholders

| 100%

Citizens Community Bancorp, Inc.

| 100%

Citizens Community Federal

The Stock Offering

We are selling common stock in a subscription offering, which represents the 74% ownership interest in CCB now owned by Citizens Community MHC in the following order of priority:

First: Depositors at Citizens Community Federal and Community Plus Savings Bank with $50 or more on deposit as of the close of business on March 31, 2005.

Second: Our employee stock ownership plan.

Third: Depositors at Citizens Community Federal with $50 or more on deposit as of close of business on June 30, 2006.

Fourth: Depositors at Citizens Community Federal as of close of business on July 31, 2006.

We are selling between 3,400,000 and 4,600,000 shares of Citizens Community Bancorp, Inc. common stock, all at a price of $10.00 per share. The number of shares sold may be increased to 5,290,000. The actual number of shares we sell will depend on an appraisal performed by RP Financial, LC., an independent appraisal firm. We also are exchanging shares of CCB, other than those held by Citizens Community MHC, for shares of Citizens Community Bancorp, Inc. based on an Exchange Ratio of between 1.22803 and 1.66145. The Exchange Ratio may be increased to as much as 1.91067 in the event the Stock Offering closes at the maximum of the valuation range, as adjusted. See “- Stock Pricing and the Number of Shares to be Offered.”

The subscription offering will terminate at 12:00 noon, Eau Claire, Wisconsin time, on ________________, 2006. We may extend this expiration date without notice to you for up to 45 days, until ________________, 2006. Once submitted, your order is irrevocable unless the Stock Offering is extended beyond ________________, 2006. We may request permission from the Office of Thrift Supervision (“OTS”) to extend the Stock Offering beyond ________________, 2006, but in no event may the Stock Offering be extended beyond________________, 2008. If the Stock Offering is extended beyond ______________, 2006, we will be required to notify each subscriber and resolicit subscriptions. During any extension period, subscribers will have the right to modify or rescind their subscriptions, and, unless an affirmative response is received, a subscriber's funds will be returned with interest at Citizens Community Federal's TYME passbook savings account rate.

We may cancel the Stock Offering at any time prior to the special meeting of members of Citizens Community MHC and the special meeting of stockholders of CCB to vote on our Plan of Conversion and Reorganization. We also may cancel the Conversion and Stock Offering after the special meetings of members and stockholders, if the OTS concurs in our decision to do so. If we cancel the Conversion and Stock Offering, orders for common stock already submitted will be canceled and subscribers' funds will be returned with interest at Citizens Community Federal's TYME passbook savings account rate.

Commencing concurrently with, during or promptly after the subscription offering, we also may offer shares of common stock in a community offering. In the community offering, current stockholders of CCB will have first preference, and natural persons and trusts of natural persons who reside in the counties where Citizens Community Federal has offices will have second preference. This part of the Stock Offering may terminate at any time without notice but will terminate no later than ________________, 2006.

Shares not sold in the subscription or community offering may be offered for sale in a syndicated community offering, which would be an offering to the general public on a best efforts basis by a syndicate of broker dealers managed by Keefe, Bruyette & Woods, Inc. This part of the Stock Offering may terminate at any time without notice but will terminate no later than ______________, 2006.

You cannot transfer your subscription rights, and we will act to ensure that you do not do so. You will be required to certify that you are purchasing shares in the Stock Offering solely for your own account and that you have no agreement or understanding with another person involving the transfer of the shares you purchase. We will not accept any stock orders that we believe involve the transfer of subscription rights. If you attempt to transfer your rights, you may lose the right to purchase shares and may be subject to criminal prosecution and/or other sanctions.

We may, in our sole discretion, reject orders received in the community offering and syndicated community offering either in whole or in part. If your order is rejected in part, you cannot cancel the remainder of your order. See “The Stock Offering” for more information regarding this offering.

The Exchange of CCB Common Stock

If you are now a stockholder of CCB, your shares will be automatically exchanged for shares of Citizens Community Bancorp, Inc. The number of shares you will receive will be based on an Exchange Ratio. The actual number of shares you receive will depend upon the number of shares we sell in our Stock Offering.

The following table shows how the Exchange Ratio will adjust based on the number of shares sold in our Stock Offering. The table also shows how many shares of Citizens Community Bancorp, Inc. an owner of CCB common stock would receive in the exchange, adjusted for the number of shares sold in the Stock Offering.

	Shares to be Sold in the Stock Offering		Shares of Citizens Community Bancorp, Inc. to be Exchanged for Existing Shares of CCB		Total Shares of Common Stock to be Outstanding	Exchange Ratio	100 Shares of CCB Would be Exchanged for the Following Number of Shares of Citizens Community Bancorp, Inc.
	Amount	Percent	Amount	Percent
Minimum	3,400,000	74%	1,173,944	26%	4,573,944	1.22803	122
Midpoint	4,000,000	74	1,381,110	26	5,381,110	1.44474	144
Maximum	4,600,000	74	1,588,277	26	6,188,277	1.66145	166
Maximum, as adjusted	5,290,000	74	1,826,519	26	7,116,519	1.91067	191

If you own your shares of CCB in "street name," the exchange will occur automatically; you do not need to take any action. If you have shares registered in your name, you will receive a transmittal form with instructions to surrender your stock certificates after the Stock Offering is completed. You will receive new certificates of our common stock within five business days after we receive your properly executed transmittal form.

No fractional shares of our common stock will be issued upon consummation of the Conversion. Payment for fractional shares will be calculated based on the $10.00 per share offering price and will be made after the receipt of surrendered CCB stock certificates by Registrar and Transfer Company, which is the transfer agent for CCB stock and will act as the exchange agent in the Conversion.

See “The Conversion - Share Exchange Ratio” for more details about this share exchange.

Tax Effects of the Conversion and Stock Offering

As a general matter, the Conversion and Stock Offering, including the exchange of shares of CCB for shares of Citizens Community Bancorp, Inc., will not be a taxable transaction for purposes of federal or state income taxes for Citizens Community MHC, Citizens Community Bancorp, Inc., CCB, Citizens Community Federal and persons eligible to subscribe for stock in the Stock Offering. The same is true for existing stockholders of CCB, except to the extent they receive cash in lieu of fractional shares; existing stockholders of CCB will recognize gain or loss equal to the difference between the cash received and the tax basis of the fractional shares. See “The Conversion - Federal and State Tax Consequences of the Conversion.”

Reasons for the Conversion and Stock Offering

We believe that the Conversion and Stock Offering will:

Provide us with funds to repay a portion of our outstanding Federal Home Loan Bank advances.

Provide us with additional capital to support future lending and deposit growth and expanded operations, particularly in the Minneapolis-St. Paul and Detroit metropolitan areas.

Support future branching activities, whether by the establishment of de novo branches or the acquisition of branches from other financial institutions, particularly in the Minneapolis-St. Paul and Detroit metropolitan areas.

Better position us to thrive and remain viable as a full service community bank in an increasingly competitive marketplace.

Assist us in our efforts to build stockholder value. Because a greater amount of our outstanding stock will be held by public stockholders after the Stock Offering, we have applied to have our common stock quoted on the Nasdaq Global Market. Listing on the Nasdaq Global Market is expected to provide additional liquidity and visibility for our common stock.

Enhance profitability and earnings through reinvesting and leveraging the proceeds, primarily through traditional funding and lending activities, in order to improve our net interest margin.

Permit us to continue to maintain capital ratios well above the regulatory requirements.

Give us greater strategic flexibility in connection with potential future acquisitions. Currently, however, we have no plans, agreements or understandings regarding any acquisition.

Enable our directors, officers and employees to increase their stock ownership through purchases of shares in the Stock Offering and awards in new stock benefit plans. We believe their stock ownership is an effective performance incentive and means of attracting and retaining qualified personnel.

Conditions to Complete the Conversion

We cannot complete the Conversion and Stock Offering unless:

it is approved by a majority of the votes eligible to be cast by members of Citizens Community MHC;

it is approved by at least two-thirds of the votes eligible to be cast by stockholders of CCB, including those shares held by Citizens Community MHC;

it is approved by a majority of the votes eligible to be cast by stockholders of CCB, excluding those shares held by Citizens Community MHC;

we sell a minimum of 3,400,000 shares of common stock; and

the OTS accepts the final update of our independent valuation.

See “The Conversion - Conditions to the Conversion.”

Stock Pricing and the Number of Shares to be Issued in the Conversion

The number of shares offered is determined by an independent appraisal of the pro forma estimated market value of Citizens Community Bancorp's stock performed by RP Financial, LC. divided by the purchase price of $10.00 and multiplied by 74%, the percentage of shares of CCB that are currently held by Citizens Community MHC, which shares are now being offered to the public.

The amount of stock sold in this offering is required by regulation to be based upon an independent appraisal which is reviewed by the OTS. The independent appraiser, RP Financial, LC., has determined that as of June 16, 2006, our estimated aggregate pro forma market value was $53.8 million. Pursuant to OTS regulations, the appraiser must establish a valuation range from 15% below to 15% above the estimated pro forma market value. Accordingly, the independent appraisal resulted in a valuation range from $45.7 million to $61.9 million. Based on this valuation range and the 74% ownership of CCB by Citizens Community MHC, between 3.4 million shares and 4.6 million shares of common stock are being offered to the public at $10 per share.

The following table presents a summary of selected pricing ratios for Citizens Community Bancorp, Inc. and for the comparable publicly traded peer group companies identified in the valuation report.

		Price-to-earnings multiple	Price-to-book value ratio	Price-to-tangible book value ratio

Citizens Community Bancorp, Inc. (pro forma) ⁽¹⁾
	Minimum	41.48x	76.92%	87.93%
	Midpoint	45.38x	83.03%	93.81%
	Maximum	48.77x	88.22%	98.69%
	Maximum, as adjusted	52.16x	93.28%	103.37%
Valuation of peer group companies as of June 16, 2006 ⁽²⁾
	Average	21.22x	109.07%	115.68%
	Median	21.00x	107.69%	115.60%

___________

(1) Based on CCB's financial data as of and for the twelve months ended March 31, 2006.

(2) Reflects earnings for the most recent 12-month period for which data was publicly available.

The ratios we have presented are commonly considered by prospective investors in order to determine whether or not the stock meets the investor's investment criteria. Because of differences and important factors such as operating characteristics, location, financial performance, asset size, capital structure, and business prospects between us and other fully converted institutions, you should not rely on these comparative valuation ratios as an indication as to whether or not the stock is an appropriate investment for you. The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing the common stock. Because the independent valuation is based on estimates and projections on a number of matters, all of which are subject to change from time to time, no assurance can be given that persons purchasing the common stock will be able to sell their shares at a price equal to or greater than the purchase price. See “Risk Factors - Our stock price may decline when trading commences,” “Pro Forma Data” and “The Stock Offering - Stock Pricing and the Number of Shares to be Offered.”

Based on the independent valuation, we intend to issue between a minimum of 4,573,944 shares and a maximum of 6,188,277 shares, including shares to be exchanged for existing shares of CCB. The independent valuation must be updated and confirmed by RP Financial, LC. before we may complete the Stock Offering. The maximum amount of common stock being offered may be increased by up to 15% without notice to persons who have subscribed for stock, so that a total of 7,116,519 shares could be issued, including shares to be exchanged for existing shares of CCB. If the updated independent valuation would result in more than 7,116,519 shares being issued, we will be required to notify all persons who have subscribed and these persons would have the opportunity to change or cancel their subscription orders, and, unless an affirmative response is received, a subscriber's funds will be returned with interest at Citizens Community Federal's TYME passbook savings account rate.

Limits on the Amount of Stock You May Purchase

The minimum purchase is 25 shares.

The maximum number of shares of stock that any individual (or individuals through a single account) may purchase is 50,000 shares.

The maximum number of shares of stock that any individual may purchase together with any associate or group of persons acting in concert is 75,000 shares.

If you are now a CCB stockholder, the shares of Citizens Community Bancorp, Inc. common stock that you receive in the exchange for shares of CCB common stock, in accordance with the Exchange Ratio, will not count against the above maximum purchase limitations.

If determined to be necessary or desirable by the Board of Directors, the plan may be amended by a vote of the board of directors, with the concurrence of the OTS. Thus, we may increase or decrease the purchase limitations. In the event the maximum purchase limitation is increased, persons who subscribed for the maximum will be notified and permitted to increase their subscription.

For further discussion of the purchase limits and definitions of "associate" and "acting in concert," see “The Stock Offering - Limitations on Purchases of Common Stock.”

How to Purchase Stock in the Offering

If you want to place an order for shares in the Stock Offering, you must complete an original stock order form and send it to us together with full payment. You also must sign the certification that is on the reverse side of the stock order form in which you acknowledge that our common stock is not a bank deposit or account, is not federally insured and is not guaranteed by Citizens Community Federal or by the federal government. The certification also includes an acknowledgment from you that before purchasing shares of our common stock, you received a copy of this Prospectus and that you are aware of the risks involved in the investment, including those described under “Risk Factors.”

We must receive your stock order form before the end of the subscription offering or the end of the community offering, as appropriate. Once we receive your order, you cannot cancel or change it without our consent.

To ensure that we properly identify your subscription rights, you must provide on your stock order form all of the information requested for each of your deposit accounts as of the eligibility dates. If you fail to do so, your subscription may be reduced or rejected if the Stock Offering is oversubscribed.

You may not add the names of others who were not eligible to purchase common stock in the Stock Offering on the applicable date of eligibility. We will reject all stock orders we believe involve the transfer of subscription rights. If you attempt to transfer your subscription rights, you may lose your right to purchase shares and may be subject to criminal prosecution and/or other sanctions.

You may pay for shares in the subscription offering or the community offering in any of the following ways:

By check or money order made payable to Citizens Community Federal.

By authorizing withdrawal from an account at Citizens Community Federal. To use funds in an IRA account at Citizens Community Federal, you must transfer your account into a self-directed IRA account at an unaffiliated institution or broker. Please contact your broker or the stock information center as soon as possible for assistance.

In cash, only if delivered in person, though we prefer that you exchange that cash with one of our tellers for a check.

We will pay interest on your subscription funds from the date we receive your funds at the TYME passbook savings account rate until the Stock Offering is completed or terminated. All funds authorized for withdrawal from deposit accounts with us will earn interest at the applicable account rate until the Stock Offering is completed or terminated. If, as a result of a withdrawal from a certificate of deposit, the balance falls below the minimum balance requirement, the remaining funds will be transferred to a savings account and will earn interest at our TYME passbook savings account rate. There will be no early withdrawal penalty for withdrawals from certificates of deposit used to pay for stock. Funds received in the subscription offering up to the minimum of the offering range will be held in a segregated deposit account at Citizens Community Federal. Funds received in excess of the minimum of the offering range may be maintained at Citizens Community Federal, or, at our discretion, at an independent insured depository institution. However, in no event shall we maintain more than one escrow account.

Proposed Stock Purchases by Management

We expect our directors and executive officers, together with their associates, to subscribe for approximately 111,100 shares of common stock in the Stock Offering. The purchase price paid by them will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the Stock Offering. Purchases of common stock in the offering by our directors and executive officers, and their associates, will be counted toward the minimum of 3,400,000 shares that must be sold in order to complete the Conversion and Stock Offering. Following the Conversion and Stock Offering, our directors and executive officers, together with their associates, are expected to own 8.7% of our outstanding shares at the midpoint of the offering range, excluding any outstanding stock options. See “Proposed Purchases by Management.”

Our Use of the Proceeds Raised from the Sale of Stock

We estimate that we will receive net proceeds from the sale of the common stock of between $32.8 million at the minimum of the offering range and $44.7 million at the maximum of the offering range. Citizens Community Bancorp, Inc. will use 50% of the net proceeds of the Stock Offering to make a capital contribution to Citizens Community Federal. Citizens Community Bancorp, Inc. also will lend our employee stock ownership plan cash to buy shares in the Stock Offering. The employee stock ownership plan currently holds 119,236 shares of CCB common stock, which will be exchanged for 146,425 to 198,105 shares of Citizens Community Bancorp, Inc. as determined by the Exchange Ratio. In accordance with OTS regulations, the employee stock ownership plan intends to purchase enough shares so that, at the end of the Stock Offering, it owns 8% of the outstanding shares of Citizens Community Bancorp, Inc. Therefore, at the minimum of the offering range, the employee stock ownership plan will purchase 219,490 shares, requiring a $2.2 million loan, and, at the maximum of the offering range, it will purchase 296,958 shares, requiring a $3.0 million loan. The balance will be used for general business purposes, which may include investment in deposits at Citizens Community Federal or other financial institutions, mortgage-backed securities and U.S. government and federal agency securities, as well as for the repurchase of shares of common stock or payment of cash dividends.

The 50% of the net proceeds received by Citizens Community Federal will be used for general business purposes, including, initially, repaying a portion of our Federal Home Loan Bank borrowings and investing in deposits in other financial institutions, mortgage-backed securities and U.S. government and federal agency securities. Over time, the funds will be used to fund loans of the type currently originated by Citizens Community Federal and to finance expansion through new branches or acquisitions of branches of other financial institutions, especially in the Minneapolis-St. Paul and Detroit metropolitan areas. In addition to expansion of our branch network through opening de novo branches or acquiring branch offices, we will consider the acquisition of local financial institutions and/or non-interest income subsidiaries as a means to expand our banking operations. It is uncertain, however, when or if these acquisitions will occur, and we do not have any current understandings, agreements or arrangements for any acquisitions. See “How We Intend to Use the Proceeds of the Stock Offering.”

Stock Benefit Plans for Management

In order to align our officers', directors' and employees' interests with our stockholders' interests, we have established certain benefit plans that use our stock as compensation. At a stockholder meeting held on February 4, 2005, stockholders of CCB approved the CCB 2004 Stock Option and Incentive Plan and the CCB 2004 Recognition and Retention Plan. Officers and directors of CCB and its subsidiaries were awarded options to purchase shares of common stock under the option plan and shares of common stock under the recognition and retention plan. The number of options and the exercise price will be adjusted in accordance with the Exchange Ratio in connection with the Conversion. The restricted stock awards also will be adjusted for the Exchange Ratio in connection with the Conversion. The vesting periods under these plans will remain unchanged. See “Management - Benefits -- Existing Stock Options and Restricted Stock.” Additionally, Citizens Community Federal previously established an employee stock ownership plan in connection with the CCB minority stock offering completed in March 2004, and the shares purchased by this plan will be exchanged for shares of Citizens Community Bancorp, Inc. in the Conversion in accordance with the Exchange Ratio.

We intend to establish additional stock benefit plans in connection with and following this Stock Offering. The following table presents information regarding the existing stock-based benefit plans and anticipated new stock-based benefit plans. The table below assumes that 5,381,110 shares are outstanding after the Stock Offering, which includes the sale of 4,000,000 shares in the Stock Offering (the midpoint) and the issuance of 1,381,110 shares in exchange for shares of CCB. It is assumed that the value of the stock is $10.00 per share and that the exchange of existing shares is in accordance with the Exchange Ratio at the midpoint of the offering range.

Existing and New Stock-Based Benefit Plans:

	Participants	Shares			Estimated Value of Shares		Percentage of Shares Outstanding After the Conversion

Existing Employee Stock Ownership Plan		172,265	⁽¹⁾	$	1,722,650		3.20	%
New Employee Stock Ownership Plan	Eligible	258,224			2,582,240		4.80
Total Employee Stock Ownership Plan	Employees	430,489			4,304,890		8.00

Existing Restricted Stock Awards	Directors and	86,133	⁽²⁾		861,325		1.60
New Restricted Stock Awards	Officers	129,112			1,291,120		2.40
Total Restricted Stock Awards		215,245			2,152,445		4.00

Existing Stock Options ⁽⁵⁾		215,333	⁽³⁾		788,188	⁽⁴⁾	4.00
New Stock Options	Directors and	322,778			926,374	⁽⁶⁾	6.00
Total Stock Options	Officers	538,111			1,714,492		10.00

Total		1,183,845		$	8,171,827		22.00	%

________________

(1)	The existing employee stock ownership plan holds 119,236 shares, which at the midpoint will be exchanged for 172,265 shares.

(2)	A total of 59,618 shares were awarded or available for future awards under the existing recognition and retention plan, which at the midpoint will be exchanged for 86,133 shares.

(3)	A total of 149,046 options were granted or available for future grant under the existing stock option plan, which at the midpoint will be exchanged for 215,333 options.

(4)	Assumes that the options granted under the existing stock option plan have a value of $3.66 per option, which was determined using the Black-Scholes-Merton option pricing formula using various assumptions. See “Pro Forma Data.”

(5)	The new stock option plan may authorize stock appreciation rights in lieu of or in tandem with stock options. This table assumes that no stock appreciation rights will be issued.

(6)

Assumes that the options granted under the new stock option plan have a value of $2.87 per option, which was determined using the Black-Scholes-Merton option pricing formula using various assumptions. See “Pro Forma Data.” If the fair market value per share on the date of grant is different than $10.00, or if the assumptions used in the option pricing formula are different from those used in preparing the pro forma data, the value of the options will be different. There can be no assurance that the actual fair market value per share on the date of grant, and correspondingly the exercise price of the options, will be $10.00 per share.

Stockholders of Citizens Community Bancorp, Inc. will experience a reduction or dilution in the percentage ownership interest of approximately 13.0%, if we use newly issued shares to fund stock options and restricted stock awards made under these plans (or taken individually, dilution of approximately 5.3% for the current plans and 7.7% for the new plan). It is our intention to fund these plans through open market purchases; however, if any options previously granted under the 2004 Stock Option and Incentive Plan are exercised during the first year following the completion of this Stock Offering, they may be funded with newly issued shares.

If we present a new stock option and restricted stock plan for a stockholder vote within one year of the Conversion, current OTS policy would require us to limit the shares under the new plan so that total shares available under the existing and new plans together do not exceed 14% of the shares outstanding after the Conversion. The table and the dilution percentages shown above assume that the new plan is presented for a stockholder vote within one year of the Conversion. If the new plan is voted on after the one year anniversary of the Conversion, we will not be subject to this limit.

Market For Common Stock

We have applied for approval from Nasdaq to have Citizens Community Bancorp, Inc.'s common stock quoted on the Nasdaq Global Market under the symbol "CZWI." Quotations for the common stock of CCB currently appear on the OTC Bulletin Board under the symbol "CZWI.OB." CCB common stock will cease trading following completion of the Stock Offering. While it is expected that Citizens Community Bancorp, Inc.'s common stock will be more easily tradable than CCB's common stock, because there will be significantly more outstanding shares than before the Conversion, there can be no assurance of this. Keefe, Bruyette & Woods, Inc. has advised us that it intends to be a market maker in our common stock but is under no obligation to do so. It also will assist us in obtaining additional market makers.

Changes in Stockholder Rights

As a result of the Conversion, existing stockholders of CCB will become stockholders of Citizens Community Bancorp, Inc. The rights of stockholders of Citizens Community Bancorp, Inc. will be less than the rights stockholders currently have. The decrease in stockholder rights results from differences between the articles of incorporation and bylaws of Citizens Community Bancorp, Inc. and the charter and bylaws of CCB and from distinctions between Maryland and federal law. The differences in stockholder rights under the articles of incorporation and bylaws of Citizens Community Bancorp, Inc. are not mandated by Maryland law but have been chosen by management as being in the best interests of the corporation and all of its stockholders. However, the provisions in Citizens Community Bancorp, Inc.’s articles of incorporation and bylaws may make it more difficult to pursue a takeover attempt that management opposes. In addition, the articles of incorporation of Citizens Community Bancorp, Inc. provide that the board of directors can increase the number of authorized shares of common stock without stockholder approval. The issuance of authorized shares would result in a reduction or dilution in the percentage ownership interest of existing stockholders. See “Comparison of Rights of Citizens Community Bancorp, Inc.’s and CCB’s Stockholders.”

Restrictions on Acquisitions of Control

Maryland and federal law imposes restrictions on the ability of individuals and other financial institutions and companies to acquire control of Citizens Community Bancorp, Inc. or Citizens Community Federal. In addition, our articles of incorporation and bylaws contain provisions that may make it difficult for someone to acquire control of Citizens Community Bancorp, Inc. These provisions may discourage takeover attempts and prevent you from receiving a premium over the market price of your shares as part of a takeover. These provisions include:

authority of our board of directors to increase authorized shares without stockholder approval;

80% stockholder vote required for certain business acquisitions, acquisitions by interested persons and charter amendments;

a prescribed standard for the board of directors to consider in evaluating control offers;

limitations on voting rights of greater than 10% stockholders;

the election of only approximately one-third of our board of directors each year; and

restrictions on the ability of stockholders to call special stockholders' meetings and remove directors.

Dividend Policy

Since the completion of its initial public stock offering in March 2004, CCB has paid quarterly dividends of $0.05 per share beginning with the quarter ended June 30, 2004. After the Stock Offering, Citizens Community Bancorp, Inc. intends to pay a regular quarterly dividend; however, there can be no assurance as to the precise amount of the dividend.

The dividends paid to date by CCB were paid only to the public stockholders, which currently hold 26% of the outstanding shares of CCB, while Citizens Community MHC waived its receipt of the dividend on the 74% of the outstanding shares it currently holds. Following the Conversion and Stock Offering, 100% of the outstanding stock of Citizens Community Bancorp, Inc. will be held by public stockholders and dividends, if and when paid, will be payable on all outstanding shares of common stock.

The payment of dividends will depend on a number of factors, including statutory and regulatory limitations. No assurance can be given that we will pay dividends in the future. See “Our Policy Regarding Dividends.”

Receiving a Prospectus and an Order Form

To ensure that each purchaser receives a Prospectus at least 48 hours before the expiration date of the subscription and community offerings, in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934, no Prospectus will be mailed any later than five days prior to the applicable expiration date or hand delivered any later than two days prior to the expiration date. Execution of the order form will confirm receipt or delivery in accordance with Rule 15c2-8. Order forms will be distributed only with a Prospectus.

Risk Factors

An investment in our common stock involves certain risks. See "Risk Factors."

For assistance, please contact the stock information center at (715) _____-________.

RISK FACTORS

You should consider these risk factors, in addition to the other information in this Prospectus, before deciding whether to make an investment in our stock.

Risks Related to Our Business

Our loan portfolio possesses increased risk due to our substantial number of consumer loans.

Our consumer loans accounted for approximately $80.8 million, or 34% of our total loan portfolio as of March 31, 2006, of which $25.2 million consisted of automobile loans, $51.2 million consisted of personal loans secured by other collateral and $4.4 million consisted of unsecured personal loans. Generally, we consider these types of loans to involve a higher degree of risk compared to first mortgage loans on one- to four-family, owner-occupied residential properties. As a result of our large portfolio of consumer loans, it may become necessary to increase the level of our provision for loan losses, which could hurt our profits. Consumer loans generally entail greater risk than do one- to four-family residential mortgage loans, particularly in the case of loans that are secured by rapidly depreciable assets, such as automobiles. In these cases, any repossessed collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance. In addition, $7.6 million of our automobile loans and $36.6 million of our other secured consumer loans were indirect loans originated by or through third parties, which present greater risk than our direct lending products. See “Business of Citizens Community Federal - Lending Activities -- Consumer Lending” and “--Asset Quality.”

If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings could decrease.

We make various assumptions and judgments about the collectibility of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for loan losses, we review our loans and our loss and delinquency experience and evaluate economic conditions. Management recognizes that significant new growth in loan portfolios and the refinancing of existing loans can result in completely new portfolios of unseasoned loans that may not perform in a historical or projected manner. If our assumptions are incorrect, our allowance for loan losses may not be sufficient to cover actual losses, resulting in additions to our allowance. Material additions to our allowance could materially decrease our net income. Our allowance for loan losses was 0.34% of net loans, and 72.66% of non-performing loans at March 31, 2006. Our regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize additional loan charge-offs. Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory authorities will have a material adverse effect on our financial condition and results of operations. As of March 31, 2006, we believe that the current allowance level is appropriate.

Rising interest rates may hurt our profits.

To be profitable we have to earn more interest on our loans and investments than we pay on our deposits and borrowings. If interest rates continue to rise, our net interest income and the value of our assets could be reduced if interest paid on interest-bearing liabilities, such as deposits and borrowings, increases more quickly than interest received on interest-earning assets, such as loans and investments. This is most likely to occur if short-term interest rates increase at a faster rate than long-term interest rates, which would cause income to go down. In addition, rising interest rates may hurt our income because they may reduce the demand for loans and the value of our securities. A flat yield curve may also hurt our income, because it would reduce our ability to reinvest proceeds from loan and investment repayments at higher rates. See “Management's Discussion and Analysis of Financial Condition and

Results of Operations - Quantitative and Qualitative Disclosures About Market Risk.” During 2005 and the first half of 2006, interest rates on deposits have been increasing at a slightly faster pace than rates on loans, which has reduced our net interest margin, return on assets and return on equity. See “Selected Consolidated Financial Information and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We operate in a highly regulated environment and may be affected adversely by negative examination results and changes in laws and regulations.

Citizens Community Federal is subject to extensive regulation, supervision and examination by the OTS, our chartering authority, and by the Federal Deposit Insurance Corporation (“FDIC”), the insurer of our deposits. Citizens Community Bancorp, Inc. will be subject to regulation and supervision by the OTS. This regulation and supervision governs the activities in which we may engage and are intended primarily for the protection of the deposit insurance fund administered by the FDIC and our depositors. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for loan losses. Any change in this regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations and profitability. See “How We Are Regulated.”

Strong competition within our market areas may limit our growth and profitability.

