Civista Bancshares Inc.
08/06/2025 | Press release | Distributed by Public on 08/06/2025 15:02
Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)
Management's Discussion and Analysis ofFinancial Condition and Results of Operations
Introduction
The following discussion focuses on the consolidated financial condition of the Company at June 30, 2025 compared to December 31, 2024, and the consolidated results of operations for the three and six month ended June 30, 2025, compared to the same period in 2024. This discussion should be read in conjunction with the unaudited consolidated financial statements and notes included in this Quarterly Report on Form 10-Q.
Forward-Looking Statements
This Quarterly Report on Form 10-Q may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995, relating to such matters as financial condition, anticipated operating results, cash flows, business line results, credit quality expectations, prospects for new lines of business, economic trends (including interest rates) and similar matters. Forward-looking statements reflect our expectations, estimates or projections concerning future results or events. These statements are generally identified by the use of forward-looking words or phrases such as "believe," "belief," "expect," "anticipate," "may," "could," "intend," "intent," "estimate," "plan," "foresee," "likely," "will," "should" or other similar words or phrases. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results, performance or achievements to differ materially from those expressed in or implied by the forward-looking statements. Such forward-looking statements could include, but are not limited to:
•
current and future economic and financial market conditions, including the effects of inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy, an increasing federal government budget deficit, slowing gross domestic product, tariffs, trade wars, and other factors beyond our control, any of which may result in adverse impacts on our deposit levels and composition, the quality of investment securities available for purchase, demand for loans, the ability of our borrowers to repay their loans, and the value of the collateral securing loans made by Civista;
•
significant changes to the size, structure, powers and operations of the federal government, changes to U.S. economic policies, and uncertainties regarding the potential for these changes may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial condition;
•
recent and future bank failures may reduce customer confidence, affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets and/or have a negative reputational impact on the banking industry as a whole, any of which could adversely affect the Company's business, financial condition and results of operations;
•
adverse changes in the real estate market, which could cause increases in delinquencies and non-performing assets, including additional loan charge-offs, and could depress our income, earnings and capital;
•
changes in interest rates resulting from national and local economic conditions and the policies of regulatory authorities, including monetary policies of the Board of Governors of the Federal Reserve System, which may adversely affect interest rates, interest margins, loan demand and interest rate sensitivity;
•
operational risks, reputational risks, legal and compliance risks, and other risks related to potential fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, or failures, disruptions or breaches in security of our systems, including those resulting from computer viruses or cyber-attacks;
•
our ability to secure sensitive or confidential client information against unauthorized disclosure or access through computer systems and telecommunication networks, including those of our third-party vendors and other service providers, which may prove inadequate;
•
a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber-attacks;
•
competitive pressures and factors among financial services organizations could increase significantly, including product and pricing pressures, changes to third-party relationships and our ability to recruit and retain qualified management and banking personnel;
•
unexpected losses of services of our key management personnel, or the inability to recruit and retain qualified personnel in the future;
•
risks inherent in pursuing strategic growth initiatives, including integration and other risks involved in past, pending, and possible future acquisitions;
Page 40
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
•
uncertainty regarding the nature, timing, cost and effect of legislative or regulatory changes in the banking industry or otherwise affecting the Company, including major reform of the regulatory oversight structure of the financial services industry;
•
changes in federal, state and/or local tax laws;
•
the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board (FASB), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, may adversely affect our reported financial condition or results of operations;
•
litigation and regulatory compliance exposure, including the costs and effects of any adverse developments in legal proceedings or other claims and the costs and effects of unfavorable resolution of regulatory and other governmental examinations or inquiries;
•
continued availability of earnings and dividends from Civista and excess capital sufficient for us to service our debt and pay dividends to our shareholders in compliance with applicable legal and regulatory requirements;
•
our ability to raise additional capital in the future if and when needed and/or on terms acceptable to us;
•
our ability to appropriately maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, as necessary to ensure the accurate reporting of our financial results;
•
our ability to conform and comply with regulatory requirements and increasing scrutiny and evolving expectations from customers, regulatory authorities, shareholders, investors and other stakeholders with regard to our environmental, social and governance (ESG) policies and practices, which could affect our reputation and business and operating results;
•
our ability to anticipate and successfully keep pace with technological changes affecting the financial services industry; and
•
other risks identified from time-to-time in the Company's other public documents on file with the SEC, including those risks identified in "Item 1A. Risk Factors" of Part I of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as supplement by Item 1A. Risk Factors" of Part II of the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2025, and as further supplemented by "Item 1A. Risk Factors" of Part II of this Quarterly Report on Form 10-Q.
The Company does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.
Recent Developments
Agreement and Plan of Merger with The Farmers Savings Bank
On July 10, 2025, CBI and Civista entered into an Agreement and Plan of Merger (the "Merger Agreement") with The Farmers Savings Bank, an Ohio-chartered bank headquartered in Spencer, Ohio ("Farmers"). Upon the terms and subject to the conditions of the Merger Agreement, at the effective time of the merger (the "Effective Time"), Farmers will merge with and into Civista, with Civista being the surviving bank in the merger (the "FSB Merger"). The acquisition of Farmers will add two branches in Medina and Lorain Counties in Northeast Ohio, as well as approximately $183 million in low-cost core deposits. As of March 31, 2025, Farmers reported total assets of $285 million and net loans of $104 million.
Under the terms and subject to the conditions of the Merger Agreement, which has been unanimously approved by the Boards of Directors of both companies, CBI agreed to pay $34.925 million in cash and issue 1,434,491 common shares, in aggregate, for all of the outstanding Farmers shares, subject to potential adjustment based on Farmers' equity prior to closing being $56.0 million. This implies an aggregate deal value of approximately $70.4 million based on the closing price of CBI's common shares on July 9, 2025 of $24.72.
The FSB Merger is expected to close in the fourth quarter of 2025, subject to the required approval of the Farmers shareholders, receipt of all required regulatory approvals and fulfillment of other customary closing conditions.
Offering of Common Shares
On July 10, 2025, CBI announced an underwritten public offering of up to a maximum of 3,788,238 of its common shares. CBI subsequently closed on the sale of 3,294,120 common shares on July 14, 2025, and the sale of an additional 494,118 common shares on July 16, 2025 pursuant to the underwriters' exercise of their overallotment option, at the public offering price of $21.25 per share. The aggregate net proceeds from the Offering to CBI were approximately, $76.0 million, after deducting expenses and the underwriting
Page 41
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
discount. CBI plans to use the net proceeds from the offering for general corporate purposes, which may include supporting organic growth opportunities and future strategic transactions.
