Civista Bancshares, Inc. Announces Third Quarter 2023 Financial Results

Rhea-AI Summary

Civista Bancshares reports unaudited financial results for Q3 2023, with net income of $10.4 million and $33.3 million for the quarter and year-to-date, respectively. Cost of deposits and total funding costs were 129 and 172 basis points, respectively. The $0.16 dividend represents an annualized yield of 4.13% and a dividend payout ratio of 24.24%.

Positive

• Net income of $10.4 million for Q3 2023, a decrease of 6.3% compared to Q3 2022
• Net income of $33.3 million for the year-to-date period, an increase of 22% compared to the same period last year
• Cost of deposits and total funding costs of 129 and 172 basis points, respectively
• Annualized yield of 4.13% and a dividend payout ratio of 24.24%

Negative

• None.

SANDUSKY, Ohio, Oct. 27, 2023 /PRNewswire/ -- Civista Bancshares, Inc. (NASDAQ: CIVB) ("Civista") announced its unaudited financial results for the three and nine month periods ending September 30, 2023. 

Third quarter and year-to-date 2023 highlights:

• Net income of $10.4 million, or $0.66 per diluted share, for the third quarter of 2023, compared to $11.1 million, or $0.72 per diluted share, for the third quarter of 2022.
• Net income of $33.3 million, or $2.12 per diluted share, compared to $27.3 million, or $1.82 per diluted share, for the nine months ended September 30, 2023 and 2022, respectively.
• Cost of deposits of 129 basis points and total funding costs of 172 basis points for the quarter.
• Based on the September 29, 2023 market close share price of $15.50, the $0.16 third quarter dividend is equivalent to an annualized yield of 4.13% and a dividend payout ratio of 24.24%.

"Overall, I am extremely pleased with our third quarter results.  Despite continued funding pressure, we were able to increase net interest income quarter-over-quarter, as loans grew by $118.6 million, or 18 percent on an annualized basis.  We continue to post record earnings, with our year-to-date net income up 22 percent over the same period last year," said Dennis G. Shaffer, CEO and President of Civista.

• During the quarter Civista made the decision to step away from its income tax refund business for 2024.  In the first quarter of 2021, the U.S Treasury mistakenly sent $5.6 billion in stimulus payments to the Company, causing an increase in the volume of consumer complaints.  The volume of complaints has diminished, however, the amount of information required by our regulators to "close out" each complaint has increased extensively.  While our business partner has been responsible for gathering most of the information related to these requests, it has become apparent that our regulators' view of this program is changing.  Management has made the decision to step away rather than risk that our participation in this program might inhibit future M&A activity.  Civista earned $2.4 million in each of the previous 3 years from this program with very few direct costs associated with it. 

Mr. Shaffer added, "We have had a long and very beneficial relationship with the Santa Barbara Tax Processing Group and our income tax refund processing program.  This was not an easy decision, but one that we felt made sense for Civista."

Results of Operations:

For the three-month periods ended September 30, 2023 and 2022

Net interest income increased $1.1 million, or 3.5%, for the third quarter of 2023 compared to the same period of 2022.  Interest income increased $13.3 million while interest expense increased $12.2 million.  The increase in interest income was driven by both increases in rates and increases in volume.  The increase interest expense was driven by rate and volume as well, but also by a shift in the mix of funding sources. 

Net interest margin decreased 44 basis points to 3.69% for the third quarter of 2023, compared to 4.03% for the same period a year ago.

The increase in interest income was primarily due to a 104 basis point increase in asset yield, which led to $8.1 million of the increase in interest income.  Additionally, a $377.9 million increase in average earning assets led to $5.2 million of the increase in interest income.  The increase in volume can be attributed to both organic growth and to the acquisitions during 2022 of Comunibanc Corp ("Comunibanc") and Civista Leasing and Financing ("CLF"), formerly known as Vision Financial group ("VFG").

Interest expense increased $12.2 million, or 582.0%, for the third quarter of 2023, compared to the same period last year.  The average rate paid on interest-bearing liabilities increased 201 basis points, while average interest-bearing liabilities increased $422.0 million.  The increase in interest-bearing liabilities was primarily in brokered time deposits and short-term FHLB borrowings to fund growth.  This shift in the funding mix, as well as rising rates, is driving the increase in the funding rate.  Interest-bearing deposit costs have increased 172 basis points compared to a year ago.   

