Civista Bancshares Inc. Reports Q3 2024 Earnings

Civista Bancshares Inc. (NASDAQ: CIVB) reported an 18% increase in net income to $8.4 million, or $0.53 per diluted share, for Q3 2024 compared to the previous quarter. However, this marks a $2 million decline year-over-year. The bank is undergoing a transition, moving away from its income tax refund processing and adapting to changes in overdraft processing. Loan growth has slowed, prompting management to actively manage its deposit and loan portfolio in anticipation of potential Federal Reserve rate cuts.

Key Takeaways

• Increased Net Income: Civista Bancshares reported an 18% quarterly increase but a year-over-year decline in net income.
• Slowed Loan Growth: The loan-to-deposit ratio decreased from 102% to 95%.
• Deposit Initiatives: The bank opened 1,000 new deposit accounts through Ohio's Homebuyer Plus program, contributing to a $246 million increase in deposits.
• Net Interest Income: Increased by 5.3% to $29.2 million with a net interest margin expansion to 3.16%.
• Dividend: A quarterly dividend of $0.16 per share was declared.
• Shelf Offering: Civista announced a $200 million shelf offering and closed a branch to save costs.
• Capital Levels: Strong capital levels with a Tier 1 leverage ratio of 8.45% and improved tangible common equity ratio.
• Management Outlook: Anticipated low single-digit loan growth and cautious approach to commercial real estate lending.

Company Outlook

Civista expects low single-digit loan growth in upcoming quarters, aiming to rebuild its tangible common equity ratio to between 7% and 7.5%.

Challenges

• $2 million decline in net income year-over-year.
• Slowed loan growth at an annualized rate of 4%.
• Non-interest income decreased by 8.1% from the prior quarter.

Opportunities

• Deposit growth through Ohio Homebuyer Plus and wealth management client conversions.
• Improvement in efficiency ratio to 70.2%.

Misses

• Increase in the cost of interest-bearing deposits to 2.80%.
• Slight rise in allowance for credit losses ratio to 1.36%.

Q&A Highlights

• Management discussed the bank's healthy reserve status and stable credit quality, with a focus on reducing wholesale funding.
• Civista expects to maintain deposit pricing amidst potential Federal Reserve rate cuts.
• Executives expressed confidence in an $800,000 reserve for system transitions.

Civista Bancshares is in a strategic adjustment phase allowed by its disciplined approach to loan pricing. Despite challenges, management is optimistic about enhancing its core deposit franchise.

InvestingPro Insights

• Civista Bancshares, with a market capitalization of $316.46 million, has raised dividends for 14 consecutive years, reflecting its commitment to shareholder returns.
• The stock is trading near a 52-week high with a reported total return of 34.1% over the last six months.

Final Remarks

Civista Bancshares remains focused on creating shareholder value while serving its customers. The bank's disciplined strategies position it well for the future amid economic uncertainties.