Financial Condition
Total assets of the Company at June 30, 2025 were $4,185,869 compared to $4,098,469 at December 31, 2024, an increase of $87,400, or 2.1%. The increase in total assets was mainly due to increases in net loans of $69,108, loans held for sale of $10,068, and cash and cash equivalents of $10,703. These increases were partially offset by decreases in available-for-sale securities of $5,157, premises and equipment of $4,244, and swap assets of $2,178. Total liabilities at June 30, 2025 were $3,781,732 compared to $3,709,967 at December 31, 2024, an increase of $71,765, or 1.9%. The increase in total liabilities was primarily attributable to a increase in short-term FHLB advances of $94,500, partially offset by decreases in total deposits of $15,663 and swap liabilities of $4,608.
Loans outstanding as of June 30, 2025 and December 31, 2024 were as follows:
|
June 30, 2025 |
December 31, 2024 |
$ Change |
% Change |
|||||||||||||
|
Commercial & Agriculture |
$ |
338,598 |
$ |
328,488 |
$ |
10,110 |
3.1 |
% |
||||||||
|
Commercial Real Estate-Owner Occupied |
378,248 |
374,367 |
3,881 |
1.0 |
% |
|||||||||||
|
Commercial Real Estate-Non-Owner Occupied |
1,263,612 |
1,225,991 |
37,621 |
3.1 |
% |
|||||||||||
|
Residential Real Estate |
815,408 |
763,869 |
51,539 |
6.7 |
% |
|||||||||||
|
Real Estate Construction |
277,643 |
305,992 |
(28,349 |
) |
-9.3 |
% |
||||||||||
|
Farm Real Estate |
23,866 |
23,035 |
831 |
3.6 |
% |
|||||||||||
|
Lease Financing Receivables |
42,758 |
46,900 |
(4,142 |
) |
-8.8 |
% |
||||||||||
|
Consumer and Other |
10,991 |
12,588 |
(1,597 |
) |
-12.7 |
% |
||||||||||
|
Total loans |
3,151,124 |
3,081,230 |
69,894 |
2.3 |
% |
|||||||||||
|
Allowance for credit losses |
(40,455 |
) |
(39,669 |
) |
(786 |
) |
2.0 |
% |
||||||||
|
Net loans |
$ |
3,110,669 |
$ |
3,041,561 |
$ |
69,108 |
2.3 |
% |
||||||||
Loans held for sale increased $10,068 since December 31, 2024. The increase was due to increases in both the number of loans and average loan balances held for sale. At June 30, 2025, 43 loans totaling $10,733 were held for sale as compared to 6 loans totaling $665 at December 31, 2024.
Net loans have increased $69,108, or 2.3%, since December 31, 2024. The increase at June 30, 2025 was mainly attributed to increases in two categories, Commercial Real Estate - Non-Owner Occupied and Residential Real Estate, partially offset by a decrease in Real Estate Construction. At June 30, 2025, the loan to deposit ratio was 98.6% compared to 95.9% at December 31, 2024.
During the first six months of 2025, provisions made to the allowances for credit losses and off-balance sheet credit exposures totaled $2,592, compared to a provision of $3,647 during the same period in 2024. The decrease in the provision for the first six months of 2025 was primarily the result of a decrease in specific reserves related to one large credit that made a significant paydown during the six months ended June 30, 2025. Commercial & Agriculture loan delinquencies decreased slightly during the first six months of 2025, primarily in the 30-59 days past due category, which decreased from $825 at December 31, 2024 to $114 at June 30, 2025. Total Residential Real Estate loans past due decreased from $9,411 at December 31, 2024 to $3,290 as of June 30, 2025, mainly due to a decrease in delinquencies in 1-4 family first lien loans.
Reserves on the Lease Financing Receivables portfolio decreased at June 30, 2025, primarily due to less charge-offs and minimal balance growth, maintaining a consistent percentage of reserves to lease balance. Total delinquencies on Lease Financing Receivables decreased from December 31, 2024 to June 30, 2025. Lease Financing Receivables 30-59 days past due and 60-89 days past due decreased from $926 to $255, while the balance of 90 days or greater past due increased slightly from $909 to $924. Nonaccrual Lease Financing Receivables decreased from $1,238 at December 31, 2024 to $799 at June 30, 2025.
Net charge-offs for the first six months ended June 30, 2025 totaled $1,633, compared to net charge-offs of $1,083 for the same period of 2024. For the first six months ended June 30, 2025, the Company charged off a total of 31 loans and leases, consisting of 11 Commercial & Agriculture loans totaling $435, seven Lease Financing Receivables totaling $152, two Commercial Real Estate -
Page 42
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Non-Owner Occupied loans totaling $1,350, eight Consumer and Other loans totaling $16 and three Residential Real Estate totaling $115. The Commercial Real Estate - Non-Owner Occupied charge-off of $1,350 is related to two loans that were previously identified and actively monitored by management, classified as nonaccrual and individually evaluated as of both December 31, 2024 and June 30, 2025, In addition, during the six months ended June 30, 2025, the Company had recoveries on previously charged-off Commercial & Agriculture loans of $335, Commercial Real Estate - Non-Owner Occupied loans of $3, Residential Real Estate loans of $42, Leasing Financing Receivables of $42 and Consumer and Other loans of $13. For each loan category, as well as in total, the percentage of net charge-offs to loans was less than one percent. Each of these factors was considered by management as part of the examination of both the level and mix of the allowance by credit type as well as the overall level of the allowance.
Management specifically evaluates loans that do not share common risk characteristics for estimates of loss. To evaluate the adequacy of the allowance for credit losses to cover probable losses in the loan portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for delinquencies and historical reserve allocations. Loss migration rates are calculated over a three-year period for all portfolio segments. Management also considers certain economic factors for trends that management uses to account for the qualitative and environmental changes in risk, which affects the level of the reserve.