Average Balance Analysis
(Unaudited - Dollars in thousands)
	Three Months Ended September 30,
	2023				2022
	Average		Yield/		Average		Yield/
Assets:	balance	Interest	rate *		balance	Interest	rate *
Interest-earning assets:
Loans and leases**	$   2,679,679	$ 39,732	5.88 %		$   2,289,588	$ 27,176	4.71 %
Taxable securities ***	359,154	2,999	2.95 %		354,597	2,936	3.06 %
Non-taxable securities ***	286,048	2,336	3.77 %		268,327	1,998	3.47 %
Interest-bearing deposits in other banks	55,288	719	5.16 %		89,744	423	1.87 %
Total interest-earning assets ***	$   3,380,169	$ 45,786	5.34 %		$   3,002,256	32,533	4.30 %
Noninterest-earning assets:
Cash and due from financial institutions	22,542				58,581
Premises and equipment, net	50,999				28,633
Accrued interest receivable	11,673				8,907
Intangible assets	128,215				84,265
Bank owned life insurance	53,879				53,131
Other assets	64,008				48,013
Less allowance for loan losses	(34,283)				(27,546)
Total Assets	$   3,677,202				$   3,256,240
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand and savings	$   1,333,903	$   2,189	0.65 %		$   1,457,112	$      379	0.10 %
Time	632,111	7,395	4.64 %		280,903	557	0.79 %
Short-term FHLB borrowings	233,547	3,246	5.51 %		6,713	48	2.84 %
Long-term FHLB borrowings	2,644	15	2.25 %		25,336	133	2.08 %
Other borrowings	8,026	198	9.91 %		-	-	0.00 %
Subordinated debentures	103,894	1,239	4.73 %		103,751	975	3.73 %
Repurchase agreements	993	-	0.00 %		19,277	2	0.04 %
Total interest-bearing liabilities	$   2,315,118	$ 14,282	2.45 %		$   1,893,092	$   2,094	0.44 %
Noninterest-bearing deposits	980,835				980,999
Other liabilities	33,040				77,015
Shareholders' equity	348,209				305,134
Total Liabilities and Shareholders' Equity	$   3,677,202				$   3,256,240
Net interest income and interest rate spread		$ 31,504	2.89 %			$ 30,439	3.86 %
Net interest margin ***			3.69 %				4.03 %

* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $621 thousand and $532 thousand for the periods ended September 30, 2023 and 2022, respectively.
** - Average balance includes nonaccrual loans
*** - Average yield on investments were calculated by adjusting the average balances of taxable and nontaxable securities by unrealized losses of $69.2 million and $46.9 million, respectively.  These adjustments were also made when calculating the yield on earning assets and the margin.

For the nine-month periods ended September 30, 2023 and 2022

Net interest income increased $17.8 million, or 22.9%, compared to the same period in 2022.

Interest income increased $47.4 million, or 56.9%, for the nine months of 2023.  Average earning assets increased $389.1 million, resulting in an increase in interest income of $19.3 million.  Average yields increased 141 basis points, resulting in an increase in interest income of $28.1 million.  The increase in volume can be attributed to both organic growth and to the acquisitions during 2022 of Comunibanc and CLF. 

Interest expense increased $29.6 million, or 526.2%, for the nine months of 2023 compared to the same period of 2022.  Average rates increased 166 basis points compared to 2022, resulting in $16.6 million of the increase in interest expense.  Average interest-bearing liabilities increased $420.1 million, resulting in $13.0 million of the increase in interest expense.    

Net interest margin increased 26 basis points to 3.88% for the nine months of 2023, compared to 3.62% for the same period a year ago. 

Average Balance Analysis
(Unaudited - Dollars in thousands)
	Nine Months Ended September 30,
	2023				2022
	Average		Yield/		Average		Yield/
Assets:	balance	Interest	rate *		balance	Interest	rate *
Interest-earning assets:
Loans **	$   2,607,632	$ 114,108	5.85 %		$   2,111,019	$ 70,065	4.44 %
Taxable securities ***	367,946	8,817	2.89 %		322,262	6,431	2.53 %
Non-taxable securities ***	285,250	6,917	3.79 %		262,790	5,669	3.55 %
Interest-bearing deposits in other banks	23,382	818	4.67 %		199,019	1,098	0.74 %
Total interest-earning assets ***	$   3,284,210	$ 130,660	5.29 %		$   2,895,090	83,263	3.88 %
Noninterest-earning assets:
Cash and due from financial institutions	33,918				108,220
Premises and equipment, net	58,338				24,429
Accrued interest receivable	11,176				8,025
Intangible assets	133,154				84,268
Bank owned life insurance	53,796				48,965
Other assets	61,669				44,077
Less allowance for loan losses	(33,138)				(27,168)
Total Assets	$   3,603,123				$   3,185,906
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand and savings	$   1,360,692	$     4,818	0.47 %		$   1,414,215	$      860	0.08 %
Time	497,458	15,532	4.17 %		250,230	1,491	0.80 %
Short-term FHLB borrowings	282,214	10,617	5.03 %		2,380	49	2.75 %
Long-term FHLB borrowings	3,062	51	2.23 %		58,263	515	1.18 %
Other borrowings	11,953	587	6.57 %		-	-	0.00 %
Subordinated debentures	103,854	3,607	4.67 %		103,726	2,701	3.48 %
Repurchase agreements	11,611	4	0.05 %		21,910	8	0.05 %
Total interest-bearing liabilities	$   2,270,844	$   35,216	2.07 %		$   1,850,724	5,624	0.41 %
Noninterest-bearing deposits	941,842				936,686
Other liabilities	44,739				76,748
Shareholders' equity	345,698				321,748
Total Liabilities and Shareholders' Equity	$   3,603,123				$   3,185,906
Net interest income and interest rate spread		$   95,444	3.22 %			$ 77,639	3.48 %
Net interest margin ***			3.88 %				3.62 %

* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1.8 million and $1.5 million for the periods ended September 30, 2023 and 2022, respectively.
** - Average balance includes nonaccrual loans
*** - 2023 and 2022 average yield on investments were calculated by adjusting the average balances of taxable and nontaxable securities by unrealized losses of $64.3 million and $24.7 million, respectively.  These adjustments were also made when calculating the yield on earning assets and the margin.

Provision for credit losses for the third quarter of 2023 was $630 thousand compared to $300 thousand for the third quarter of 2022, primarily related to loan and lease growth.

On January 1, 2023, Civista adopted CECL, which resulted in an adjustment to the reserve of approximately $4.3 million.  For the nine months ended September 30, 2023, provision for credit losses was $2.1 million, compared to $1.0 million for the same period of 2022.  The reserve ratio increased to 1.28% as of September 30, 2023 from 1.12% at December 31, 2022.

The adoption of CECL also resulted in an additional $3.4 million reserve for unfunded commitments, which is reflected as a liability in the consolidated financial statements.  Provision for unfunded commitments for the third quarter of 2023 was $130 thousand and $595 thousand for the nine months ended September 30, 2023.  There was no provision for unfunded commitments during the first nine months of 2022.

For the third quarter of 2023, noninterest income totaled $8.0 million, an increase of $2.3 million, or 39.3%, compared to the prior year's third quarter. 

Noninterest income
(unaudited - dollars in thousands)	Three months ended September 30,
	2023		2022		$ change		% change
Service charges	$    1,853		$    1,885		$        (32)		-1.7 %
Net gain on sale of securities	-		4		(4)		-100.0 %
Net gain/(loss) on equity securities	69		(133)		202		151.9 %
Net gain on sale of loans and leases	787		637		150		23.5 %
ATM/Interchange fees	1,424		1,394		30		2.2 %
Wealth management fees	1,197		1,208		(11)		-0.9 %
Lease revenue and residual income	1,913		-		1,913		0.0 %
Bank owned life insurance	266		255		11		4.3 %
Tax refund processing fees	-	#	-		-		0.0 %
Other	616		484		132		27.3 %
Total noninterest income	$    8,125		$    5,734		$    2,391		41.7 %

Net gain/loss on equity securities increase of $202 thousand was the result of a market valuation adjustment.

The net gain on sale of loans and leases increased by $150 thousand compared to the same period last year.  CLF generated a $466 thousand gain on the sale of $10.9 million in commercial loans and leases.  The sale of mortgage loans generated a $321 thousand gain on the sale of $16.2 million, a decrease in the gain of $316 thousand  and a $17.7 million decrease in volume in 2023, compared to 2022.

Lease revenue and residual income contributed $1.9 million to noninterest income due to the acquisition of CLF during 2022.

For the nine months ended September 30, 2023, noninterest income totaled $28.2 million, an increase of $9.2 million, or 48.3%, compared to the same period in the prior year. 

Noninterest income
(unaudited - dollars in thousands)	Nine months ended September 30,
	2023		2022		$ change		% change
Service charges	$    5,457		$    5,004		$       453		9.1 %
Net gain on sale of securities	-		10		(10)		-100.0 %
Net (loss) on equity securities	(169)		(44)		(125)		-284.1 %
Net gain on sale of loans and leases	2,033		2,146		(113)		-5.3 %
ATM/Interchange fees	4,227		3,990		237		5.9 %
Wealth management fees	3,570		3,713		(143)		-3.9 %
Lease revenue and residual income	6,160		-		6,160		0.0 %
Bank owned life insurance	830		732		98		13.4 %
Tax refund processing fees	2,375		2,375		-		0.0 %
Other	3,859		1,086		2,773		255.3 %
Total noninterest income	$  28,342		$  19,012		$    9,330		49.1 %

 

The increase in service charge income is split between $115 thousand in personal service charges and $149 thousand in business service charges. Overdraft fees also increased by $188 thousand.   

The change in net loss on equity securities was the result of a market valuation adjustment.   

The net gain on sale of loans and leases decreased by $113 thousand compared to the same period last year.  CLF generated a $1.1 million gain on the sale of $32.9 million in commercial loans and leases.  The sale of mortgage loans generated a $911 thousand gain on the sale of $42.2 million, a decrease in the gain of $1.2 million and a $65.4 million decrease in volume in 2023, compared to 2022.

Lease revenue and residual income contributed $6.2 million due to the acquisition of CLF during 2022.