Competition in the banking and financial services industry is intense. In our market areas, we compete with numerous commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere. Some of our competitors have substantially greater resources and broader lending authority than we have, have greater name recognition and market presence, which benefit them in attracting business, and offer certain services that we do not or cannot provide. In addition, larger competitors may be able to price loans and deposits more aggressively than we do. Our profitability depends upon our continued ability to successfully compete in our market areas. The greater resources and deposit and loan products offered by some of our competitors may limit our ability to increase our interest-earning assets. See “Business - Competition.”

Our business is geographically concentrated in Wisconsin, Minnesota and Michigan and a downturn in economic conditions in these states could reduce our profits.

Most of our loans are to individuals located in Wisconsin, Minnesota and Michigan. Any decline in the economy of these states could have an adverse impact on our earnings. Decreases in local real estate values could adversely affect the value of property used as collateral. Adverse changes in the economy also may have a negative effect on the ability of our borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings.

Risks Related to this Stock Offering

After this offering, our compensation expenses will increase. Our return on equity also will be low compared to other companies. These factors could negatively impact the price of our stock.

The proceeds we will receive from the sale of our common stock will significantly increase our capital and it will take us time to fully deploy those proceeds in our business operations. Our compensation expense will increase because of the costs associated with the employee stock ownership and stock-based benefit plans. We estimate the increase in compensation expense from these plans to be approximately $548,000 on an after-tax basis, based on the maximum of the valuation range. Therefore, we expect our return on equity to be below our historical level and less than many of our regional and national peers. This low return on equity could hurt our stock price. We cannot guarantee when or if we will achieve returns on equity that are comparable to industry peers. For further information regarding pro forma income and expenses, see “Pro Forma Data.”

We have broad discretion in using the proceeds of this offering. Our failure to effectively use these proceeds could reduce our profits.

Citizens Community Bancorp, Inc. will use a portion of the net proceeds it retains to finance the purchase of common stock in the offering by the employee stock ownership plan and may use the remaining net proceeds to pay dividends to stockholders, repurchase shares of common stock, purchase securities, deposit funds in Citizens Community Federal or other financial institutions, or for other general corporate purposes. Citizens Community Federal may use the proceeds it receives to repay a portion of its outstanding Federal Home Loan Bank borrowings, fund new loans, establish or acquire new branches, purchase securities, or for general corporate purposes. In particular, we intend to expand our presence in the Minneapolis-St. Paul and Detroit metropolitan areas through branch acquisitions and de novo branching and indirect loan production relationships. The establishment or acquisition of new branches may negatively affect our earnings until these new offices achieve profitability. We have not, however, earmarked specific amounts of proceeds for any of these purposes, and we will have significant flexibility in determining the amount of net proceeds we apply to different uses and the timing of these proceeds applications. Our failure to utilize these net proceeds effectively could reduce our profitability. We have not established a timetable for the effective deployment of the net proceeds, and we cannot predict how long we will require to effectively deploy those proceeds.

Provisions in our Maryland charter and bylaws that limit the rights of stockholders may deter potential takeovers and may reduce the trading price of our stock.

Provisions in our Maryland charter and bylaws may make it difficult and expensive to pursue a change in control or takeover attempt that our board of directors opposes. As a result, you may not have an opportunity to participate in such a transaction, and the trading price of our stock may not rise to the level of other institutions that are more vulnerable to hostile takeovers. See “Summary - Restrictions on Acquisitions of Control” and “Restrictions on Acquisitions of Citizens Community Bancorp, Inc. and Citizens Community Federal - Charter and Bylaws of Citizens Community Bancorp, Inc.”

The implementation of a new stock-based benefit plan and the ability of all board of directors to increase authorized shares and direct the issuance of authorized shares may dilute your ownership interest.

We intend to adopt a stock-based benefit plan following the Stock Offering. This stock-based benefit plan will be funded through either open market purchases or the issuance of authorized but unissued shares of our common stock. Stockholders would experience a reduction in ownership interest totaling approximately 7.7% in the event newly issued shares of our common stock are used to fund stock options and restricted stock awards under this plan in an amount equal to 6.0% and 2.4%, respectively at the maximum of the valuation range, of the shares to be outstanding after the Stock Offering. Based on the issuance of our common stock at the maximum of the valuation range, we expect to have 6,188,277 shares of common stock outstanding and 13,811,723 shares of authorized but unissued shares. In addition, our board of directors is permitted to authorize additional shares of common stock without stockholder approval. The issuance of these authorized but previously unissued shares would reduce the ownership interest of existing stockholders.

Our stock price may decline when trading commences.

We cannot assure you that if you purchase shares in this Stock Offering, you will later be able to sell them at or above the $10.00 purchase price. In numerous recent cases, shares of common stock issued by newly converted savings institutions or mutual holding companies have traded below the price at which the shares were sold in the offering conducted by those companies. The final aggregate purchase price of the shares of common stock in the offering will be based on an independent appraisal. The appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock. The valuation is based on estimates and projections of a number of matters, all of which are subject to change from time to time. After our shares begin trading, the trading price of our common stock will be determined by the marketplace and may be influenced by many factors, including prevailing interest rates, the overall performance of the economy, investor perceptions of Citizens Community Bancorp, Inc. and the outlook for the financial institutions industry in general.

There may be a limited trading market in our common stock, which would hinder your ability to sell our common stock and may lower the market price of the stock.

We expect that our common stock will be quoted on the Nasdaq Global Market under the symbol “CZWI.” There is no guarantee that an active and liquid trading market in shares of our common stock will develop. Persons purchasing shares may not be able to sell their shares when they desire if a liquid trading market does not develop or to sell them at a price equal to or above the initial purchase price of $10.00 per share, even if a liquid trading market develops. This limited trading market for our common stock may reduce the market value of the common stock and make it difficult to buy or sell our shares on short notice. See “Market for the Common Stock.”

Our new organizational structure will result in changes in stockholder rights for existing stockholders.

As a result of the Conversion, the existing stockholders of CCB will become stockholders of Citizens Community Bancorp, Inc. There are certain differences in stockholder rights arising from distinctions between CCB’s federal charter and bylaws and Citizen Community Bancorp, Inc.’s articles of incorporation and bylaws, which are based on Maryland corporate law. The rights of stockholders to call special meetings, make director nominations and stockholder proposals and amend the corporation’s governing instruments are more limited under Citizens Community Bancorp, Inc.’s articles of incorporation and bylaws. Additionally, the articles of incorporation of Citizens Community Bancorp, Inc. allows the board of directors to increase authorized shares without stockholder vote and limits the voting rights of shares held in excess of 10% of the outstanding shares. See “Comparison of Rights of Citizens Community Bancorp, Inc’s and CCB’s Stockholders.”

SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA

The financial information under the captions Balance Sheet Data and Summary of Operations in this section is derived from CCB's audited financial statements for the five fiscal years ended September 30, 2005 and unaudited financial statements for the six months ended March 31, 2006 and 2005, and should be read together with the financial statements and the notes thereto beginning on page F-1 of this document. In the opinion of management, all adjustments consisting of normal recurring adjustments that are necessary for a fair presentation of the interim periods have been reflected. The results of operations and other data presented for the six months ended March 31, 2006 do not necessarily indicate the results that may be expected for the fiscal year ending September 30, 2006 or any other period.

	March 31,		September 30,
	2006			2005		2004		2003		2002		2001
	(In thousands)

Selected Financial Condition Data:

Total assets	$	256,625	$	245,707	$	161,980	$	130,400	$	115,257	$	108,083
Loans receivable, net		234,324		217,931		152,376		123,107		104,091		93,618
Other interest-bearing deposits		1,153		1,444		---		---		1,485		6,931
Securities available for sale		1,839		2,088		---		---		---		---
Deposits		188,298		177,469		127,976		114,963		104,429		98,128
Total borrowings		36,200		36,200		13,500		3,700		---		---
Stockholders' equity⁽¹⁾		29,814		29,553		19,606		10,991		10,393		9,729

	For the Six Months Ended March 31,				At or For the Year Ended September 30,
	2006		2005		2005		2004		2003		2002		2001
	(In thousands)
Selected Operations Data:
Total interest income	$	7,524	$	5,397	$	11,926	$	9,619	$	8,880	$	8,493	$	8,822
Total interest expense		3,141		1,649		3,992		2,889		3,178		3,859		4,844
Net interest income		4,383		3,748		7,934		6,730		5,702		4,634		3,978
Provision for loan losses		108		202		414		396		406		375		230
Net interest income after provision for loan losses		4,275		3,546		7,520		6,334		5,296		4,259		3,748
Fees and service charges		670		519		1,160		1,038		1,009		821		782
Gain (loss) on sales of loans, mortgage- backed securities and investment securities		27		---		---		---		---		---		---
Other non-interest income		173		589		861		331		323		286		218
Total non-interest income		870		1,108		2,021		1,369		1,332		1,107		1,000
Total non-interest expense		4,719		3,672		7,806		6,323		5,641		4,675		4,189
Income before taxes		426		982		1,735		1,380		987		691		559
Income tax provision⁽²⁾		176		398		684		543		390		27		--
Net income	$	250	$	584	$	1,051	$	837	$	597	$	664	$	559

Basic and diluted earnings per share	$	0.07	$	0.20	$	0.35		N/A⁽³⁾		N/A⁽³⁾		N/A⁽³⁾		N/A⁽³⁾

Selected Financial Ratios and Other Data

	For the Six Months Ended March 31,		At or For the Year Ended September 30,
	2006	2005	2005	2004	2003	2002	2001

Performance Ratios⁽³⁾
Return on assets (ratio of net income to average total assets)	0.20%	0.69%	0.56%	0.57%	0.49%	0.60%	0.54%
Return on assets, net of tax⁽²⁾	0.20%	0.69%	0.56%	0.57%	0.49%	0.37%	0.33%
Return on equity (ratio of net income to average equity)	1.68%	6.07%	4.87%	5.47%	5.59%	6.61%	5.92%
Return on equity, net of tax⁽²⁾	1.68%	6.07%	4.87%	5.47%	5.59%	4.15%	3.58%
Dividend payout ratio	1.42%	0.50%	0.57%	0.67%⁽⁴⁾	N/A⁽⁵⁾	N/A⁽⁵⁾	N/A⁽⁵⁾
Interest rate spread information
Average during period	3.49%	4.29%	4.28%	4.50%	4.82%	4.30%	3.99%
End of period	3.53%	4.33%	3.92%	4.59%	4.80%	4.74%	3.88%
Net interest margin	3.73%	4.52%	4.19%	4.70%	4.90%	4.39%	4.14%
Ratio of operating expense to average total assets	3.77%	4.33%	4.12%	4.33%	4.59%	4.19%	4.05%
Ratio of average interest-bearing assets to average interest-bearing liabilities	1.09%	1.12%	1.11%	1.10%	1.05%	1.03%	1.03%

Quality Ratios
Non-performing assets to total assets at end of period	0.43%	0.36%	0.29%	0.43%	0.43%	0.53%	0.37%
Allowance for loan losses to non- performing loans	72.66%	100.92%	118.26%	79.51%	82.92%	65.36%	75.74%
Allowance for loan losses to net loans	0.34%	0.38%	0.37%	0.36%	0.38%	0.34%	0.33%

Capital Ratios
Equity to total assets at end of period	11.62%	10.83%	12.03%	12.10%	8.43%	9.02%	9.00%
Average equity to average assets	11.82%	11.44%	11.40%	10.46%	8.70%	9.01%	9.14%

Other Data
Number of full-service offices	12	10	12	9	8	7	6

_________________

(1)	Prior to March 29, 2004, Citizens Community Federal was a mutual institution whose equity was retained earnings.

(2)

Until its conversion to a federally chartered mutual savings bank on December 10, 2001, Citizens Community Federal was a credit union, exempt from federal and state income taxes. Had Citizens Community Federal been subject to federal and state income taxes for the fiscal years ended September 30, 2002 and 2001, income tax expense would have been approximately $273,000 and $221,000, respectively, and net income would have been approximately $418,000, and $338,000, respectively.

(3)	Performance ratios for the six month period ended March 31, 2006 and 2005 are annualized where appropriate.

(4)

This reflects only the last two quarters of the fiscal year with earnings per share of $0.15 for the two quarters and dividends of $0.05 for each quarter. During the first two quarters of the fiscal year, CCB did not exist, and Citizens Community Federal was a mutual institution with no outstanding stock.

(5)	Because the formation of CCB was completed on March 29, 2004, per share earnings for those years are not meaningful.

HOW WE INTEND TO USE THE PROCEEDS OF THE STOCK OFFERING

We are conducting this Stock Offering principally to raise additional capital to support our continued growth. The actual net proceeds will depend on the number of shares sold, the independent valuation, market considerations and the expenses of the Stock Offering. Although the actual net proceeds from the sale of the common stock cannot be determined until the Stock Offering is completed, we estimate that we will receive net proceeds from the sale of common stock of between $32.8 million at the minimum and $51.5 million at the maximum, as adjusted, of the offering range.

Assuming expenses of between $1.2 million at the minimum and $1.4 million at the maximum, as adjusted, of the offering range and assuming the proposed purchase of shares by our employee stock ownership plan, the following table shows the manner in which we will use the net proceeds:

	Minimum					Midpoint					Maximum					Maximum, as Adjusted
	$		%			$		%			$		%			$		%
	(Dollars in thousands)

Loan to employee stock ownership plan	$	2,195		6.7	%	$	2,582		6.7	%	$	2,970		6.6	%	$	3,415	$	6.6	%
Investment in Citizens Community Federal		16,423		50.0			19,385		50.0			22,347		50.0			25,754		50.0
Citizens Community Bancorp, Inc. working capital.		14,228		43.3			16,803		43.3			19,377		43.4			22,338		43.4
Net Proceeds		32,846		100.0	%		38,770		100.0	%		44,694		100.0	%		51,507		100.0	%

We will use 50% of the net proceeds of the Stock Offering to make a capital contribution to Citizens Community Federal. We will also lend Citizens Community Federal's employee stock ownership plan cash to enable the plan to buy enough shares so that, at the end of the Stock Offering, it owns 8% of our outstanding shares, including the 119,236 it currently owns, as adjusted in accordance with the Exchange Ratio. The balance, ranging from $14.2 million at the minimum of the offering range to $22.3 million at the maximum, as adjusted, will be retained as our initial capitalization. We will use these funds for general business purposes, which may include investment in deposits at Citizens Community Federal and other financial institutions, mortgage-backed securities and U.S. government and federal agency securities, as well as the repurchase of shares of our common stock or payment of cash dividends. For additional information regarding the payment of cash dividends, see “Our Policy Regarding Dividends.” Under current OTS regulations, Citizens Community Bancorp, Inc. may not repurchase shares of its common stock during the first year following the Conversion, except to fund restricted stock awards in a stockholder-approved, stock-based benefit plan or, with prior regulatory approval, when extraordinary circumstances exist.

The 50% of the net proceeds funds received by Citizens Community Federal from us will be used for general business purposes, including, initially, paying a portion of its Federal Home Loan Bank borrowings and investing in deposits in other financial institutions, mortgage-related securities and U.S. government and federal agency securities. Our Federal Home Loan Bank borrowings have grown recently as we have leveraged our balance sheet by funding loan originations, primarily one- to four-family mortgage loans, with overnight borrowings. Over time, these funds will be used:

to fund new loans of a type that are currently made by Citizens Community Federal;

to hire additional loan originators to accelerate our mortgage and consumer loan growth;

to finance the possible expansion of its business activities, including developing new branch locations or acquiring branches of other financial institutions; or

for general corporate purposes.

Though we have no present understandings, agreements or arrangements for any acquisitions, we may consider acquisitions of other financial institutions and/or non-interest income subsidiaries as a means of expanding our operations.

Except as described above, neither Citizens Community Bancorp, Inc. nor Citizens Community Federal has any specific plans for the investment of the proceeds of this offering and has not earmarked a specific portion of the proceeds to any particular use. For a discussion of our business reasons for undertaking the Conversion, see “The Conversion - Reasons for the Conversion and Stock Offering.”

If the employee stock ownership plan is not able to purchase all shares of our common stock it wants in the Stock Offering, it may purchase shares in the open market after the Stock Offering. If the purchase price of the common stock is higher than $10.00 per share, the amount of proceeds required for the purchase by the employee stock ownership plan will increase, and the resulting stockholders' equity will decrease.

The net proceeds may vary significantly because total expenses of the Stock Offering may be significantly more or less than those estimated at the various points of the offering range. Payments for shares made through withdrawals from existing deposit accounts at Citizens Community Federal will not result in the receipt of new funds for investment but will result in a reduction of Citizens Community Federal’s deposits and interest expense as funds are transferred from interest-bearing certificates or other deposit accounts.

OUR POLICY REGARDING DIVIDENDS

Since the completion of its initial public stock offering in March 2004, CCB has paid $0.05 per share dividends each quarter since the quarter ended June 30, 2004. After the Conversion, Citizens Community Bancorp, Inc. intends to pay a regular quarterly dividend. The continued ability to pay dividends will depend on a number of factors including our regulatory capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. No assurance can be given that we will pay dividends in the future, or that, if paid, dividends will not be reduced or eliminated in future periods.

The dividends paid to date by CCB were paid only to the public stockholders, which currently hold 26% of the outstanding shares of CCB, while Citizens Community MHC waived its receipt of the dividend on the 74% of the outstanding shares it currently holds. Following the Conversion and Stock Offering, however, 100% of the outstanding stock of Citizens Community Bancorp, Inc. will be held by public stockholders, and dividends will be payable on all outstanding shares of common stock.

Under Maryland law, Citizens Community Bancorp, Inc. may pay dividends on its common stock if, after giving effect thereto, it would be able to pay its debts as they become due in the usual course of its business and if its total assets exceed its total liabilities and the amount needed, if it were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of any holders of capital stock who have a preference in the event of dissolution. Citizens Community Bancorp, Inc.'s ability to pay dividends also may depend on the receipt of dividends from Citizens Community Federal, which is subject to a variety of regulatory limitations on the payment of dividends. See “How We Are Regulated - Limitations on Dividends and Other Capital Distributions.” Furthermore, as a condition to the OTS giving its authorization to conduct the Stock Offering, Citizens Community Bancorp, Inc. has agreed that it will not initiate any action within one year of completion of the Stock Offering in the furtherance of payment of a special distribution or return of capital to stockholders of Citizens Community Bancorp, Inc.

MARKET FOR THE COMMON STOCK

Quotations for CCB's common stock currently appear on the OTC Bulletin Board under the symbol "CZWI.OB." Citizens Community Bancorp, Inc. is a newly formed Maryland corporation and has not issued capital stock. It will not have any stock outstanding until the completion of this Stock Offering. It is expected that there will be a more active trading market for the common stock of Citizens Community Bancorp, Inc. than there has been for CCB because there will be more shares outstanding to the public. We have applied for approval from Nasdaq to have our common stock quoted on the Nasdaq Global Market under the symbol "CZWI." Keefe, Bruyette & Woods, Inc. intends to become a market maker in our common stock following the Stock Offering, but is under no obligation to do so.There can be no assurance, however, that an active and liquid trading market for our common stock will develop or, if developed, be maintained.

The following table sets forth the high and low sales prices for CCB's common stock and dividends paid per share for the periods indicated. CCB's common stock commenced trading on March 29, 2004. The following stock price information represents inter-dealer quotations and, therefore, may not include retail markups, markdowns, or commissions and may not reflect actual transactions. As of March 31, 2006, there were 955,959 shares of CCB's common stock outstanding to persons other than Citizens Community MHC. In connection with the Conversion, each share of CCB common stock will be converted into between 1.22803 and 1.91067 shares of common stock of Citizens Community Bancorp, Inc., based upon the Exchange Ratio. Accordingly, the information in this table should be reviewed in conjunction with the Exchange Ratio information at “The Conversion - Share Exchange Ratio.”

	High	Low	Dividends
Fiscal 2004
Second Quarter (March 29, 2004 to March 31, 2004)	$13.50	$12.10	$ --
Third Quarter (April 1, 2004 to June 30, 2004)	13.25	11.25	0.05
Fourth Quarter (July 1, 2004 to September 30, 2004)	12.75	11.80	0.05

Fiscal 2005
First Quarter (October 1, 2004 to December 31, 2004)	$15.50	$12.50	$0.05
Second Quarter (January 1, 2005 to March 31, 2005)	15.50	13.00	0.05
Third Quarter (April 1, 2005 to June 30, 2005)	12.75	12.75	0.05
Fourth Quarter (July 1, 2005 to September 30, 2005)	13.00	12.50	0.05

Fiscal 2006
First Quarter (October 1, 2005 to December 31, 2005)	$13.20	$10.30	$0.05
Second Quarter (January 1, 2006 to March 31, 2006)	14.25	12.90	0.05
Third Quarter (April 1, 2006 to June 16, 2006)	18.00	13.75	0.05

At April 24, 2006, the business day immediately preceding the public announcement of the Conversion and Stock Offering, and at June 16, 2006, the closing price of CCB’s common stock as reported on the OTC Bulletin Board was $14.14 per share and $17.65 per share, respectively. At June 16, 2006, CCB had 350 stockholders of record.

CAPITALIZATION

Set forth below is the historical capitalization of Citizens Community Bancorp, Inc. as of March 31, 2006, and its pro forma capitalization after giving effect to the Stock Offering. The table also gives effect to the assumptions set forth under “Pro Form Data.” A change in the number of shares sold in the Stock Offering may materially affect this pro forma capitalization.

	Pro Forma Capitalization at March 31, 2006
	Actual at March 31, 2006 ⁽¹⁾			Minimum 3,400,000 shares at $10.00 per share			Midpoint 4,000,000 shares at $10.00 per share			Maximum 4,600,000 shares at $10.00 per share			Maximum, as adjusted, 5,290,000 shares at $10.00 per share ⁽²⁾
	(In thousands)
Deposits ⁽³⁾	$	188,298		$	188,298		$	188,298		$	188,298		$	188,298
Federal Home Loan Bank advances ⁽⁴⁾		36,200			36,200			36,200			36,200			36,200
Total deposits and borrowings	$	224,498		$	224,498		$	224,498		$	224,498		$	224,498

Stockholders’ equity
Preferred stock, $0.01 par value, 1,000,000 shares authorized (post Conversion);
None to be issued	$	--		$	--		$	--		$	--		$	--
Common stock, $0.01 par value, 20,000,000 shares authorized (post Conversion); assuming shares outstanding as shown ⁽⁵⁾		37			46			54			62			71
Additional paid-in capital ⁽⁵⁾ ⁽⁶⁾		18,797			51,635			57,551			63,466			70,270
Retained earnings ⁽⁷⁾		12,691			12,691			12,691			12,691			12,691
Assets received from Citizens Community
MHC ⁽⁸⁾		--			95			95			95			95
Less:
Accumulated other comprehensive loss, net of tax		(22	)		(22	)		(22	)		(22	)		(22	)
Unearned employee stock ownership plan shares ⁽⁹⁾		(954	)		(3,149	)		(3,536	)		(3,923	)		(4,369	)
Unearned restricted stock ⁽¹⁰⁾		(341	)		(1,438	)		(1,632	)		(1,826	)		(2,048	)
Treasury stock		(394	)		(394	)		(394	)		(394	)		(394	)
Total stockholders’ equity	$	29,814		$	59,463		$	64,806		$	70,149		$	76,293

Pro forma stockholders’ equity to assets ⁽³⁾		11.62	%		20.77	%		22.22	%		23.62	%		25.17	%

____________

(1)	Actual capitalization at March 31, 2006 consists of the existing capitalization of CCB.

(2)	As adjusted to give effect to an increase in the number of shares that could occur due to an increase in the independent valuation and a commensurate increase in the offering range of up to 15% to reflect changes in market and financial conditions.

(3)	Does not reflect withdrawals from deposit accounts for the purchase of stock in the offering. Any withdrawals would reduce pro forma deposits and assets by an amount equal to the withdrawals.

(4)

We intend, in the near term, to use a portion of the proceeds to repay a portion of our outstanding Federal Home Loan Bank borrowings. At March 31, 2006, these borrowings totaled $36.2 million. Pro forma Federal Home Loan Bank advances would decrease if we use a portion of the proceeds to repay half of these borrowings.

(5)	Pro forma common stock and additional paid-in capital reflect the number of shares of common stock to be outstanding after the Stock Offering. Additional paid-in capital amounts under pro forma capitalization are net of estimated expenses of the offering.

(6)

No effect has been given to the issuance of additional shares of stock pursuant to the 2004 Stock Option and Incentive Plan or any stock option plan that may be adopted by Citizens Community Bancorp, Inc. and presented for approval by the stockholders after the Stock Offering. An amount equal to 10% of the shares of stock outstanding after the offering would be issued or available for issuance upon the exercise of options to be granted under the existing and new stock option plan following the Stock Offering. See “Management - Benefits -- Potential Stock Benefit Plans.”

(7)	The retained earnings of Citizens Community Federal will be substantially restricted after the Conversion. See “How We Are Regulated - Limitations on Dividends and Other Capital Distributions.”

(8)	Pro forma data reflects the consolidation of $95,000 of capital from Citizens Community MHC.

(9)

The purchase price of unearned shares held by the employee stock ownership plan is reflected as a reduction of stockholders' equity. Includes unearned shares held currently by the existing employee stock ownership plan and assumes that enough shares will be purchased by the new employee stock ownership plan so that it owns 8% of our common stock outstanding at the end of the Stock Offering, and that the funds used by the employee stock ownership plan to acquire the additional shares will be borrowed from Citizens Community Bancorp, Inc. For an estimate of the impact of the loan on earnings, see “Pro Forma Data.” Citizens Community Federal intends to make scheduled discretionary contributions to the employee stock ownership plan sufficient to enable the plan to service and repay its debt over a ten-year period. See “Management - Benefits -- Employee Stock Ownership Plan.” If the employee stock ownership plan does not purchase stock in the Stock Offering and the purchase price in the market is greater than $10.00 per share, there will be a corresponding reduction in stockholders' equity. See “The Stock Offering - Subscription Offering -- Subscription Rights.”

(10)

The purchase price of unearned shares held by the current and to be used by the new restricted stock plan is reflected as a reduction of stockholders' equity, which is an amount equal to 4% of the shares of our stock outstanding at the end of the Stock Offering have been or will be purchased for the restricted stock plans following the Stock Offering at $10.00 per share. If the purchase price in the open market is greater than $10.00 per share, there will be a corresponding reduction in stockholders' equity. See footnote (2) to the table under “Pro Forma Data.” See “Management - Benefits -- Potential Stock Benefit Plans.”

PRO FORMA DATA

The actual net proceeds from the sale of the stock cannot be determined until the Stock Offering is completed. However, investable net proceeds to Citizens Community Bancorp, Inc. are currently estimated to be between approximately $32.8 million and $44.7 million (or $51.5 million if the independent valuation is increased by 15%) based on the following assumptions:

Receipt of assets of $95,000 from Citizens Community MHC;

The amount of our loan to our employee stock ownership plan to enable it to purchase enough shares in the Stock Offering so that, at the end of the Stock Offering, it owns 8% of all outstanding shares;

An amount equal to approximately 4% of our shares outstanding at the end of the Stock Offering less the 59,618 shares reserved for restricted stock under our current recognition and retention plan as adjusted in accordance with the Exchange Ratio will be awarded pursuant to a new stock-based benefit plan adopted no sooner than six months following the Stock Offering, funded through open market purchases;

The payment of a fee to Keefe, Bruyette & Woods, Inc. equal to 1.35% of the aggregate purchase price of shares sold in the Stock Offering (excluding shares purchased by the employee stock option plan and our directors, officers, employees and their immediate families); and

Other expenses of the Stock Offering are estimated to be approximately $710,000.

We have prepared the following table, which sets forth our historical net income and stockholders' equity prior to the Stock Offering and our pro forma consolidated net income and stockholders' equity following the Stock Offering. In preparing this table, and in calculating pro forma data, we have made the following assumptions:

Pro forma earnings have been calculated assuming the stock had been sold at the beginning of the period and the net proceeds had been invested at a before-tax average yield of 4.82% for the six months ended March 31, 2006 and 4.01% for the year ended September 30, 2005, which approximates the yield on a one-year U.S. Treasury bill on March 31, 2006 and September 30, 2005. An effective tax rate of 40% is utilized for both periods, resulting in net after-tax yields of 2.89% and 2.41%, respectively. The yield on a one-year U.S. Treasury bill, rather than an arithmetic average of the average yield on interest-earning assets and the average rate paid on deposits, has been used to estimate income on net proceeds because it is believed that the one-year U.S. Treasury bill rate is a more accurate estimate of the rate that would be obtained on an investment of net proceeds from the Stock Offering.

We did not include any withdrawals from deposit accounts to purchase shares in the Stock Offering.

Historical and pro forma per share amounts have been calculated by dividing historical and pro forma amounts by the indicated number of shares of stock, as adjusted in the pro forma net earnings per share to give effect to the purchase of shares by the employee stock ownership plan.

Pro forma stockholders' equity amounts have been calculated as if the stock had been sold on March 31, 2006 and September 30, 2005, respectively, and no effect has been given to the assumed earnings effect of the transactions.

The following pro forma data rely on the assumptions we outlined above, and these data do not represent the fair market value of the common stock, the current value of assets or liabilities, or the amount of money that would be distributed to stockholders if we liquidated Citizens Community Bancorp, Inc. The pro forma data do not predict how much we will earn in the future. You should not use the following information to predict future results of operations.

The pro forma information does not take into account our anticipated future expenses in connection with de novo branching or the expenses related to our growth strategy, including the hiring of additional loan originators. It also does not reflect any expenses for the current stock option and restricted stock plans. Please see Note 14 to the Consolidated Financial Statements and Note 3 to the Pro Forma Data tables below.

