Civista Bancshares(CIVB) - 2025 Q2 - Quarterly Report

PART I. Financial Information Item 1. Financial Statements This section presents the unaudited consolidated balance sheets, statements of operations, and cash flows for the period ended June 30, 2025 Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Total Assets | $4,185,869 | $4,098,469 | | Loans, net | $3,110,669 | $3,041,561 | | Securities available-for-sale | $642,910 | $648,067 | | Goodwill | $125,520 | $125,520 | | Total Liabilities | $3,781,732 | $3,709,967 | | Total Deposits | $3,196,207 | $3,211,870 | | Short-term FHLB advances | $433,500 | $339,000 | | Total Shareholders' Equity | $404,137 | $388,502 | Consolidated Statements of Operations Highlights (Unaudited) | Metric ($ in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $34,814 | $27,751 | $67,587 | $56,123 | | Provision for Credit Losses - Loans | $1,171 | $1,800 | $2,419 | $3,842 | | Noninterest Income | $6,589 | $10,377 | $14,449 | $18,634 | | Noninterest Expense | $27,482 | $28,389 | $54,608 | $55,831 | | Net Income | $11,015 | $7,064 | $21,183 | $13,424 | | Earnings per share, diluted | $0.71 | $0.45 | $1.37 | $0.85 | Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,693 | $12,945 | | Net cash used for investing activities | ($76,078) | ($164,247) | | Net cash provided by financing activities | $72,088 | $146,656 | | Increase (Decrease) in cash and cash equivalents | $10,703 | ($4,646) | Notes to Interim Consolidated Financial Statements (Unaudited) Details accounting policies, securities, loans, credit loss allowances, and significant subsequent events like a planned merger - The Company operates primarily in one reportable segment, banking, providing financial services in Ohio, Indiana, and Kentucky[18][19] - Total nonaccrual loans decreased to $22.7 million at June 30, 2025, from $31.0 million at December 31, 2024[61][62] - On July 10, 2025, the Company announced an agreement to merge with The Farmers Savings Bank for an aggregate deal value of approximately $70.4 million[142][143][144] - On July 10, 2025, the Company announced an underwritten public offering of common shares, raising aggregate net proceeds of approximately $76.0 million[145] Loan Portfolio Composition ($ in thousands) | Loan Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial & Agriculture | $338,598 | $328,488 | | Commercial Real Estate- Owner Occupied | $378,248 | $374,367 | | Commercial Real Estate- Non-Owner Occupied | $1,263,612 | $1,225,991 | | Residential Real Estate | $815,408 | $763,869 | | Real Estate Construction | $277,643 | $305,992 | | Total Loans | $3,151,124 | $3,081,230 | Allowance for Credit Losses (ACL) Roll-Forward - Six Months Ended June 30, 2025 ($ in thousands) | Category | Beginning Balance (Dec 31, 2024) | Charge-offs | Recoveries | Provision | Ending Balance (June 30, 2025) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total | $39,669 | ($2,068) | $435 | $2,419 | $40,455 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Discusses financial condition and operational results, highlighting asset growth, increased net income, and recent strategic actions Financial Condition Total assets grew 2.1% to $4.19 billion, driven by loan growth funded by FHLB advances as deposits slightly decreased - Total assets increased by $87.4 million (2.1%) to $4.19 billion at June 30, 2025, from $4.10 billion at December 31, 2024[157] Loan Portfolio Change ($ in thousands) | Loan Category | Change from Dec 31, 2024 | % Change | | :--- | :--- | :--- | | Residential Real Estate | $51,539 | 6.7% | | Commercial Real Estate—Non Owner Occupied | $37,621 | 3.1% | | Real Estate Construction | ($28,349) | -9.3% | | Total Loans | $69,894 | 2.3% | Deposit Composition Change ($ in thousands) | Deposit Category | Change from Dec 31, 2024 | % Change | | :--- | :--- | :--- | | Time deposits | $90,748 | 19.3% | | Brokered deposits | ($46,118) | -9.2% | | Noninterest-bearing demand | ($47,485) | -6.8% | | Total Deposits | ($15,663) | -0.5% | Results of Operations Net income increased significantly for Q2 and YTD 2025, driven by higher net interest income and an expanded net interest margin - The fully tax equivalent net interest margin for the six months ended June 30, 2025, was 3.57%, an increase from 3.16% for the same period in 2024[188] Q2 2025 vs Q2 2024 Performance ($ in thousands) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $11,015 | $7,064 | $3,951 | | Net Interest Income | $34,814 | $27,751 | $7,063 | | Noninterest Income | $6,589 | $10,377 | ($3,788) | | Noninterest Expense | $27,482 | $28,389 | ($907) | YTD 2025 vs YTD 2024 Performance ($ in thousands) | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $21,183 | $13,424 | $7,759 | | Net Interest Income | $67,587 | $56,123 | $11,464 | | Noninterest Income | $14,449 | $18,634 | ($4,185) | | Noninterest Expense | $54,608 | $55,831 | ($1,223) | Capital Resources and Liquidity The Company maintains a strong capital position with all regulatory ratios exceeding 'well-capitalized' minimums and has significant liquidity - As of June 30, 2025, Civista had a remaining borrowing capacity of approximately $331.8 million with the FHLB, plus other credit lines[205] Regulatory Capital Ratios | Ratio | June 30, 2025 | December 31, 2024 | Well-Capitalized Minimum | | :--- | :--- | :--- | :--- | | CET1 Risk Based Capital | 10.3% | 9.5% | 6.5% | | Tier I Risk Based Capital | 11.2% | 10.4% | 8.0% | | Total Risk Based Capital | 14.7% | 13.9% | 10.0% | | Leverage Ratio | 8.8% | 8.6% | 5.0% | Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company's primary market risk is interest-rate risk, with analysis showing a slightly asset-sensitive position - The company's primary technique for managing interest-rate risk is the measurement of its asset/liability gap[212] Net Portfolio Value Sensitivity Analysis (June 30, 2025) | Change in Rates (basis points) | Dollar Change ($ in thousands) | Percent Change | | :--- | :--- | :--- | | +400bp | $34,022 | 5.4% | | +200bp | $17,280 | 2.7% | | +100bp | $8,026 | 1.3% | | Base | — | 0.0% | | -100bp | ($6,861) | (1.1%) | | -200bp | ($29,396) | (4.7%) | Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls during the quarter - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[218] - No material changes in internal control over financial reporting occurred during the quarter[219] PART II. Other Information Item 1. Legal Proceedings Management believes pending legal proceedings in the ordinary course of business will not have a material adverse effect - Management believes that any pending legal proceedings will not have a material adverse effect on the company's financial position or operations[221] Item 1A. Risk Factors Updates risk factors, focusing on the pending merger with The Farmers Savings Bank and challenges in maintaining internal controls - The consummation of the FSB Merger is subject to customary closing conditions, and there is no assurance it will be completed[224] - The company may face challenges in integrating FSB's business, which could prevent the realization of anticipated benefits and synergies[227][231] - A new risk factor highlights the importance of maintaining effective internal control over financial reporting due to recent staff turnover and acquisitions[233][235] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds A new $13.5 million share repurchase program was authorized, though no shares were repurchased in the second quarter of 2025 - On April 15, 2025, the Company announced a new common share repurchase program authorizing up to $13.5 million in repurchases[238] - No shares were repurchased during the three months ended June 30, 2025[237]