Larger (greater than $350) Commercial & Agricultural and Commercial Real Estate loan relationships, as well as Residential Real Estate and Consumer loans and Lease Financing Receivables that are part of a larger relationship are individually evaluated on a quarterly basis, when they do not share similar risk characteristics with the collectively evaluated pools. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the value of the loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. The Company's policy for recognizing interest income on individually evaluated loans does not differ from its overall policy for interest recognition. Loans held for sale are excluded from consideration as individually evaluated. Loans are generally moved to nonaccrual status when 90 days or more past due. Loans, or portions thereof, are charged-off when deemed uncollectible. The allowance for credit losses as a percent of total loans was 1.28% at June 30, 2025 and 1.29% at December 31, 2024.
The available-for-sale securities portfolio decreased by $5,157, from $648,067 at December 31, 2024 to $642,910 at June 30, 2025. Management continually evaluates our securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, and the level of interest rate risk to which the Company is exposed. These evaluations may cause the Company to change the level of funds it deploys into investment securities and change the composition of its investment securities portfolio. As of June 30, 2025, the Company was in compliance with all pledging requirements.
Premises and equipment, net, decreased $4,244 from December 31, 2024 to June 30, 2025. The decrease was the result of depreciation of $4,644 and disposals of $76, partially offset by purchases of $476. The decrease in depreciation was mainly attributable to leasing operations as operating leases mature. Since mid-2024, new lease originations have primarily consisted of finance leases which are recorded in Loans on the Consolidated Balance Sheets.
Swap assets decreased $2,178 from December 31, 2024 to June 30, 2025. The decrease was primarily the result of a decline in market value.
Total deposits as of June 30, 2025 and December 31, 2024 were as follows:
|
June 30, 2025 |
December 31, 2024 |
$ Change |
% Change |
|||||||||||||
|
Noninterest-bearing demand |
$ |
647,609 |
$ |
695,094 |
$ |
(47,485 |
) |
-6.8 |
% |
|||||||
|
Interest-bearing demand |
433,089 |
419,583 |
13,506 |
3.2 |
% |
|||||||||||
|
Savings and money market |
1,100,660 |
1,126,974 |
(26,314 |
) |
-2.3 |
% |
||||||||||
|
Time deposits |
560,702 |
469,954 |
90,748 |
19.3 |
% |
|||||||||||
|
Brokered deposits |
454,147 |
500,265 |
(46,118 |
) |
-9.2 |
% |
||||||||||
|
Total Deposits |
$ |
3,196,207 |
$ |
3,211,870 |
$ |
(15,663 |
) |
-0.5 |
% |
|||||||
The Company had approximately $457,130 and $431,713 of uninsured deposits as of June 30, 2025 and December 31, 2024, respectively. Uninsured deposit amounts are estimated based on the portions of customer account balances that exceed the FDIC insurance limit of $250.
Page 43
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Total deposits at June 30, 2025 decreased $15,663 from December 31, 2024. Noninterest-bearing deposits decreased $47,485 from December 31, 2024, while interest-bearing deposits, including savings and money markets, time deposits, and brokered deposits, increased $31,822 from December 31, 2024. The decrease in noninterest-bearing deposits was primarily due to a $51,899 decrease in noninterest-bearing business accounts, partially offset by an increase of $9,917 in noninterest-bearing public funds accounts. The increase in interest-bearing demand deposits was primarily due to an increase of $27,858 in interest-bearing public funds accounts, slightly offset by a decrease of $6,443 in Jumbo NOW accounts. The $26,314 decrease in savings and money market accounts was primarily due to a $36,603 decrease in ICS demand and money market accounts, and a $8,325 decrease in retail money market savings, mostly offset by an increase of $20,115 in business money market savings. The $90,748 increase in time deposits was due to increases of $66,090 in jumbo time deposits and a $29,029 increase in retail time deposits, which were slightly offset by a decrease of $5,481 in reciprocal time deposits. The year-to-date average balance of total deposits increased $216,105, compared to the average balance for the same period in 2024, mainly due to a increases of $203,964 in the average balance of demand and savings deposits and $58,565 in time deposits, partially offset by a $46,424 decrease in the average balance of noninterest-bearing deposits.
Short-term FHLB advances increased $94,500 from December 31, 2024 to June 30, 2025 for purposes of funding loan growth.
Swap liabilities decreased $4,608 from December 31, 2024 to June 30, 2025. The decrease was the result of a decrease in fair value of swap liabilities.
Shareholders' equity at June 30, 2025 was $404,137, or 9.7% of total assets, compared to $388,502, or 9.5% of total assets, at December 31, 2024. The increase was a result of net income of $21,183, partially offset by dividends paid on common shares of $5,270.
Total outstanding common shares at June 30, 2025 were 15,529,342, which increased from 15,487,667 common shares outstanding at December 31, 2024. Common shares outstanding increased due to the grant of 49,857 restricted common shares to certain officers under the Company's 2024 Incentive Plan, partially offset by 8,182 common shares surrendered by officers to the Company to pay taxes upon vesting of restricted shares.
Results of Operations
Three Months Ended June 30, 2025 and 2024
The Company had net income of $11,015 for the three months ended June 30, 2025, an increase of $3,951 from net income of $7,064 for the same period of 2024. Basic and diluted earnings per common share were $0.71 for the quarter ended June 30, 2025, compared to $0.45 for the same period of 2024. In the second quarter of 2025, net income was increased by $757 from non-recurring adjustments resulting from the Civista Leasing and Finance ("CLF") division's core system conversion. The primary reasons for the changes in net income are explained below.
Net interest income for the three months ended June 30, 2025 was $34,814, an increase of $7,063 from $27,751 for the same period of 2024. This increase was a result of an increase of $5,678 in total interest and dividend income, coupled with a $1,385 decrease in total interest expense. Total interest-earning assets averaged $3,841,369 during the three months ended June 30, 2025, an increase of $221,560 from $3,619,809 for the same period of 2024. The Company's total average interest-bearing liabilities increased from $2,813,034 during the three months ended June 30, 2024 to $3,062,324 during the three months ended June 30, 2025. The Company's fully tax equivalent net interest margin for the three months ended June 30, 2025 and 2024 was 3.64% and 3.09%, respectively. Net interest income was increased $1,621 in the second quarter of 2025, resulting from non-recurring adjustments from the CLF core system conversion.