The following tables summarize historical data and pro forma data at or for the six months ended March 31, 2006 and at or for the year ended September 30, 2005 based on the assumptions set forth above and in the tables and should not be used as a basis for projections of market value of the stock following the Stock Offering. Pro forma stockholders' equity per share does not give effect to the liquidation account to be established in the Conversion. See “Management - Benefits -- Potential Stock Benefit Plans” and “The Conversion - Liquidation Rights.”

	At or for the Six Months Ended March 31, 2006
	3,400,000 Shares sold at $10.00 per share			4,000,000 Shares sold at $10.00 per share			4,600,000 Shares sold at $10.00 per share			5,290,000 Shares sold at $10.00 per share
	(Dollars in thousands, except per share amounts)
Gross Proceeds	$	34,000		$	40,000		$	46,000		$	52,900
Less expenses		(1,154	)		(1,230	)		(1,306	)		(1,393	)
Estimated net proceeds		32,846			38,770			44,694			51,507
Plus: Assets received from Citizens Community MHC		95			95			95			95
Less: employee stock ownership plan funded by Citizens Community Bancorp, Inc		(2,195	)		(2,582	)		(2,970	)		(3,415	)
Less: recognition and retention plan adjustment		(1,097	)		(1,291	)		(1,485	)		(1,708	)
Estimated investable net proceeds	$	29,649		$	34,992		$	40,335		$	46,469

Net Income:
Historical	$	250		$	250		$	250		$	250
Pro forma income on net proceeds		428			505			582			671
Plus: Pro forma income on assets received from Citizens Community MHC		1			1			1			1
Less: Pro forma employee stock ownership plan adjustment ⁽¹⁾		(66	)		(77	)		(89	)		(102	)
Less: Pro forma recognition and retention plan adjustment ⁽²⁾		(66	)		(77	)		(89	)		(102	)
Less: Pro forma options adjustment - new options ⁽³⁾		(71	)		(84	)		(95	)		(111	)
Less: Pro forma options adjustment - February 2005 options ⁽⁴⁾		(34	)		(34	)		(34	)		(34	)
Pro forma net income ^{(1)(2)(3)(4)(5)}	$	442		$	484		$	526		$	573

Per share net income:
Historical	$	0.06		$	0.05		$	0.04		$	0.04
Pro forma income on net proceeds		0.10			0.10			0.10			0.10
Plus: Pro forma income on assets received from Citizens Community MHC		-			-			-			-
Less: Pro forma employee stock ownership plan adjustment		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Less: Pro forma recognition and retention plan adjustments		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Less: Pro forma options adjustment - new options		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Less: Pro forma options adjustment - February 2005 options		(0.01	)		(0.01	)		(0.01	)		--
Pro forma net income per share ^{(1)(2)(3)(4)(5)}	$	0.09		$	0.08		$	0.07		$	0.08

Offering price as a multiple of pro forma net income per share		55.56	x		62.50	x		71.43	x		62.50	x

Shares used in calculation of income per share		4,365,428			5,135,797			5,906,167			6,792,093

Stockholders’ equity:

Historical	$	29,814		$	29,814		$	29,814		$	29,814
Estimated net proceeds		32,846			38,770			44,694			51,507
Plus: Assets received from Citizens Community MHC		95			95			95			95
Less: common stock acquired by the employee stock ownership plan ⁽¹⁾		(2,195	)		(2,582	)		(2,970	)		(3,415	)
Less: common stock acquired by the recognition and retention plan ⁽²⁾		(1,097	)		(1,291	)		(1,485	)		(1,708	)
Pro forma stockholders' equity		59,463			64,806			70,149			76,293
Less: intangible assets		(7,446	)		(7,446	)		(7,446	)		(7,446	)
Pro forma tangible stockholders' equity	$	52,017		$	57,360		$	62,703		$	68,847

Stockholders’ equity per share:

Historical	$	6.52		$	5.54		$	4.82		$	4.19
Estimated net proceeds		7.18			7.20			7.22			7.24
Plus: Assets received from Citizens Community MHC		0.02			0.02			0.02			0.01
Less: common stock acquired by the employee stock ownership plan ⁽¹⁾		(0.48	)		(0.48	)		(0.48	)		(0.48	)
Less: common stock acquired by the recognition and retention plan ⁽²⁾		(0.24	)		(0.24	)		(0.24	)		(0.24	)

Pro forma stockholders' equity per share	$	13.00		$	12.04		$	11.34		$	10.72
Less: intangible assets per share		(1.63	)		(1.38	)		(1.20	)		(1.05	)
Pro forma tangible stockholders’ equity per share	$	11.37		$	10.66		$	10.14		$	9.67

Offering price as a percentage of pro forma stockholders' equity per share		76.92	%		83.06	%		88.18	%		93.28	%
Offering price as a percentage of pro forma tangible stockholders’ equity per share		87.95	%		93.81	%		98.62	%		103.41	%

Shares used in calculation of stockholders' equity per share ⁽⁶⁾		4,573,944			5,381,110			6,188,277			7,116,519

(Footnotes on following page)

(1)

Assumes that the employee stock ownership plan will purchase enough shares so that it owns 8% of our outstanding shares at the end of the Stock Offering, including the 119,236 shares of CCB it has already purchased, as adjusted in accordance with the Exchange Ratio. The plan will borrow funds from Citizens Community Bancorp, Inc. to make that acquisition of shares. The stock acquired by the employee stock ownership plan is reflected as a reduction of stockholders' equity. Citizens Community Federal intends to make annual contributions to the plan in an amount at least equal to the principal and interest requirement of the loan. This table assumes a ten-year amortization period. See “Management - Benefits -- Employee Stock Ownership Plan.” The pro forma net earnings assumes: (i) that Citizens Community Federal's contribution to the employee stock ownership plan for the principal portion of the debt service requirement for the six months ended March 31, 2006 was made at the end of the period; (ii) that 10,975, 12, 911, 14,848, 17,075 shares at the minimum, midpoint, maximum, and 15% above the maximum of the range, respectively, were committed to be released during the six months ended March 31, 2006, at an average fair value of $10.00 per share and were accounted for as a charge to expense in accordance with Statement of Position ("SOP") No. 93-6; and (iii) only the employee stock ownership plan shares committed to be released were considered outstanding for purposes of the net earnings per share calculations. All employee stock ownership plan shares were considered outstanding for purposes of the stockholders' equity per share calculations.

(2)

Gives effect to a restricted stock plan that may be adopted following the Stock Offering and presented for approval at a meeting of stockholders to be held after completion of the Stock Offering. If that plan is approved by the stockholders, the restricted stock plan is expected to acquire an amount of stock equal to 4% of our outstanding shares at the end of the Stock Offering, (excluding the 59,618 shares originally reserved for restricted stock under the current plan as adjusted in accordance with the Exchange Ratio) or 109,745, 129,112, 148,479 and 170,751 shares of stock, respectively, at the minimum, midpoint, maximum and 15% above the maximum of the range through open market purchases. Funds used by the restricted stock plan to purchase shares will be contributed to the restricted stock plan by Citizens Community Federal. In calculating the pro forma effect of the restricted stock plan, it is assumed that the required stockholder approval has been received for the plan, that the shares were acquired by the restricted stock plan at the beginning of the six months ended March 31, 2006 through open market purchases, at $10.00 per share, and that 10% of the amount contributed was amortized to expense during the six months ended March 31, 2006. The restricted stock plan will be amortized over 5 years. The issuance of authorized but unissued shares of stock to the restricted stock plan instead of open market purchases would dilute the voting interests of existing stockholders by approximately 2.45% and pro forma net income per share for the six months ended March 31, 2006 would be $0.10, $0.10, $0.09 and $0.09 at the minimum, midpoint, maximum and 15% above the maximum of the range, respectively, and pro forma stockholders' equity per share at March 31, 2006 would be $12.93, $12.00, $11.30 and $10.70 at the minimum, midpoint, maximum and 15% above the maximum of the range, respectively. There can be no assurance that stockholder approval of the restricted stock plan will be obtained, or the actual purchase price of the shares will be equal to $10.00 per share. See “Management - Benefits -- Potential Stock Benefit Plan.”

(3)

Gives effect to a stock option plan that may be adopted by Citizens Community Bancorp, Inc. following the Stock Offering and presented for approval at a meeting of stockholders to be held after completion of the Stock Offering and assumes that the options granted under the stock option plan have a value of $2.87 per option, which was determined using the Black-Scholes-Merton option pricing formula using the following assumptions: (i) the trading price on date of grant was $10.00 per share; (ii) exercise price is equal to the trading price on the date of grant; (iii) dividend yield of 1.4%; (iv) expected life of 10 years; (v) expected volatility of 12.62%; and risk-free interest rate of 4.86%. The assumed expected volatility is based on the historical volatility of the SNL Thrift Index, an index of all publicly traded thrifts, over the most recent 15 months. If the fair market value per share on the date of grant is different than $10.00, or if the assumptions used in the option pricing formula are different from those used in preparing this pro forma data, the value of the options and the related expense recognized will be different. There can be no assurance that the actual fair market value per share on the date of grant, and correspondingly the exercise price of the options, will be $10.00 per share. The issuance of authorized but unissued shares of stock instead of on market purchases to fund exercises of options granted under the stock option plan would dilute the voting interests of existing stockholders by approximately 5.91%. See “Management - Benefits -- Potential Stock Benefit Plans.”

(4)

The pro forma data for the six months ended March 31, 2006 includes an adjustment for stock option expense for those options awarded in February 2005. Please see Note 14 to the Consolidated Financial Statements for the pro forma expense disclosed and Note 3 above for the Black-Scholes assumptions and number of options.

(5)	Retained earnings will continue to be substantially restricted after the Stock Offering. See “Our Policy Regarding Dividends” and “How We Are Regulated - Limitations on Dividends and Other Capital Distributions.”

(6)

For purposes of calculating net income per share, only the employee stock ownership plan shares committed to be released under the plan were considered outstanding. For purposes of calculating stockholders' equity per share, all employee stock ownership shares were considered outstanding. We have also assumed that no options granted under the stock option plan were exercised during the period and that the trading price of Citizens Community Bancorp, Inc. common stock at the end of the period was $10.00 per share. Under this assumption, using the treasury stock method, no additional shares of stock were considered to be outstanding for purposes of calculating earnings per share or stockholders' equity per share.

	At or for the Year Ended September 30, 2005
	3,400,000			4,000,000			4,600,000			5,290,000
	Shares sold			Shares sold			Shares sold			Shares sold
	at $10.00			at $10.00			at $10.00			at $10.00
	per share			per share			per share			per share
	(Dollars in thousands, except per share amounts)

Gross proceeds	$	34,000		$	40,000		$	46,000		$	52,900

Less: expenses		(1,154	)		(1,230	)		(1,306	)		(1,393	)
Estimated net proceeds		32,846			38,770			44,694			51,507
Plus: Assets received from Citizens Community MHC		95			95			95			95
Less: employee stock ownership plan funded by Citizens Community Bancorp, Inc.		(2,195	)		(2,582	)		(2,970	)		(3,415	)
Less: recognition and retention plan adjustment		(1,097	)		(1,291	)		(1,485	)		(1,708	)
Estimated investable net proceeds	$	29,649		$	34,992		$	40,335		$	46,479

Net Income:
Historical	$	1,051		$	1,051		$	1,051		$	1,051
Pro forma income on net proceeds		711			840			968			1,116
Plus: Pro forma income on assets received from Citizens Community MHC		2			2			2			2
Less: Pro forma employee stock ownership plan adjustment ⁽¹⁾		(132	)		(155	)		(178	)		(205	)
Less: Pro forma recognition and retention plan adjustment ⁽²⁾		(132	)		(155	)		(178	)		(205	)
Less: Pro forma options adjustment - new options ⁽³⁾		(142	)		(167	)		(192	)		(221	)
Less: Pro forma options adjustment - February 2005 options ⁽⁴⁾		(67	)		(67	)		(67	)		(67	)
Pro forma net income ^{(1)(2)(3)(4)(5)}	$	1,291		$	1,349		$	1,406		$	1,471

Per share net income:
Historical	$	0.24		$	0.20		$	0.18		$	0.15
Pro forma income on net proceeds		0.16			0.16			0.16			0.16
Plus: Pro forma income on assets received from Citizens Community MHC		-			-			-			-
Less: Pro forma employee stock ownership plan adjustment"		(0.03	)		(0.03	)		(0.03	)		(0.03	)
Less: Pro forma recognition and retention plan adjustments		(0.03	)		(0.03	)		(0.03	)		(0.03	)
Less: Pro forma options adjustment - new options		(0.03	)		(0.03	)		(0.03	)		(0.03	)
Less: Pro forma options adjustment - February 2005 options		(0.02	)		(0.01	)		(0.01	)		(0.01	)
Pro forma net income per share ^{(1)(2)(3)(4)(5)}	$	0.29		$	0.26		$	0.24		$	0.21

Offering price as a multiple of pro forma net income per share		34.48	x		38.46	x		41.67	x		47.62	x

Shares used in calculation of income per share		4,376,402			5,148,709			5,921,015			6,809,168
Stockholders' equity:
Historical	$	29,553		$	29,553		$	29,553		$	29,553
Estimated net proceeds		32,846			38,770			44,694			51,507
Plus: Assets received from Citizens Community MHC		95			95			95			95
Less: common stock acquired by the employee stock ownership plan ⁽¹⁾		(2,195	)		(2,582	)		(2,970	)		(3,415	)
Less: common stock acquired by the recognition and retention plan ⁽²⁾		(1,097	)		(1,291	)		(1,485	)		(1,708	)
Pro forma stockholders' equity		59,202			64,545			69,887			76,032
Less: intangible assets		(7,597	)		(7,597	)		(7,597	)		(7,597	)
Pro forma tangible stockholders' equity	$	51,605		$	56,948		$	62,290		$	68,435

Stockholders' equity per share:
Historical	$	6.46		$	5.49		$	4.78		$	4.15
Estimated net proceeds		7.18			7.20			7.22			7.24
Less: Assets received from Citizens Community MHC		0.02			0.02			0.02			0.01
Less: common stock acquired by the employee stock ownership plan ⁽¹⁾		(0.48	)		(0.48	)		(0.48	)		(0.48	)
Less: common stock acquired by the recognition and retention plan ⁽²⁾		(0.24	)		(0.24	)		(0.24	)		(0.24	)

Pro forma stockholders' equity per share		12.94			11.99			11.30			10.68
Less: intangible assets per share		(1.66	)		(1.41	)		(1.23	)		(1.07	)
Pro forma tangible stockholders’ equity per share	$	11.28		$	10.58		$	10.07		$	9.62

Offering price as a percentage of pro forma stockholders' equity per share		77.28	%		83.40	%		88.50	%		93.63	%
Offering price as a percentage of pro forma tangible stockholders’ equity per share		88.65	%		94.52	%		99.30	%		104.06	%

Shares used in calculation of stockholders' equity per share ⁽⁶⁾		4,573,944			5,381,110			6,188,277			7,116,519

(Footnotes on following page)

(1)

Assumes that the employee stock ownership plan will purchase enough shares so that it owns 8% of our outstanding shares at the end of the Stock Offering, including the 119,236 shares of CCB it has already purchased, as adjusted in accordance with the Exchange Ratio. The plan will borrow funds from Citizens Community Bancorp, Inc. to make that acquisition of shares. The stock acquired by the employee stock ownership plan is reflected as a reduction of stockholders' equity. Citizens Community Federal intends to make annual contributions to the plan in an amount at least equal to the principal and interest requirement of the loan. This table assumes a ten-year amortization period. See “Management - Benefits -- Employee Stock Ownership Plan.” The pro forma net earnings assumes: (i) that Citizens Community Federal's contribution to the employee stock ownership plan for the principal portion of the debt service requirement for year ended September 30, 2005 was made at the end of the period; (ii) that 21,949, 25,822, 29,696 and 34,150 shares at the minimum, midpoint, maximum, and 15% above the maximum of the range, respectively, were committed to be released during the year ended September 30, 2005, at an average fair value of $10.00 per share and were accounted for as a charge to expense in accordance with Statement of Position ("SOP") No. 93-6; and (iii) only the employee stock ownership plan shares committed to be released were considered outstanding for purposes of the net earnings per share calculations. All employee stock ownership plan shares were considered outstanding for purposes of the stockholders' equity per share calculations.

(2)

Gives effect to a restricted stock plan that may be adopted following the Stock Offering and presented for approval at a meeting of stockholders to be held after completion of the Stock Offering. If that plan is approved by the stockholders, the restricted stock plan is expected to acquire an amount of stock equal to 4% of our outstanding shares at the end of the Stock Offering, (excluding the 59,618 shares originally reserved for restricted stock under the current plan as adjusted in accordance with the Exchange Ratio) or 109,745, 129,112, 148,479, 170,751 shares of stock, respectively, at the minimum, midpoint, maximum and 15% above the maximum of the range through open market purchases. Funds used by the restricted stock plan to purchase shares will be contributed to the restricted stock plan by Citizens Community Federal. In calculating the pro forma effect of the restricted stock plan it is assumed that the required stockholder approval has been received for the plan, that the shares were acquired by the restricted stock plan at the beginning of the year ended September 30, 2005 through open market purchases, at $10.00 per share, and that 20% of the amount contributed was amortized to expense during the year ended September 30, 2005. The restricted stock plan will be amortized over 5 years. The issuance of authorized but unissued shares of stock to the restricted stock plan instead of on market purchases would dilute the voting interests of existing stockholders by approximately 2.45% and pro forma net income per share for the year ended September 30, 2005 would be $0.29, $0.26, $0.24 and $0.22 at the minimum, midpoint, maximum and 15% above the maximum of the range, respectively, and pro forma stockholders' equity per share at September 30, 2005 would be $12.87, $11.95, $11.26 and $10.67 at the minimum, midpoint, maximum and 15% above the maximum of the range, respectively. There can be no assurance that stockholder approval of the restricted stock plan will be obtained, or the actual purchase price of the shares will be equal to $10.00 per share. See “Management - Benefits -- Potential Stock Benefit Plan.”

(3)

Gives effect to a stock option plan that may be adopted by Citizens Community Bancorp, Inc. following the Stock Offering and presented for approval at a meeting of stockholders to be held after completion of the Stock Offering and assumes that the options granted under the stock option plan have a value of $2.87 per option, which was determined using the Black-Scholes-Merton option pricing formula using the following assumptions: (i) the trading price on date of grant was $10.00 per share; (ii) exercise price is equal to the trading price on the date of grant; (iii) dividend yield of 1.4%; (iv) expected life of 10 years; (v) expected volatility of 12.62%; and risk-free interest rate of 4.86%. The assumed expected volatility is based on the historical volatility of the SNL Thrift & Index, an index of all publicly traded thrifts, over the most recent 15 months. If the fair market value per share on the date of grant is different than $10.00, or if the assumptions used in the option pricing formula are different from those used in preparing this pro forma data, the value of the options and the related expense recognized will be different. There can be no assurance that the actual fair market value per share on the date of grant, and correspondingly the exercise price of the options, will be $10.00 per share. The issuance of authorized but unissued shares of stock instead of open market purchases to fund exercises of options granted under the stock option plan would dilute the voting interests of existing stockholders by approximately 5.90%. See “Management - Benefits -- Potential Stock Benefit Plans.”

(4)	Retained earnings will continue to be substantially restricted after the Stock Offering. See “Our Policy Regarding Dividends” and “How We Are Regulated - Limitations on Dividends and Other Capital Distributions.”

(5)

WE EXCEED ALL REGULATORY CAPITAL REQUIREMENTS

The following table presents Citizens Community Federal’s historical and pro forma capital position and its capital requirements as of March 31, 2006. Pro forma capital levels assume receipt by Citizens Community Federal of 50% of the net proceeds of the Stock Offering. For a discussion of the assumptions underlying the pro forma capital calculations presented below, see “How We Intend to Use the Proceeds of the Stock Offering,” “Capitalization” and “Pro Forma Data.” The definitions of the terms used in the table are those provided in the capital regulations issued by the OTS. For a discussion of the capital standards applicable to Citizens Community Federal, see “Regulation - Regulatory Capital Requirements.”

	Actual, at March 31, 2006					$34,000,000 Minimum Offering					$40,000,000 Midpoint Offering					$46,000,000 Maximum Offering					$52,900,000 Maximum, As Adjusted Offering ⁽¹⁾
	Amount		Percentage of Assets⁽²⁾			Amount		Percentage of Assets⁽²⁾			Amount		Percentage of Assets⁽²⁾			Amount		Percentage of Assets⁽²⁾			Amount		Percentage of Assets⁽²⁾
	(Dollars in thousands)

GAAP Capital ⁽³⁾	$	26,675		10.39	%	$	39,806		14.76	%	$	42,187		15.50	%	$	44,568		16.23	%	$	47,306		17.06	%

Tangible Capital:
Actual or Pro Forma	$	19,251		7.72	%	$	32,382		12.33	%	$	34,763		13.12	%	$	37,144		13.89	%	$	39,882		14.77	%
Required		3,742		1.50			3,939		1.50			3,975		1.50			4,010		1.50			4,051		1.50
Excess	$	15,509		6.22	%	$	28,443		10.83	%	$	30,788		11.62	%	$	33,133		12.39	%	$	35,831		13.27	%

Core Capital:
Actual or Pro Forma	$	19,251		7.72	%	$	32,382		12.33	%	$	34,763		13.12	%	$	37,144		13.89	%	$	39,882		14.77	%
Required ⁽⁴⁾		9,978		4.00			10,504		4.00			10,599		4.00			10,694		4.00			10,804		4.00
Excess	$	9,273		3.72	%	$	21,878		8.23	%	$	24,164		9.12	%	$	26,450		9.89	%	$	29,078		10.77	%

Risk-Based Capital:
Actual or Pro Forma ^{(5) (6)}	$	19,879		12.08	%	$	33,010		19.28	%	$	35,391		20.53	%	$	37,772		21.76	%	$	40,510		23.16	%
Required		13,170		8.00			13,695		8.00			13,790		8.00			13,886		8.00			13,995		8.00
Excess	$	6,709		4.08	%	$	19,314		11.28	%	$	21,600		12.53	%	$	23,886		13.76	%	$	26,515		15.16	%

Tier 1 Risk-Based Capital:
Actual or Pro Forma ⁽⁵⁾⁽⁶⁾	$	19,251		11.69	%	$	32,382		18.92	%	$	34,763		20.17	%	$	37,144		21.40	%	$	39,882		22.80	%
Required		6,585		4.00			6,848		4.00			6,895		4.00			6,943		4.00			6,998		4.00
Excess	$	12,666		7.69	%	$	25,534		14.92	%	$	27,867		16.17	%	$	30,201		17.40	%	$	32,884		18.80	%

_______

(1)	As adjusted to give effect to an increase in the number of shares that could occur due to an increase in the offering range of up to 15% as a result of regulatory considerations or changes in market or general financial and economic conditions following the commencement of the Stock Offering.

(2)	Tangible and core capital levels are shown as a percentage of total adjusted assets. The risk-based capital level is shown as a percentage of risk-weighted assets.

(3)	GAAP capital includes unrealized gain (loss) on available-for-sale securities, net, goodwill, and other intangibles which are not included as regulatory capital.

(4)	The current OTS core capital requirement for savings banks is 3% of total adjusted assets for thrifts that receive the highest supervisory rating for safety and soundness and 4% to 5% for all other thrifts. Our required level is 4%. See “Regulation - Regulatory Capital Requirements.”

(5)	Assumes net proceeds are invested in assets that carry a 50% risk-weighing.

(6)	The difference between equity under GAAP and regulatory risk-based capital is attributable to the addition of $22,000 for accumulated other comprehensive loss, $628,000 for the allowance for loan losses, and the subtraction of $7,446,000 for goodwill and other intangibles.

THE CONVERSION

On April 20, 2006, the boards of directors of Citizens Community MHC, CCB and Citizens Community Federal adopted a Plan of Conversion and Reorganization, which authorizes the Conversion and Stock Offering, subject to the approval of the OTS, members of Citizens Community MHC, stockholders of CCB and the satisfaction of certain other conditions. In accordance with the plan, Citizens Community MHC will convert from a mutual holding company to a full stock corporation. Public stockholders currently own 26% of CCB and the remaining 74% is owned by Citizens Community MHC. Upon consummation of the Conversion, Citizens Community MHC will cease to exist. The stock held by the public stockholders of CCB will be converted into shares of Citizens Community Bancorp, Inc., a newly formed Maryland corporation. After the conversion, Citizens Community Federal will be a wholly owned subsidiary of Citizens Community Bancorp, Inc. We received authorization from the OTS to conduct the Conversion and Stock Offering on ______________, 2006. OTS authorization does not constitute a recommendation or endorsement of an investment in our stock by the OTS.

Request for a Copy of the Plan of Conversion and Reorganization

The following is a brief summary of the pertinent aspects of the Conversion. A copy of the Plan of Conversion and Reorganization is available upon request and is available for inspection at the offices of Citizens Community Federal and the OTS. The Plan of Conversion and Reorganization also is filed as an exhibit to the registration statement, of which this Prospectus forms a part, that Citizens Community Bancorp, Inc. has filed with the SEC. See “Where You Can Find Additional Information.”

Reasons for the Conversion and Stock Offering

After considering the advantages and disadvantages of the Conversion, the boards of directors of Citizens Community MHC, CCB and Citizens Community Federal unanimously approved the Conversion as being in their respective best interests and in the best interests of their stockholders or members. The boards of directors concluded that the Conversion offers a number of advantages that will be important to our future growth and performance.

The Conversion will result in the raising of additional capital for Citizens Community Bancorp, Inc. and Citizens Community Federal, which will support Citizens Community Federal’s future lending and operational growth and may also support possible future branching activities. It also will better position Citizens Community Federal to thrive and remain viable as a full-service community bank and to meet the increasing competition in its market areas. Through the reinvestment and leveraging of the proceeds, we hope to enhance our profitability and earnings by improving our net interest margin. As a fully converted stock holding company, we will have greater flexibility in structuring mergers and acquisitions with other financial institutions or financial services companies, including the form of consideration paid in a transaction. Our current mutual holding company structure, by its nature, limits our ability to offer our common stock as consideration in a merger or acquisition. Our new stock holding company structure will enhance our ability to compete with other bidders when acquisition opportunities arise by better enabling us to offer stock or cash consideration or a combination of the two.

Our additional capital will permit us to maintain capital ratios well above the regulatory requirements. The proceeds from the Stock Offering will provide us with additional equity capital, which will support our proposed future deposit growth and expanded operations. While we currently exceed applicable regulatory capital requirements, the sale of stock, coupled with the accumulation of earnings, less dividends or other reductions in capital, from year to year, represents a means for the orderly preservation and expansion of our capital base.

After completion of the Conversion, the unissued common and preferred stock authorized by Citizens Community Bancorp, Inc.’s articles of incorporation will permit it to raise additional capital through further sales of securities. Although CCB currently has the ability to raise additional capital through the sale of additional shares of CCB common stock, that ability is limited by the mutual holding company structure, which, among other things, requires that Citizens Community MHC hold a majority of the outstanding shares of CCB’s common stock.

We believe the Conversion and Stock Offering will assist us in our efforts to build stockholder value. As a result of the Stock Offering, 100% of our shares will be held by public stockholders. This greater amount of publicly held shares enabled us to apply to have our common stock quoted on the Nasdaq Global Market. Although no assurances can be given, we expect that listing on the Nasdaq Global Market will result in a more active and liquid market for Citizens Community Bancorp, Inc. common stock, which we have applied to have listed on the Nasdaq Global Market, than currently exists for CCB common stock, which is not listed on Nasdaq and has limited liquidity.

The Conversion will afford our officers and employees the opportunity to increase their stock ownership, which we believe to be an effective performance incentive and an effective means of attracting and retaining qualified personnel. The Conversion also will provide our customers and local community members with an opportunity to acquire our stock.

Description of the Conversion

Citizens Community Bancorp, Inc. has been incorporated under Maryland law as a first-tier wholly owned subsidiary of Citizens Community Federal. To effect the Conversion, the following will occur.

CCB will convert into an interim federal stock savings bank and simultaneously merge with and into Citizens Community Federal and cease to exist;

Citizens Community MHC will convert from mutual form to an interim federal stock savings bank and simultaneously merge with and into Citizens Community Federal and cease to exist and the shares of CCB common stock held by Citizens Community MHC will be canceled; and

CCBC Interim Three Savings Bank will be formed as a wholly owned subsidiary of Citizens Community Bancorp, Inc., and then will merge with and into Citizens Community Federal.

As a result of the merger of CCBC Interim Three Savings Bank with and into Citizens Community Federal, Citizens Community Federal will become a wholly owned subsidiary of Citizens Community Bancorp, Inc. and the outstanding shares of CCB common stock held by the general public will be converted into a number of shares of Citizens Community Bancorp, Inc. common stock that will result in the holders of such shares owning in the aggregate approximately the same percentage of Citizens Community Bancorp, Inc. common stock to be outstanding upon the completion of the Conversion (i.e., the common stock and the exchange shares) as the percentage of CCB common stock owned by them in the aggregate immediately before consummation of the Conversion before giving effect to the payment of cash in lieu of issuing fractional exchange shares and any shares of common stock purchased by public stockholders in the Stock Offering.

Pursuant to OTS regulations, consummation of the Conversion (including the offering of common stock in the Stock Offering, as described below) is conditioned upon the approval of the Plan of Conversion and Reorganization by (1) the OTS, (2) at least a majority of the total number of votes eligible to be cast by members of Citizens Community MHC at the special meeting of members, (3) holders of two-thirds of the shares of the outstanding CCB common stock (including Citizens Community MHC) at the special meeting of stockholders, and (4) the holders of a majority of the shares of CCB (excluding Citizens Community MHC) at the special meeting.

