Civista Bancshares(CIVB) - 2024 Q1 - Quarterly Results

First Quarter 2024 Highlights Civista's Q1 2024 net income fell to $6.4 million ($0.41/share) from $12.9 million ($0.82/share) in Q1 2023, driven by a $3.8 million noninterest income shortfall Q1 2024 vs Q1 2023 Performance | Metric | Q1 2024 (USD) | Q1 2023 (USD) | | :--- | :--- | :--- | | Net Income | $6.4 million | $12.9 million | | Diluted EPS | $0.41 | $0.82 | - The company faced approximately $3.8 million in noninterest income headwinds due to exiting the tax refund business, the absence of a prior-year $1.5 million one-time bonus, and changes in overdraft processing[3] - The first quarter dividend of $0.16 per share represents an annualized yield of 4.16% and a dividend payout ratio of 42.11%, based on the March 29, 2024 share price[6] Results of Operations Q1 2024 operations saw a 13.0% net interest income and 23.2% noninterest income decrease, driven by higher interest expense and strategic exits, worsening the efficiency ratio to 73.8% Net Interest Income and Margin Q1 2024 net interest income decreased by 13.0% to $28.4 million, with net interest margin contracting 77 basis points to 3.22%, due to surging interest expense Net Interest Income and Margin (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (USD) | Q1 2023 (USD) | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $28.4 million | $32.6 million | -13.0% | | Net Interest Margin | 3.22% | 3.99% | -77 bps | - Interest income increased due to a 41 basis point rise in yield (+$3.7M) and a $239.3 million increase in average earning assets (+$3.5M)[7] - Interest expense surged by $12.8 million (143.4%) YoY, driven by a 140 basis point increase in the average rate paid on interest-bearing liabilities and a $411.6 million increase in their average balance, primarily in time deposits[8] Provision for Credit Losses Q1 2024 provision for credit losses increased to $2.0 million from $620 thousand in Q1 2023, with the allowance for credit losses to loans rising to 1.34% Provision for Credit Losses (Q1 2024 vs Q1 2023) | Period | Provision for Credit Losses (USD) | | :--- | :--- | | Q1 2024 | $2.0 million | | Q1 2023 | $620 thousand | - The reserve ratio (allowance for credit losses to loans) increased to 1.34% as of March 31, 2024, from 1.30% at December 31, 2023[12] Noninterest Income Noninterest income decreased by 23.2% to $8.5 million YoY, primarily due to the exit from tax refund processing and the absence of a prior-year $1.5 million nonrecurring fee Noninterest Income Breakdown (in thousands) | Category | Q1 2024 (USD thousands) | Q1 2023 (USD thousands) | $ Change (USD thousands) | | :--- | :--- | :--- | :--- | | Total Noninterest Income | $8,504 | $11,068 | $(2,564) | | Tax refund processing fees | $0 | $1,900 | $(1,900) | | Other | $1,602 | $1,926 | $(324) | | Service charges | $1,440 | $1,773 | $(333) | - The company generated zero income from tax refund processing fees after exiting the third-party payment processor business, compared to $1.9 million in Q1 2023[17] - Other income decreased primarily due to a $1.5 million nonrecurring fee collected in 2023 from the renewal of the company's MasterCard contract[17] Noninterest Expense Noninterest expense increased marginally by 0.9% to $27.7 million YoY, with compensation and software costs rising, while the efficiency ratio worsened to 73.8% Noninterest Expense Breakdown (in thousands) | Category | Q1 2024 (USD thousands) | Q1 2023 (USD thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Noninterest Expense | $27,689 | $27,432 | 0.9% | | Compensation expense | $15,457 | $15,105 | 2.3% | | Professional services | $1,149 | $1,555 | -26.1% | | Software maintenance expense | $1,189 | $878 | 35.4% | - The efficiency ratio deteriorated to 73.8% for Q1 2024, compared to 62.0% for Q1 2023, primarily due to decreased net interest and noninterest income[23] Balance Sheet Analysis Total assets grew to $3.9 billion with a 1.3% loan portfolio increase, while deposits remained stable at approximately $3.0 billion despite a shift to higher-cost accounts - Total assets increased by $18.8 million (<1%) from December 31, 2023, to March 31, 2024, driven by a $36.4 million increase in the loan portfolio[25] Loan Portfolio The loan portfolio grew by $36.4 million (1.3%) to $2.9 billion in Q1 2024, driven by increases in commercial and residential real estate loans Loan Balances by Category (in thousands) | Category | March 31, 2024 (USD thousands) | Dec 31, 2023 (USD thousands) | $ Change (USD thousands) | | :--- | :--- | :--- | :--- | | Total Loans | $2,898,139 | $2,861,727 | $36,412 | | Commercial Real