Total interest and dividend income was $56,271 for the three months ended June 30, 2025, an increase of $5,678 from $50,593 for the same period of 2024. The increase in interest and dividend income is attributable to a $5,026 increase in interest and fees on loans and a $681 increase in interest income on taxable securities. The $5,026 increase in interest and fees on loans is attributable to increases in both average balances and loan yield. The average balance of loans increased by $171,714, or 5.8%, to $3,136,091 for the three months ended June 30, 2025, as compared to $2,964,377 for the same period of 2024. The loan yield increased to 6.39% for the three months ended June 30, 2025, from 6.10% for the same period of 2024.
Page 44
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Interest on taxable securities increased $681 to $3,751 for the three months ended June 30, 2025, compared to $3,070 for the same period of 2024. The average balance of taxable securities increased $52,607 to $404,104 for the three months ended June 30, 2025, as compared to $351,497 for the same period of 2024. The yield on taxable securities increased 31 basis points to 3.42% for the three months ended June 30, 2025, compared to 3.11% for the same period of 2024, resulting from the purchase of similar securities with higher rates due to the current rate environment in the second quarter of 2025 compared to the same period of 2024. Interest on tax-exempt securities decreased $34 to $2,338 for the three months ended June 30, 2025, compared to $2,372 for the same period of 2024. The average balance of tax-exempt securities decreased $10,197 to $277,931 for the three months ended June 30, 2025, as compared to $288,128 for the same period of 2024. The yield on tax-exempt securities increased 1 basis points to 3.88% for the three months ended June 30, 2025, compared to 3.87% for the same period of 2024.
Total interest expense decreased $1,385, or 6.1%, to $21,457 for the three months ended June 30, 2025, compared to $22,842 for the same period of 2024. For the three months ended June 30, 2025, the average balance of interest-bearing liabilities increased $249,290 to $3,062,324, as compared to $2,813,034 for the same period of 2024. Interest incurred on deposits increased by $53 to $15,558 for the three months ended June 30, 2025, compared to $15,505 for the same period of 2024. The average balance of interest-bearing deposits increased by $272,166 to $2,538,500 for the three months ended June 30, 2025, as compared to the same period in 2024, slightly offset by a decrease in the rate paid on time deposits from 5.40% in 2024 to 4.04% in 2025. The decrease in rates on time deposits was primarily related to paying lower rates on retail and brokered CDs due to the lower rate environment in the second quarter of 2025 compared to the same period of 2024. Interest expense incurred on short-term FHLB advances decreased because of the yield curve shifting downwards during the second quarter of 2025 compared to the same period of 2024.
The following table presents the condensed average balance sheets for the three months ended June 30, 2025 and 2024. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a
Page 45
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
21% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.
|
Three Months Ended June 30, |
||||||||||||||||||||||||
|
2025 |
2024 |
|||||||||||||||||||||||
|
Assets: |
Average |
Interest |
Yield/ |
Average |
Interest |
Yield/ |
||||||||||||||||||
|
Interest-earning assets: |
||||||||||||||||||||||||
|
Loans, including fees** |
$ |
3,136,091 |
$ |
49,972 |
6.39 |
% |
$ |
2,964,377 |
$ |
44,946 |
6.10 |
% |
||||||||||||
|
Taxable securities |
404,104 |
3,751 |
3.42 |
% |
351,497 |
3,070 |
3.11 |
% |
||||||||||||||||
|
Tax-exempt securities |
277,931 |
2,338 |
3.88 |
% |
288,128 |
2,372 |
3.87 |
% |
||||||||||||||||
|
Interest-bearing deposits in other banks |
23,243 |
210 |
3.61 |
% |
15,807 |
205 |
5.22 |
% |
||||||||||||||||
|
Total interest-earning assets |
$ |
3,841,369 |
$ |
56,271 |
5.84 |
% |
$ |
3,619,809 |
$ |
50,593 |
5.58 |
% |
||||||||||||
|
Noninterest-earning assets: |
||||||||||||||||||||||||
|
Cash and due from financial institutions |
40,329 |
32,564 |
||||||||||||||||||||||
|
Premises and equipment, net |
44,687 |
53,654 |
||||||||||||||||||||||
|
Accrued interest receivable |
13,919 |
13,230 |
||||||||||||||||||||||
|
Intangible assets |
132,887 |
134,473 |
||||||||||||||||||||||
|
Bank owned life insurance |
63,302 |
61,871 |
||||||||||||||||||||||
|
Other assets |
59,948 |
65,818 |
||||||||||||||||||||||
|
Less allowance for loan losses |
(40,546 |
) |
(39,190 |
) |
||||||||||||||||||||
|
Total Assets |
$ |
4,155,895 |
$ |
3,942,229 |
||||||||||||||||||||
|
Liabilities and Shareholders Equity: |
||||||||||||||||||||||||
|
Interest-bearing liabilities: |
||||||||||||||||||||||||
|
Demand and savings |
$ |
1,551,856 |
$ |
5,632 |
1.46 |
% |
$ |
1,339,503 |
$ |
3,054 |
0.92 |
% |
||||||||||||
|
Time |
986,644 |
9,926 |
4.04 |
% |
926,831 |
12,451 |
5.40 |
% |
||||||||||||||||
|
Short-term FHLB advances |
412,545 |
4,603 |
4.48 |
% |
440,670 |
6,078 |
5.55 |
% |
||||||||||||||||
|
Long-term FHLB advances |
1,260 |
8 |
2.57 |
% |
2,031 |
12 |
2.38 |
% |
||||||||||||||||
|
Other borrowings |
5,874 |
123 |
8.40 |
% |
- |
- |
0.00 |
% |
||||||||||||||||
|
Subordinated debentures |
104,145 |
1,165 |
4.49 |
% |
103,999 |
1,247 |
4.83 |
% |
||||||||||||||||
|
Total interest-bearing liabilities |
$ |
3,062,324 |
$ |
21,457 |
2.81 |
% |
$ |
2,813,034 |
$ |
22,842 |
3.27 |
% |
||||||||||||
|
Noninterest-bearing deposits |
652,092 |
703,046 |
||||||||||||||||||||||
|
Other liabilities |
40,564 |
60,365 |
||||||||||||||||||||||
|
Shareholders' Equity |
400,915 |
365,784 |
||||||||||||||||||||||
|
Total Liabilities and Shareholders' Equity |
$ |
4,155,895 |
$ |
3,942,229 |
||||||||||||||||||||
|
Net interest income and interest rate spread(1) |
$ |
34,814 |
3.03 |
% |
$ |
27,751 |
2.31 |
% |
||||||||||||||||
|
Net interest margin(2) |
3.64 |
% |
3.09 |
% |
||||||||||||||||||||
(1) Net interest spread represents the difference between the yield on average interest-earning assets and the cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income divided by average interest-earning assets.
*Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $622 and $631 for the periods ended June 30, 2025 and 2024, respectively.
**Average balance includes nonaccrual loans.
Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the three months ended June 30, 2025 and 2024.
Page 46
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
|
Increase (decrease) due to: |
||||||||||||
|
Volume (1) |
Rate (1) |
Net |
||||||||||
|
(Dollars in thousands) |
||||||||||||
|
Interest income: |
||||||||||||
|
Loans, including fees |
$ |
2,724 |
$ |
2,302 |
$ |
5,026 |
||||||
|
Taxable securities |
354 |
327 |
681 |
|||||||||
|
Tax-exempt securities |
(48 |
) |
14 |
(34 |
) |
|||||||
|
Interest-bearing deposits in other banks |
79 |
(74 |
) |
5 |
||||||||
|
Total interest income |
$ |
3,109 |
$ |
2,569 |
$ |
5,678 |
||||||
|
Interest expense: |
||||||||||||
|
Demand and savings |
$ |
545 |
$ |
2,033 |
$ |
2,578 |
||||||
|
Time |
762 |
(3,287 |
) |
(2,525 |
) |
|||||||
|
Short-term FHLB advances |
(369 |
) |
(1,106 |
) |
(1,475 |
) |
||||||
|
Long-term FHLB advances |
(5 |
) |
1 |
(4 |
) |
|||||||
|
Other borrowings |
123 |
- |
123 |
|||||||||
|
Subordinated debentures |
2 |
(84 |
) |
(82 |
) |
|||||||
|
Total interest expense |
$ |
1,058 |
$ |
(2,443 |
) |
$ |
(1,385 |
) |
||||
|
Net interest income |
$ |
2,051 |
$ |
5,012 |
$ |
7,063 |
||||||
(1)
The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate.
The Company provides for credit losses through regular provisions to the allowance for credit losses. During the three months ended June 30, 2025, the Company recorded a provision for credit losses of $1,025, a decrease of $630, from $1,655 during the three months ended June 30, 2024.
Noninterest income for the three month periods ended June 30, 2025 and 2024 was as follows:
|
Three Months Ended June 30, |
||||||||||||||||
|
2025 |
2024 |
$ Change |
% Change |
|||||||||||||
|
Service charges |
$ |
1,564 |
$ |
1,488 |
$ |
76 |
5.1 |
% |
||||||||
|
Net gain (loss) on equity securities |
(74 |
) |
74 |
(148 |
) |
-200.0 |
% |
|||||||||
|
Net gain on sale of loans and leases |
841 |
888 |
(47 |
) |
-5.3 |
% |
||||||||||
|
ATM/Interchange fees |
1,418 |
1,416 |
2 |
0.1 |
% |
|||||||||||
|
Wealth management fees |
1,325 |
1,337 |
(12 |
) |
-0.9 |
% |
||||||||||
|
Lease revenue and residual income |
525 |
3,529 |
(3,004 |
) |
-85.1 |
% |
||||||||||
|
Bank owned life insurance |
386 |
367 |
19 |
5.2 |
% |
|||||||||||
|
Swap fees |
53 |
65 |
(12 |
) |
-18.5 |
% |
||||||||||
|
Other |
551 |
1,213 |
(662 |
) |
-54.6 |
% |
||||||||||
|
Total noninterest income |
$ |
6,589 |
$ |
10,377 |
$ |
(3,788 |
) |
-36.5 |
% |
|||||||
Total noninterest income for the three months ended June 30, 2025 was $6,589, a decrease of $3,788, or 36.5%, from $10,377 for the same period of 2024. Lease revenue and residual income decreased $3,004 for the three months ended June 30, 2025, compared to the same period of 2024, mainly due to stronger lease originations in 2024 coupled with a one-time non-recurring adjustment in 2025 that
Page 47
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
decreased leasing revenue by $1,044 associated with CLF's core system conversion. Other income decreased $639 for the three months ended June 30, 2025, compared to the same period of 2024, mostly related to lower fee revenue from CLF.
Noninterest expense for the three month periods ended June 30, 2025 and 2024 was as follows:
|
Three Months Ended June 30, |
||||||||||||||||
|
2025 |
2024 |
$ Change |
% Change |
|||||||||||||
|
Compensation expense |
$ |
15,011 |
$ |
15,740 |
$ |
(729 |
) |
-4.6 |
% |
|||||||
|
Net occupancy expense |
1,419 |
1,298 |
121 |
9.3 |
% |
|||||||||||
|
Contracted data processing |
536 |
559 |
(23 |
) |
-4.1 |
% |
||||||||||
|
FDIC Assessment |
689 |
548 |
141 |
25.7 |
% |
|||||||||||
|
State franchise tax |
634 |
479 |
155 |
32.4 |
% |
|||||||||||
|
Professional services |
1,798 |
1,249 |
549 |
44.0 |
% |
|||||||||||
|
Equipment expense |
1,764 |
2,434 |
(670 |
) |
-27.5 |
% |
||||||||||
|
ATM/Interchange expense |
683 |
632 |
51 |
8.1 |
% |
|||||||||||
|
Marketing |
289 |
445 |
(156 |
) |
-35.1 |
% |
||||||||||
|
Amortization of core deposit intangibles |
338 |
366 |
(28 |
) |
-7.7 |
% |
||||||||||
|
Software maintenance expense |
1,294 |
$ |
1,176 |
118 |
10.0 |
% |
||||||||||
|
Other |
3,027 |
$ |
3,463 |
(436 |
) |
-12.6 |
% |
|||||||||
|
Total noninterest expense |
$ |
27,482 |
$ |
28,389 |
$ |
(907 |
) |
-3.2 |
% |
|||||||
Total noninterest expense for the three months ended June 30, 2025 was $27,482, a decrease of $907, or 3.2%, from $28,389 reported for the same period of 2024. The decrease in total noninterest expense was primarily due to decreases in compensation expense and equipment expense, mostly offset by increases in professional services. The decrease in compensation expense was primarily due to an increase in the deferral of salaries and wages related to the loan growth in the second quarter of 2025 coupled with a decrease in the average number of full-time equivalent employees to 526 at June 30, 2025, compared to 537 for the same period of 2024, resulting in lower compensation and benefits costs. The decrease in equipment expense was mainly due to normal depreciation as well as decreases in expenses related to operating lease contracts. The increase in professional fees was attributable to utilizing consultants to assist in the transitioning of the new core operating system at CLF.