Other income increased as result of a $1.5 million fee collected associated with the renewal of the company's contract with MasterCard.  Other income also increased as result of $707 thousand in interim rent at Civista Leasing and Finance, and $198 thousand increase in swap fee income. 

For the third quarter of 2023, noninterest expense totaled $26.6 million, an increase of $4.1 million, or 18.0%, compared to the prior year's third quarter. 

Noninterest expense
(unaudited - dollars in thousands)	Three months ended September 30,
	2023		2022		$ change		% change
Compensation expense	$  14,054		$  12,484		$    1,570		12.6 %
Net occupancy and equipment	4,055		1,889		2,166		114.7 %
Contracted data processing	651		846		(195)		-23.0 %
Taxes and assessments	1,028		799		229		28.7 %
Professional services	1,010		1,335		(325)		-24.3 %
Amortization of intangible assets	398		456		(58)		-12.7 %
ATM/Interchange expense	619		604		15		2.5 %
Marketing	497		372		125		33.6 %
Software maintenance expense	1,052		942		110		11.7 %
Other	3,388		2,828		560		19.8 %
Total noninterest expense	$  26,752		$  22,555		$    4,197		18.6 %

Compensation expense increased primarily due to the acquisition of CLF resulting in an additional $1.3 million. The quarter-to-date average full time equivalent (FTE) employees were 528 at September 30, 2023, an increase of 85 FTEs over the same period in 2022.

The increase in occupancy and equipment expense is primarily due to a $2.0 million increase in equipment depreciation and expense related to the acquisition of CLF. 

Taxes and assessments increased due to an increase in the FDIC assessment rate charged.

The decrease in professional services is attributable to higher consulting expense in 2022 related to the acquisition of Comunibanc.

The increase in other operating expense is primarily due to a $130 thousand provision for credit losses on unfunded commitments as well as an increase in bad check loss of $255 thousand compared to the same period in 2022.  Additional increases related to the acquisition of CLF are also attributable to the increase in 2023.  

The efficiency ratio was 66.5% for the quarter ended September 30, 2023, compared to 61.4% for the quarter ended September 30, 2022.  The change in the efficiency ratio is primarily due to an increase in noninterest expense, partially offset by an increases in noninterest income and in net interest income.

Civista's effective income tax rate for the third quarter 2023 was 15.2% compared to 16.6% in 2022.

For the nine months ended September 30, 2023, noninterest expense totaled $82.2 million, an increase of $19.0 million, or 30.0%, compared to the same period in the prior year. 

Noninterest expense
(unaudited - dollars in thousands)	Nine months ended September 30,
	2023		2022		$ change		% change
Compensation expense	$  44,137		$  36,654		$    7,483		20.4 %
Net occupancy and equipment	12,310		5,122		7,188		140.3 %
Contracted data processing	1,730		1,899		(169)		-8.9 %
Taxes and assessments	2,985		2,416		569		23.6 %
Professional services	3,804		3,593		211		5.9 %
Amortization of intangible assets	1,195		890		305		34.3 %
ATM/Interchange expense	1,814		1,659		155		9.3 %
Marketing	1,542		1,069		473		44.2 %
Software maintenance expense	2,989		2,440		549		22.5 %
Other	9,792		7,450		2,342		31.4 %
Total noninterest expense	$  82,298		$  63,192		$  19,106		30.2 %

Compensation expense increased primarily due to $4.6 million of salaries related to the acquisition of CLF.  Other increases related to salaries were a result of annual merit increases and add-to-staff positions as well as increases in employee insurance. The year-to-date average full time equivalent (FTE) employees were 531 at September 30, 2023, an increase of 67 FTEs over the same period in 2022.

The increase in occupancy and equipment expense is primarily due to a $6.1 million increase in equipment depreciation related to the acquisition of CLF.

The increase in amortization expense is due to $377 thousand related to the core deposit intangible associated with the acquisition of Comunibanc.

Marketing expense increased due to an increase in marketing efforts in newly acquired markets related to the Comunibanc and CLF acquisitions. 

The increase in software maintenance expense is due to increases in software maintenance contracts related to the digital banking platform.  

The increase in other operating expense is primarily due to a $595 thousand provision for credit losses on unfunded commitments, a $353 thousand increase in bad check loss expense and additional expenses related to CLF of $608 thousand.  Business promotion, travel & lodging, donations, and education & training all increased as well. 

The efficiency ratio was 65.5% for the nine months ended September 30, 2023 compared to 64.4% for the nine months ended September 30, 2022.  The change in the efficiency ratio is primarily due to an increase in noninterest expense, partially offset by an increases in net interest income and noninterest income.

Civista's effective income tax rate was 15.4% for the nine months of 2023 and 16.0% for the nine months 2022.   

Balance Sheet

Total assets increased $195.1 million, or 5.5%, from December 31, 2022 to September 30, 2023, primarily due to growth in the loan portfolio.         