Estate: Non-owner Occupied | $1,185,688 | $1,161,893 | $23,795 | | Residential Real Estate | $676,800 | $659,841 | $16,959 | | Real Estate Construction | $267,737 | $260,409 | $7,328 | Deposits Total deposits marginally decreased by $4.3 million to $2.98 billion, with a $63.7 million outflow from noninterest-bearing deposits offset by growth in higher-cost accounts Deposit Balances by Category (in thousands) | Category | March 31, 2024 (USD thousands) | Dec 31, 2023 (USD thousands) | $ Change (USD thousands) | | :--- | :--- | :--- | :--- | | Total Deposits | $2,980,695 | $2,985,028 | $(4,333) | | Noninterest-bearing demand | $707,993 | $771,699 | $(63,706) | | Savings and money market | $929,126 | $863,067 | $66,059 | | Time deposits | $908,884 | $900,813 | $8,071 | - The decrease in noninterest-bearing demand deposits was primarily due to a $51.7 million decrease in business accounts and a $19.5 million decrease related to the former tax refund program[28] Shareholders' Equity and Stock Repurchase Program Shareholders' equity decreased by $2.3 million to $369.7 million in Q1 2024, primarily due to increased accumulated other comprehensive loss, with no share repurchases - Total shareholders' equity decreased by $2.3 million from year-end 2023, as a $3.9 million increase in retained earnings was more than offset by a $6.2 million increase in accumulated other comprehensive loss[33] - Civista did not repurchase any shares in 2024. Approximately $12.0 million remains under the current $13.5 million repurchase authorization, which expires in May 2024[32] Asset Quality Asset quality showed slight deterioration with non-performing assets increasing to $15.7 million (0.41% of total assets), while the allowance for credit losses to loans rose to 1.34% Asset Quality Metrics | Metric | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Non-performing assets | $15.7 million | $15.1 million | | Non-performing assets to assets ratio | 0.41% | 0.39% | | Allowance for credit losses to loans | 1.34% | 1.30% | | Allowance for credit losses to non-performing loans | 247.06% | 245.67% | - Net charge-offs for Q1 2024 were $353 thousand, compared to $128 thousand for Q1 2023[34] Supplemental Financial Information This section presents consolidated financial statements, key Q1 2024 figures including $6.4 million net income, balance sheet data, quarterly trends, and non-GAAP reconciliations for tangible common equity Consolidated Financial Statements Q1 2024 condensed income statement shows $6.4 million net income and $28.4 million net interest income, with the balance sheet reporting $3.88 billion total assets Consolidated Income Statement (in thousands) | Metric | Q1 2024 (USD thousands) | Q1 2023 (USD thousands) | | :--- | :--- | :--- | | Net interest income | $28,372 | $32,601 | | Provision for credit losses | $1,992 | $821 | | Net income | $6,360 | $12,888 | | Earnings per share, diluted | $0.41 | $0.82 | Selected Balance Sheet Items (in thousands) | Metric | March 31, 2024 (USD thousands) | Dec 31, 2023 (USD thousands) | | :--- | :--- | :--- | | Total assets | $3,880,258 | $3,861,418 | | Net loans | $2,859,290 | $2,824,568 | | Total deposits | $2,980,695 | $2,985,028 | | Total shareholders' equity | $369,659 | $372,002 | Quarterly Financial Trends Five-quarter trends show total interest expense more than doubling to $21.8 million, leading to consistent declines in net interest income and net income, while assets and loans grew modestly Quarterly Income Statement Trend (in thousands) | Metric | Q1 2024 (USD thousands) | Q4 2023 (USD thousands) | Q3 2023 (USD thousands) | Q2 2023 (USD thousands) | Q1 2023 (USD thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net interest income | $28,372 | $30,052 | $31,504 | $31,339 | $32,601 | | Net income | $6,360 | $9,655 | $10,387 | $10,034 | $12,888 | - Total interest expense has more than doubled over the last five quarters, increasing from $10.3 million in Q1 2023 to $21.8 million in Q1 2024, compressing profitability[50] Reconciliation of Non-GAAP Measures This section reconciles GAAP shareholders' equity to non-GAAP tangible common equity, which was $235.0 million as of March 31, 2024, with a tangible book value per share of $14.95 Tangible Common Equity Ratio (Non-GAAP) | Metric | March 31, 2024 (USD) | Dec 31, 2023 (USD) | | :--- | :--- | :--- | | Total Shareholder's Equity (GAAP) | $369.7M | $372.0M | | Less: Goodwill and intangible assets | $134.6M | $135.0M | | Tangible common equity (Non-GAAP) | $235.0M | $237.0M | | Tangible book value per share | $14.95 | $15.10 | | Tangible common equity to tangible assets | 6.28% | 6.36% |