Income tax expense for the three months ended June 30, 2025 totaled $1,881, up $861 compared to the same period of 2024. The effective tax rates for the three month periods ended June 30, 2025 and 2024 were 14.8% and 12.6%, respectively. The difference between the statutory federal income tax rate and the Company's effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low-income housing tax credits, tax-deductible captive insurance premiums and bank owned life insurance income.
Six Months Ended June 30, 2025 and 2024
The Company had net income of $21,183 for the six months ended June 30, 2025, an increase of $7,759 from net income of $13,424 for the same six months of 2024. Basic and diluted earnings per common share were $1.37 for the six months ended June 30, 2025, compared to $0.85 for the same period in 2024. For the six months ended June 30, 2025, net income was increased by $757 from non-recurring adjustments resulting from the CLF core system conversion. The primary reasons for the changes in net income are explained below.
Net interest income for the six months ended June 30, 2025 was $67,587, an increase of $11,464, from $56,123 for the same six months of 2024. This increase was a result of an increase of $9,283 in total interest and dividend income, coupled with a $2,181 decrease in total interest expense. Total interest-earning assets averaged $3,821,649 during the six months ended June 30, 2025, an increase of $235,469 from $3,586,180 for the same period of 2024. The Company's total average interest-bearing liabilities increased from $2,766,811 during the six months ended June 30, 2024 to $3,034,362 during the six months ended June 30, 2025. The Company's fully tax equivalent net interest margin for the six months ended June 30, 2025 and 2024 was 3.57% and 3.16%, respectively. Net interest income was increased $1,621 in the six months ended June 30, 2025, resulting from non-recurring adjustments from the CLF core system conversion.
Page 48
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Total interest and dividend income increased $9,283 to $110,004 for the six months ended June 30, 2025. This change was the result of an increase in the average balance of loans, accompanied by a higher yield on the portfolio. The average balance of loans increased by $195,663, or 6.7%, to $3,117,867 for the six months ended June 30, 2025, as compared to $2,922,204 for the six months ended June 30, 2024. The loan yield increased to 6.31% for 2025, from 6.15% in 2024.
Interest on taxable securities increased $1,302 to $7,306 for the six months ended June 30, 2025, compared to $6,004 for the same period in 2024. The average balance of taxable securities increased $49,362 to $400,518 for the six months ended June 30, 2025, as compared to $351,156 for the six months ended June 30, 2024. The yield on taxable securities increased 31 basis points to 3.37% for 2025, compared to 3.06% for 2024. Interest on tax-exempt securities decreased $69 to $4,678 for the six months ended June 30, 2025, compared to $4,747 for the same period in 2024. The average balance of tax-exempt securities decreased $9,575 to $282,183 for the six months ended June 30, 2025, as compared to $291,758 for the six months ended June 30, 2024. The yield on tax-exempt securities increased 4 basis points to 3.90% for 2025, compared to 3.86% for 2024.
Total interest expense decreased $2,181, or 4.9%, to $42,417 for the six months ended June 30, 2025, compared to $44,598 for the same period in 2024. The change in interest expense can be attributed to a decrease in rate, mostly offset by an increase in the average balance of interest-bearing liabilities. For the six months ended June 30, 2025, the average balance of interest-bearing liabilities increased $267,551 to $3,034,362, compared to $2,766,811 for the six months ended June 30, 2024. Interest incurred on deposits decreased $218 to $31,274 for the six months ended June 30, 2025, compared to $31,492 for the same period in 2024. The average balance of interest-bearing deposits increased by $262,529 for the six months ended June 30, 2025, as compared to the same period in 2024, and the rate paid on demand and savings accounts increased from 1.04% in 2024 to 1.46% in 2025. The rate paid on time deposits decreased from 5.38% in 2024 to 4.13% in 2025. In addition, for the six months ended June 30, 2025, the average balance of short-term FHLB balances decreased $455 to $384,224 from $384,679 compared to the same period in 2024. The rate paid on subordinated debentures decreased 31 basis points for the six months ended June 30, 2025, as compared to the same period in 2024.
The following table presents the condensed average balance sheets for the six months ended June 30, 2025 and 2024. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a 21% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.