End of period loan and lease balances
(unaudited - dollars in thousands)
	September 30,		December 31,
	2023		2022		$ Change		% Change
Commercial and Agriculture	$           301,877		$           278,595		$    23,282		8.4 %
Commercial Real Estate:
Owner Occupied	375,851		371,147		4,704		1.3 %
Non-owner Occupied	1,102,932		1,018,736		84,196		8.3 %
Residential Real Estate	614,304		552,781		61,523		11.1 %
Real Estate Construction	269,292		243,127		26,165		10.8 %
Farm Real Estate	24,109		24,708		(599)		-2.4 %
Lease financing receivable	48,259		36,797		11,462		31.1 %
Consumer and Other	18,267		20,775		(2,508)		-12.1 %
Total Loans	$        2,754,891		$        2,546,666		$  208,225		8.2 %

Loan and lease balances increased $208.2 million, or 8.2% since December 31, 2022.  Commercial growth is predominately due to loan production from the leasing division and an increase in new commercial customers with commercial lines of credit outstanding. Even with the increase, the revolving line of credit balances continue to be less than forty percent advanced.  Commercial Real Estate continued to grow due to consistent demand in the Non-owner Occupied category, especially in the multi-family area in the major Ohio metropolitan areas.  Real Estate Construction has increased as many construction projects near completion. The undrawn construction availability continues to be near all-time highs.  Residential Real Estate has grown with continued new production in our Community Reinvestment Act ("CRA") product, more home construction loans, and more on balance sheet ARM products in this higher rate environment.

Deposits

Total deposits increased $175.8 million, or 6.7%, from December 31, 2022 to September 30, 2023. 

End of period deposit balances
(unaudited - dollars in thousands)
	September 30,		December 31,
	2023		2022		$ Change		% Change
Noninterest-bearing demand	$             802,614		$             896,333		$     (93,719)		-10.5 %
Interest-bearing demand	464,338		527,879		(63,541)		-12.0 %
Savings and money market	872,805		876,427		(3,622)		-0.4 %
Time deposits	655,986		319,345		336,641		105.4 %
Total Deposits	$         2,795,743		$         2,619,984		$    175,759		6.7 %

The decrease in noninterest-bearing demand of $93.7 million was primarily due to a $71.5 million decrease in noninterest-bearing business accounts and $32.3 million noninterest-bearing personal accounts.  The $63.5 million decrease in interest-bearing demand deposits was spread across personal, business, and public fund accounts.  The decrease in savings and money market was primarily due to a $62.5 million decrease in statement savings, an $11.0 million decrease in corporate savings, a $33.7 million decrease in personal money markets, partially offset by a $46.5 million increase in brokered money market accounts, a $42.1 million increase in business money market accounts and a $14.2 million increase in public money market accounts.  The increase in time certificates was primarily due to a $202.5 million increase in brokered time deposits.  In addition, Jumbo time certificates increased $62.4 million and retail time certificates increased $28.8 million.  

FHLB overnight advances totaled $431.5 million on September 30, 2023, up from $393.7 million on December 31, 2022.  FHLB term advances totaled $2.6 million on September 30, 2023, down from $3.6 million on December 31, 2022.

Stock Repurchase Program

During the nine months of 2023, Civista has repurchased 84,230 shares for $1.5 million at a weighted average price of $17.77 per share.  We have approximately $12.0 million remaining of the current $13.5 million repurchase authorization.  The current repurchase plan will expire in May 2024.  In January, Civista liquidated 5,620 shares held by employees, at $21.52 per share, to satisfy tax obligations stemming from vesting of restricted shares.

Shareholders' Equity

Total shareholders' equity decreased $2.1 million from December 31, 2022 to September 30, 2023, primarily due to a decrease in accumulated other comprehensive loss of $21.4 million, partially offset by a $20.2 million increase in retained earnings.     

Asset Quality

Civista recorded net losses of $535 thousand for the nine months of 2023 compared to net recoveries of $132 thousand for the same period of 2022.  The allowance for credit losses to loans ratio was 1.28% at September 30, 2023 and 1.12% at December 31, 2022.     

Allowance for Credit Losses
(dollars in thousands)
	Nine months ended September 30,
	2023		2022
Beginning of period	$            28,511		$            26,641
CECL adoption adjustments	5,193		-
Charge-offs	(855)		(164)
Recoveries	320		296
Provision	2,111		1,000
End of period	$            35,280		$            27,773
Allowance for Unfunded Commitments
(dollars in thousands)
	Nine months ended September 30,
	2023		2022
Beginning of period	$                      -		$                      -
CECL adoption adjustments	3,386
Charge-offs	-		-
Recoveries	-		-
Provision	595		-
End of period	$              3,981		$                      -

Non-performing assets at September 30, 2023 were $11.4 million, a 4.9% increase from December 31, 2022.  The non-performing assets to assets ratio was 0.31% at September 30, 2023 and 0.31% at December 31, 2022.  The allowance for credit losses to non-performing loans increased from 261.45% at December 31, 2022 to 308.52% at September 30, 2023.  