Share Exchange Ratio

OTS regulations provide that in this Conversion of our mutual holding company to stock form, the minority public stockholders of CCB will be entitled to exchange their shares of common stock for common stock of Citizens Community Bancorp, Inc., provided that Citizens Community Federal and the mutual holding company demonstrate to the satisfaction of the OTS that the basis for the exchange is fair and reasonable. On the date of completion of the Conversion, each publicly held share of CCB common stock will automatically be converted into and become the right to receive a number of exchange shares determined pursuant to the Exchange Ratio. The public stockholders of CCB common stock will own the same percentage of Citizens Community Bancorp, Inc. after the Conversion as they currently hold in CCB, subject to additional purchases and the receipt of cash in lieu of fractional shares.

Based on the independent valuation, the 74% of the outstanding shares of CCB common stock held by Citizens Community MHC as of the date of the independent valuation and the 26% public ownership interest of CCB, the following table sets forth, at the minimum, midpoint, maximum, and adjusted maximum of the offering range:

the total number of subscription shares and exchange shares to be issued in the Conversion;

the total shares of common stock outstanding after the Conversion;

the Exchange Ratio; and

the number of shares an owner of CCB will receive in the exchange, adjusted for the number of shares sold in the Stock Offering.

	Shares to be sold in the Stock Offering		Shares of Citizens Community Bancorp, Inc. to be exchanged for existing shares of CCB		Total Shares of Common Stock to be Outstanding	Exchange Ratio	100 shares of CCB would be exchanged for the following number of shares of Citizens Community Bancorp, Inc.
	Amount	Percent	Amount	Percent	Total Shares of Common Stock to be Outstanding	Exchange Ratio

Minimum	3,400,000	74%	1,173,944	26%	4,573,944	1.22803	122
Midpoint	4,000,000	74	1,381,110	26	5,381,110	1.44474	144
Maximum	4,600,000	74	1,588,277	26	6,188,277	1.66145	166
Adjusted maximum	5,290,000	74	1,826,519	26	7,116,519	1.91067	191

Options to purchase shares of CCB common stock will be converted into options to purchase shares of Citizens Community Bancorp, Inc. common stock. Additionally, restricted stock awards of CCB will also be converted into restricted shares of Citizens Community Bancorp, Inc. common stock. At March 31, 2006, there were outstanding options to purchase 105,827 shares of CCB common stock and there were 36,962 restricted stock awards of CCB common stock outstanding. The number of shares of common stock to be received upon exercise of these options will be determined pursuant to the Exchange Ratio. The aggregate exercise price, duration, and vesting schedule of these options and restricted stock awards will not be affected.

Effect of the Conversion on Minority Stockholders

Effect on Stockholders' Equity Per Share of the Shares Exchanged. The Conversion will increase the stockholders' equity of the public stockholders of CCB common stock. At March 31, 2006, the stockholders' equity per share of CCB common stock was $6.52, including shares held by Citizens Community MHC. As set forth under the March 31, 2006 “Pro Forma Data,” pro forma stockholders' equity per share is $13.00, $12.04, $11.34, and $10.72, respectively, at the minimum, midpoint, maximum and adjusted maximum, of the offering range.

Effect on Earnings per Share of the Shares Exchanged. The Conversion also will affect the public stockholders of CCB common stock pro forma earnings per share. For the six months ended March 31, 2006, basic and diluted earnings per share of CCB common stock was $0.07, including shares held by Citizens Community MHC. As set forth under the six months ended March 31, 2006 “Pro Forma Data,” pro forma earnings per share range from $0.09 to $0.08 for the minimum to the adjusted maximum of the offering range.

Dissenters' and Appraisal Rights. Under OTS regulations, dissenters' rights of appraisal are available to holders of CCB’s common stock in connection with the Conversion. The following discussion is not a complete statement of the law pertaining to dissenters' rights under the OTS Regulations and is qualified in its entirety by the full text of Section 552.14 of the OTS Regulations, which is referred to as Section 552.14 and is reprinted in its entirety as Appendix A to this Prospectus. Any CCB stockholder who desires to exercise his or her dissenters' rights should review carefully Section 552.14 and is urged to consult a legal advisor before electing or attempting to exercise his or her rights. All references in Section 552.14 to a "stockholder" and in this summary of dissenters' rights are to the record holder of shares of CCB common stock as to which dissenters' rights are asserted. Subject to the exceptions stated below, holders of CCB common stock who comply with the applicable procedures summarized below will be entitled to exercise dissenters' rights under Section 552.14.

A stockholder electing to exercise his or her rights to dissent from the Conversion is required to file with CCB (addressed to Stockholder Relations, Citizens Community Bancorp, 2174 EastRidge Center, Eau Claire, Wisconsin 54701) prior to voting on the Plan of Conversion and Reorganization, a written statement identifying himself or herself and stating his or her intention to demand appraisal of, and payment for, his or her shares. This demand must be made in addition to, and separate from, any proxy or vote. A failure to vote on the proposal to approve the Plan of Conversion and Reorganization will not constitute a waiver of appraisal rights, but a vote for the Plan of Conversion and Reorganization will be deemed a waiver of such rights. A vote against the Plan of Conversion and Reorganization will not be deemed to satisfy the requirement to file the written statement. However, if a stockholder returns a signed proxy but does not specify a vote against the Plan of Conversion and Reorganization, or a direction to abstain, the proxy, if not revoked prior to the CCB stockholders' meeting, will be voted for approval of the Plan of Conversion and Reorganization, which will have the effect of waiving that stockholder's dissenters' rights.

Within ten days after the completion of the Conversion and Stock Offering, Citizens Community Bancorp, Inc. shall (i) give written notice by mail to any dissenting stockholder who has not voted in favor of the Plan of Conversion and Reorganization, (ii) make a written offer to each dissenting stockholder to pay for his or her shares at a specified price deemed by Citizens Community Bancorp, Inc. to be fair value of such shares, and (iii) inform any dissenting stockholder that within 60 days of the completion of the Conversion and Stock Offering the dissenting stockholder must file a petition with the OTS, 1700 G Street, N.W., Washington, D.C. 20552, if the stockholder and Citizens Community Bancorp, Inc. do not agree as to the fair market value.

If, within 60 days of the completion of the Conversion and Stock Offering, the fair value is agreed upon between Citizens Community Bancorp, Inc. and any dissenting stockholder, payment will be made within 90 days of the completion of the Conversion and Stock Offering. If, within such period, however, Citizens Community Bancorp, Inc. and any dissenting stockholder do not agree as to the fair value of such shares, such stockholder may file a petition with the OTS demanding a determination of the fair market value of the stock. A copy of such petition must be sent by registered or certified mail to Citizens Community Bancorp, Inc. Any such stockholder who fails to file the petition within 60 days of the completion of the Conversion and Stock Offering is deemed to have accepted the terms of the Plan.

Each dissenting stockholder, within 60 days of the completion of the Conversion and Stock Offering, must submit his or her certificates to the transfer agent for notation thereon that an appraisal and payment have been demanded. Any stockholder who fails to submit his or her certificates will not be entitled to appraisal rights and will be deemed to have accepted the terms of the Plan.

Any stockholder who is demanding payment for his shares in accordance with Section 552.14 shall not thereafter be entitled to vote or exercise any rights of a stockholder except the right to receive payment for his shares pursuant to the provisions of Section 552.14 and the right to maintain certain legal actions. The respective shares for which payment has been demanded shall not thereafter be considered outstanding for the purposes of any subsequent vote of stockholders.

Comparison of Stockholders' Rights of CCB and Citizens Community Bancorp, Inc.

As a result of the Conversion, the current public stockholders of CCB, a federal corporation chartered by the OTS, will become stockholders of Citizens Community Bancorp, Inc., a Maryland chartered corporation. There are certain differences in stockholder rights arising from distinctions between CCB's federal charter and bylaws and Citizens Community Bancorp, Inc.'s articles of incorporation and bylaws and from differences in federal laws and regulations governing mutual holding companies and Maryland corporate law. These differences include the ability of the board of directors of Citizens Community Bancorp, Inc. to authorize additional shares without stockholder approval, more stringent perquisites for stockholders' nominations, proposals and calling special meetings, limits on acquisitions of greater than 10% of our stock and various anti-takeover provisions. See “Comparison of Rights of Stockholders of Citizens Community Bancorp, Inc.’s and CCB’s Stockholders.”

Effects of the Conversion on Depositors, Borrowers and Members

Continuity. The Conversion will not have any effect on Citizens Community Federal's present business of accepting deposits and investing its funds in loans and other investments permitted by law. The Conversion will not result in any change in the existing services provided to depositors and borrowers, or in existing offices, management, and staff. After the Conversion, Citizens Community Federal will continue to be subject to regulation, supervision, and examination by the OTS and the FDIC.

Deposits and Loans. Each holder of a deposit account in Citizens Community Federal at the time of the Conversion will continue as an account holder in Citizens Community Federal after the Conversion, and the Conversion will not affect the deposit balance, interest rate, or other terms. Each deposit account will be insured by the FDIC to the same extent as before the Conversion. Depositors will continue to hold their existing certificates, savings records, checkbooks, and other evidence of their accounts. The Conversion will not affect the loans of any borrower from Citizens Community Federal. The amount, interest rate, maturity, security for, and obligations under each loan will remain contractually fixed as they existed prior to the Conversion.

Voting Rights of Members. At present, all depositors of Citizens Community Federal are members of, and have voting rights in, Citizens Community MHC as to all matters requiring membership action. Upon completion of the Conversion, depositors and borrowers will cease to be members of Citizens Community MHC and will no longer be entitled to vote at meetings of Citizens Community MHC. Upon completion of the Conversion, Citizens Community Bancorp, Inc. will be the sole stockholder of Citizens Community Federal and have all voting rights in Citizens Community Federal. Stockholders of Citizens Community Bancorp, Inc. will have exclusive voting rights in the corporation. Depositors of Citizens Community Federal will not have voting rights after the Conversion, except to the extent that they become our stockholders through the purchase of common stock.

Effect on Liquidation Rights. Each depositor in Citizens Community Federal has both a deposit account in Citizens Community Federal and a pro rata ownership interest in the net worth of Citizens Community MHC based upon the balance in his or her account. This interest may only be realized in the event of a complete liquidation of Citizens Community MHC and Citizens Community Federal. However, this ownership interest is tied to the depositor's account and has no tangible market value separate from the deposit account. Any depositor who opens a deposit account obtains a pro rata ownership interest in Citizens Community MHC without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her account receives a portion or all of the balance in the deposit account but nothing for his or her ownership interest in the net worth of Citizens Community MHC, which is lost to the extent that the balance in the account is reduced or closed.

Consequently, depositors in a stock subsidiary of a mutual holding company normally have no way of realizing the value of their ownership interest, which has realizable value only in the unlikely event that Citizens Community MHC and Citizens Community Federal are liquidated. If this occurs, the depositors of record at that time, as owners, would share pro rata in any residual surplus and reserves of Citizens Community MHC after other claims, including claims of depositors to the amounts of their deposits, are paid.

In the unlikely event that Citizens Community Federal were to liquidate after the conversion, all claims of creditors, including those of depositors, also would be paid first, followed by distribution of the "liquidation account" to depositors as of March 31, 2005 and June 30, 2006 who continue to maintain their deposit accounts as of the date of liquidation, with any assets remaining thereafter distributed to CCB as the holder of Citizens Community Federal's capital stock. Pursuant to the rules and regulations of the OTS, a post-conversion merger, consolidation, sale of bulk assets or similar combination or transaction with another insured savings institution would not be considered a liquidation, and the liquidation account would be assumed by the surviving institution. See “- Liquidation Rights.”

Federal and State Tax Consequences of the Conversion

We have received opinions from Silver, Freedman & Taff, L.L.P, and from Wipfli LLP regarding the federal and Wisconsin tax consequences of the Conversion. The opinions have been filed as exhibits to the registration statement of which this Prospectus is a part and cover those federal and state tax matters that are material to the transaction. The opinions are made in reliance upon various statements, representations and declarations as to matters of fact made by us, as detailed in the opinions. The opinions provide that:

The transactions qualify as statutory mergers and each merger required by the Plan qualifies as a reorganization within the meaning of Code Section 368(a)(1)(A). Citizens Community MHC, CCB, Citizens Community Bancorp, Inc. and Citizens Community Federal will be a party to a "reorganization" as defined in Code Section 368(b).

Citizens Community MHC will not recognize any gain or loss on the transfer of its assets to Citizens Community Federal in exchange for Citizens Community Federal liquidation interests for the benefit of Citizens Community MHC members who remain depositors of Citizens Community Federal.

No gain or loss will be recognized by Citizens Community Federal upon the receipt of the assets of Citizens Community MHC in exchange for the transfer to the members of Citizens Community Federal liquidation interests.

No gain or loss will be recognized by Citizens Community Federal upon the receipt of the assets of CCBC Interim Two Savings Bank and CCBC Interim Three Savings Bank pursuant to the Conversion.

No gain or loss will be recognized by CCBC Interim Two Savings Bank following its Conversion to a federal stock savings bank.

The reorganization of Citizens Community Bancorp, Inc. as the holding company of Citizens Community Federal qualifies as a reorganization within the meaning of Code Section 368(a)(I)(A) by virtue of Code Section 368(a)(2)(E). Therefore, Citizens Community Federal, CCB, and CCBC Interim Three Savings Bank will each be a party to a reorganization, as defined in Code Section 368(b).

No gain or loss will be recognized by CCBC Interim Three Savings Bank upon the transfer of its assets to Citizens Community Federal pursuant to the Conversion.

Members will recognize no gain or loss upon the receipt of Citizens Community Federal liquidation interests.

No gain or loss will be recognized by Citizens Community Bancorp, Inc., upon the receipt of Citizens Community Federal Stock solely in exchange for stock of Citizens Community Bancorp, Inc.

Current stockholders of CCB will not recognize any gain or loss upon their exchange of common stock solely for shares of stock of Citizens Community Bancorp, Inc.

Each stockholder's aggregate basis in shares of stock of Citizens Community Bancorp, Inc. received in the exchange will be the same as the aggregate basis of common stock surrendered in the exchange before giving effect to any payment of cash in lieu of fractional shares.

No gain or loss will be recognized by Citizens Community Bancorp, Inc. on the receipt of money in exchange for stock of Citizens Community Bancorp, Inc. sold in the Stock Offering.

No gain or loss will be recognized by Eligible Account Holders, Supplemental Eligible Account Holders and Other Members upon the distribution to them of the non-transferable subscription rights to purchase shares of stock of Citizens Community Bancorp, Inc.

The opinion in the last bullet above is predicated on representations from Citizens Community Federal, CCB, Citizens Community Bancorp, Inc. and Citizens Community MHC that no person shall receive any payment, whether in money or property, in lieu of the issuance of subscription rights. The opinion in the last bullet above is based on the position that the subscription rights to purchase shares of common stock received by Eligible Account Holders, Supplemental Eligible Account Holders and Other Members have a fair market value of zero. In reaching their opinion stated in the second bullet above, Silver, Freedman & Taff, L.L.P. has noted that the subscription rights will be granted at no cost to the recipients, will be legally non-transferable and of short duration, and will provide the recipients with the right only to purchase shares of common stock at the same price to be paid by members of the general public in any community offering. Silver, Freedman & Taff, L.L.P. believes that it is more likely than not that the fair market value of the subscription rights to purchase common stock is zero.

If the non-transferable subscription rights to purchase common stock are subsequently found to have a fair market value, income may be recognized by various recipients of the subscription rights (in certain cases, whether or not the rights are exercised), and we may be taxed on the distribution of the subscription rights.

We are also subject to Wisconsin income taxes and have received an opinion from Wipfli LLP that the Stock Offering will be treated for Wisconsin state tax purposes similarly to the treatment of the Stock Offering for federal tax purposes.

Unlike a private letter ruling from the IRS, the federal and state tax opinions have no binding effect or official status, and no assurance can be given that the conclusions reached in any of those opinions would be sustained by a court if contested by the IRS or the Wisconsin tax authorities. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members are encouraged to consult with their own tax advisers as to the tax consequences in the event the subscription rights are determined to have any market value.

Liquidation Rights

In the unlikely event of a complete liquidation of CCB prior to the Conversion, all claims of creditors of CCB, including those of depositors to the extent of their deposit balances, would be paid first. Thereafter, if there were any assets of CCB remaining, these assets would be distributed to stockholders, including Citizens Community MHC. In the unlikely event that Citizens Community MHC and CCB are liquidated prior to the Conversion, all claims of creditors would be paid first. Then, if there were any assets of Citizens Community MHC remaining, members of Citizens Community MHC would receive those remaining assets, pro rata, based upon the deposit balances in their deposit account in Citizens Community Federal immediately prior to liquidation. In the unlikely event that Citizens Community Federal were to liquidate after the Conversion, all claims of creditors, including those of depositors, would be paid first, followed by distribution of the liquidation account to certain depositors, with any assets remaining thereafter distributed to Citizens Community Bancorp, Inc. as the holder of Citizens Community Federal capital stock. Pursuant to the rules and regulations of the OTS, a post-conversion merger, consolidation, sale of bulk assets or similar combination or transaction with another insured savings institution would not be considered a liquidation and, in these types of transactions, the liquidation account would be assumed by the surviving institution.

The Plan of Conversion and Reorganization provides that Citizens Community Federal shall establish, upon the completion of the Conversion, the special liquidation account for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders (as those terms are defined in the Plan of Conversion and Reorganization) in an amount equal to the greater of:

(1)

74% (Citizens Community MHC's ownership interest) of the retained earnings of CCB as of the date of its latest balance sheet contained in this Prospectus; or

(2)

the retained earnings of Citizens Community Federal at December 31, 2003 (the date of its latest balance sheet in the prospectus used at the time that it reorganized into the mutual holding company form).

The purpose of the liquidation account is to provide Eligible Account Holders and Supplemental Eligible Account Holders who maintain their deposit accounts with Citizens Community Federal after the Conversion with an interest in the unlikely event of the complete liquidation of Citizens Community Federal after the Conversion. Each Eligible Account Holder and Supplemental Eligible Account Holder that continues to maintain his or her deposit account at Citizens Community Federal, would be entitled, on a complete liquidation of Citizens Community Federal after the Conversion, to an interest in the liquidation account prior to any payment to the stockholders of Citizens Community Bancorp, Inc. Each Eligible Account Holder and Supplemental Eligible Account Holder would have an initial interest in the liquidation account for each deposit account, including savings accounts, checking accounts, money market deposit accounts, and certificates of deposit, with a balance of $50 or more held in Citizens Community Federal as of the close of business on March 31, 2005, or June 30, 2006. Each Eligible Account Holder and Supplemental Eligible Account Holder would have a pro rata interest in the total liquidation account for each such deposit account, based on the proportion that the balance of each such deposit account on March 31, 2005 or June 30, 2006 bears to the balance of all deposit accounts in Citizens Community Federal on these dates.

If, however, on any September 30 annual closing date commencing after the completion of the Conversion, the amount in any deposit account is less than the amount in that deposit account on March 31, 2005 or June 30, 2006 or any other annual closing date, then the interest in the liquidation account relating to that deposit account would be reduced from time to time by the proportion of the reduction, and the interest will cease to exist if the deposit account is closed. In addition, no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders would be separate and apart from the payment of any insured deposit accounts to a depositor. Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders are satisfied would be distributed to Citizens Community Bancorp, Inc. as the sole stockholder of Citizens Community Federal.

Amendment or Termination of the Plan of Conversion and Reorganization

If deemed necessary or desirable by the Board of Directors, the Plan of Conversion and Reorganization may be substantively amended, as a result of comments from regulatory authorities or otherwise, at any time prior to the solicitation of proxies from members and stockholders to vote on the plan and at any time thereafter with the concurrence of the OTS. Any amendment to the plan made after approval by the members and stockholders with the concurrence of the OTS shall not necessitate further approval by the members or stockholders unless otherwise required by the OTS. The plan shall terminate if the sale of all shares of stock is not completed within 24 months from the date of the special meeting of members. Prior to the earlier of the special meeting of members and the stockholders' meeting, the plan may be terminated by the Board of Directors without approval of the OTS. After the special meeting or the stockholders' meeting, the Board of Directors may terminate the plan only with the approval of the OTS.

Conditions to the Conversion and Stock Offering

We cannot complete our Conversion and our Stock Offering unless:

(1)

We sell a minimum of 3,400,000 shares of common stock;

(2)

The Plan of Conversion and Reorganization is approved by a majority of the votes eligible to be cast by members of Citizens Community MHC;

(3)

The Plan of Conversion and Reorganization is approved by at least two-thirds of the votes eligible to be cast by stockholders of Citizens Community Bancorp, including those shares held by Citizens Community MHC; and

(4)

The Plan of Conversion and Reorganization is approved by a majority of the votes eligible to be cast by stockholders of Citizens Community Bancorp, excluding those shares held by Citizens Community MHC.

The Plan of Conversion and Reorganization also must be approved by the OTS, which has given its conditional approval. If these conditions are not met before we complete the Stock Offering, all funds received will be promptly returned with interest at Citizens Community Federal's TYME passbook savings account rate and all withdrawal authorizations will be canceled. The stock purchases of our officers and directors will be counted for purposes of meeting the minimum number of shares.

Citizens Community MHC intends to vote its 74% ownership interest in favor of the Conversion. In addition, as of May 31, 2006, directors and executive officers of CCB and their associates own 252,858 outstanding shares of CCB, or 6.8% of the total outstanding shares. They intend to vote those shares in favor of the Conversion.

THE STOCK OFFERING

General

On April 26, 2006, the boards of directors of Citizens Community MHC, CCB and Citizens Community Federal adopted the Plan of Conversion and Reorganization authorizing the Conversion and Stock Offering, subject to the approval of the OTS, members of Citizens Community MHC and stockholders of CCB. The Plan provides that Citizens Community Bancorp, Inc. will sell shares of common stock to eligible depositors of Citizens Community Federal in a subscription offering and, if necessary, to the general public, if a community and/or a syndicated community offering is held. The boards of directors unanimously adopted the plan after consideration of the advantages and the disadvantages of the Conversion and the Stock Offering. The Stock Offering will be accomplished in accordance with the procedures set forth in the plan, the requirements of applicable law and regulations and the policies of the OTS. We received authorization from the OTS to conduct the Stock Offering on August ____, 2006. OTS authorization does not constitute a recommendation or endorsement of an investment in our stock by the OTS.

We are offering between a minimum of 3,400,000 shares and a maximum of 4,600,000 shares of common stock in the offering (subject to adjustment to up to 5,290,000 shares if our estimated pro forma market value has increased at the conclusion of the Stock Offering), which will expire at 12:00 noon, Eau Claire, Wisconsin time on _________________ 2006, unless extended. See “- Deadlines for Purchasing Stock.” The minimum purchase is 25 shares of common stock (minimum investment of $250). Our common stock is being offered at a fixed price of $10.00 per share in the Stock Offering.

In accordance with Rule 15c2-4 of the Securities Exchange Act of 1934, pending completion or termination of the Stock Offering, subscription funds received by us will be invested only in investments permissible under Rule 15c2-4.

Conduct of the Stock Offering

Subject to the limitations of the plan adopted by our boards of directors, shares of common stock are being offered in descending order of priority in the subscription offering to:

Eligible Account Holders (depositors of both Citizens Community Federal and Community Plus Savings Bank at the close of business on March 31, 2005 with deposits of at least $50.00);

Our employee stock ownership plan;

Supplemental Eligible Account Holders (depositors at the close of business on June 30, 2006 with deposits of at least $50.00, excluding our directors, officers and their associates); and

Other Members (depositors at the close of business on July 31, 2006).

To the extent that shares remain available and depending on market conditions at or near the completion of the subscription offering, we may conduct a community offering and possibly a syndicated community offering. The community offering, if any, may commence simultaneously with, during or subsequent to the completion of the subscription offering. A syndicated community offering, if we conduct one, would commence just prior to, or as soon as practicable after, the termination of the subscription offering. In any community offering or syndicated community offering, we will first fill orders for our common stock in an equitable manner as determined by the board of directors in order to achieve a wide distribution of the stock. If an oversubscription occurs in the Stock Offering by Eligible Account Holders, the employee stock ownership plan may, in whole or in part, fill its order through open market purchases subsequent to the closing of the Stock Offering, subject to any required regulatory approval.

Shares sold above the maximum of the offering range may be sold to the employee stock ownership plan before satisfying remaining unfilled orders of Eligible Account Holders to fill the plan's subscription, or the plan may purchase some or all of the shares covered by its subscription after the Stock Offering in the open market, subject to any required regulatory approval.

Subscription Offering

Subscription Rights. Non-transferable subscription rights to subscribe for the purchase of common stock have been granted under the plan of stock issuance to the following persons:

Priority 1: Eligible Account Holders. Each Eligible Account Holder shall be given the opportunity to purchase, subject to the overall limitations described under “-Limitations on Purchases of Stock,” up to the greater of (i) the maximum purchase limitation in the community offering (i.e., 50,000 shares or $500,000), (ii) one-tenth of 1% of the total offering of shares of common stock offered in the subscription offering, and (iii) 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of common stock offered in the subscription offering by a fraction, of which the numerator is the amount of the qualifying deposits of the Eligible Account Holder

and the denominator is the total amount of all qualifying deposits of all Eligible Account Holders. If there are insufficient shares available to satisfy all subscriptions of Eligible Account Holders, shares will be allocated to Eligible Account Holders so as to permit each subscribing Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares ordered. Thereafter, unallocated shares will be allocated to remaining subscribing Eligible Account Holders whose subscriptions remain unfilled in the same proportion that each subscriber's qualifying deposit bears to the total amount of qualifying deposits of all subscribing Eligible Account Holders, in each case on March 31, 2005, whose subscriptions remain unfilled. Subscription rights received by officers and directors, based on their increased deposits in Citizens Community Federal in the one year preceding the eligibility record date will be subordinated to the subscription rights of other eligible account holders. To ensure proper allocation of stock, each Eligible Account Holder must list on his or her order form all accounts in which he or she had an ownership interest as of the Eligibility Record Date.

Priority 2: The Employee Plans. The tax qualified employee plans may be given the opportunity to purchase in the aggregate up to 10% of the common stock issued in the subscription offering. It is expected that the employee stock ownership plan will purchase enough shares in the Stock Offering so that it owns 8% of our common stock outstanding at the end of the Stock Offering (including the 119,236 shares it already holds, as adjusted in accordance with the Exchange Ratio). If an oversubscription occurs in the Stock Offering by Eligible Account Holders, the employee stock ownership plan may, in whole or in part, fill its order through open market purchases subsequent to the closing of the Stock Offering, subject to any required regulatory approval.

Priority 3: Supplemental Eligible Account Holders. If there are sufficient shares remaining after satisfaction of subscriptions by Eligible Account Holders and the employee stock ownership plan and other tax-qualified employee stock benefit plans, each Supplemental Eligible Account Holder shall have the opportunity to purchase, subject to the overall limitations described under “- Limitations on Purchases of Common Stock,” up to the greater of (i) the maximum purchase limitation in the community offering (i.e., 50,000 shares or $500,000), (ii) one-tenth of 1% of the total offering of shares of common stock offered in the subscription offering, or (iii) 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of common stock offered in the subscription offering by a fraction, of which the numerator is the amount of the qualifying deposits of the Eligible Account Holder and the denominator is the total amount of all qualifying deposits of all Eligible Account Holders. If Supplemental Eligible Account Holders subscribe for a number of shares which, when added to the shares subscribed for by Eligible Account Holders and the employee stock ownership plan and other tax-qualified employee stock benefit plans, if any, is in excess of the total number of shares offered in the Stock Offering, the shares of common stock will be allocated among subscribing Supplemental Eligible Account Holders first so as to permit each subscribing Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares ordered. Thereafter, unallocated shares will be allocated to each subscribing Supplemental Eligible Account Holder whose subscription remains unfilled in the same proportion that each subscriber's qualifying deposits bear to the total amount of qualifying deposits of all subscribing Supplemental Eligible Account Holders, in each case on June 30, 2006, whose subscriptions remain unfilled. To ensure proper allocation of stock, each Supplemental Eligible Account Holder must list on his or her order form all accounts in which he or she had an ownership interest as of the Supplemental Eligibility Record Date.

Priority 4: Other Members. To the extent that there are shares remaining after satisfaction of subscriptions by Eligible Account Holders, our tax-qualified employee stock benefit plans, and Supplemental Eligible Account Holders, each member of Citizens Community MHC (depositors of Citizens Community Federal) on the voting record date of July 31, 2006 who is not an Eligible Account Holder or Supplemental Eligible Account Holder ("Other Members") will receive, without payment therefor, nontransferable subscription rights to purchase up to the greater of 50,000 shares of common stock or one-tenth of 1% of the total offering of shares of common stock offered in the subscription

offering, subject to the overall purchase limitations. See “- Limitations on Purchases of Common Stock.” If there are not sufficient shares available to satisfy all subscriptions, available shares will be allocated among subscribing Other Members first to permit each such subscriber to purchase shares up to the lesser of 100 or the number of shares ordered. Thereafter, remaining shares available shall be allocated among subscribing Other Members with unsatisfied orders over 100 shares on a pro rata basis in the same proportion as each such subscriber’s subscription bears to the total of all such subscribing Other Members.

Restrictions on Transfer of Subscription Rights and Shares. Subscription rights are not transferable under any circumstances. The Plan of Conversion and Reorganization prohibits any person with subscription rights from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the subscription rights or the shares of common stock to be issued when subscription rights are exercised. Furthermore, it is illegal to take any such action. Subscription rights may be exercised only by the person to whom they are granted and only for his or her account. Each person subscribing for shares will be required to certify that he or she is purchasing shares solely for his or her own account and that he or she has no agreement or understanding regarding the sale or transfer of the shares. OTS regulations also prohibit any person from offering or making an announcement of an offer or intent to make an offer to purchase subscription rights or shares of common stock before the completion of the Stock Offering.