Page 49
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
|
Six Months Ended June 30, |
||||||||||||||||||||||||
|
2025 |
2024 |
|||||||||||||||||||||||
|
Assets: |
Average |
Interest |
Yield/ |
Average |
Interest |
Yield/ |
||||||||||||||||||
|
Interest-earning assets: |
||||||||||||||||||||||||
|
Loans, including fees** |
$ |
3,117,867 |
$ |
97,618 |
6.31 |
% |
2,922,204 |
89,431 |
6.15 |
% |
||||||||||||||
|
Taxable securities |
400,518 |
7,306 |
3.37 |
% |
351,156 |
6,004 |
3.06 |
% |
||||||||||||||||
|
Tax-exempt securities |
282,183 |
4,678 |
3.90 |
% |
291,758 |
4,747 |
3.86 |
% |
||||||||||||||||
|
Interest-bearing deposits in other banks |
21,081 |
402 |
3.84 |
% |
21,062 |
539 |
5.15 |
% |
||||||||||||||||
|
Total interest-earning assets |
$ |
3,821,649 |
$ |
110,004 |
5.77 |
% |
$ |
3,586,180 |
$ |
100,721 |
5.62 |
% |
||||||||||||
|
Noninterest-earning assets: |
||||||||||||||||||||||||
|
Cash and due from financial institutions |
41,758 |
31,123 |
||||||||||||||||||||||
|
Premises and equipment, net |
45,541 |
54,317 |
||||||||||||||||||||||
|
Accrued interest receivable |
13,744 |
12,977 |
||||||||||||||||||||||
|
Intangible assets |
133,076 |
134,672 |
||||||||||||||||||||||
|
Bank owned life insurance |
63,110 |
61,664 |
||||||||||||||||||||||
|
Other assets |
59,271 |
62,414 |
||||||||||||||||||||||
|
Less allowance for loan losses |
(40,252 |
) |
(38,273 |
) |
||||||||||||||||||||
|
Total Assets |
$ |
4,137,897 |
$ |
3,905,074 |
||||||||||||||||||||
|
Liabilities and Shareholders Equity: |
||||||||||||||||||||||||
|
Interest-bearing liabilities: |
||||||||||||||||||||||||
|
Demand and savings |
$ |
1,565,328 |
$ |
11,360 |
1.46 |
% |
$ |
1,361,364 |
$ |
7,039 |
1.04 |
% |
||||||||||||
|
Time |
973,202 |
19,914 |
4.13 |
% |
914,637 |
24,452 |
5.38 |
% |
||||||||||||||||
|
Short-term FHLB advance |
384,224 |
8,532 |
4.48 |
% |
384,679 |
10,593 |
5.54 |
% |
||||||||||||||||
|
Long-term FHLB advance |
1,334 |
17 |
2.57 |
% |
2,153 |
25 |
2.34 |
% |
||||||||||||||||
|
Other borrowings |
6,150 |
268 |
8.78 |
% |
- |
- |
- |
|||||||||||||||||
|
Subordinated debentures |
104,124 |
2,326 |
4.50 |
% |
103,978 |
2,489 |
4.81 |
% |
||||||||||||||||
|
Total interest-bearing liabilities |
$ |
3,034,362 |
$ |
42,417 |
2.82 |
% |
$ |
2,766,811 |
$ |
44,598 |
3.24 |
% |
||||||||||||
|
Noninterest-bearing deposits |
661,382 |
707,806 |
||||||||||||||||||||||
|
Other liabilities |
43,174 |
62,331 |
||||||||||||||||||||||
|
Shareholders' Equity |
398,979 |
368,126 |
||||||||||||||||||||||
|
Total Liabilities and Shareholders' Equity |
$ |
4,137,897 |
$ |
3,905,074 |
||||||||||||||||||||
|
Net interest income and interest rate spread(1) |
$ |
67,587 |
2.95 |
% |
$ |
56,123 |
2.38 |
% |
||||||||||||||||
|
Net interest margin(2) |
3.57 |
% |
3.16 |
% |
||||||||||||||||||||
*Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1.2 million and $1.3 million for the periods ended June 30, 2025 and 2024, respectively.
**Average balance includes nonaccrual loans.
Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the six months ended June 30, 2025 and 2024. The table is presented on a fully tax-equivalent basis.
Page 50
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
|
Increase (decrease) due to: |
||||||||||||
|
Volume (1) |
Rate (1) |
Net |
||||||||||
|
(Dollars in thousands) |
||||||||||||
|
Interest income: |
||||||||||||
|
Loans, including fees |
$ |
6,140 |
$ |
2,047 |
$ |
8,187 |
||||||
|
Taxable securities |
695 |
607 |
1,302 |
|||||||||
|
Tax-exempt securities |
(96 |
) |
27 |
(69 |
) |
|||||||
|
Interest-bearing deposits in other banks |
- |
(137 |
) |
(137 |
) |
|||||||
|
Total interest income |
$ |
6,739 |
$ |
2,544 |
$ |
9,283 |
||||||
|
Interest expense: |
||||||||||||
|
Demand and savings |
$ |
1,170 |
$ |
3,151 |
$ |
4,321 |
||||||
|
Time |
1,487 |
(6,025 |
) |
(4,538 |
) |
|||||||
|
Short-term FHLB advance |
(13 |
) |
(2,048 |
) |
(2,061 |
) |
||||||
|
Long-term FHLB advance |
(10 |
) |
2 |
(8 |
) |
|||||||
|
Other borrowings |
268 |
- |
268 |
|||||||||
|
Subordinated debentures |
3 |
(166 |
) |
(163 |
) |
|||||||
|
Repurchase agreements |
- |
- |
- |
|||||||||
|
Total interest expense |
$ |
2,905 |
$ |
(5,086 |
) |
$ |
(2,181 |
) |
||||
|
Net interest income |
$ |
3,834 |
$ |
7,630 |
$ |
11,464 |
||||||
(1)
The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate.
The Company provides for credit losses through regular provisions to the allowance for credit losses. During the six months ended June 30, 2025, the Company recorded a provision for credit losses of $2,592, a decrease of $1,055, from $3,647 during the six months ended June 30, 2024.
Noninterest income for the six months ended June 30, 2025 and 2024 was as follows:
|
Six Months Ended June 30, |
||||||||||||||||
|
2025 |
2024 |
$ Change |
% Change |
|||||||||||||
|
Service charges |
$ |
3,088 |
$ |
2,928 |
$ |
160 |
5.5 |
% |
||||||||
|
Net gain (loss) on equity securities |
(103 |
) |
(67 |
) |
(36 |
) |
-53.7 |
% |
||||||||
|
Net gain on sale of loans and leases |
1,445 |
1,751 |
(306 |
) |
-17.5 |
% |
||||||||||
|
ATM/Interchange fees |
2,744 |
2,799 |
(55 |
) |
-2.0 |
% |
||||||||||
|
Wealth management fees |
2,665 |
2,613 |
52 |
2.0 |
% |
|||||||||||
|
Lease revenue and residual income |
2,421 |
5,203 |
(2,782 |
) |
-53.5 |
% |
||||||||||
|
Bank owned life insurance |
773 |
717 |
56 |
7.8 |
% |
|||||||||||
|
Swap fees |
125 |
122 |
3 |
2.5 |
% |
|||||||||||
|
Other |
1,291 |
2,568 |
(1,277 |
) |
-49.7 |
% |
||||||||||
|
Total noninterest income |
$ |
14,449 |
$ |
18,634 |
$ |
(4,185 |
) |
-22.5 |
% |
|||||||
Total noninterest income for the six months ended June 30, 2025 was $14,449, a decrease of $4,185, or 22.5%, from $18,634 for the same period of 2024. Lease revenue and residual income decreased $2,782 for the six months ended June 30, 2025, compared to the same period of 2024, mainly due to stronger lease originations in 2024 coupled with a one-time non-recurring adjustment decreasing leasing revenue by $1,044 associated with CLF's core system conversion. Other income decreased $1,277 for the six months ended June 30, 2025, compared to the same period of 2024, mostly related to lower fee revenue from CLF.