Non-performing Assets
(dollars in thousands)	September 30,		December 31,
	2023		2022
Non-accrual loans	$          8,713		$          7,890
Restructured loans	2,722		3,015
Total non-performing loans	11,435		10,905
Other Real Estate Owned	-		-
Total non-performing assets	$        11,435		$        10,905

Conference Call and Webcast

Civista Bancshares, Inc. will also host a conference call to discuss the Company's financial results for the third quarter of 2023 at 1:00 p.m. ET on Friday, October 27, 2023.  Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company's website, www.civb.com.  Participants can also listen to the conference call by dialing 855-238-2712 and ask to join the Civista Bancshares, Inc. third quarter 2023 earnings call.  Please log in or dial in at least 10 minutes prior to the start time to ensure a connection.

An archive of the webcast will be available for one year on the Investor Relations section of the Company's website (www.civb.com).

Forward Looking Statements

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Civista.  For these statements, Civista claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.   Statements in this press release should be considered in conjunction with the other information available about Civista, including the information in the filings we make with the Securities and Exchange Commission.  Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance.  The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties.  We have tried, wherever possible, to identify such statements by using words such as "anticipate," "estimate," "project," "intend," "plan," "believe," "will" and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.  Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Civista' reports filed with the Securities and Exchange Commission, including those described in "Item 1A Risk Factors" of Part I of Civista's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and any additional risks identified in the Company's subsequent Form 10-Q's.  Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof.  Civista does not undertake, and specifically disclaims any obligation, to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Civista Bancshares, Inc., is a $3.7 billion financial holding company headquartered in Sandusky, Ohio.  Its primary subsidiary, Civista Bank, was founded in 1884 and provides full-service banking, commercial lending, mortgage, and wealth management services.  Today, Civista Bank operates 43 locations across Ohio, Southeastern Indiana and Northern Kentucky.  Civista Leasing & Finance, a division of Civista Bank, offers commercial equipment leasing services for businesses nationwide.  Civista Bancshares' common shares are traded on the NASDAQ Capital Market under the symbol "CIVB".  Learn more at www.civb.com.

Civista Bancshares, Inc.
Financial Highlights
(Unaudited, dollars in thousands, except share and per share amounts)

Consolidated Condensed Statement of Income
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Interest income	$         45,786		$         32,533		$       130,660		$         83,263
Interest expense	14,282		2,094		35,216		5,624
Net interest income	31,504		30,439		95,444		77,639
Provision for credit losses	630		300		2,111		1,000
Net interest income after provision	30,874		30,139		93,333		76,639
Noninterest income	8,125		5,734		28,342		19,012
Noninterest expense	26,752		22,555		82,298		63,192
Income before taxes	12,247		13,318		39,377		32,459
Income tax expense	1,860		2,206		6,068		5,180
Net income	10,387		11,112		33,309		27,279
Dividends paid per common share	$             0.16		$             0.14		$             0.45		$             0.42
Earnings per common share
Basic
Net income	$         10,387		$         11,112		$         33,309		$         27,279
Less allocation of earnings and
dividends to participating securities	389		52		1,220		122
Net income available to common
shareholders - basic	$           9,998		$         11,060		$         32,089		$         27,157
Weighted average common shares outstanding	15,735,007		15,394,898		15,747,648		14,974,862
Less average participating securities	588,715		71,604		576,902		67,323
Weighted average number of shares outstanding
used to calculate basic earnings per share	15,146,292		15,323,294		15,170,746		14,907,539
Earnings per common share
Basic	$             0.66		$             0.72		$             2.12		$             1.82
Diluted	0.66		0.72		2.12		1.82
Selected financial ratios:
Return on average assets	1.12 %		1.35 %		1.24 %		1.14 %
Return on average equity	11.83 %		14.45 %		12.88 %		11.34 %
Dividend payout ratio	24.24 %		19.40 %		21.27 %		23.06 %
Net interest margin (tax equivalent)	3.69 %		4.03 %		3.88 %		3.62 %

 

Selected Balance Sheet Items
(Dollars in thousands, except share and per share amounts)
	September 30,		December 31,
	2023		2022
	(unaudited)		(unaudited)
Cash and due from financial institutions	$                  50,316		$                  43,361
Investment in time deposits	1,472		1,477
Investment securities	595,508		617,592
Loans held for sale	1,589		683
Loans	2,754,890		2,546,666
Less: allowance for credit losses	(35,280)		(28,511)
Net loans	2,719,610		2,518,155
Other securities	34,224		33,585
Premises and equipment, net	58,989		64,018
Goodwill and other intangibles	134,998		133,528
Bank owned life insurance	54,053		53,543
Other assets	82,157		71,888
Total assets	$            3,732,916		$            3,537,830
Total deposits	$            2,795,743		$            2,619,984
Federal Home Loan Bank advances - short term	431,500		393,700
Federal Home Loan Bank advances - long term	2,573		3,578
Securities sold under agreements to repurchase	-		25,143
Subordinated debentures	103,921		103,799
Other borrowings	10,964		15,516
Securities purchased payable	1,755		1,338
Tax refunds in process	493		278
Accrued expenses and other liabilities	53,222		39,658
Total shareholders' equity	332,745		334,836
Total liabilities and shareholders' equity	$            3,732,916		$            3,537,830
Shares outstanding at period end	15,695,997		15,728,234
Book value per share	$                    21.20		$                    21.29
Equity to asset ratio	8.91 %		9.46 %
Selected asset quality ratios:
Allowance for loan losses to total loans	1.28 %		1.12 %
Non-performing assets to total assets	0.31 %		0.31 %
Allowance for loan losses to non-performing loans	308.52 %		261.45 %
Non-performing asset analysis
Nonaccrual loans	$                    8,713		$                    7,890
Restructured loans	2,722		3,015
Other real estate owned	-		-
Total	$                  11,435		$                  10,905