We will pursue any and all legal and equitable remedies in the event we become aware of the transfer of subscription rights and will not honor orders that we determine involve the transfer of subscription rights.

Deadlines for Purchasing Stock

The subscription offering will terminate at 12:00 noon, Eau Claire, Wisconsin time, on September ___, 2006. We may extend this expiration date without notice to you for up to 45 days, until October ___, 2006. Once submitted, your order is irrevocable unless the Stock Offering is extended beyond October ___, 2006. We may request permission from the OTS to extend the Stock Offering beyond October ___, 2006, and the OTS may grant one or more extensions of the Stock Offering of up to 90 days per extension, but in no event may the Stock Offering be extended beyond October ___, 2008. If the Stock Offering is extended beyond October ____, 2006, we will be required to notify each subscriber and resolicit subscriptions. During any extension period, subscribers will have the right to modify or rescind their subscriptions, and, unless an affirmative response is received, a subscriber's funds will be returned with interest at Citizens Community Federal's TYME passbook savings account rate. A community offering and a syndicated community offering, if these offerings are conducted, may terminate at any time without notice but no later than ______________, 2006.

We may cancel the Conversion and Stock Offering at any time prior to the special meeting of members of Citizens Community MHC and the special meeting of stockholders of CCB to vote on the Plan of Conversion and Reorganization. We also may cancel the Conversion and Stock Offering after the special meetings of members and stockholders if the OTS concurs in our decision to do so. If we cancel the Conversion and Stock Offering, orders for common stock already submitted will be canceled and subscribers' funds will be returned with interest at Citizens Community Federal's TYME passbook savings account rate.

Community Offering and Syndicated Community Offering

Community Offering. The community offering, if any, may commence simultaneously with, during or subsequent to the completion of the subscription offering. The community offering, if any, must be completed within 45 days after the completion of the subscription offering unless otherwise extended by the OTS.

If less than the total number of shares of common stock to be subscribed for in the Stock Offering are sold in the subscription offering and depending on market conditions at or

near the completion of the subscription offering, shares remaining unsubscribed may be made available for purchase in the community offering to certain members of the general public. The maximum amount of common stock that any person may purchase in the community offering, subject to the overall purchase limitations described under “- Limitations on Purchases of Common Stock” is 50,000 shares, or $500,000. In the community offering, if any, shares will be available for purchase by the general public, and preference will be given first to existing stockholders of CCB and second to natural persons and trusts of natural persons residing in counties in which Citizens Community Federal has branch offices. These counties include Eau Claire, Buffalo, Jackson, Sauk, Barron and Chippewa counties in Wisconsin, Blue Earth and Washington counties in Minnesota and Oakland and McComb counties in Michigan. We will attempt to issue the shares in an equitable manner that would promote a wide distribution of common stock.

If purchasers in the community offering, whose orders would otherwise be accepted, subscribe for more shares than are available for purchase, the shares available to them will be allocated first to each preferred subscriber whose order is accepted in an amount equal to the lesser of 100 shares or the number of shares subscribed for by each such preferred subscriber, if possible. Thereafter, unallocated shares shall be allocated among the preferred subscribers whose accepted orders remain unsatisfied in the same proportion that the unfilled order bears to the total unfilled orders of all preferred subscribers whose accepted orders remain unsatisfied, provided that no fractional shares shall be issued. If any shares remain after the orders of preferred subscribers are filled, such shares shall be allocated to the general public in the same fashion as allocated among preferred subscribers.

We, in our absolute discretion, reserve the right to reject any or all orders in whole or in part which are received in the community offering, at the time of receipt or as soon as practicable following the completion of the community offering.

Syndicated Community Offering. If shares remain available after the subscription offering, and depending on market conditions at or near the completion of the subscription offering, we may offer shares to selected persons through a syndicated community offering on a best-efforts basis conducted by Keefe, Bruyette & Woods, Inc., acting as our agent, in accordance with such terms, conditions and procedures as may be determined by our board of directors. A syndicate of broker-dealers (selected dealers) may be formed to assist in the syndicated community offering. A syndicated community offering, if we conduct one, would commence just prior to, or as soon as practicable after, the termination of the subscription offering. Neither Keefe, Bruyette & Woods, Inc. nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering; however, Keefe, Bruyette & Woods, Inc. has agreed to use its best efforts in the sale of shares in any syndicated community offering.

Orders received in connection with the syndicated community offering, if any, will receive a lower priority than orders received in the subscription offering and community offering. Common stock sold in the syndicated community offering will be sold at the same price as all other shares in the subscription offering. A syndicated community offering would be open to the general public beyond the local community. Orders received in the syndicated community offering shall be filled first to a maximum of 2% of the total number of shares available in the Stock Offering, and, thereafter, any remaining shares will be allocated on an equal number of shares basis per order until all orders are filled. We have the right to reject orders, in whole or in part, in our sole discretion in the syndicated community offering. No person will be permitted, subject to the overall purchase limitations described under “- Limitations on Purchases of Common Stock” to purchase more than 50,000 shares, or $500,000, of common stock in the syndicated community offering.

The date by which orders must be received in the syndicated community offering will be set by us at the time the syndicated community offering commences; but if the syndicated community offering is extended beyond ________________, 2006, each purchaser will have the opportunity to maintain, modify, or rescind his or her order. In that event, all funds received in the syndicated community offering will be promptly returned with interest at Citizens Community Federal's TYME passbook savings account rate to each purchaser unless he or she requests otherwise.

Limitations on Purchases of Common Stock

The following additional limitations have been imposed on purchases of shares of common stock:

The maximum number of shares that may be purchased in the Stock Offering by any individual (or individuals through a single account) shall not exceed 50,000 shares, or $500,000. This limit applies to stock purchases in total in the subscription, community and syndicated community offerings.

The maximum number of shares that may be purchased by any individual together with any associate or group of persons acting in concert is 75,000 shares, or $750,000. This limit applies to stock purchases in total in the subscription, community and syndicated community offerings. This limit does not apply to our employee stock benefit plans, which in the aggregate may subscribe for up to 10% of the common stock issued in the Stock Offering.

The maximum number of shares which may be purchased in all categories in the Stock Offering by our officers and directors and their associates in the aggregate shall not exceed 31% of the total number of shares issued in the Stock Offering.

The minimum order is 25 shares or $250.

If the number of shares otherwise allocable to any person or that person's associates would be in excess of the maximum number of shares permitted as set forth above, the number of shares allocated to that person shall be reduced to the lowest limitation applicable to that person, and then the number of shares allocated to each group consisting of a person and that person's associates shall be reduced so that the aggregate allocation to that person and his or her associates complies with the above maximums, and the maximum number of shares shall be reallocated among that person and his or her associates in proportion to the shares subscribed by each (after first applying the maximums applicable to each person separately).

Depending on market or financial conditions, we may decrease or increase the purchase limitations, provided that the maximum purchase limitations may not be increased to a percentage in excess of 5% of the Stock Offering. If we increase the maximum purchase limitations, we are only required to resolicit persons who subscribed for the maximum purchase amount and may, in our sole discretion, resolicit certain other large subscribers.

If the total number of shares offered increases in the Stock Offering due to an increase in the maximum of the estimated valuation range of up to 15% (the adjusted maximum) the additional shares will be used in the following order of priority: (a) to fill the employee stock ownership plan's subscription so it acquires enough shares so that it owns, at the end of the Stock Offering, 8% of the shares outstanding at the adjusted maximum of the offering range, including shares it has historically acquired adjusted in accordance with the Exchange Ratio (unless the employee stock ownership plan elects to purchase stock subsequent to the Stock Offering in the open market); (b) if there is an oversubscription

at the Eligible Account Holder level, to fill unfilled subscriptions of Eligible Account Holders exclusive of the adjusted maximum unless the employee stock ownership plan elects to purchase stock subsequent to the Stock Offering in the open market; (c) if there is an oversubscription at the Supplemental Eligible Account Holder level, to fill unfilled subscriptions of Supplemental Eligible Account Holders exclusive of the adjusted maximum; (d) if there is an oversubscription at the Other Members level, to fill unfilled subscriptions of Other Members exclusive of the adjusted maximum; (e) to fill orders received in a community offering exclusive of the adjusted maximum, with preference given to existing stockholders and persons who live in the local community; and (f) to fill orders received in the syndicated community offering exclusive of the adjusted maximum.

No person will be allowed to purchase any stock if that purchase would be illegal under any federal law or state law or regulation or would violate regulations or policies of the National Association of Securities Dealers, Inc., particularly those regarding free riding and withholding. We and/or our representatives may ask for an acceptable legal opinion from any purchaser regarding the legality of the purchase and may refuse to honor any purchase order if that opinion is not timely furnished.

We have the right to reject any order submitted by a person whose representations we believe are untrue or who we believe is violating, circumventing, or intends to violate, evade, or circumvent the terms and conditions of the plan of stock issuance, either alone or acting in concert with others.

10.

The above restrictions also apply to purchases by persons acting in concert under applicable regulations of the OTS. Under regulations of the OTS, our directors are not considered to be affiliates or a group acting in concert with other directors solely as a result of membership on our board of directors.

11.

In addition, in any community offering or syndicated community offering, we must first fill orders for our common stock in the Stock Offering in a manner that will achieve a wide distribution of the stock, using the allocation methods referenced above in “- Community Offering and Syndicated Community Offering.”

The term "associate" of a person is defined in the plan of stock issuance to mean:

(1)

any corporation or organization of which a person is an officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities;

(2)

any trust or other estate in which a person has a substantial beneficial interest or as to which a person serves as trustee or in a similar fiduciary capacity; or

(3)

any relative or spouse of a person or any relative of a spouse, who has the same home as that person.

For example, a corporation for which a person serves as an officer would be an associate of that person and all shares purchased by that corporation would be included with the number of shares which that person individually could purchase under the above limitations.

The term "acting in concert" means:

(1)

knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or

(2)

a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise.

A person or company which acts in concert with another person or company ("other party") shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated. We will presume that certain persons are acting in concert based upon various facts, including the fact that persons have joint account relationships or the fact that persons have filed joint Schedules 13D with the Securities and Exchange Commission with respect to other companies. We reserve the right to make an independent investigation of any facts or circumstances brought to our attention that indicate that one or more persons acting independently or as a group acting in concert may be attempting to violate or circumvent the regulatory prohibition on the transferability of subscription rights.

We have the right, in our sole discretion, to determine whether prospective purchasers are "associates" or "acting in concert." These determinations are in our sole discretion and may be based on whatever evidence we believe to be relevant, including joint account relationships or shared addresses on the records of Citizens Community Federal.

Each person purchasing shares of the common stock in the Stock Offering will be considered to have confirmed that his or her purchase does not conflict with the maximum purchase limitation. If the purchase limitation is violated by any person or any associate or group of persons affiliated or otherwise acting in concert with that person, we will have the right to purchase from that person at the $10.00 purchase price per share all shares acquired by that person in excess of that purchase limitation or, if the excess shares have been sold by that person, to receive the difference between the purchase price per share paid for the excess shares and the price at which the excess shares were sold by that person. Our right to purchase the excess shares will be assignable.

Common stock purchased in the Stock Offering will be freely transferable, except for shares purchased by our directors and executive officers. For certain restrictions on the common stock purchased by our directors and executive officers, see “- Restrictions on Transferability by Directors and Executive Officers.”

Ordering and Receiving Common Stock

Use of Order Forms. Rights to subscribe may only be exercised by completion of an order form. Any person receiving an order form who desires to subscribe for shares of common stock must do so prior to the applicable expiration date by delivering by mail or in person a properly executed and completed order form, together with full payment of the purchase price for all shares for which subscription is made; provided, however, that if the employee plans subscribe for shares during the subscription offering, the employee plans will not be required to pay for the shares at the time they subscribe but rather may pay for the shares upon completion of the Stock Offering. All subscription rights will expire on the expiration date, whether or not we have been able to locate each person entitled to subscription rights. Once tendered, subscription orders cannot be revoked without our consent.

If a stock order form:

is not delivered and is returned to us by the United States Postal Service or we are unable to locate the addressee;

is not received or is received after the applicable expiration date;

is not completed correctly or executed; or

is not accompanied by the full required payment for the shares subscribed for, including instances where a savings account or certificate balance from which withdrawal is authorized is unavailable, uncollected or insufficient to fund the required payment, but excluding subscriptions by the employee plans,

then the subscription rights for that person will lapse as though that person failed to return the completed order form within the time period specified.

However, we may, but will not be required to, waive any irregularity on any order form or require the submission of corrected order forms or the remittance of full payment for subscribed shares by a date that we may specify. The waiver of an irregularity on an order form in no way obligates us to waive any other irregularity on any other order form. Waivers will be considered on a case by case basis. We will not accept orders received on photocopies or facsimile order forms, or for which payment is to be made by wire transfer or payment from private third parties. Our interpretation of the terms and conditions of the Plan of Conversion and Reorganization and of the acceptability of the order forms will be final, subject to the authority of the OTS.

You may not add the names of others to your order forms who were not eligible to purchase common stock in the Stock Offering on the applicable date of eligibility. We will reject all stock orders we believe involve the transfer of subscription rights. If you attempt to transfer your subscription rights, you may lose your right to purchase shares and may be subject to criminal prosecution and/or other sanctions.

To ensure that each purchaser receives a prospectus at least 48 hours before the applicable expiration date, in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934, no prospectus will be mailed any later than five days prior to the expiration date or hand delivered any later than two days prior to the expiration date. Execution of the order form will confirm receipt or delivery in accordance with Rule 15c2-8. Order forms will only be distributed with a prospectus.

Payment for Shares. For subscriptions to be valid, payment for all subscribed shares will be required to accompany all properly completed order forms on or prior to the expiration date specified on the order form unless we extend the date. Employee plans subscribing for shares during the subscription offering may pay for those shares upon completion of the Stock Offering. Payment for shares of common stock may be made:

by check or money order made payable to Citizens Community Federal;

for shares subscribed for in the subscription offering, by authorization of withdrawal from deposit accounts maintained with Citizens Community Federal; or

in cash, only if delivered in person, though we prefer that you exchange that cash with one of our tellers for a check.

In accordance with Rule 15c2-4 of the Securities Exchange Act of 1934, subscribers' checks must be made payable to Citizens Community Bancorp, Inc., and checks received by the stock information center will be transmitted by noon of the following business day directly to the segregated deposit account at Citizens Community Federal established to hold funds received as payment for shares. Funds received before completion of the Stock Offering up to the minimum of the offering range will be held by Citizens Community Federal. Funds received in excess of the minimum offering range may be maintained at Citizens Community Federal, or, at its discretion, in our account at an independent insured depository institution. However, in no event shall we maintain more than one escrow account. We may, at our discretion, determine during the Stock Offering period that it is in the best interest of Citizens Community Federal to instead hold subscription funds in an escrow account at another insured financial institution.

Appropriate means by which account withdrawals may be authorized are provided on the order form. Once a withdrawal has been authorized, none of the designated withdrawal amount may be used by a subscriber for any purpose other than to purchase the common stock for which a subscription has been made until the Stock Offering has been completed or terminated. In the case of payments authorized to be made through withdrawal from savings accounts, all sums authorized for withdrawal will continue to earn interest at the contract rate until the Stock Offering has been completed or terminated. Interest penalties for early withdrawal applicable to certificate accounts will not apply to withdrawals authorized for the purchase of shares; however, if a partial withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement, the certificate shall be canceled at the time of withdrawal, without penalty, and the remaining balance will earn interest at the TYME passbook savings account rate subsequent to the withdrawal. In the case of payments made in cash or by check or money order, funds will be placed in a segregated account and interest will be paid by Citizens Community Federal at the TYME passbook savings account rate from the date payment is received until the Stock Offering is completed or terminated. An executed order form, once we receive it, may not be modified, amended, or rescinded without our consent, unless the Stock Offering is not completed within 45 days after the conclusion of the subscription offering, in which event subscribers may be given the opportunity to increase, decrease, or rescind their subscription for a specified period of time. If the Stock Offering is not completed for any reason, all funds submitted pursuant to the offerings will be promptly refunded with interest as described above.

Owners of self-directed IRAs may use the assets of their IRAs to purchase shares of common stock in the offerings, provided that their IRAs are not maintained on deposit at Citizens Community Federal. Persons with IRAs maintained at Citizens Community Federal must have their accounts transferred to an unaffiliated institution or broker to purchase shares of common stock in the offerings. There is no early withdrawal or IRS interest penalties for these transfers. Depositors interested in using funds in a Citizens Community Federal IRA to purchase common stock should contact their broker or the stock information center as soon as possible so that the necessary forms may be forwarded, executed and returned prior to the expiration date.

Federal regulations prohibit Citizens Community Federal from lending funds or extending credit to any person to purchase the common stock in the Stock Offering (excluding the funds provided to the employee stock ownership plan).

Stock Information Center. Our stock information center is located at 219 Fairfax Street, Altoona, Wisconsin 54720. The telephone number is (715) _____-________. The stock information center's hours of operation are 11:00 a.m. to 5:00 p.m. on Monday, 8:30 a.m. to 5:00 p.m. on Tuesday to Thursday and 8:30 a.m. to 3:30 p.m. on Friday (all Eau Claire, Wisconsin time).

Exchange of Stock Certificates of Minority Public Stockholders

The conversion of outstanding shares of common stock of CCB (excluding shares owned by Citizens Community MHC) into shares of Citizens Community Bancorp, Inc. common stock will occur automatically on the date of completion of the Conversion. After this date, former holders of common stock (excluding Citizens Community MHC) will have no further equity interest in CCB, other than as stockholders of Citizens Community Bancorp, Inc., and there will be no further transfers of shares of CCB common stock on the stock transfer records of CCB. Shares of CCB owned by Citizens Community MHC will be cancelled.

As soon as practicable after the completion of the Conversion, the exchange agent will send a transmittal form to each stockholder of CCB. The transmittal forms are expected to be mailed within five business days after the date of the completion of the Conversion and will contain instructions with respect to the surrender of certificates representing CCB common stock to be exchanged into Citizens Community Bancorp, Inc. common stock in accordance with the Exchange Ratio. It is expected that certificates for shares of Citizens Community Bancorp, Inc. common stock will be distributed within five business days after the receipt of properly executed transmittal forms and other required documents. Stockholders should not forward their stock certificates to the exchange agent until they have received transmittal forms.

Until the certificates representing CCB common stock are surrendered for exchange after consummation of the Conversion, in compliance with the terms of the transmittal form, holders of these certificates will not receive new certificates for shares of Citizens Community Bancorp, Inc. All shares of Citizens Community Bancorp, Inc. common stock issued upon exchange of shares of CCB common stock shall be deemed to have been issued in full satisfaction of all rights pertaining to shares of CCB common stock.

No fractional shares of our common stock will be issued to any stockholder upon consummation of the Conversion. For each fractional share that would otherwise be issued, we will pay by check an amount equal to the product obtained by multiplying the fractional share interest to which the holder would otherwise be entitled by the subscription price. Payment for fractional shares will be made as soon as practicable after the receipt by the exchange agent of surrendered CCB stock certificates.

If a certificate for CCB common stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable upon receipt of appropriate evidence as to the loss, theft or destruction, appropriate evidence as to the ownership of the certificate by the claimant, and appropriate and customary indemnification.

Delivery of Stock Certificates of Citizens Community Bancorp, Inc.

Certificates representing common stock of Citizens Community Bancorp, Inc. issued in the Stock Offering, to all persons other than minority stockholders of CCB, will be mailed to the persons entitled thereto at the address noted on the order form as soon as practicable following consummation of the Stock Offering. Any certificates returned as undeliverable will be held until claimed by persons legally entitled thereto or otherwise disposed of in accordance with applicable law. Until certificates for the common stock are available and delivered to subscribers, subscribers may not be able to sell the shares of stock for which they subscribed.

Restrictions on Repurchase of Shares

Under OTS regulations, during the first year following the Stock Offering, we will not be permitted to repurchase shares of our stock: except (1) in an offer approved by the OTS to all stockholders to repurchase the common stock on a pro rata basis, (2) the repurchase of qualifying shares of a director, or (3) repurchases to fund restricted stock plans or tax-qualified employee stock benefit plans. If extraordinary circumstances exist and if we can show a compelling and valid business purpose for the repurchase, the OTS may approve repurchases of up to 5% of the outstanding stock during the first year after the Stock Offering. After the first year following the Stock Offering, we can repurchase any amount of stock so long as the repurchase would not cause us to become undercapitalized. If, in the future, the rules and regulations regarding the repurchase of stock are liberalized, we may utilize the rules and regulations then in effect.

Stock Offering and the Number of Shares to be Offered

The Plan of Conversion and Reorganization requires that the purchase price of the common stock must be based on the appraised pro forma market value of Citizens Community Bancorp, Inc. and Citizens Community Federal, as determined on the basis of an independent valuation. RP Financial, LC., a financial services industry consulting firm with extensive experience in valuing financial institutions for conversions and stock offerings, has been retained to make this valuation. We selected RP Financial, LC. based upon its experience and reputation in valuing stock offerings by issuers such as Citizens Community Bancorp, Inc. RP Financial, LC. performed the appraisal in CCB’s 2004 offering. For its services in making this appraisal, RP Financial, LC.'s fees are estimated to be $40,000 and it will be reimbursed for out-of-pocket expenses not to exceed $5,000. We have agreed to indemnify RP Financial, LC. and any employees of RP Financial, LC. who act for or on behalf of RP Financial, LC. in connection with the appraisal against any and all loss, cost, damage, claim, liability or expense of any kind, including claims under federal and state securities laws, arising out of any misstatement, untrue statement of a material fact or omission to state a material fact in the information supplied by us to RP Financial, LC., unless RP Financial, LC. is determined to be negligent or otherwise at fault.

RP Financial, LC. made its appraisal in reliance upon the information contained in this Prospectus, including the financial statements. RP Financial, LC. also considered the following factors, among others:

the present and projected operating results and financial condition of CCB and Citizens Community Federal, which were prepared by Citizens Community Federal and then adjusted by RP Financial, LC. to reflect the net proceeds of this Stock Offering and the economic and demographic conditions in Citizens Community Federal’s existing marketing area as prepared by RP Financial, LC.;

certain historical, financial and other information relating to Citizens Community Federal prepared by Citizens Community Federal; and

the impact of the Stock Offering on our net worth and earnings potential as calculated by RP Financial, LC.

The appraisal also incorporated an analysis of a peer group of publicly-traded companies that RP Financial, LC. considered to be comparable to us. The peer group analysis conducted by RP Financial, LC. included a total of 10 publicly traded thrift holding companies with total assets ranging from $156 million to $443 million. The analysis of comparable publicly traded institutions included an evaluation of the average and median price-to-earnings and price-to-book value ratios indicated by the market prices of the peer companies. RP Financial, LC. applied the peer group's pricing ratios, as adjusted for certain qualitative valuation factors to account for differences between us and the peer group, to our pro forma earnings, book value and assets to derive our estimated pro forma market value.

The board of directors reviewed the methodologies and the appropriateness of the assumptions used by RP Financial, LC. in addition to the factors listed above, and the board of directors believes that these assumptions were reasonable. On the basis of the foregoing, RP Financial, LC. has advised us that in its opinion, dated June 16, 2006, the estimated pro forma market value of Citizens Community Bancorp, Inc. following the Conversion of Citizens Community MHC from the mutual holding company to the stock form of organization ranged from a minimum of $45.7 million to a maximum of $61.9 million with a midpoint of $53.8 million. Our board of directors determined that the common stock should be sold at $10.00 per share. Based on the estimated valuation and the $10.00 per share price, the number of shares of common stock that Citizens Community Bancorp, Inc. will issue, including shares issued in exchange for shares of CCB, will range from a minimum of 4,573,944 shares to a maximum of 6,188,277 shares, with a midpoint of 5,381,110 shares.

The estimated valuation range may be amended with the approval of the OTS or if necessitated by subsequent developments in our financial condition or market conditions generally. In the event the estimated valuation range is updated to amend the value of Citizens Community Bancorp, Inc. below $45.7 million, which is the minimum of the estimated valuation range, or above $71.2 million, which is the maximum of the estimated valuation range, as adjusted by 15%, a new appraisal will be filed with the OTS.

Based upon current market and financial conditions and recent practices and policies of the OTS, if we receive orders for common stock in excess of $46,000,000 (the maximum of the estimated valuation range of shares to be sold to the public) and up to $52,900,000 (the maximum of the estimated valuation range of shares to be sold to the public, as adjusted by 15%), the OTS may require us to accept all of these orders. We cannot guarantee, however, that we will receive orders for common stock in excess of the maximum of the estimated valuation range of shares to be sold to the public or that, if such orders are received, that all of these orders will be accepted because our final valuation and the number of shares to be issued are subject to the receipt of an updated appraisal from RP Financial, LC. which reflects this increase in the valuation and the approval of an increase by the OTS. In addition, an increase in the number of shares to be sold above 4,600,000 shares will first be used, if necessary, to fill the order of the employee stock ownership plan. There is no obligation or understanding on the part of management to take and/or pay for any shares in order to complete the Stock Offering.

The following table presents a summary of selected pricing ratios for the peer group companies and the pricing ratios for Citizens Community Bancorp, Inc. reflecting the pro forma impact of the Stock Offering. Compared to the median pricing ratios of the peer group, Citizens Community Bancorp, Inc.'s pro forma pricing ratios at the midpoint of the offering range indicated a premium of 116.1% on a price-to-earnings basis and a discount of 18.9% on a price-to-tangible book value basis. The estimated appraised value and the resulting premiums or discounts took into consideration the potential financial impact of the Stock Offering.

	Price-to-earnings multiple	Price-to-book value ratio	Price-to-tangible book value ratio
Citizens Community Bancorp, Inc. (pro forma)⁽¹⁾

Minimum	41.48x	76.92%	87.93%
Midpoint	45.38x	83.03%	93.81%
Maximum	48.77x	88.22%	98.69%
Maximum, as adjusted	52.16x	93.28%	103.37%
Valuation of peer group companies as of June 16, 2006⁽²⁾
Average	21.22x	109.07%	115.68%
Median	21.00x	107.69%	115.60%

________________

(1)	Based on CCB’s financial data as of and for the twelve months ended March 31, 2006.

(2)	Reflects earnings for the most recent 12-month period for which data was publicly available.

RP Financial, LC.'s valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of Citizens Community Bancorp, Inc. RP Financial, LC. did not independently verify the consolidated financial statements and other information we provided to them, nor did RP Financial, LC. value independently our assets or liabilities. The valuation considers Citizens Community Bancorp, Inc. as a going concern and should not be considered as an indication of the liquidation value of Citizens Community Bancorp, Inc. Moreover, because this valuation is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons purchasing common stock in the offerings will thereafter be able to sell their shares at prices at or above the purchase price or in the range of the valuation described above.

No sale of shares of common stock in the Stock Offering may be completed unless RP Financial, LC. confirms that nothing of a material nature has occurred which would cause it to conclude that the aggregate value of the common stock to be issued is materially incompatible with the estimate of our pro forma market value. If this confirmation is not received, we may cancel the Stock Offering, extend the Stock Offering period and establish a new estimated valuation and offering range and/or estimated price range, extend, reopen or hold a new Stock Offering or take any other action the OTS may permit.

Depending upon market or financial conditions following the start of the subscription offering, the total number of shares of common stock to be issued may be increased or decreased without a resolicitation of subscribers, provided that the product of the total number of shares issued times the purchase price is not below the minimum or more than 15 % above the maximum of the estimated valuation range. If market or financial conditions change so as to cause the aggregate value of the common stock to be issued to be below the minimum of the estimated valuation range or more than 15% above the maximum of this range, purchasers will be resolicited and be permitted to continue their orders, in which case they will need to reconfirm their subscriptions prior to the expiration of the resolicitation offering or their subscription funds will be promptly refunded with interest, or be permitted to modify or rescind their subscriptions. Any change in the estimated valuation range must be approved by the OTS.

An increase in the number of shares of common stock to be issued as a result of an increase in the estimated pro forma market value would decrease both a subscriber's ownership interest and Citizens Community Bancorp, Inc.'s pro forma net income and stockholders' equity on a per share basis while increasing pro forma net income and stockholders' equity on an aggregate basis. A decrease in the number of shares of common stock to be issued would increase both a subscriber's ownership interest and Citizens Community Bancorp, Inc.'s pro forma net income and stockholders' equity on a per share basis while decreasing pro forma net income and stockholders' equity on an aggregate basis.

Copies of the appraisal report of RP Financial, LC., including any amendments, and the detailed report of the appraiser setting forth the method and assumptions for the appraisal are available for inspection at the main office of Citizens Community Federal and the other locations specified under “Where You Can Find Additional Information.” In addition, the appraisal report is an exhibit to the registration statement of which this Prospectus is a part. Portions of the appraisal report included in the registration statement are available on the SEC's website at www.sec.gov.

Pricing Characteristics and After-Market Trends

The following table, prepared by RP Financial, LC., presents for all second-step conversions completed between January 1, 2002 and June 16, 2006, the percentage stock appreciation from the initial trading date of the offering to the dates shown in the table. The table also presents the average and the median percentage stock appreciation from January 1, 2002 to June 16, 2006. This information relates to stock appreciation experienced by other companies that reorganized in different market areas and in different stock market and economic environments. In addition, the companies may have no similarities to Citizens Community Bancorp, Inc. with regard to market area, earnings quality and growth potential, among other factors. The information shown in the following table was not included in the appraisal report; however, the appraisal prepared by RP Financial did consider the after market trading experience of transactions that closed three months prior to the June 16, 2006 valuation date used in the appraisal.

