Civista Bancshares(CIVB) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net income of $12.8 million or $0.68 per diluted share, a 53% increase from Q3 2024 and a 16% increase from the linked quarter [5] - Pre-provision net revenue increased by $4.9 million or 45% compared to Q3 2024 and by $1.9 million or 14% from the linked quarter [5] - Net interest income totaled $34.5 million, consistent with the linked quarter, while net interest margin declined by six basis points to 3.58% [5][6] - Non-interest income increased by $3 million or 46.2% over the linked quarter, totaling $9.6 million, consistent with Q3 2024 [8][10] Business Line Data and Key Metrics Changes - Non-interest income for the quarter was $9.6 million, with a $494,000 decline in leasing fees offset by increases in other categories [10] - The company experienced a decline in total loans and leases by $55.1 million, primarily due to over $120 million in payoffs [12] - Significant declines were noted in commercial and agricultural loans by $36 million and non-owner occupied commercial real estate by $48 million [13] Market Data and Key Metrics Changes - Total deposits grew by $33.4 million, with a reduction in brokered deposits by $23 million [16] - The loan-to-deposit ratio was 95.8%, down from the linked quarter, with expectations to reduce this further post-acquisition of Farmers Savings Bank [18] Company Strategy and Development Direction - The company plans to use new capital to reduce overnight borrowings and strengthen tangible common equity, while focusing on organic growth and technology investments [6][7] - The merger with Farmers Savings Bank is expected to close shortly after November 4, enhancing the company's deposit base and operational capabilities [7][20] - The company aims to streamline deposit accounts and enhance digital services to attract new customers and deepen existing relationships [17][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic environment across their footprint, noting strong credit quality and stable credit metrics [21][22] - The company anticipates organic loan growth returning to mid-single digits in Q4 and increasing into mid to high single digits in 2026 [15][40] - The effective tax rate for the quarter was 18.5%, with expectations to remain in the 16% to 16.5% range for the remainder of the year [34] Other Important Information - The company announced a quarterly dividend of $0.17 per share, consistent with the prior quarter, representing a 3.3% yield [8] - The tangible common equity ratio increased from 6.7% to 9.21% due to strong earnings and a successful capital raise [20] Q&A Session Summary Question: Margin outlook with potential rate cuts - Management anticipates margin expansion by five basis points in Q4 if rate cuts occur as expected [27] Question: Capital priorities post-Farmers acquisition - The focus will be on organic growth and increasing tangible book value, with M&A opportunities evaluated on a disciplined basis [28][30] Question: Confidence in achieving loan growth targets - Management noted a strong pipeline and historical loan generation capabilities, despite recent payoffs [39][40] Question: Fee income outlook - Anticipated fee income for Q4 is around $9.2 million, including contributions from Farmers [45] Question: Loan yield decline explanation - The decline was attributed to a mix shift and pricing competition, with expectations for yield improvement as loans reprice [48][49] Question: Timing of Farmers acquisition closure - The acquisition is expected to close shortly after the shareholder meeting on November 4 [54][55]