 

Supplemental Financial Information
(Unaudited - dollars in thousands except share data)
	September 30,		June 30,		March 31,		December 31,		September 30,
End of Period Balances	2023		2023		2023		2022		2022
Assets
Cash and due from banks	$       50,316		$       41,354		$       52,723		$       43,361		$        40,914
Investment in time deposits	1,472		1,719		1,721		1,477		1,479
Investment securities	595,508		619,250		629,829		617,592		604,074
Loans held for sale	1,589		3,014		1,465		683		3,491
Loans and leases	2,754,890		2,636,280		2,580,066		2,546,666		2,328,614
Allowance for credit losses	(35,280)		(35,149)		(34,196)		(28,511)		(27,773)
Net Loans	2,719,610		2,601,131		2,545,870		2,518,155		2,300,841
Other securities	34,224		28,449		35,383		33,585		18,578
Premises and equipment, net	58,989		60,899		61,895		64,018		30,168
Goodwill and other intangibles	134,998		135,406		135,808		136,454		113,206
Bank owned life insurance	54,053		53,787		53,796		53,543		53,291
Other assets	82,157		70,971		66,068		68,962		75,677
Total Assets	$  3,732,916		$  3,615,980		$  3,584,558		$  3,537,830		$  3,241,719
Liabilities
Total deposits	$  2,795,743		$  2,942,774		$  2,843,516		$  2,619,984		$  2,708,253
Federal Home Loan Bank advances - short term	431,500		142,000		212,000		393,700		55,000
Federal Home Loan Bank advances - long term	2,573		2,859		3,361		3,578		6,723
Securities sold under agreement to repurchase	-		6,788		15,631		25,143		20,155
Subordinated debentures	103,921		103,880		103,841		103,799		103,778
Other borrowings	10,964		12,568		13,938		15,516		-
Securities purchased payable	1,755		-		-		1,338		2,611
Tax refunds in process	493		7,208		5,752		278		2,709
Accrued expenses and other liabilities	53,222		48,027		38,822		39,658		39,888
Total liabilities	3,400,171		3,266,104		3,236,861		3,202,994		2,939,117
Shareholders' Equity
Common shares	310,975		310,784		310,412		310,182		299,515
Retained earnings	176,644		168,777		161,110		156,493		146,546
Treasury shares	(75,412)		(73,915)		(73,915)		(73,794)		(73,641)
Accumulated other comprehensive loss	(79,462)		(55,770)		(49,910)		(58,045)		(69,818)
Total shareholders' equity	332,745		349,876		347,697		334,836		302,602
Total Liabilities and Shareholders' Equity	$  3,732,916		$  3,615,980		$  3,584,558		$  3,537,830		$  3,241,719
Quarterly Average Balances
Assets:
Earning assets	$  3,380,169		$  3,258,738		$  3,211,902		$  3,099,501		$  3,002,256
Securities	645,202		658,515		655,987		630,127		622,924
Loans	2,679,679		2,593,286		2,548,518		2,458,980		2,289,588
Liabilities and Shareholders' Equity
Total deposits	$  2,946,849		$  2,817,712		$  2,654,356		$  2,649,755		$  2,719,014
Interest-bearing deposits	1,966,014		1,912,955		1,692,470		1,710,019		1,738,015
Other interest-bearing liabilities	115,557		375,608		515,122		407,710		155,077
Total shareholders' equity	348,209		347,647		341,159		299,509		305,134

 