This table is not intended to indicate how our stock may perform. Furthermore, this table presents only short-term price performance and may not be indicative of the longer-term stock price performance of these companies. The increase in any particular company's stock price is subject to various factors, including, but not limited to, the amount of proceeds a company raises, the company's historical and anticipated operating results, the nature and quality of the company's assets, the company's market area, and the quality of management and management's ability to deploy proceeds (such as through loans and investments, the acquisition of other financial institutions or other businesses, the payment of dividends and common stock repurchases). In addition, stock prices may be affected by general market and economic conditions, the interest rate environment, the market for financial institutions and merger or takeover transactions, the presence of professional and other investors who purchase stock on speculation, as well as other unforeseeable events not in the control of management. Before you make an investment decision, we urge you to carefully read this Prospectus, including, but not limited to, “Risk Factors.”

						Price Appreciation After
Institution	State	Conversion Date		Total Assets ($Mil.)	Stock Offered by MHC (%)	One Day (%)	One Week (%)	One Month (%)
*Second Step Conversions*
NEBS Bancshares, Inc.	CT	12/29/05	$	219.9	58%	6.6%	7.0%	7.0%
American Bancorp of New Jersey	NJ	10/06/05		443.2	70%	1.6%	-2.5%	1.6%
Hudson City Bancorp, Inc.	NJ	06/07/05		21,131.2	66%	9.6%	10.8%	15.9%
First Federal of NM Bancorp, Inc.	MI	04/04/05		262.8	55%	-5.1%	-8.0%	-16.0%
Rome Bancorp, Inc.	NY	03/31/05		270.1	62%	0.5%	-2.5%	-5.6%
Roebling Financial Corp.	NJ	10/01/04		90.0	54%	-1.0%	-0.5%	-8.0%
DSA Financial Corporation	IN	07/30/04		78.2	52%	-2.0%	-5.0%	-7.0%
Partners Trust Financial Group, Inc.	NY	07/15/04		3,628.5	54%	-0.1%	-0.2%	-1.9%
Synergy Financial Group, Inc.	NJ	01/21/04		591.3	57%	8.1%	8.0%	7.9%
Provident Bancorp, Inc.	NY	01/15/04		1,544.2	56%	15.0%	11.5%	15.1%
Bank Mutual Corporation	WI	10/30/03		2,865.1	52%	17.8%	18.5%	15.4%
Jefferson Bancshares, Inc.	TN	07/01/03		265.5	79%	23.9%	25.0%	40.0%
First Niagara Fin Grp, Inc.	NY	01/21/03		3,290.8	58%	12.7%	14.5%	11.8%
Wayne Savings Bancshares, Inc.	OH	01/09/03		337.2	52%	12.0%	12.0%	11.5%
Sound Federal Bancorp, Inc.	NY	01/07/03		672.6	59%	10.0%	12.0%	16.1%
Bridge Street Financial, Inc.	NY	01/06/03		179.0	56%	1.6%	7.0%	9.4%
Citizens South Banking Corp.	NC	10/01/02		439.3	58%	-0.5%	-6.0%	-2.5%
Brookline Bancorp, Inc.	MA	07/10/02		1,138.4	58%	10.6%	14.0%	15.5%
Willow Grove Bancorp, Inc.	PA	04/04/02		643.8	57%	10.0%	15.5%	16.2%

Average			$	2,004.8	58%	6.9%	6.9%	7.5%
Median			$	443.2	57%	8.1%	8.0%	9.4%

Data presented in the table reflects a small number of transactions. You should be aware that, in certain market conditions, stock prices in initial public offerings by savings associations have decreased. For example, as the above table illustrates, after one month, the shares of six companies traded below their initial offering price. There can be no assurance that our stock price will trade similarly to these companies. There can also be no assurance that our stock price will not trade below $10.00 per share, particularly as the substantial proceeds raised as a percentage of pro forma stockholders' equity may have a negative effect on our stock price performance.

Plan of Distribution/Marketing Arrangements

We have retained Keefe, Bruyette & Woods, Inc., to consult with and to advise and assist us, on a best efforts basis, in the distribution of our common stock in this Stock Offering. The services that Keefe, Bruyette & Woods, Inc. will provide include, but are not limited to:

training the employees of Citizens Community Federal who will perform certain ministerial functions in the subscription offering and direct community offering regarding the mechanics and regulatory requirements of the Stock Offering process;

managing the stock information center by assisting interested stock subscribers and by keeping records of all stock orders; and

preparing marketing materials.

For its services, Keefe, Bruyette & Woods, Inc., will receive a management fee of $30,000 and a success fee of 1.35% of the aggregate purchase price, less any shares of common stock sold to directors, officers, and employees and the Tax-Qualified Employee Plans. The success fee paid to Keefe, Bruyette & Woods, Inc., will be reduced by the amount of the management fee. The total fees that are expected to be paid to Keefe, Bruyette & Woods, Inc. for its services in the Subscription and Community Offerings range from $414,370 at the minimum to $653,049 at the adjusted maximum. We have made payments totaling $30,000 to Keefe, Bruyette & Woods, Inc. for the management fee, that is included in the total fees. In the event that selected dealers are used to assist in the sale of our common stock in the direct community offering, these dealers will be paid a fee of up to 5.5% of the total purchase price of the shares sold by the dealers. We have agreed to indemnify Keefe, Bruyette & Woods, Inc., against certain claims or liabilities, including certain liabilities under the Securities Act of 1933, as amended, and will contribute to payments Keefe, Bruyette & Woods, Inc. may be required to make in connection with any such claims or liabilities. In addition, Keefe, Bruyette & Woods, Inc., will be reimbursed for the fees of its legal counsel in an amount not to exceed $40,000 and other reasonable out-of-pocket expenses not to exceed $40,000.

Sales of shares of our common stock will be made by registered representatives affiliated with Keefe, Bruyette & Woods, Inc., or by the broker-dealers managed by Keefe, Bruyette & Woods, Inc. Keefe, Bruyette & Woods, Inc. has undertaken that our common stock will be sold in a manner that will ensure that the distribution standards of the Nasdaq Global Market will be met. A stock information center will be established at the office of Citizens Community Federal located at 219 Fairfax Street, Altoona, Wisconsin 54720. We will rely on Rule 3a4-1 of the Securities Exchange Act of 1934 and sales of our common stock will be conducted within the requirements of this rule, so as to permit officers, directors and employees to participate in the sale of our common stock in those states where the law permits. No officer, director or employee of Citizens Community Federal, CCB or Citizens Community Bancorp, Inc. will be compensated directly or indirectly by the payment of commissions or other remuneration in connection with his or her participation in the sale of common stock.

Restrictions on Transferability by Directors and Executive Officers

Shares of the common stock purchased by our directors or executive officers cannot be sold for a period of one year following completion of the Stock Offering, except for a disposition of shares after death. To ensure this restriction is upheld, shares of the common stock issued to directors and executive officers will bear a legend restricting their sale. Any shares issued to directors and executive officers as a stock dividend, stock split, or otherwise with respect to restricted stock will be subject to the same restriction.

For a period of three years following the Stock Offering, our directors and executive officers and their associates may not, without the prior approval of the OTS, purchase our common stock except from a broker or dealer registered with the SEC. This prohibition does not apply to negotiated transactions for more than 1% of our common stock or purchases made for tax qualified or non-tax qualified employee stock benefit plans which may be attributable to individual directors or executive officers.

Restrictions on Agreements or Understandings Regarding Transfer of Common Stock to be Purchased in the Stock Offering

Before the completion of the Stock Offering, no depositor may transfer or enter into an agreement or understanding to transfer any subscription rights or the legal or beneficial ownership of the shares of common stock to be purchased in the Stock Offering. Depositors who submit an order form will be required to certify that their purchase of common stock is solely for their own account and there is no agreement or understanding regarding the sale or transfer of their shares. We intend to pursue any and all legal and equitable remedies after we become aware of any agreement or understanding, and will not honor orders we reasonably believe to involve an agreement or understanding regarding the sale or transfer of shares.

PROPOSED PURCHASES BY MANAGEMENT

The following table sets forth, for each of our directors and executive officers and for all of the directors and executive officers as a group, the following information:

(1)

the number of exchange shares to be held upon consummation of the Conversion, based upon their ownership of CCB outstanding shares of common stock as of May 31, 2006;

(2)

the proposed purchases of subscription shares, assuming sufficient shares are available to satisfy their subscriptions; and

(3)

the total amount of our outstanding shares of common stock to be held upon consummation of the Conversion and Stock Offering.

The table below assumes that 5,381,110 shares are outstanding after the Stock Offering, which includes the sale of 4,000,000 shares in the stock offering (the midpoint of the offering range) and the issuance of 1,381,110 shares in exchange for outstanding shares of CCB. See “The Stock Offering - Limitations on Purchases of Common Stock.” The table does not take into account any stock benefit plans to be adopted following the Stock Offering. See “Management - Benefits -- Potential Stock Benefit Plans.” The amounts include shares that may be purchased through individual retirement accounts and by associates of the directors and executive officers. These purchases are intended for investment purposes only and not for resale.

	Number of	Proposed Number of Shares to be	Proposed Total Common Stock Held After the Stock Offering
Name ⁽¹⁾	Exchange Shares to be Held⁽²⁾	Purchased in the Stock Offering⁽³⁾		Number of Shares	Percent of Total

Richard McHugh Chairman and Director	136,623	10,000		146,623	2.7	%
David B. Westrate Director	67,281	10,000		77,281	1.4
James G. Cooley President, Chief Executive Officer and Director	92,724	50,000		142,724	2.7
Thomas C. Kempen Vice Chairman and Director	10,390	1,000		11,390	*
Brian R. Schilling Director	1,866	─		1,866	*
Adonis E. Talmage Director	1,866	100		1,966	*
John D. Zettler Chief Financial Officer	12,222	10,000		22,222	*
Johnny W. Thompson Senior Vice President and Chief Administration Officer	8,252	10,000		18,252	*
Timothy J. Cruciani Executive Vice President	23,417	15,000		38,417	*
Rebecca Johnson Vice President, MIC/Accounting	10,669	5,000		15,669	*
Brian P. Ashley Senior Vice President, Community Plus Division	─	─		─	─
Total	365,310	111,100		476,410	8.9	%

____________________

(1)	All executive officers are officers of both CCB and Citizens Community Federal, except for Mr. Ashley, who is solely an executive officer of Citizens Community Federal.

(2)	Outstanding shares of CCB owned on May 31, 2006, (including all restricted stock awards and allocations under the employee stock ownership plan) are adjusted by the 1.44474 Exchange Ratio at the midpoint of the valuation range. Does not include shares underlying outstanding options.

(3)	Does not include the subscription order by the employee stock ownership plan, a portion of which, over time, will be allocated to these executive officers.

*	Less than 1% of pro forma outstanding shares.

A WARNING ABOUT FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements, which can be identified by the use of words such as "believes," "expects," "anticipates," "estimates" or similar expressions. Forward-looking statements include:

statements of our goals, intentions and expectations;

statements regarding our business plans, prospects, growth and operating strategies;

statements regarding the quality of our loan and investment portfolios; and

estimates of our risks and future costs and benefits.

These forward-looking statements are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:

general economic conditions, either nationally or in our market area, that are worse than expected;

changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments;

increased competitive pressures among financial services companies;

changes in consumer spending, borrowing and savings habits;

legislative or regulatory changes that adversely affect our business;

adverse changes in the securities markets;

our ability to successfully manage our growth;

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies or the Financial Accounting Standards Board; and

our ability to enter into new markets and/or expand product offerings successfully and take advantage of growth opportunities.

Any of the forward-looking statements that we make in this prospectus and in other public statements we make may turn out to be incorrect because of inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Consequently, no forward-looking statement can be guaranteed.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, consisting primarily of loans, investment securities and interest-bearing deposits with other financial institutions, and the interest we pay on our interest-bearing liabilities, consisting primarily of savings accounts, money market accounts, time deposits and borrowings. Our results of operations are also affected by our provision for loan losses, noninterest income and noninterest expense. Noninterest income consists primarily of service charges on deposit accounts, insurance commissions and loan fees. We have initiated a mortgage banking operation in the Minneapolis/St. Paul and Detroit metropolitan areas. Loans originated in this operation will be sold with servicing released. This will generate more fee income and gains/losses on sales of loans. Noninterest expense includes salaries and employee benefits, occupancy, equipment, data processing costs and deposit insurance premiums. Our results of operations may also be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Evolution of Business Strategy

CCB is a federally chartered holding company formed on March 29, 2004, for the purpose of acquiring all of the common stock of Citizens Community Federal concurrent with its reorganization and stock issuance plan. The reorganization was consummated on March 29, 2004. In connection with the reorganization, CCB sold 978,650 shares of its common stock, par value of $0.01 per share, in a subscription offering, and issued 2,063,100 shares to Citizens Community MHC raising approximately $8.9 million net of costs. CCB is a majority owned subsidiary of Citizens Community MHC, a federally chartered mutual holding company.

On July 1, 2005, CCB acquired Community Plus Savings Bank, Rochester Hills, Michigan, through a merger with and into Citizens Community Federal. In accordance with the merger agreement, CCB issued 705,569 additional shares to Citizens Community MHC, based on the $9.25 million independently appraised value of Community Plus Savings Bank and the members of Community Plus became members of Citizens Community MHC. At June 30, 2005, Community Plus Savings Bank had total assets of $46.0 million and deposits and other liabilities of $41.8 million, prior to purchase accounting adjustments.

Historically, we were a federal credit union. We accepted deposits and made loans to members, who were the people who lived, worked or worshiped in the Wisconsin counties of Chippewa and Eau Claire, and parts of Pepin, Buffalo and Trempealeau. In addition, this included businesses and other entities located in these counties, and members and employees of the Hocak Nation. In December 2001, we converted to a federal mutual savings bank in order to better serve our customers and the local community through the broader lending ability of a federal savings bank, and to expand our customer base beyond the limited field of membership permitted for credit unions. As a federal savings bank, we have expanded authority in structuring residential mortgage and consumer loans, and the ability to make commercial loans, although the Bank does not currently have any immediate plans to commence making commercial loans.

We have utilized this expanded lending authority to significantly increase our ability to market one- to four-family residential lending. Most of these loans are originated through our internal marketing efforts and our existing and walk-in customers. We typically do not rely on real estate brokers and builders to help us generate loan originations.

In order to differentiate ourselves from our competitors, we have stressed the use of personalized branch-oriented customer service. Rather than building additional electronic means for our customers to conduct banking, we have structured operations around a branch system that is staffed with knowledgeable and well-equipped employees. A key to ensuring a high level of quality customer service is our ongoing commitment to training all levels of our staff.

CCB anticipates continued strong loan growth and fee income that should help offset the decline in rate spread going forward. We are expanding our presence in the Minneapolis/St. Paul and Detroit markets through a mortgage banking operation. Loans funded in this program will be sold to Countrywide Financial Corporation with servicing released.

Our current business strategy is to operate as a well-capitalized, profitable and community-oriented savings bank dedicated to providing quality customer service. We intend to make primarily one- to four-family residential and consumer loans. Subject to capital requirements and our ability to continue to grow in a reasonable and prudent manner, we may open or acquire additional branches as opportunities arise. One element of our business plan is to open one branch per year in either the Minneapolis/St. Paul or Detroit markets. There can be no assurances that we will successfully implement our strategy.

Comparison of Operating Results for the Six Months Ended March 31, 2006 and March 31, 2005

Overview. For the six months ended March 31, 2006, CCB continued to see strong loan demand with a leveling off of the rapid deposit growth from the previous quarter as management reduced its cash position to fund the loan demand. Loan quality remains good with low delinquency levels and a continued reduction in provision for loan loss. Interest rates on deposits continued to increase at a slightly faster pace than the rates on loans. CCB incurred increased operating expenses, primarily associated with the two Michigan offices acquired July 1, 2005, and with non-recurring costs associated with overtime, training and other non-interest expenses related to the computer conversion completed during the quarter.

Net Income. Net income was $250,000 for the six months ended March 31, 2006, as compared to net income of $584,000 for the same period in 2005. The decrease was primarily a result of income generated from the January 12, 2005 merger of PULSE-EFT and Discover Financial Services. CCB was a stockholder and member of PULSE-EFT. As a result of the merger, CCB received $384,000 in pre-tax income in the second quarter of fiscal 2005 from this one-time event. Both net interest margin and interest spread decreased from 4.42% and 4.40%, respectively, for the prior six-month period to 3.53% and 3.47%, respectively, for the current six-month period. The decrease in both net interest margin and interest spread were a result of the increase in short-term interest rates and the flat yield curve that existed during the periods.

Total Interest Income. Total interest income increased by $2.1 million for the six-month period ended March 31, 2006, to $7.5 million from $5.4 million for the six-month period ended March 31, 2005. The increase was a result of an increase in the average balance of loans receivable attributed to strong loan demand. The yield on loans receivable decreased from 6.59% for the six-month period ended March 31, 2005, to 6.47% for the six-month period ended March 31, 2006, reflecting the payments and payoffs on higher yielding loans being replaced by new loans with lower interest rates.

Net Interest Income. Net interest income increased by $635,000 for the six-month period ended March 31, 2006, from $3.7 million to $4.4 million. The increase in net interest income was due to an increase in the average balance of loans receivable, partially offset by a decrease in average loan yield and an increase in interest expense due to an increase in the average balance of deposits and an increase in the average rate paid on interest-bearing liabilities. The average cost of interest-bearing liabilities increased from 2.35% for the six-month period ended March 31, 2005, to 3.08% for the current six-month period.

Provision for Loan Losses. We establish the provision for loan losses, which is charged to operations, at a level management believes will adjust the allowance for loan losses to reflect probable incurred credit losses in the loan portfolio. In evaluating the level of the allowance for loan losses, management considers the types of loans and the amount of loans in the loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. Based on our evaluation of these factors, we made provisions of $108,000 for the six-month period ended March 31, 2006 compared to provisions of $202,000 for the prior six-month period. Non-performing assets were approximately $1.1 million at March 31, 2006, as compared to $701,000 at September 30, 2005. Non-performing assets were 0.43% of total assets as compared to 0.29% of total assets as of September 30, 2005. The primary cause of the increase was a result of one borrower filing bankruptcy. The borrower owes $293,000 on a loan secured by a one- to four-family home. Minimal loss is anticipated. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available, or as future events change. We used the same methodology and generally similar assumptions in assessing the loan allowance for both periods.

The level of the allowance is based on estimates and the ultimate losses may vary from the estimates. Management assesses the allowance for loan losses on a monthly basis and makes provisions for loan losses as necessary in order to maintain the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in economic conditions or changes in individual account conditions. In addition, various regulatory agencies, as an integral part in their examination process, periodically review the allowance for loan losses and may require us to recognize additional provisions based on their judgment of information available to them at the time of their examination.

Non-Interest Income. For the six-month period ended March 31, 2006, non-interest income decreased to $870,000 from $1.1 million for the six-month period ended March 31, 2005. The decrease came primarily as a result of non-recurring income generated from the previously discussed January 12, 2005 merger of PULSE-EFT and Discover Financial Services.

Non-Interest Expense. Non-interest expense increased from $3.7 million for the six-month period ended March 31, 2005 to $4.7 million for the same period in 2006. The increase was due primarily to the additional operating costs associated with the two Michigan offices acquired July 1, 2005, located in Rochester Hills and Lake Orion. In addition, there were non-recurring costs in the current periods associated with the February 2006 computer conversion due to considerable time and effort involved with the project. The cost of overtime, training, travel expenses, customer mailings and form replacement totaled approximately $50,000 during the period ended March 31, 2006.

Comparison of Operating Results for the Years Ended September 30, 2005 and September 30, 2004

Overview. Net income increased by 25.6% to $1.1 million for the year ended September 30, 2005 from $837,000 for the year ended September 30, 2004. The growth in net income at Citizens Community Federal was a result of an increase in non-interest income, and an increase in net interest income partially offset by an increase in non-interest expense.

Interest Income. Total interest and dividend income increased by $2.3 million or 24.0% to $11.9 million for the year ended September 30, 2005 from $9.6 million for the year ended September 30, 2004. The primary reason for the increase in interest income was the $38.6 million increase in the average outstanding balance of loans receivable from $138.3 million for the year ended September 30, 2004 to $176.8 million for the year ended September 30, 2005. The increase was the result of loan originations exceeding repayments due to strong loan demand and the merger of the Community Plus Savings Bank on July 1, 2005, with loans receivable of $26.7 million. The yield in average loans receivable decreased to 6.65% from 6.90%, reflecting the nearly steady long-term market rates of interest and the repayments and refinancing of higher yielding existing loans receivable. The increase in loan demand was a result of strong internal marketing to existing customers.

Interest Expense. Total interest expense increased $1.1 million, or 38.2% to $4.0 million for the year ended September 30, 2005, from $2.9 million for the year ended September 30, 2004. The increase in interest expense resulted from an increase in expenses on both deposits and interest on notes payable as a result of an increase in average deposits outstanding and an increase in advances from the Federal Home Loan Bank of Chicago. Management used the advances as it sought the most cost-effective source of funds. The use of borrowed funds helped to keep deposit yields lower than would have been necessary to attract the additional funding for loan demand. The average cost of interest- bearing liabilities increased from 2.22% for the year ended September 30, 2004 to 2.40% for the year ended September 30, 2005, reflecting generally higher market rates of interest in fiscal 2005.

Net Interest Income. Net interest income increased 17.9% to $7.9 million for the year ended September 30, 2005, from $6.7 million for the year ended September 30, 2004. The average net interest spread for fiscal 2005 was 4.10%, a decrease of 40 basis points from the average interest spread for 2004 of 4.50%. The average interest rate margin decreased 37 basis points to 4.33% from 4.70%. The net interest spread and net interest margin performance was a result of an increase in average outstanding balance of loans receivable offset by a reduction in loan yield and an increase in interest expense.

Provision for Loan Losses. We establish provisions for loan losses, which are charged to operations, at a level management believes will reflect probable incurred credit losses in the loan portfolio. In evaluating the level of the allowance for loan losses, management considers the types of loans and the amount of loans in the loan portfolio, historical loss experience, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.

In fiscal 2005, we recorded a provision for loan losses of $414,000, compared to $396,000 in 2004. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available, or as future events change. The allowance for loan losses as a percentage of loans receivable increased to 0.37% at September 30, 2005, from 0.36% at September 30, 2004. The level of the allowance is based on estimates and the ultimate losses may vary from the estimates. Non-performing assets were approximately $701,000 at September 30, 2005, as compared to $697,000 at September 30, 2004.

Nonperforming loans at September 30, 2005 were 0.29% of total assets as compared to 0.43% of total assets at September 30, 2004. Net charged-off loans were $205,000 for the year ended September 30, 2005, compared to $309,000 for the year ended September 30, 2004. The allowance for loan losses as a percentage of non-performing loans was 118.3% at September 30, 2005 compared to 79.5% at September 30, 2004. The increase in the allowance was primarily a result of the 43% increase in loans receivable, including 29.3% in consumer loans, which are viewed as having a higher risk of loss than one- to four-family residential loans.

Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require us to recognize additional provisions based on their judgment of information available to them at the time of their examination. The allowance for loan losses as of September 30, 2005 was maintained at a level that represents management's best estimate of probable losses inherent in the loan portfolio, and such losses were both probable and reasonably estimable.

Non-Interest Income. Total non-interest income increased $600,000 from $1.4 million in fiscal 2004 to $2.0 million in fiscal 2005, as a result of continued strong loan fee income and income generated from the January 12, 2005 merger of PULSE-EFT and Discover Financial Services. CCB was a stockholder and member of PULSE-EFT. As a result of this merger, CCB received $448,000 in pre-tax income in fiscal 2005.

Non-Interest Expense. Total non-interest expense for the year ended September 30, 2005 increased 23.5% to $7.8 million from $6.3 million for the year ended September 30, 2004. The increase was primarily due to the additional operating cost associated with the three new branch offices; Oakdale, Minnesota, which opened in October 2004; and the two Michigan offices acquired July 1, 2005, located in Rochester Hills and Lake Orion.

Income Tax Expense. Income tax expense increased to $684,000, or 39.4% of income before income taxes for the year ended September 30, 2005, from $543,000, or 39.5% of income before income taxes for the year ended September 30, 2004. The increase was due to the increase in income before taxes.

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 1 Summary of Significant Accounting Policies (Continued)

Stock-Based Compensation (Continued)

The following table illustrates the effect of net income and earnings per share if the fair-value-based method had been applied to all outstanding and unvested awards in each period:

	March 31,				September 30,
	2006		2005		2005		2004
	(unaudited)
Net income, as reported	$	249,594	$	583,990	$	1,051,070	$	836,545
Deduct:
Total stock-based employee compensation expense
determined under the fair-value-based method for all
awards, net of related tax effects		33,432		0		44,576		0

Pro forma net income	$	216,162	$	583,990	$	1,006,494	$	836,545

Earnings per share - Basic and diluted
As reported:
Basic	$	0.07	$	0.20	$	0.35	$	0.33
Diluted	$	0.07	$	0.20	$	0.35	$	0.33

Pro forma:
Basic	$	0.06	$	0.20	$	0.33	$	0.33
Diluted	$	0.06	$	0.20	$	0.33	$	0.33

The fair value of stock options granted in 2005 was estimated at the date of grant using the Black-Scholes methodology. No options were granted in 2004. The following assumptions were made in estimating the fair value for options granted for the six months ended March 31, 2006 (unaudited) and the year ended September 30, 2005:

Dividend yield	1.49	%
Risk-free interest rate	4.16	%
Weighted average expected life (years)	10
Expected volatility	16.08	%

The weighted average fair value of options at their grant date, using the assumptions shown above, was computed at $3.66 per share for options granted for the six months ended March 31, 2006 (unaudited) and year ended September 30, 2005, respectively.

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 credit card arrangements. Such financial instruments are recorded in the financial statements when they become payable.

F-14

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 1 Summary of Significant Accounting Policies (Continued)

Other Comprehensive Income

The Company’ accumulated other comprehensive income (loss) is comprised of the unrealized gain or loss on securities available for sale, net of tax.

Segment Information

The Company, through a branch network of its banking subsidiary, provides a full range of banking services in northern Wisconsin, Minnesota, and Michigan.

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

Unaudited Periods

Balances as of March 31, 2006 and for the six months ended March 31, 2006 and 2005 have not been audited. In the opinion of management, all adjustments consisting of normal recurring adjustments that are necessary for a fair presentation of the unaudited periods have been reflected.

Note 2 Merger

On July 1, 2005, the acquisition of Community Plus Savings Bank (CPSB) by the Company in a tax-free merger of CPSB with and into the Bank (the Merger) was completed. In accordance with the agreement, the Company issued 705,569 additional shares to CCMHC as determined under the agreement. The primary objectives of the Merger were to provide additional liquidity and geographic growth opportunities for the Company.

The merger was accounted for using the purchase method of accounting. Accordingly, the results of operations of CPSB since the date of acquisition are included in the consolidated financial statements.

The purchase price to complete the merger was $9.76 million. In conjunction with the Merger, net cash of $13,172,051 was received. The purchase price of the Merger has been allocated to the assets acquired and liabilities assumed, using their fair values at the merger date.

Goodwill and other purchase accounting adjustments were recorded upon the consummation of the purchase acquisition where the purchase price exceeded the fair value of net assets acquired. The Bank recorded a core deposit intangible of $1,877,000, which is being amortized as indicated in Note 8. In addition, approximately $516,000 of expenses associated with the acquisition were capitalized. The computation of the purchase price and the allocation of the purchase price to the net assets of CPSB - based on their fair values as of July 1, 2005 - and the resulting goodwill follow.

F-15

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 2 Merger (Continued)

(In thousands, except per share amounts)	July 1, 2005

Purchase price
Company common stock issued		705,569
Average price per Company common share ¹	$	13.11

	$	9,250
Merger costs capitalized		516

Total purchase price	$	9,766

Net assets acquired:
CPSB stockholders’ equity	$	4,144

Adjustments to reflect assets acquired at fair value:
Investment securities		(11	)
Loans receivable		(456	)
Office properties and equipment		(82	)
Core deposit intangible		1,877
Other assets		(420	)

Adjustments to reflect liabilities assumed at fair value:
Deposits		(50	)
Deferred income taxes		(405	)
Pension liability		(220	)
Other liabilities		(77	)

Net assets acquired at fair market value		4,300

Goodwill resulting from Merger	$	5 ,466

¹The value of the Company's common stock issued to CCMHC was based on the average closing bid price of the Company's common stock for the 20th

through the 5th trading days prior to the July 1, 2005, closing date.

F-16

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 2 Merger (Continued)

Unaudited pro forma condensed combined financial information

The following unaudited pro forma condensed combined financial information presents the results of operations of CPSB had the Merger taken place at the beginning of each period.

(In thousands, except per share amounts)	2005		2004

Net interest income	$	9,028	$	8,563
Noninterest income		2,173		1,406
Provision for loan losses		427		409
Other noninterest expense		9,260		8,132
Income before income taxes		1,514		1,428
Net income		920		870

Basic and diluted earnings per share	$	0.28		N/A

Note 3 Cash and Cash Equivalents

In the normal course of business, the Bank maintains cash and due from bank balances with correspondent banks which routinely exceed insured amounts. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $100,000. The Bank monitors the financial condition of correspondent banks and believes credit risk is minimal.

