Civista Bancshares, Inc. Announces Tactical Balance Sheet Transactions

Rhea-AI Summary

Civista Bancshares, Inc. (NASDAQ:CIVB) announced three strategic transactions on May 17-19, 2021. The company sold 7,361 shares of Visa Inc. Class B stock for a pre-tax gain of $1.8 million. Additionally, it prepaid $50 million in Federal Home Loan Bank advances, incurring a $3.7 million loss but saving $1 million in annual interest expenses. The net result of these actions is a pre-tax loss of $1.9 million, but it is expected to enhance earnings per share by $0.12 annually and improve the net interest margin by a total of 29 basis points.

Positive

• Sale of Visa Class B shares resulted in a pre-tax gain of $1.8 million.
• Prepayment of FHLB advances saves approximately $1 million annually in interest expense.
• Expected annual improvement of $0.12 in earnings per share.
• Projected enhancement of net interest margin by 29 basis points.

Negative

• Prepayment of FHLB advances resulted in a one-time loss of $3.7 million.
• Immediate net effect of the transactions shows a total pre-tax loss of $1.9 million.

SANDUSKY, Ohio, May 21, 2021 /PRNewswire/ -- Civista Bancshares, Inc. (NASDAQ:CIVB) ("Civista") announced three tactical transactions.

On May 17, 2021, Civista entered into an agreement to sell 7,361 shares of Visa Inc. Class B common stock at a pre-tax gain of approximately $1.8 million. The carrying value of the Visa Class B shares on the Company's balance sheet was $100 as the Bank had no other historical cost basis in the shares.

On May 19, 2021, Civista also completed a $50.0 million prepayment of long-term Federal Home Loan Bank advances with a rate of 2.05% and a remaining maturity of approximately 8 years. This transaction was accounted for as an early debt extinguishment resulting in a loss, reported within noninterest expense, of $3.7 million in the second quarter 2021. The debt prepayment, funded with excess cash, will save approximately $1.0 million in annual interest expense.

"As we look for different ways to deploy excess liquidity, the prepayment of the Federal Home Loan Bank advances is one measure we are taking. While the immediate net effect of the advance prepayment and the sale of the Visa B shares is additional expense of $1.9 million, we expect the prepayment to improve our net interest margin by 12 basis points on an annualized basis," commented Dennis Shaffer, CEO and President of Civista.

In addition, Civista redeployed $100 million of excess cash into a mix of investments, yielding 1.50% with an average duration of 5.2 years.

The net effect of these three transactions is a pre-tax net loss of $1.9 million and has an estimated earn-back of 0.8 years. The transactions will create $0.12 of accretion to earnings per share on an annualized basis and improve our net interest margin by 17 basis points on an annualized basis.

Civista Bancshares, Inc. is a $3.1 billion financial holding company headquartered in Sandusky, Ohio. The Company's banking subsidiary, Civista Bank, operates 37 locations in Northern, Central and Southwestern Ohio, Southeastern Indiana and Northern Kentucky. Civista Bancshares, Inc. may be accessed at www.civb.com. Civista's common shares are traded on the NASDAQ Capital Market under the symbol "CIVB". 

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SOURCE Civista Bancshares, Inc.

FAQ

What were the recent transactions announced by Civista Bancshares on May 21, 2021?

Civista Bancshares announced the sale of Visa shares and the prepayment of Federal Home Loan Bank advances.

How much did Civista gain from the sale of Visa Inc. Class B shares?

Civista gained approximately $1.8 million pre-tax from the sale of Visa shares.

What is the impact of Civista's prepayment of Federal Home Loan Bank advances?

The prepayment incurs a $3.7 million loss but is projected to save around $1 million in annual interest.

How will the transactions affect Civista Bancshares' earnings per share?

The transactions are expected to improve earnings per share by $0.12 annually.

What is the overall financial impact of Civista's recent transactions?

The net effect is a pre-tax loss of $1.9 million, but it improves net interest margin by 29 basis points.