Supplemental Financial Information
(Unaudited - dollars in thousands except share data)
	Three Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,
Income statement	2023		2023		2023		2022		2022
Total interest and dividend income	$          45,786		$          43,335		$          41,539		$          37,990		$          32,533
Total interest expense	14,282		11,996		8,938		5,425		2,094
Net interest income	31,504		31,339		32,601		32,565		30,439
Provision for loan losses	630		861		620		752		300
Noninterest income	8,125		9,149		11,068		10,064		5,734
Noninterest expense	26,752		27,913		27,633		27,301		22,555
Income before taxes	12,247		11,714		15,416		14,576		13,318
Income tax expense	1,860		1,680		2,528		2,428		2,206
Net income	$          10,387		$          10,034		$          12,888		$          12,148		$          11,112
Per share data
Earnings per common share
Basic
Net income	$          10,387		$          10,034		$          12,888		$          12,148		$          11,112
Less allocation of earnings and
dividends to participating securities	389		374		453		432		52
Net income available to common
shareholders - basic	$            9,998		$            9,660		$          12,435		$          11,716		$          11,060
Weighted average common shares outstanding	15,735,007		15,775,812		15,732,092		15,717,439		15,394,898
Less average participating securities	588,715		588,715		552,882		559,596		71,604
Weighted average number of shares outstanding
used to calculate basic earnings per share	15,146,292		15,187,097		15,179,210		15,157,843		15,323,294
Earnings per common share
Basic	$              0.66		$              0.64		$              0.82		$              0.77		$              0.72
Diluted	0.66		0.64		0.82		0.77		0.72
Common shares dividend paid	$            2,521		$            2,367		$            2,201		$            2,202		$            2,042
Dividends paid per common share	0.16		0.15		0.14		0.14		0.14

 

Supplemental Financial Information
(Unaudited - dollars in thousands except share data)
	Three Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,
Asset quality	2023		2023		2023		2022		2022
Allowance for credit losses:
Beginning of period	$         35,251		$         34,196		$         28,511		$         27,773		$         27,435
CECL adoption adjustments	-		-		5,193		-		-
Charge-offs	(666)		(14)		(175)		(58)		(74)
Recoveries	65		208		47		44		112
Provision	630		861		620		752		300
End of period	$         35,280		$         35,251		$         34,196		$         28,511		$         27,773
Allowance for unfunded commitments:
Beginning of period	$            3,851		$            3,587		$                     -		$                     -		$                     -
CECL adoption adjustments	-		-		3,386		-		-
Charge-offs	-		-		-		-		-
Recoveries	-		-		-		-		-
Provision	130		264		201		-		-
End of period	$            3,981		$            3,851		$            3,587		$                     -		$                     -
Ratios
Allowance to total loans	1.28 %		1.33 %		1.33 %		1.12 %		1.19 %
Allowance to nonperforming assets	308.52 %		327.05 %		345.91 %		261.45 %		476.24 %
Allowance to nonperforming loans	308.52 %		327.05 %		345.82 %		261.45 %		476.24 %
Nonperforming assets
Nonperforming loans	$         11,435		$         10,747		$            9,860		$         10,905		$            5,832
Other real estate owned	-		-		26		-		-
Total nonperforming assets	$         11,435		$         10,747		$            9,886		$         10,905		$            5,832
Capital and liquidity
Tier 1 leverage ratio	8.79 %		8.86 %		8.63 %		8.92 %		9.32 %
Tier 1 risk-based capital ratio	10.72 %		10.93 %		10.80 %		10.78 %		11.62 %
Total risk-based capital ratio	14.51 %		14.83 %		14.73 %		14.52 %		15.62 %
Tangible common equity ratio (1)	5.50 %		6.16 %		6.14 %		5.83 %		6.05 %

(1) See reconciliation of non-GAAP measures at the end of this press release.

 

Reconciliation of Non-GAAP Financial Measures
(Unaudited - dollars in thousands except share data)
	Three Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,
	2023		2023		2023		2022		2022
Tangible Common Equity
Total Shareholder's Equity - GAAP	$       332,745		$       349,876		$       347,697		$       334,835		$       302,602
Less: Goodwill and intangible assets	134,998		135,406		135,808		136,454		113,206
Tangible common equity (Non-GAAP)	$       197,747		$       214,470		$       211,889		$       198,381		$       189,396
Total Shares Outstanding	15,695,997		15,780,227		15,732,092		15,728,234		15,235,545
Tangible book value per share	$            12.60		$            13.59		$            13.47		$            12.61		$            12.43
Tangible Assets
Total Assets - GAAP	$    3,732,916		$    3,615,980		$    3,587,118		$    3,537,830		$    3,241,719
Less: Goodwill and intangible assets	134,998		135,406		135,808		136,454		113,206
Tangible assets (Non-GAAP)	$    3,597,918		$    3,480,574		$    3,451,310		$    3,401,376		$    3,128,513
Tangible common equity to tangible assets	5.50 %		6.16 %		6.14 %		5.83 %		6.05 %

 

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SOURCE Civista Bancshares, Inc.

FAQ

What is the net income for Q3 2023?

The net income for Q3 2023 is $10.4 million.

How does the net income for the year-to-date period compare to last year?

The net income for the year-to-date period is $33.3 million, an increase of 22% compared to the same period last year.

What are the cost of deposits and total funding costs?

The cost of deposits is 129 basis points and the total funding costs are 172 basis points.

What is the annualized yield and dividend payout ratio?

The annualized yield is 4.13% and the dividend payout ratio is 24.24%.