Note 4 Securities

The amortized cost and fair value of securities, with gross unrealized gains and losses, follows:

	March 31, 2006 (unaudited)
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value

Securities Available for Sale

Debt securities:
Corporate securities	$	1,000,000	$	0	$	8,835	$	991,165
Mortgage-related securities		870,849		0		22,933		847,916

Total securities available for sale	$	1,870,849	$	0	$	31,768	$	1,839,081

F-17

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 4 Securities (Continued)

	September 30, 2005
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value

Securities Available for Sale

Debt securities:
Corporate securities	$	1,000,000	$	0	$	18,740	$	981,260
Mortgage-related securities		952,254		246		6,147		946,353
Mutual funds		141,518		19,218		0		160,736

Total securities available for sale	$	2,093,772	$	19,464	$	24,887	$	2,088,349

The following table shows the fair value and gross unrealized losses of securities with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	March 31, 2006
	(unaudited)
	Less than 12 Months				12 Months or More				Total
Description	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
of Securities	Value		Losses		Value		Losses		Value		Losses

Corporate securities	$	991,165	$	8,835	$	0	$	0	$	991,165	$	8,835
Mortgage-related securities		847,916		22,933		0		0		847,916		22,933

Total temporarily impaired
securities	$	1,839,081	$	31,768	$	0	$	0	$	1,839,081	$	31,768

	September 30, 2005
	Less than 12 Months				12 Months or More				Total
Description	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
of Securities	Value		Losses		Value		Losses		Value		Losses

Corporate securities	$	981,260	$	18,740	$	0	$	0	$	981,260	$	18,740
Mortgage-related securities		608,160		6,147		0		0		608,160		6,147

Total temporarily impaired
securities	$	1,589,420	$	24,887	$	0	$	0	$	1,589,420	$	24,887

F-18

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 4 Securities (Continued)

At March 31, 2006 (unaudited), five securities have unrealized losses with aggregate depreciation of 1.7% from the Company’s amortized cost basis. At September 30, 2005, four securities have unrealized losses with aggregate depreciation of 1.6% from the Company’s amortized cost basis. The unrealized losses relate principally to the increase in interest rates and are not due to changes in the financial condition of the issuer. When analyzing an issuer’s financial condition, management considers whether the securities are issued by a government body or agency, whether a rating agency has downgraded the securities, and industry analysts’ reports. Since management has the ability to hold securities until the foreseeable future for securities available for sale, no declines are deemed to be other than temporary.

The following is a summary of amortized cost and estimated fair value of debt securities by contractual maturity. Contractual maturities will differ from expected maturities for mortgage-related securities because borrowers may have the right to call or prepay obligations without penalties:

	Available for Sale
	Amortized		Estimated
	Cost		Fair Value

March 31, 2006 (unaudited)
Due in one year or less	$	1,000,000	$	991,165
Mortgage-related securities		870,849		847,916

Total	$	1,870,849	$	1,839,081

September 31, 2005
Due in one year or less	$	1,000,000	$	981,260
Mortgage-related securities		952,254		946,353
Mutual funds		141,518		160,736

Total	$	2,093,772	$	2,088,349

F-19

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 5 Loans

The composition of loans were as follows:

	March 31,		September 30,
	2006		2005		2004
	(unaudited)

Real estate loans:
First mortgages—1- to 4-family	$	146,075,634	$	136,646,768	$	89,841,081
Multifamily and commercial		270,007		274,450		320,616
Second mortgages		7,960,733		7,629,782		5,398,362

Total real estate loans		154,306,374		144,551,000		95,560,059

Consumer loans:
Automobile		25,223,228		25,979,550		25,808,371
Secured personal		51,161,685		43,459,864		27,607,256
Unsecured personal		4,440,123		4,743,470		3,954,854

Total consumer loans		80,825,036		74,182,884		57,370,481

Gross loans		235,131,410		218,733,884		152,930,540
Less - Allowance for loan losses		807,766		803,218		554,210

Loans receivable, net	$	234,323,644	$	217,930,666	$	152,376,330

The aggregate amount of nonperforming loans was $1,063,000, $669,220, and $697,072 at March 31, 2006 (unaudited) and at September 30, 2005 and 2004, respectively. Nonperforming loans are those which are contractually past due more than 90 days as to interest or principal payments, on a nonaccrual of interest status, or loans the terms of which have been renegotiated to provide a reduction or deferral of interest or principal. If interest on those loans had been accrued, such income would have been $55,182, $36,276, and $37,608 for the six months ended March 31, 2006 and for the years ended September 30, 2005 and 2004, respectively. No loans were considered impaired.

Directors, officers, principal stockholders, and employees of the Company, including their families and firms in which they are principal owners, are considered to be related parties. Substantially all loans to directors and executive officers were made on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with others and, in the opinion of management, did not involve more than the normal risk of collectibility or present other unfavorable features.

Company directors, executive officers, principal stockholders and their affiliates had aggregate borrowings (direct and indirect) from the Bank totaling approximately $58,381, $61,998, and $79,500 at March 31, 2006 (unaudited), September 30, 2005, and 2004, respectively.

F-20

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 5 Loans (Continued)

An analysis of the activity in the allowance for loan losses follows:

	March 31,			September 30,
	2006			2005			2004
	(unaudited)

Balance at beginning	$	803,218		$	554,210		$	466,527
Provisions charged to operating expense		108,451			414,078			395,997
Allowance for loan losses obtained through bank merger		0			39,825			0
Loans charged off		(109,554	)		(236,059	)		(341,437	)
Recoveries on loans		5,651			31,164			33,123

Balance at end	$	807,766		$	803,218		$	554,210

Note 6 Office Properties and Equipment

Office properties and equipment consists of the following:

	March 31,		September 30,
	2006		2005		2004
	(unaudited)

Land	$	612,727	$	612,727	$	467,727
Buildings		2,444,248		2,485,033		1,873,663
Furniture, equipment, and vehicles		3,510,660		2,548,747		1,878,932

Subtotals		6,567,635		5,646,507		4,220,322
Less - Accumulated depreciation		2,955,814		2,723,623		2,021,513

Office properties and equipment - Net	$	3,611,821	$	2,922,884	$	2,198,809

Depreciation charged to operating expense totaled $181,276, $278,032, and $256,162 for the six months ended March 31, 2006 (unaudited) and the years ended September 30, 2005 and 2004, respectively.

F-21

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 7 Intangible Assets

The carrying amounts of the core deposit intangible are as follows:

	March 31,			September 30,
	2006			2005			2004
	(unaudited)

Balance at beginning	$	2,130,949		$	348,486		$	155,687
Capitalized		0			1,877,000			217,129
Amortization		(150,779	)		(94,537	)		(24,330	)

Balance at end	$	1,980,170		$	2,130,949		$	348,486

Note 8 Goodwill

Goodwill acquired through acquisition was approximately $5,466,000 as of March 31, 2006 (unaudited) and September 30, 2005. The Company tested for impairment during the fourth quarter of fiscal year 2005 and determined there was no impairment of goodwill during 2005.

Note 9 Deposits

The composition of deposits are as follows:

	March 31,		September 30,
	2006		2005		2004
	(unaudited)

Non-interest-bearing demand deposits	$	15,026,693	$	14,413,347	$	4,460,849
Interest-bearing demand deposits		5,170,866		4,901,837		6,985,799
Savings accounts		26,676,796		27,192,518		15,420,505
Money market accounts		27,512,531		30,323,395		23,628,315
Certificate accounts		113,911,214		100,638,003		77,480,794

Total deposits	$	188,298,100	$	177,469,100	$	127,976,262

F-22

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 9 Deposits (Continued)

Interest expense on deposits was as follows:

	March 31,		September 30,
	2006		2005		2004
	(unaudited)

Interest-bearing demand deposits	$	14,077	$	29,686	$	31,392
Savings accounts		72,794		146,951		114,972
Money market accounts		263,053		433,141		388,939
Certificate accounts		2,017,870		2,653,281		2,269,407

Totals	$	2,367,794	$	3,263,059	$	2,804,710

The aggregate amount of time deposit accounts with individual balances greater than $100,000 was $23,582,000, $21,408,696 and $16,546,579 at March 31, 2006 (unaudited), and September 30, 2005 and 2004, respectively.

The scheduled maturities of certificate accounts are as follows:

	March 31, 2006
	(unaudited)

2007	$	61,025,835
2008		39,783,657
2009		4,202,576
2010		8,875,578
After 2010		23,568

Total	$	113,911,214

		September 30,
		2005

2006	$	60,355,259
2007		26,172,661
2008		4,748,395
2009		9,144,743
After 2009		216,945

Total	$	100,638,003

F-23

Note 10 Federal Home Loan Bank Advances

At March 31, 2006 (unaudited) and September 30, 2005, and 2004, respectively, the Company had $36,200,000, $36,200,000, and $13,500,000 in Federal Home Loan Bank variable interest rate daily advances, at 5.11% at March 31, 2006 (unaudited) and 4.09% at September 30, 2005. These advances are secured by a blanket lien consisting principally of 1- to 4-family real estate loans totaling in excess of $108,000,000. At March 31, 2006 (unaudited) and September 30, 2005, the unused portion of this open line of credit totaled approximately $72,152,000 and $46,995,000, respectively. Interest expense was $772,784, $728,618, and $84,597 for the six months ended March 31, 2006 (unaudited) and the years ended September 30, 2005 and 2004, respectively.

The Company owns stock in the Federal Home Loan Bank totaling $1,826,480, $2,094,900, and $827,700 at March 31, 2006 (unaudited) and September 30, 2005 and 2004, respectively. The stock is recorded at cost, which approximates fair value. The Company is required to hold the stock as a member of the Federal Home Loan Bank system, and transfer of the stock is substantially restricted.

As a result of the Community Plus merger, the Company has requested a redemption of stock of the Federal Home Loan Bank in Indianapolis totaling $284,900. Under the terms of the redemption agreement, the redemption may not occur until 2010 on this stock investment.

Note 11 Income Taxes

The components of the provision for income taxes are as follows:

	Six Months Ended						Years Ended
	March 31,						September 30,
	2006			2005			2005		2004
	(unaudited)

Current tax expense:
Federal	$	156,788		$	347,974		$	491,637	$	525,604
State		5,464			61,312			88,697		141,724

Total current tax expense		162,252			409,286			580,334		667,328

Deferred tax expense (benefit):
Federal		(12,000	)		(14,000	)		98,400		(99,200	)
State		26,000			3,000			5,600		(24,800	)

Total deferred tax expense (benefit)		14,000			(11,000	)		104,000		(124,000	)

Total provision for income taxes	$	176,252		$	398,286		$	684,334	$	543,328

F-24

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 11 Income Taxes (Continued)

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities, net of a valuation allowance for deferred tax assets not likely to be realized. The major components of net deferred tax asset (liability) are as follows:

	March 31,			September 30,
	2006			2005			2004
	(unaudited)

Deferred tax assets:
Mutual savings bank conversion costs	$	34,400		$	48,600		$	44,000
Director/officer compensation plans		536,800			568,800			274,000
Net ESOP plan		0			0			8,500
Net asset fair value adjustments		172,900			175,400			0

Deferred tax assets		744,100			792,800			326,500

Deferred tax liabilities:
Office properties and equipment		(57,800	)		(63,200	)		(42,705	)
Allowance for loan losses		(47,100	)		(23,300	)		(94,000	)
Federal Home Loan Bank stock		(73,600	)		(73,900	)		(43,200	)
Prepaids		(33,600	)		(40,100	)		0
Core deposit - Intangible		(657,500	)		(714,200	)		0
Other		0			(2,100	)		0

Deferred tax liabilities		(869,600	)		(916,800	)		(179,905	)

Net deferred tax asset (liability)		($125,500	)		($124,000	)	$	146,595

A summary of the source of differences between income taxes at the federal statutory rate and the provisions for income taxes follows:

	Six Months Ended March 31,
	2006				2005
	(unaudited)
			Percent of				Percent of
			Pretax				Pretax
	Amount		Income		Amount		Income

Tax expense at statutory rate	$	144,788		34.0	$	333,974		34.0
Increase in taxes resulting from:
State income tax		31,464		7.4		64,312		6.5

Provision for income taxes	$	176,252		41.4	$	398,286		40.5

F-25

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 11 Income Taxes (Continued)

	Years Ended September 30,
	2005				2004
			Percent of				Percent of
			Pretax				Pretax
	Amount		Income		Amount		Income

Tax expense at statutory rate	$	590,037		34.0	$	469,157		34.0
Increase in taxes resulting from:
State income tax		94,297		5.4		74,171		5.5

Provision for income taxes	$	684,334		39.4	$	543,328		39.5

Note 12 Retirement Plans

401(k) Plan

The Company sponsors a 401(k) profit sharing plan that covers substantially all employees. Employees may make pretax voluntary contributions to the plan which are matched in part by the Company. Employer matching contributions to the plan were $44,635, $73,576, and $58,036 for the six months ended March 31, 2006 (unaudited), and the years ended September 30, 2005 and 2004, respectively.

Supplemental Executive and Director Retirement Plan

On August 1, 2002, the Company adopted a Supplemental Executive and Directors’ Retirement Plan (SERP). The SERP is an unfunded, noncontributory plan under which the Company will pay supplemental pension benefits to certain key employees and directors upon retirement. Benefits are based on a formula which includes participants’ past and future earnings and years of service with the Company. Prior service costs associated with plan adoption are amortized to expense over the remaining working life of each participant.

Actuarial assumptions include assumed discount rates of 5.25% and 6% at September 30, 2005 and 2004, respectively, on benefit obligations and annual salary increases of 5%.

The accumulated benefit obligation was $2,171,454 and $1,734,481 and the accrued benefit cost was $1,219,267 and $685,883 at September 30, 2005 and 2004, respectively. The accrued benefit cost is included in the balance sheet caption “Other Liabilities.”

The accumulated benefit obligation and the accrued benefit cost as of March 31, 2006 have not been actuarially calculated. The accrued benefit cost of $1,415,893 at March 31, 2006 is included in the balance sheet caption “Other Liabilities”.

F-26

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 12 Retirement Plans (Continued)

The components of net periodic benefit cost are as follows:

	2005		2004


Beginning SERP accrued benefit cost	$	685,883	$	414,066

Service cost		64,007		56,569
Interest cost		110,288		95,235
Amortization of prior service cost		135,012		120,013
Unrecognized net loss		4,077		0

Net periodic benefit cost		313,384		271,817
Additional costs associated with merger		220,000		0

Ending SERP accrued benefit cost	$	1,219,267	$	685,883

Employee Stock Ownership Plan

The Board of Directors approved an Employee Stock Ownership Plan (ESOP) that became effective March 29, 2004. The Plan is designed to provide eligible employees the advantage of ownership of Company stock. Employees are eligible to participate in the Plan after reaching age twenty-one, completing one year of service, and working at least one thousand hours of consecutive service during the year. Contributions are allocated to eligible participants on the basis of compensation.

The ESOP borrowed $1,192,360 from the Company to finance the purchase of 119,236 shares in connection with the initial public offering. The loan is payable in annual installments over ten years at an annual interest rate equal to 5%. The loan can be prepaid without penalty. Loan payments are principally funded by cash contributions from the Company, subject to federal tax law limits.

Shares used as collateral to secure the loan are released and available for allocation to eligible employees as the principal and interest on the loan is paid. Employees become fully vested in their ESOP account after five years of service. Dividends on unallocated shares are generally applied toward payment of the loan. ESOP shares committed to be released are considered outstanding in determining earnings per share.

Contribution expense to the ESOP is based on the fair value (average stock price) of the shares scheduled to be released and totaled $76,876 and $162,400 for the six months ended March 31, 2006 (unaudited) and the year ended September 30, 2005, respectively. One-tenth of the shares are scheduled to be released each year. The cost of all unallocated shares held by the ESOP has been reflected in the consolidated balance sheets as a contra equity amount.

F-27

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 12 Retirement Plans (Continued)

The ESOP shares were as follows:

	March 31,		September 30,
	2006		2005		2004
	(unaudited)

Allocated		20,866		5,962		0
Committed to be released		11,924		11,928		5,962
Unallocated		86,446		101,346		113,274

Total shares held by ESOP		119,236		119,236		119,236

Note 13 Leases

The Bank leases its administrative and data processing center located in Eau Claire, Wisconsin. The lease, which is for three years expiring in 2009, is classified as an operating lease. Monthly rent is $8,464; $8,962; and $9,294 in 2006, 2007, and 2008 through the termination date. The monthly rent includes utilities and property taxes. The Bank has one three-year renewal option on the lease. The Mondovi, Wisconsin branch, the Eau Claire training center, and the Rochester Hills, Michigan administrative offices are also rented under operating leases expiring in 2006. The Rice Lake, Wisconsin office is rented under an operating lease expiring in 2007. The Oakdale, Minnesota; Mankato, Minnesota; and Lake Orion, Michigan branches are rented under operating leases expiring in 2009, 2010, and 2012, respectively.

The rental expense for all operating leases was $155,232, $248,056, and $197,477 for the six months ended March 31, 2006 (unaudited) and the years ended September 30, 2005 and 2004, respectively.

Future minimum lease payments at September 30, 2005, by year and in aggregate under the original terms of the non-cancelable operating leases consist of the following:

2006	$	253,403
2007		221,493
2008		205,314
2009		165,762
2010		51,718

Total	$	897,690

F-28

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 14

Stock-Based Compensation Plans

Recognition and Retention Plans

On February 4, 2005, shareholders approved the Citizens Community Bancorp 2004 Recognition and Retention Plan (Recognition Plan) which authorized the Board of Directors to award up to 59,618 shares of common stock. On February 4, 2005, the Board of Directors granted 33,386 shares under the Recognition Plan to members of management and nonemployee directors. The market value of the shares awarded at the grant date amounted to $449,042 and has been recognized in the accompanying balance sheet as unearned stock-based compensation. The market value of the shares awarded is being recognized as compensation expense ratably over the five-year vesting period. During the six months ended March 31, 2006 (unaudited) and fiscal year 2005, no shares were forfeited. Compensation expense related to the Recognition Plan was $48,420 and $59,873 for the six months ended March 31, 2006 (unaudited) and the year ended September 30, 2005. During fiscal year 2004, there was no compensation expense related to the Recognition Plan.

Stock Option Plan

On February 4, 2005, shareholders approved the Citizens Community Bancorp 2004 Stock Option and Incentive Plan (Option Plan) which authorized the Board of Directors to grant up to 149,046 shares of common stock. On February 4, 2005, the Board of Directors granted 105,827 options to buy stock under the Option Plan at an exercise price of $13.45, the fair value of the stock on that date. The options vest ratably over a five-year period.

Unexercised, nonqualified stock options expire in 15 years and unexercised, incentive stock options expire in 10 years. None of the options granted were vested, exercised, or forfeited during the six months ended March 31, 2006 (unaudited) and the year ended September 30, 2005, and all options granted remain outstanding at March 31, 2006.

Activity is summarized in the following table.

	March 31,				September 30,
	2006				2005
	(unaudited)
			Weighted				Weighted
	Option		Average		Option		Average
	Shares		Price		Shares		Price

Outstanding - Beginning of year		105,827	$	13.45		0	$	0.00
Options granted		0		0.00		105,827		13.45

Outstanding - End of Year		105,827	$	13.45		105,827	$	13.45

Exercisable		0				0
Weighted average fair value of options granted			$	3.66			$	3.66
Available for future grant at year-end		43,219				43,219

F-29

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 14

Stock-Based Compensation Plans (Continued)

The following table summarizes information about Plan awards outstanding at March 31, 2006 (unaudited) September 30, 2005:

Options Outstanding and Exercisable
	March 31,		September 30,
	2006		2005
	Weighted Average
Number Outstanding	Remaining Contractual Life				Exercise Price

68,562		8.92 years		9.42 years	$	13.45
37,265		13.92 years		14.42 years	$	13.45

Note 15

Commitments and Contingencies

Financial Instruments with Off-Balance-Sheet Risk

The Company’s financial statements do not reflect various commitments and contingent liabilities which arise in the normal course of business and which involve elements of credit risk, interest rate risk, and liquidity risk. These commitments and contingent liabilities are commitments to extend credit.

A summary of the Company’s commitments and contingent liabilities follows:

	March 31,		September 30,
	2006		2005		2004
	(unaudited)

Commitments to extend credit	$	378,200	$	611,163	$	445,000
Unused lines of credit:
Real estate equity advance plan (REAP)		1,197,859		825,153		553,994
Kwik cash and lines of credit		1,715,350		1,734,116		1,656,257
MasterCard and VISA credit cards		4,891,640		4,955,968		2,874,447

Totals	$	8,183,049	$	8,126,400	$	5,529,698

F-30

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 15

Commitments and Contingencies (Continued)

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. A portion of the commitments is expected to be drawn upon, thus representing future cash requirements. Management evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained upon extension of credit is based on management’s credit evaluation of the customer. Collateral held varies but may include real estate and personal property. Substantial amounts of unsecured personal loans are granted by the Company. However, ongoing credit evaluations of customers are performed.

In September 2005 the Company entered into a data processing services agreement for a period of five years, and a series of purchase agreements for computer equipment and software.

Concentration of Credit Risk

The majority of the Company’s loans and commitments have been granted to customers in the Company’s local market area. The concentrations of credit by type are set forth in Note 5. Management believes the diversity of the area economy will prevent significant losses in the event of an economic downturn.

Contingencies

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

Note 16

Capital Requirements

The Bank is subject to various regulatory capital requirements administered by the federal agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital to risk-weighted assets and of Tier I capital to average assets. It is management’s opinion as of March 31, 2006 and September 30, 2005, that the Bank meets all capital adequacy requirements.

F-31

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 16

Capital Requirements (Continued)

As of March 31, 2006 (unaudited) and September 30, 2005, the most recent notification from the Office of Thrift Supervision categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The Bank’s actual and regulatory capital amounts and ratios are presented in the following table:

										To Be Well-
						For Capital				Capitalized Under
	Actual					Adequacy Purposes				Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio

March 31, 2006

Total capital (to risk-weighted assets)	$	19,879,000		12.1	%	$	13,170,000		>8.0%	$	16,463,000		>10.0%
Tier 1 capital (to risk-weighted assets)		19,251,000		11.7	%		6,585,000		>4.0%		9,878,000		>6.0%
Tier 1 capital (to adjusted total assets)		19,251,000		7.7	%		9,978,000		>4.0%		12,473,000		>5.0%
Tangible capital (to tangible assets)		19,251,000		7.7	%		3,742,000		>1.5%		N/A		N/A

September 30, 2005

Total capital (to risk-weighted assets)	$	19,318,000		12.6	%	$	12,259,000		>8.0%	$	15,323,000		>10.0%
Tier 1 capital (to risk-weighted assets)		18,693,000		12.2	%		6,129,000		>4.0%		9,194,000		>6.0%
Tier 1 capital (to adjusted total assets)		18,693,000		7.9	%		9,495,000		>4.0%		11,869,000		>5.0%
Tangible capital (to tangible assets)		18,693,000		7.9	%		3,561,000		>1.5%		N/A		N/A

September 30, 2004

Total capital (to risk-weighted assets)	$	15,281,000		14.0	%	$	8,749,000		>8.0%	$	10,936,000		>10.0%
Tier 1 capital (to risk-weighted assets)		14,870,000		13.6	%		4,374,480		>4.0%		6,562,000		>6.0%
Tier 1 capital (to adjusted total assets)		14,870,000		9.2	%		6,469,000		>4.0%		8,086,000		>5.0%
Tangible capital (to tangible assets)		14,870,000		9.2	%		2,426,000		>1.5%		N/A		N/A

F-32

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 17

Fair Values of Financial Instruments

Current accounting standards require that the Company disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions for the Company’s financial instruments are summarized below.

Cash and Cash Equivalents

The carrying values approximate the fair values for these assets.

Securities Available for Sale

Fair values are based on quoted market prices, where available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans

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

The methodology in determining fair value of nonaccrual loans is to average them into the blended interest rate at 0% interest. This has the effect of decreasing the carrying amount below the risk-free rate amount and, therefore, discounts the estimated fair value.

Impaired loans are measured at the estimated fair value of the expected future cash flows at the loan’s effective interest rate or the fair value of the collateral for loans which are collateral dependent. Therefore, the carrying values of impaired loans approximate the estimated fair values for these assets.

Federal Home Loan Bank Stock

Fair value for the Federal Home Loan Bank stock is based on its redeemable (carrying) value, since the market for this stock is restricted.

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 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 FHLB advances is estimated using discounted cash flows based on the Bank’s current incremental borrowing rates for similar borrowing arrangements.

Accrued Interest

The carrying amount of accrued interest approximates its fair value.

F-33

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 17

Fair Value of Financial Instruments (Continued)

Off-Balance-Sheet Instruments

The fair value of 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, no amounts for fair value are presented.

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

	March 31,				September 30,
	2006				2005				2004
	(unaudited)
			Estimated				Estimated				Estimated
	Carrying		Fair		Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value		Amount		Value

Financial assets:
Cash and cash equivalents	$	4,296,325	$	4,296,325	$	9,265,477	$	9,265,477	$	4,768,007	$	4,768,007
Securities available for sale		1,839,081		1,839,081		2,088,349		2,088,349		0		0
Loans receivable		234,323,644		227,712,348		217,930,666		214,866,681		152,376,330		155,494,000
FHLB stock		1,826,480		1,826,480		2,094,900		2,094,900		827,700		827,700
Accrued interest receivable		749,953		749,953		612,644		612,644		466,399		466,399

Financial liabilities:
Deposits		188,298,100		188,517,302		177,469,100		177,774,517		127,976,262		128,227,000
FHLB advances		36,200,000		35,658,781		36,200,000		36,200,000		13,500,000		13,500,000
Accrued interest payable		1,790		1,790		50,228		50,228		3,503		3,503

Limitations

Fair value estimates are made at a specific time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include premises and equipment, -, and other liabilities.

In addition, the tax ramifications related to the realization of the unrealized gains or losses can have a significant effect on fair value estimates and have not been considered in the estimates.

F-34

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 18

Condensed Parent Company Only Financial Statements

The following condensed balance sheets as of March 31, 2006 (unaudited), and September 30, 2005 and 2004, and condensed statements of income and cash flows for the six months ended March 31, 2006 and 2005 (unaudited) and for the years ended September 30, 2005 and 2004 for Citizens Community Bancorp should be read in conjunction with the consolidated financial statements and the notes thereto. As explained in Note 1, Citizens Community Bancorp was formed March 29, 2004.

Balance Sheets

	March 31,		September 30,
Assets	2006		2005		2004
	(unaudited)

Cash and cash equivalents	$	2,138,413	$	2,213,867	$	3,239,230
Investment in subsidiary		26,674,971		26,288,488		15,218,787
Note receivable - ESOP		1,000,705		1,051,045		1,147,906

TOTAL ASSETS	$	29,814,089	$	29,553,400	$	19,605,923

Stockholders' Equity

TOTAL STOCKHOLDERS' EQUITY	$	29,814,089	$	29,553,400	$	19,605,923

Statements of Income

	Six Months Ended						Years Ended
	March 31,						September 30,
	2006			2005			2005			2004
	(unaudited)

Income:
Interest and dividends	$	45,176		$	55,633		$	102,773		$	61,081

Total income		45,176			55,633			102,773			61,081

Expenses - Other		81,739			81,675			159,945			28,874

Income (loss) before provision for income taxes and equity in undistributed net income of subsidiary		(36,563	)		(26,042	)		(57,172	)		32,207

Provision (benefit) for income taxes		(6,400	)		0			(23,189	)		11,000

Income (loss) before equity in undistributed net income of subsidiary		(30,163	)		(26,042	)		(33,983	)		21,207

Equity in undistributed net income of subsidiary		279,757			610,032			1,085,053			815,338

Net income	$	249,594		$	583,990		$	1,051,070		$	836,545

F-35

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 18

Condensed Parent Company Only Financial Statements (Continued)

Statements of Cash Flows

	Six Months Ended						Years Ended
	March 31,						September 30,
	2006			2005			2005			2004
	(unaudited)

Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net income	$	249,594		$	583,990		$	1,051,070		$	836,545
Adjustments to reconcile net income to net cash provided by operating activities - Equity in undistributed income of subsidiary		(279,757	)		(610,032	)		(1,085,053	)		(815,338	)

Net cash provided by (used in) operating activities		(30,163	)		(26,042	)		(33,983	)		21,207

Cash flows from investing activities:
Investment in subsidiary		0			0			0			(4,533,328	)
Loan to ESOP		0			0			0			(1,192,360	)
Principal received on ESOP loan		50,338			47,899			96,861			44,454

Net cash provided by (used in) investing activities		50,338			47,899			96,861			(5,681,234	)

Cash flows from financing activities:
Sale of common stock		0			0			0			9,048,189
Formation of CCMHC		0			0			0			(100,000	)
Purchase of treasury stock		(211	)		(894,866	)		(895,135	)		0
Cash dividends paid		(95,418	)		(97,866	)		(193,106	)		(48,932	)

Net cash provided by (used in) financing activities		(95,629	)		(992,732	)		(1,088,241	)		8,899,257

Net increase (decrease) in cash and cash equivalents		(75,454	)		(970,875	)		(1,025,363	)		3,239,230
Cash and cash equivalents at beginning		2,213,867			3,239,230			3,239,230			0

Cash and cash equivalents at end	$	2,138,413		$	2,268,355		$	2,213,867		$	3,239,230

Supplemental cash flow information:
Cash paid (received) during the period for income taxes	$	6,400		$	80			($23,189	)	$	11,000

F-36

Citizens Community Bancorp and Subsidiary

Notes to Consolidated Financial Statements

Note 19

Adoption of Plan of Conversion and Reorganization (Unaudited)

On April 20, 2006, the Board of Directors of CCMHC, the Company and the Bank adopted a Plan of Conversion and Reorganization providing for the conversion of CCMHC to stock form and the formation of a new Maryland-chartered stock holding company, Citizens Community Bancorp, Inc. (“Holding Company”). Under the Plan, the existing shares of the Company’s common stock owned by shareholders, other than CCMHC, will be converted into shares of common stock of the Holding Company (“Holding Company Common Stock”). Simultaneously, the Holding Company will conduct a stock offering that represents the 74% ownership interest of CCMHC in the Company. The Conversion will result in the Bank being wholly owned by a Maryland-chartered stock holding company that is owned by public shareholders. Shares of conversion stock will be offered in a subscription offering in descending order of priority to eligible deposit account holders, the Bank’s tax-qualified employee stock ownership plan, supplemental eligible account holders, and then to other depositors of the Bank. Any shares of the Holding Company’s common stock not sold in the subscription offering will be offered for sale to the general public, giving preference to the Bank’s market area.