Page 51
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
The components of noninterest expense for the six month periods ended June 30, 2025 and 2024 are as follows:
|
Six Months Ended June 30, |
||||||||||||||||
|
2025 |
2024 |
$ Change |
% Change |
|||||||||||||
|
Compensation expense |
$ |
29,054 |
$ |
31,197 |
$ |
(2,143 |
) |
-6.9 |
% |
|||||||
|
Net occupancy expense |
3,053 |
2,666 |
387 |
14.5 |
% |
|||||||||||
|
Contracted data processing |
1,103 |
1,104 |
(1 |
) |
-0.1 |
% |
||||||||||
|
FDIC Assessment |
1,562 |
1,032 |
530 |
51.4 |
% |
|||||||||||
|
State franchise tax |
1,160 |
964 |
196 |
20.3 |
% |
|||||||||||
|
Professional services |
3,888 |
2,398 |
1,490 |
62.1 |
% |
|||||||||||
|
Equipment expense |
3,867 |
4,969 |
(1,102 |
) |
-22.2 |
% |
||||||||||
|
ATM/Interchange expense |
1,263 |
1,257 |
6 |
0.5 |
% |
|||||||||||
|
Marketing |
585 |
924 |
(339 |
) |
-36.7 |
% |
||||||||||
|
Amortization of core deposit intangibles |
670 |
757 |
(87 |
) |
-11.5 |
% |
||||||||||
|
Software maintenance expense |
2,571 |
2,365 |
206 |
8.7 |
% |
|||||||||||
|
Other |
5,832 |
6,198 |
(366 |
) |
-5.9 |
% |
||||||||||
|
Total noninterest expense |
$ |
54,608 |
$ |
55,831 |
$ |
(1,223 |
) |
-2.2 |
% |
|||||||
Total noninterest expense for the six months ended June 30, 2025 was $54,608, a decrease of $1,223, or 2.2%, from $55,831 reported for the same period of 2024. The decrease in total noninterest expense was primarily due to decreases in compensation expense and equipment expense, mostly offset by increases in professional services. The decrease in compensation expense was primarily due to an increase in the deferral of salaries and wages related to the loan growth in the first six months of 2025 coupled with a decrease in the average number of full-time equivalent employees to 523 at June 30, 2025, compared to 538 for the same period of 2024, resulting in lower compensation and benefits costs. The decrease in equipment expense was mainly due to normal depreciation as well as decreases in expenses related to operating lease contracts. The increase in professional fees was attributable to utilizing consultants to assist in the transitioning of the new core operating system at CLF.
Income tax expense for the six months ended June 30, 2025 totaled $3,653, up $1,798 compared to the same period of 2024. The effective tax rates for the six months ended June 30, 2025 and 2024 were 14.7% and 12.1%, respectively. The difference between the statutory federal income tax rate and the Company's effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low-income housing tax credits, tax-deductible captive insurance premiums and bank owned life insurance income.
Capital Resources
Shareholders' equity totaled $404,137 at June 30, 2025, compared to $388,502 at December 31, 2024. Shareholders' equity increased during the first six months of 2025 as a result of net income of $21,183, partially offset by dividends on common shares of $5,270.
All of the Company's capital ratios exceeded the regulatory minimum guidelines as of June 30, 2025 and December 31, 2024 as identified in the following table:
|
Total Risk |
Tier I Risk |
CET1 Risk |
Leverage |
|||||||||||||
|
Company Ratios-June 30, 2025 |
14.7 |
% |
11.2 |
% |
10.3 |
% |
8.8 |
% |
||||||||
|
Company Ratios-December 31, 2024 |
13.9 |
% |
10.4 |
% |
9.5 |
% |
8.6 |
% |
||||||||
|
For Capital Adequacy Purposes |
8.0 |
% |
6.0 |
% |
4.5 |
% |
4.0 |
% |
||||||||
|
To Be Well Capitalized Under Prompt |
||||||||||||||||
|
Corrective Action Provisions |
10.0 |
% |
8.0 |
% |
6.5 |
% |
5.0 |
% |
||||||||
Liquidity
The Company maintains a conservative liquidity position. All securities, with the exception of equity securities, are classified as available-for-sale. Securities, with maturities of one year or less, totaled $8,840, or 1.25% of the total securities portfolio, at June 30, 2025. The available-for-sale securities portfolio helps to provide the Company with the ability to meet its funding needs. The Condensed
Page 52
Civista Bancshares, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Consolidated Statements of Cash Flows (Unaudited) contained in the Consolidated Financial Statements detail the Company's cash flows from operating activities resulting from net earnings.
As reported in the Condensed Consolidated Statements of Cash Flows (Unaudited), our cash flows are classified for financial reporting purposes as operating, investing or financing cash flows. Net cash provided by operating activities was $14,693 and $12,945 for the six months ended June 30, 2025 and 2024, respectively. The primary additions to cash from operating activities are from proceeds from the sale of loans. The primary use of cash from operating activities is from loans originated for sale. Net cash used for investing activities was $76,078 and $164,247 for the six months ended June 30, 2025 and 2024, respectively, principally reflecting our loan and investment security activities. Cash provided by financing activities was $72,088 and $146,656 for the six months ended June 30, 2025 and 2024, respectively. The primary additions in financing activities is the increase in short-term FHLB advances, partially offset by the payment of common dividends.
Future loan demand of Civista may be funded by increases in deposit accounts, proceeds from payments on existing loans, the maturity of securities, and the sale of securities classified as available-for-sale. Additional sources of funds may also come from borrowing in the Federal Funds market and/or borrowing from the FHLB. Through its correspondent banks, Civista maintains federal funds borrowing lines totaling $50,000. As of June 30, 2025, Civista had total credit availability with the FHLB of $889,402 with standby letters of credit totaling $123,000 and a remaining borrowing capacity of approximately $331,799. In addition, CBI maintains a credit line with a third party lender totaling $10,000. No borrowings were outstanding by CBI under this credit line as of June 30, 2025.
Page 53
Civista Bancshares, Inc.
Quantitative and Qualitative Disclosures About Market Risk
Form 10-Q
(Amounts in thousands, except share data)
Civista Bancshares Inc. published this content on August 06, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on August 06, 2025 at 21:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]