Civista Bancshares(CIVB) - 2024 Q4 - Annual Report

Financial Performance - Net income for the year ended December 31, 2024 was $31,683, compared to$42,964 for the year ended December 31, 2023[248]. - Net interest income for 2024 was $116,710, a decrease of$8,786, or 7.0%, from 2023[249]. - Noninterest income increased by $585, or 1.6$37,748 for the year ended December 31, 2024, driven by gains in loan sales and lease revenue[258]. - Noninterest expense increased by $4,909, or 4.6$112,520 for the year ended December 31, 2024, primarily due to higher compensation and professional services expenses[260]. - Income tax expense decreased to $4,891 in 2024 from$7,649 in 2023, with an effective tax rate of 13.4% compared to 15.1% in 2023[261]. Asset and Loan Growth - As of December 31, 2024, the company's total assets increased to $4,098,469, up from$3,861,418 in 2023, representing a growth of approximately 6.1%[216]. - Net loans totaled $3,041,561 as of December 31, 2024, reflecting a 7.7$2,824,568 in 2023[218]. - The total average loans outstanding for 2024 were $2,984,912, up from$2,286,928 in 2023, reflecting a robust lending environment[223]. - Commercial Real Estate - Non-Owner Occupied loans increased by $64,097, contributing significantly to the overall growth in net loans[218]. - The average balance of loans increased by$262,115, or 9.6%, to $2,984,912 for the year ended December 31, 2024[250]. Credit Quality and Provisions - The allowance for credit losses at year-end 2024 was$39,669, compared to $28,511 in 2023, indicating a significant increase in provisions for potential credit losses[223]. - The ratio of allowance for credit losses to total loans outstanding was 1.29$3,376 in 2024, compared to a recovery of $118 in 2023, highlighting a shift towards increased credit losses[223]. - Provisions for credit losses totaled$5,364 in 2024, an increase of $929 from$4,435 in 2023, primarily to support organic loan growth[255]. Deposits and Interest Rates - Year-end deposit balances totaled $3,211,870 in 2024 compared to$2,985,028 in 2023, an increase of $226,842, or 7.6$3,086,961 compared to $2,852,037 for 2023, an increase of 8.2$32,747, or 57.2%, to $89,985 for the year ended December 31, 2024, attributed to higher average rates and balances of interest-bearing liabilities[252]. Shareholder Equity and Dividends - Total shareholders' equity increased$16,500, or 4.4%, during 2024 to $388,502[244]. - Shareholders' equity rose to$388,502 at December 31, 2024, compared to $372,002 at the end of 2023, driven by net income of$31,683[278]. - The Company paid $0.64 per common share in dividends in 2024 compared to$0.61 per common share in dividends in 2023[244]. - The company paid dividends totaling $20,300 to CBI in 2024, representing approximately 57% of Civista's earnings for the year[276]. Regulatory and Operational Risks - The company is subject to operational risks including cybersecurity threats, which could lead to financial loss and reputational damage[136]. - The company has implemented security controls to prevent unauthorized access to its systems, but risks remain due to potential breaches[145]. - Noncompliance with the Bank Secrecy Act and anti-money laundering regulations could result in significant financial penalties and reputational harm[150]. - The company relies heavily on third-party vendors for operational services, which exposes it to additional risks if those vendors experience disruptions[153]. - The company is subject to extensive regulatory scrutiny, and changes in regulations could adversely affect its operations and financial condition[176]. Market and Economic Conditions - The company faces strong competition in attracting deposits and originating loans, particularly from large regional financial institutions and nontraditional sources, which may impact its net interest margin[157]. - Changes in tax laws could adversely affect the company's performance and the demand for its loans and deposit products[196]. - The company must continuously update its technology to remain competitive and meet customer demands in a rapidly changing financial services market[197]. - External events such as climate change, natural disasters, and acts of war or terrorism could significantly impact the company's business operations[199].