Upon completion of the Conversion and Reorganization, the public will own 100% of the outstanding shares of common stock of the Holding Company. The Holding Company will own 100% of the bank. The payment of dividends from the Bank to the Holding Company will be subject to regulatory limits and in some instances, will be prohibited.

The Holding Company intends to contribute approximately 50% of the proceeds of the offering to the Bank. The balance will be retained as the Holding Company’s initial capitalization and may be used for general business purposes, including investment in securities, repurchasing shares of its common stock and paying dividends. The funds received by the Bank will be used for general business purposes, including repaying FHLB advances, originating loans and purchasing securities. They also will be used for growth through expansion of the Bank’s branch office network.

Offering costs will be deferred and deducted from the proceeds of the shares sold in the stock offering. If the offering is not completed, all costs will be charged to expense. At March 31, 2006, no costs have been incurred.

The Plan provides for the establishment, upon completion of the Conversion, of a special “liquidation account” in an amount equal to the Bank’s net worth as of the latest practicable date prior to the Conversion. Each eligible account holder and supplemental eligible account holder will be entitled to a proportionate share of this account in the event of a complete liquidation of the Bank, and only in such event. This share in the liquidation account will be reduced if the eligible account holder’s or the supplemental account holder’s deposit balance in the account falls below the amounts on the date of the holder’s eligibility and will cease if that if the deposit account is closed. The liquidation account will never be increased despite any increase in the eligible deposit balance after the Conversion and Reorganization.

As part of the Conversion, the Holding Company and Bank are authorized to adopt an equity incentive plan authorizing the issuance of stock options, stock appreciations rights and restricted stock to directors, officers and employees.

F-37

	Six Months Ended March 31,
	2006		2005

Balance at Beginning	$	803,218	$	554,210

Provisions Charged to Operating Expense		108,451		202,136

Loans Charged Off		109,554		128,405

Recoveries on Loans		5,651		13,402

Balance at End	$	807,766	$	641,343

	At March 31,			Six Months Ended March 31,														Year Ended September 30,
	2006			2006							2005							2005							2004
	Average Yield/ Cost			Average Outstanding Balance		Interest Earned/ Paid		Yield/ Rate			Average Outstanding Balance		Interest Earned/ Paid		Yield/ Rate			Average Outstanding Balance		Interest Earned/ Paid		Yield/ Rate			Average Outstanding Balance		Interest Earned/ Paid		Yield/ Rate



Interest-Earning Assets:
Cash equivalents		3.75	%	$	7,514	$	134		3.58	%	$	4,098	$	17		0.83	%	$	5,489	$	134		2.44	%	$	4,133	$	30		0.73	%
Loans receivable(1)		6.58			226,343		7,373		6.53			160,942		5,348		6.66			176,802		11,763		6.65			138,252		9,545		6.90
Other interest-bearing deposits		2.89			1,277		23		3.61			---		---		---			215		8		3.72			---		---		---
Securities available for sale		4.11			1,905		33		3.47			---		---		---			522		21		4.02			---		---		---
Federal Home Loan Bank stock		3.67			2,025		30		2.97			984		26		5.30			1,345		54		4.01			749		45		6.01
Total interest-earning assets		6.62		$	239,065		7,593		6.37		$	166,197		5,391		6.51		$	184,373		11,980		6.50		$	143,134		9,620		6.72

Interest-Bearing Liabilities:
Savings accounts		0.66		$	24,134		73		0.61		$	13,550		53		0.78		$	15,877		122		0.77		$	14,020		115		0.82
Demand accounts(2)		0.13			19,517		14		0.14			11,938		15		0.25			13,346		30		0.22			11,003		31		0.28
Money market accounts		1.87			28,865		263		1.83			23,767		218		1.84			24,527		433		1.77			19,739		389		1.97
CDs		3.93			101,189		1,851		3.67			71,988		1,037		2.89			78,052		2,370		3.04			67,553		1,969		2.91
IRAs		3.45			10,561		167		3.17			8,981		133		2.97			9,316		308		3.31			9,156		302		3.30
Federal Home Loan Bank advances		4.94			34,414		773		4.50			18,667		193		2.07			25,140		729		2.90			8,600		83		0.97
Total interest-bearing liabilities		3.09		$	218,680		3,141		2.88		$	148,891		1,649		2.22		$	166,258		3,992		2.40		$	130,071		2,889		2.22

Net interest income						$	4,452						$	3,742						$	7,988						$	6,731
Net interest rate spread		3.53							3.49	%						4.29	%						4.10	%						4.50	%
Net interest margin (3)									3.73	%						4.52	%						4.33	%						4.70	%
Average interest-earning assets to average interest- liabilities							1.09x							1.12x							1.11x							1.10x

Change in Interest Rates in Basis Points ("bp")	Net Portfolio Value								Net Portfolio Value as % of Present Value of Assets
(Rate Shock in Rates) ⁽¹⁾	Amount		Change			Change			NPV Ratio			Change
	(Dollars in Thousands)
+300 bp	$	16,520	$	(6,405	)		(28	)%		6.83	%		(227	) bp
+200 bp		18,715		(4,220	)		(18	)		7.62			(147	)
+100 bp		20,880		(2,055	)		(9	)		8.39			(71	)
0 bp		22,935		---			---			9.10			---
-100 bp		24,605		1,670			7			9.65			55
-200 bp		25,468		2,533			11			9.90			81

Change in Interest Rates in Basis Points ("bp")	Net Portfolio Value								Net Portfolio Value as % of Present Value of Assets
(Rate Shock in Rates) ⁽¹⁾	Amount		Change			Change			NPV Ratio			Change
	(Dollars in Thousands)
+300 bp	$	17,011	$	(5,622	)		(25	)%		7.34	%		(206	) bp
+200 bp		18,970		(3,644	)		(16	)		8.08			(132	)
+100 bp		20,886		(1,748	)		(8	)		8.78			(62	)
0 bp		22,634		---			---			9.40			---
-100 bp		23,823		1,189			5			9.79			140
-200 bp		2,131		1,497			117			9.86			46

	Six Months or Less			Over Six Months to One Year			Over One to Three Years			Over Three to Five Years			Over Five Years			Total
	(Dollars in Thousands)
Real estate mortgage loans	$	28,378		$	20,601		$	54,480		$	27,391		$	23,457		$	154,307
Consumer loans		36,844			24,363			16,157			1,445			2,016			80,825
Securities available for sale		1,073			73			311			179			235			1,871
Other interest-bearing deposits		564			589			---			---			---			1,153
Federal Home Loan Bank stock		1,826			---			---			---			---			1,826
Cash equivalents		4,296			---			---			---			---			4,296
Total interest-earning assets		72,981			45,626			70,948			29,015			25,708			244,278

Savings accounts		2,665			2,665			20,488			820			39			26,677
Demand and money market		6,879			6,879			10,317			2,580			21,056			47,711
Certificates of deposit		29,701			31,287			43,986			8,900			---			113,874
FHLB advances		28,850			---			7,350			---			---			36,200
Total interest-bearing liabilities		68,095			40,831			82,141			12,300			21,095			224,462

Interest-earning assets less interest-bearing liabilities	$	4,886		$	4,795		$	(11,193	)	$	16,715		$	4,613		$	19,816

Cumulative interest rate sensitivity gap	$	4,886		$	9,681		$	(1,152	)	$	15,203		$	19,816		$	19,816

Cumulative interest rate gap as a percentage of assets at March 31, 2006		1.90	%		3.77	%		(0.59	)%		5.92	%		7.72	%		7.72	%

Cumulative interest rate gap as a percentage of interest-earning assets at March 31, 2006		2.00	%		3.96	%		(0.62	)%		6.23	%		8.11	%		8.11	%

		Six Months Ended March 31, 2006 vs. 2005								Year Ended September 30, 2005 vs. 2004
		Increase (Decrease) Due to								Increase (Decrease) Due to
		Volume		Rate			Total Increase (Decrease)			Volume		Rate			Total Increase (Decrease)
	(In Thousands)

Interest-earning assets:
Loans receivable(1)		$	3,240	$	(217	)	$	3,023		$	2,576	$	(358	)	$	2,218
Other			248		(23	)		225			113		29			142

Total interest-earning assets		$	3,488	$	(240	)		3,248		$	2,689	$	(329	)		2,360

Interest-bearing liabilities:
Savings accounts		$	54	$	(30	)		24		$	15	$	(8	)		7
Demand accounts			11		(13	)		(2	)		6		(7	)		(1	)
Money market accounts			79		16			95			87		(43	)		44
IRA accounts			40		(13	)		27			316		85			401
Certificates of deposit			788		554			1,342			5		(1	)		6
FHLB advances			328		493			821			316		330			646

Total interest-bearing liabilities		$	1,300	$	1,007			2,307		$	745	$	358			1,103

Net interest income							$	940							$	1,257

	At March 31,					At September 30,
	2006					2005					2004					2003					2002					2001
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in Thousands)

Real Estate Loans:
One - to four-family first mortgages	$	146,077		62.1	%	$	136,647		62.5	%	$	89,841		58.8	%	$	71,108		57.5	%	$	54,505		52.2	%	$	43,026		45.8	%
Second mortgages		7,960		3.4			7,630		3.5			5,398		3.5			4,661		3.8			5,687		5.4			1,638		1.7
Multi-family and commercial		270		0.1			274		0.1			321		0.2			239		0.3			147		0.1			---		---
Total real estate loans		154,307		65.6			144,551		66.1			95,560		62.5			76,008		61.6			60,339		57.7			44,664		47.5

Consumer Loans:
Automobile ⁽¹⁾		25,223		10.7			25,980		11.9			25,808		16.9			26,905		21.7			29,882		28.6			26,403		28.1
Other secured personal loans ⁽²⁾		51,162		21.8			43,460		19.8			27,607		18.0			17,028		13.8			10,615		10.2			18,738		20.0
Unsecured personal loans ⁽³⁾		4,440		1.9			4,743		2.2			3,955		2.6			3,633		2.9			3,604		3.5			4,119		4.4
Total consumer loans		80,825		34.4			74,183		33.9			57,370		37.5			47,566		38.4			44,101		42.3			49,260		52.5

Total loans		235,132		100.0	%		218,734		100.0	%		152,930		100.0	%		123,574		100.0	%		104,440		100.0	%		93,924		100.0	%

Less:
Allowance for loan losses		808					803					554					467					349					306

Total loans receivable, net	$	234,324				$	217,931				$	152,376				$	123,107				$	104,091				$	93,618

	Real Estate															Consumer
	One- to Four-Family First Mortgage⁽¹⁾					Second Mortgage					Multi-Family and Commercial					Automobile					Secured Personal					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			Amount		Weighted Average Rate
	(Dollars in thousands)


2007⁽²⁾	$	9,095		4.77	%	$	1,355		8.99	%	$	40		5.75	%	$	986		8.61	%	$	1,327		6.71	%	$	2,785		12.20	%	$	15,588		6.87	%
2008		169		6.40			411		8.05			138		7.25			2,941		8.29			1,763		8.22			534		10.18			5,956		8.34
2009		221		5.15			874		7.79			---		---			6,283		7.83			4,288		7.61			488		9.62			12,154		7.77
2010 - 2011		969		6.17			2,886		7.41			59		6.75			12,845		7.58			13,837		7.51			633		9.95			31,229		7.54
2012 - 2013		1,314		6.23			969		7.80			---		---			1,758		6.81			6,533		7.33			---		---			10,574		7.15
2014 - 2028		51,030		5.91			1,196		7.33			33		6.50			410		7.09			23,414		7.05			---		---			76,083		6.29
2029 and after		83,279		6.22			269		5.99			---		---			---		---			---		---			---		---			83,548		6.22

	$	146,077		6.02		$	7,960		7.74		$	270		6.83		$	25,223		7.70		$	51,162		7.29		$	4,440		11.35		$	235,132		6.64

	Six Months Ended March 31,				Year Ended September 30,
	2006		2005		2005		2004		2003
	(In thousands)
Originations by type:
Real estate⁽¹⁾	$	26,989	$	29,228	$	53,731	$	43,604	$	48,369
Non-real estate - consumer		31,042		25,892		55,010		46,044		38,995
Total loans originated		58,031		55,120		108,741		89,648		87,364

Loans obtained through merger		---		---		26,670		---		---

Repayments:
Principal repayments		41,633		37,702		69,608		60,292		68,129
Loans transferred to other real estate		---		---		---		---		101
Net increase (decrease)	$	16,398	$	17,418	$	65,803	$	29,356	$	19,134

	Loans Delinquent For:
	60-89 Days				90 Days and Over				Total Delinquent Loans
	Number		Amount		Number		Amount		Number		Amount
	(Dollars in thousands)

Real estate		4	$	128		6	$	565		10	$	693

Consumer⁽¹⁾		102		426		120		498		222		924

Total		106	$	554		126	$	1,063		232	$	1,617

	At March 31,			At September 30,
	2006			2005			2004			2003			2002			2001
	(Dollars in thousands)
Non-accruing loans:
One- to four-family	$	565		$	207		$	300		$	162		$	51		$	---
Consumer⁽¹⁾		498			462			397			400			483			404
Total		1,063			669			697			562			534			404

Foreclosed assets:
One- to four-family		---			---			---			---			73			---
Consumer		49			32			---			---			---			---
Total		49			32			---			---			73			---

Total non-performing assets	$	1,112		$	701		$	697		$	562		$	607		$	404

Total as a percentage of total assets		0.43	%		0.29	%		0.43	%		0.43	%		0.53	%		0.37	%

	Six Months Ended March 31,			Year Ended September 30,
	2006			2005			2004			2003			2002			2001
	(Dollars in thousands)

Balance at beginning of period	$	803		$	554		$	467		$	349		$	306		$	333

Charge-offs:
One- to four-family		---			(24	)		---			(16	)		(2	)		(13	)
Consumer		(109	)		(212	)		(342	)		(297	)		(340	)		(266	)
Total charge-offs		(109	)		(236	)		(342	)		(313	)		(342	)		(279	)

Recoveries:
Consumer		6			31			33			25			10			22
Total recoveries		6			31			33			25			10			22

Net charge-offs		(103	)		(205	)		(309	)		(288	)		(332	)		(257	)
Other - obtained through merger		---			40			---			---			---			---
Additions charged to operations		108			414			396			406			375			230
Balance at end of period	$	808		$	803		$	554		$	467		$	349		$	306

Ratio of allowance for loan losses to net loans outstanding at end of period		0.34	%		0.37	%		0.36	%		0.38	%		0.34	%		0.33	%

Ratio of net charge-offs during the period to average loans outstanding during the period		0.05	%		0.12	%		0.22	%		0.25	%		0.33	%		0.27	%

Ratio of net charge-offs during the period to average non-performing assets		11.40	%		28.37	%		49.05	%		49.23	%		65.61	%		64.25	%

	Six Months Ended March 31,						Year Ended September 30,
	2006			2005			2005			2004			2003
	(Dollars in Thousands)

Opening balance	$	177,469		$	127,976		$	127,976		$	114,963		$	104,429
Deposits assumed in merger		---			---			41,571			---			---
Net deposits		8,461			4,193			4,659			10,208			7,358
Interest credited		2,368			1,456			3,263			2,805			3,176

Ending balance	$	188,298		$	133,625		$	177,469		$	127,976		$	114,963

Net increase	$	10,829		$	5,649		$	49,493		$	13,013		$	10,534

Percent increase		6.1	%		4.4	%		38.7	%		11.3	%		10.1	%

	0.00- 1.99%			2.00- 3.99%			4.00- 5.99%			6.00- 7.99%			Total		Percent of Total
	(Dollars in thousands)
Certificate accounts maturing during the twelve months ended:
March 31, 2007	$	2,467		$	39,076		$	19,482		$	---		$	61,025		53.5	%
March 31, 2008		179			9,307			30,298			---			39,784		34.9
March 31, 2009		---			1,347			2,855			---			4,202		3.7
March 31, 2010		---			105			8,770			---			8,875		7.8
Thereafter		---			---			24			---			24		0.1

Total	$	2,646		$	49,835		$	61,429		$	---		$	113,910		100.0	%

Percent of total		2.3	%		43.8	%		53.9	%		---	%

	3 Months or Less		Over 3 to 6 Months		Over 6 to 12 Months		Over 12 Months		Total
	(In thousands)

Certificates of deposit less than $100,000	$	7,970	$	13,240	$	26,193	$	42,924	$	90,327

Certificates of deposit of $100,000 or more		3,945		4,583		5,094		9,961		23,583

Total certificates of deposit	$	11,915	$	17,823	$	31,287	$	52,885	$	113,910

Location	Owned or Leased	Lease Expiration Date	Net Book Value at March 31, 2006 (Dollars in Thousands)
ADMINISTRATIVE OFFICE 2174 EastRidge Center Eau Claire, WI 54701	Leased	April 30, 2009	N/A
414 Main Street Rochester Hills, MI 48306	Leased	July 31, 2006⁽¹⁾	N/A
BRANCH OFFICES:
Westside Branch 2125 Cameron Street Eau Claire, WI 54703	Owned	N/A	$305,800
Eastside Branch 1028 N. Hillcrest Parkway Altoona, WI 54720	Owned	N/A	$363,750
Fairfax Branch 219 Fairfax Street Altoona, WI 54720	Owned	N/A	$822,000
Mondovi Branch 695 E. Main Street Mondovi, WI 54755	Leased	June 30, 2007⁽²⁾	N/A
Rice Lake Branch 2462 S. Main Street Rice Lake, WI 54868	Leased	April 30, 2007	N/A
Chippewa Falls Branch 427 W. Prairie View Road Chippewa Falls, WI 54729	Owned	N/A	$262,000
Baraboo Branch S2423 Highway 12 Baraboo, WI 53913	Owned⁽³⁾	N/A	$ 1,000
Black River Falls Branch W9036 Highway 54 E. Black River Falls, WI 54615	Owned⁽³⁾	N/A	$ 31,000
Mankato Branch 1410 Madison Avenue Mankato, MN 56001	Leased	October 30, 2010	N/A
Oakdale Branch 7035 10^th Street North Oakdale, MN 55128	Leased	September 30, 2009	N/A
Lake Orion Branch⁽⁴⁾ 688 S. Lapeer Road Lake Orion, MI 48362	Leased	February 28, 2012	N/A
Rochester Hills Branch 310 West Tienken Road Rochester Hills, MI 48306	Owned	N/A	$608,000

Name	Age⁽¹⁾	Position(s) Held with Citizens Community Bancorp, Inc., CCB and Citizens Community Federal	Director Since⁽²⁾	Term to Expire

Brian R. Schilling	52	Director	1987	2009
David B. Westrate	63	Director	1991	2009
Adonis E. Talmage	80	Director	1984	2007
James G. Cooley	59	President, Chief Executive Officer and Director	1993	2007
Richard McHugh	64	Chairman and Director	1985	2008
Thomas C. Kempen	65	Vice-Chairman	1982	2008

(1)	At September 30, 2005.
(2)	Includes service as a director of Citizens Community Federal and its predecessors.

Name	Age(1)	Position(s) Held with Citizens Community Bancorp, Inc., CCB and Citizens Community Federal (2)

James G. Cooley	59	President, Chief Executive Officer and Director
John D. Zettler	51	Senior Vice President and Chief Financial Officer
Johnny W. Thompson	53	Senior Vice President and Chief Administration Officer
Timothy J. Cruciani	45	Executive Vice President
Rebecca Johnson	45	Vice President, MIC/Accounting
Brian P. Ashley	59	Senior Vice President, Community Plus Division of the Bank

		Annual Compensation							Long Term Compensation Awards
Name and Principal Position	Fiscal Year	Salary		Bonus		Other Annual Compensation ($)⁽¹⁾			Restricted Stock Award ($)⁽²⁾		Options (#)⁽²⁾		All Other Compensation ⁽³⁾
James G. Cooley	2005	$	213,036	$	20,000	$	---		$	200,472		37,262	$	102,680
President, Chief Executive	2004		206,894		---		---			---		---		88,369
Officer and Director	2003		188,003		---		---			---		---		57,436

John Zettler	2005	$	127,777	$	---	$	---		$	32,078		5,962	$	16,786
Senior Vice President and	2004		124,093		---		---			---		---		13,656
Chief Financial Officer	2003		112,336		---		---			---		---		10,360

Johnny W. Thompson	2005	$	113,993	$	---	$	4,800⁽⁴	⁾	$	32,078		5,962	$	12,324
Senior Vice President and	2004		111,352		---		4,800⁽⁴	⁾		---		---		12,639
Chief Administration Officer	2003		106,703		---		13,800⁽⁴	⁾		---		---		14,965

Timothy J. Cruciani	2005	$	101,962	$	---	$	---		$	72,173		13,414	$	11,282
Executive Vice President	2004		98,177		---		---			---		---		8,336
	2003		84,083		---		---			---		---		5,415

	Individual Grants
Name	Number of Securities Underlying Options Granted (#)	% of Total Options Granted to Employees in Fiscal Year	Exercise Price ($/Share)	Expiration Date

James G. Cooley President	37,262	54.3%	$13.45	2/4/2015

John D. Zettler Senior Vice President and Chief Financial Officer	5,962	8.7%	$13.45	2/4/2015

Johnny W. Thompson Senior Vice President and Chief Administration Officer	5,962	8.7%	$13.45	2/4/2015

Timothy J. Cruciani Executive Vice President	13,414	19.6%	$13.45	2/4/2015

			Number of Securities Underlying Unexercised Options at FY-End (#)		Value of Unexercised In-the-Money Options FY-End ($)
Name	Shares Acquired on Exercise (#)	Value Realized ($)	Exercisable	Unexercisable	Exercisable	Unexercisable


James G. Cooley President	---	---	---	37,262	---	---

John D. Zettler Senior Vice President and Chief Financial Officer		---	---	5,962	---	---

Johnny W. Thompson Senior Vice President and Chief Administration Officer	---	---	---	5,962	---	---

Timothy J. Cruciani Senior Vice President and Chief Administration Officer	---	---	---	13,414	---	---

Beneficial Owners	Number of Shares Beneficially Owned⁽¹⁾		Percent of Common Stock Outstanding
Beneficial Owners of More Than 5% Other than Directors and Named Executive Officers
Citizens Community MHC 2174 EastRidge Center Eau Claire, Wisconsin 54701		2,768,669		74.3	%
Citizens Community Bancorp Employee Stock Ownership Plan Trust⁽²⁾ 2174 EastRidge Center Eau Claire, Wisconsin 54701		119,236		3.2	%

Directors and Named Executive Officers
Directors:
Richard McHugh⁽³⁾		96,057		2.6	%
David B. Westrate⁽⁴⁾		48,061		1.3	%
James G. Cooley⁽⁵⁾		71,634		1.9	%
Thomas C. Kempen⁽⁶⁾		8,683		*
Brian R. Schilling⁽⁶⁾		2,783		*
Adonis E. Talmage⁽⁶⁾		2,783		*
Named Executive Officers:
Timothy J. Cruciani⁽⁷⁾		18,892		*
Johnny W. Thompson⁽⁸⁾		6,904		*
John D. Zettler⁽⁹⁾		9,652		*
Director of Citizens Community Federal
Brian P. Ashley
Directors and executive officers of CCB, as a group (11 persons)⁽¹⁰⁾		274,026		7.3	%






Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Income	F-4
Consolidated Statements of Changes in Stockholders’ Equity	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-8

																	Accumulated
					Additional						Unearned						Other
			Common		Paid-In			Retained			ESOP			Unearned			Comprehensive			Treasury
	Shares		Stock		Capital			Earnings			Shares			Compensation			Loss			Stock			Totals

Balance, September 30, 2003		0	$	0	$	0		$	10,990,935		$	0		$	0		$	0		$	0		$	10,990,935

Comprehensive income:
Net income									836,545															836,545
Sale of common stock - Unearned ESOP shares		978,650		9,787		9,038,403																		9,048,190
Common stock acquired by ESOP - 119,236 shares												(1,192,360	)											(1,192,360	)
Committed ESOP shares												59,620												59,620
Appreciation in fair value of ESOP shares
charged to expense						11,924																		11,924
Capitalization of CCMHC		2,063,100		20,631		(20,631	)		(100,000	)														(100,000	)
Cash dividends ($.05 per share)									(48,932	)														(48,932	)

Balance, September 30, 2004		3,041,750		30,418		9,029,696			11,678,548			(1,132,740	)		0			0			0			19,605,922

Comprehensive income:
Net income									1,051,070															1,051,070
Net unrealized loss on available-for-sale securities																		(3,654	)					(3,654	)

Total comprehensive income																								1,047,416

Common stock issued due to merger		705,569		7,055		9,758,975																		9,766,030
Common stock purchased - 59,637 shares																					(895,135	)		(895,135	)
Committed ESOP shares						43,120						119,280												162,400
Common stock awarded for Recognition and
Retention Plan - 33,386 shares						(52,082	)								(449,042	)					501,124			0
Amortization of restricted stock															59,873									59,873
Cash dividends ($.05 per share)									(193,106	)														(193,106	)

Balance, September 30, 2005		3,747,319	$	37,473	$	18,779,709		$	12,536,512			($1,013,460	)		($389,169	)		($3,654	)		($394,011	)	$	29,553,400

Loans	$	705,751
Other assets		241,756

Assets acquired	$	947,507

Deposits assumed	$	7,894,530
Other liabilities		23,175

Liabilities assumed	$	7,917,705

Counsel fees and expenses	$ 200,000
Accounting fees and expenses	40,000
Appraisal preparation fees and expenses	45,000
Business plan preparation fees and expenses	20,000
Underwriting fees⁽¹⁾ (including financial advisory fee and expenses)	595,912
Underwriter's counsel fees and expenses	45,000
Printing, postage and mailing	200,000
Registration and Filing Fees	27,232
NASDAQ Listing Fee	100,000
Stock transfer agent and certificates	25,000
Other expenses⁽¹⁾	7,768
TOTAL	$1,305,912

(a)	The undersigned Registrant hereby undertakes:
	(1)	To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to:
		(i)	Include any Prospectus required by Section 10(a)(3) of the Securities Act of 1933;
		(ii)	Reflect in the Prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and

		(iii)	Include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.
	(2)	That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(3)	To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(b)	Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and it will be governed by the final adjudication of such issue.

	CITIZENS COMMUNITY BANCORP, INC.
	By:	/s/ James G. Cooley James G. Cooley, President and Chief Executive Officer (Duly Authorized Representative)

/s/ James G. Cooley James G. Cooley, President, Chief Executive Officer and Director (Duly authorized representative and Principal Executive Officer)	Date:	June 30, 2006
/s/ Richard McHugh Richard McHugh, Chairman of the Board	Date:	June 30, 2006
/s/ Thomas C. Kempen Thomas C. Kempen, Vice Chairman of the Board	Date:	June 30, 2006
/s/ Adonis E. Talmage Adonis E. Talmage, Director	Date:	June 30, 2006
/s/ Brian R. Schilling Brian R. Schilling, Director	Date:	June 30, 2006
/s/ David B. Westrate David B. Westrate, Director	Date:	June 30, 2006
/s/ John D. Zettler John D. Zettler, Chief Financial Officer and Senior Vice President (Principal Financial and Accounting Officer)	Date:	June 30, 2006

Exhibit
1.1	Engagement Letter with Keefe, Bruyette & Woods, Inc.
1.2	Form of Agency Agreement with Keefe, Bruyette & Woods, Inc.*
2.0	Plan of Conversion and Reorganization
3.1	Charter for Citizens Community Bancorp, Inc.
3.2	Bylaws of Citizens Community Bancorp, Inc.
4.0	Form of Stock Certificate of Citizens Community Bancorp, Inc.
5.0	Opinion of Silver, Freedman & Taff L.L.P. re: Legality
8.1	Opinion of Silver, Freedman & Taff L.L.P. re: Federal Tax Matters
8.2	Opinion of Wipfli, LLP re: State Tax Matters*
8.3	Letter of RP Financial LP. re: Subscription Rights

10.1	Employment Agreement with:
	a.	James G. Cooley
	b.	Johnny W. Thompson
	c.	John D. Zettler
	d.	Timothy J. Cruciani
	e.	Rebecca Johnson

10.2	Citizens Community Federal Supplemental Executive Retirement Plan
10.3	Letter Agreement re: Appraisal Services
10.4	Letter Agreement re: Business Plan
10.5	Citizens Community Bancorp 2004 Stock Option and Incentive Plan
10.6	Citizens Community Bancorp 2004 Recognition and Retention Plan
21.0	Subsidiaries of the Registrant
23.1	Consent of Silver, Freedman & Taff L.L.P. re: Legality (included in Exhibit 5.0)
23.2	Consent of Wipfli, LLP
23.3	Consent of RP Financial, LP.
24.0	Power of Attorney, included in signature pages
99.1	Appraisal Report of RP Financial, LP. (waiver requested)*
99.2	Subscription Order Form and Instructions
99.3	Additional Solicitation Material