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, representing a 53% increase from Q3 2024 and a 16% increase from the linked quarter [2] - Pre-provision net revenue increased by $4.9 million, or 45% year-over-year, and by $1.9 million, or 14% sequentially [3] - Net interest income totaled $34.5 million, consistent with the linked quarter, while the net interest margin declined by six basis points to 3.58% [3] - Non-interest income increased by $3 million, or 46.2% over the linked quarter, and was consistent with Q3 2024 [5] Business Line Data and Key Metrics Changes - Non-interest income for the quarter was $9.6 million, consistent with the prior year's third quarter, despite a $494,000 decline in leasing fees [6] - The company experienced a $55.1 million decline in total loans and leases, with significant declines in commercial and agricultural loans and non-owner occupied commercial real estate [8] - Residential loans increased by $27 million, indicating a shift in loan origination focus [9] Market Data and Key Metrics Changes - Total deposits grew by $33.4 million, with a $56.4 million increase in core deposit funding during the quarter [11][12] - 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 [14] Company Strategy and Development Direction - The company completed a follow-on common stock offering, raising $80.5 million to support organic growth and investments in technology and infrastructure [4] - The merger with Farmers Savings Bank is expected to enhance liquidity and expand the customer base, with preparations for system conversion underway [4][18] - The focus remains on organic growth, deepening customer relationships, and enhancing fee income through capital investments in technology and automation [25][27] 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 [16] - The company anticipates loan growth returning to a mid-single-digit range for Q4 and increasing into mid to high single digits in 2026 [10][34] - 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 [28] Other Important Information - The company announced a quarterly dividend of $0.17 per share, consistent with the prior quarter, representing a 3.3% yield [5] - The tangible common equity ratio increased from 6.7% to 9.21% due to strong earnings and successful capital raise, with expectations of a decline post-merger [15] Q&A Session Summary Question: Margin outlook with potential rate cuts - Management anticipates a margin expansion of about five basis points in Q4, considering potential rate cuts [23] Question: Capital priorities post-Farmers acquisition - The focus will be on organic growth and increasing tangible book value, with a disciplined approach to M&A [24][25] Question: Confidence in achieving loan growth targets - Management expressed confidence due to a strong pipeline and historical loan-generating capabilities [34] Question: Fee income outlook - Anticipated fee income for Q4 is projected to be around $9.2 million, including contributions from Farmers Savings Bank [39] Question: Loan yield decline explanation - The decline was attributed to a mix shift and competitive pricing, with expectations for yield improvement as loans reprice [42][44] Question: Timing of Farmers acquisition closure - The acquisition is expected to close shortly after the shareholder meeting on November 4 [50]