Civista Bancshares(CIVB) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net income for Q4 2025 of $12.3 million, or $0.61 per diluted share, a 24% increase from Q4 2024 [3] - For the full year, net income was $46.2 million, or $2.64 per diluted share, compared to $31.7 million, or $2.01 per diluted share for 2024 [4] - The return on assets (ROA) for Q4 was 1.14%, improving to 1.42% when excluding one-time expenses [5] - The efficiency ratio improved to 57.7% for the quarter, compared to 61.4% for the linked quarter and 68.3% for the prior year [10] Business Line Data and Key Metrics Changes - Net interest income for Q4 totaled $36.5 million, a 5.5% increase over the linked quarter and a 16% increase over Q4 2024 [5] - Non-interest income increased by $251,000, or 2.6%, from the linked quarter, but decreased by $3.8 million, or 10%, for the year compared to 2024 [8][9] - The loan and lease portfolio grew by $68.7 million, representing an annualized growth rate of 8.7% during Q4 [6] Market Data and Key Metrics Changes - The company added $106 million in loans and $236 million in low-cost deposits from the acquisition of Farmers Savings Bank [5] - The loan-to-deposit ratio was 94.3%, slightly down from the linked quarter, with a target range of 90%-95% [15] - The security portfolio totaled $685 million, representing 15.8% of the balance sheet, with 100% classified as available for sale [16] Company Strategy and Development Direction - The company aims to maintain a strong capital position to support organic growth and invest in technology and infrastructure [17] - There is a focus on reducing reliance on wholesale funding, with a successful reduction in brokered deposits for four consecutive quarters [7] - The company plans to leverage the excess deposits from Farmers Savings Bank to support future loan growth [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic conditions across Ohio and Southeastern Indiana, noting no systemic signs of deterioration [17] - The company anticipates mid-single-digit loan growth in 2026, with a focus on commercial and industrial lending [6][22] - Credit quality remains solid, with low delinquencies and a stable allowance for credit losses [18] Other Important Information - The company announced an increase in its quarterly dividend to $0.18 per share, representing a 3.2% annualized yield [7] - The tangible common equity ratio increased from 9.21% at September 30 to 9.54% at year-end [17] - The company is investing in technology and personnel to enhance its operations and growth potential [28] Q&A Session Summary Question: Loan growth outlook and composition - Management expects commercial lending to lead growth in 2026, with a focus on C&I and commercial real estate [22][23] Question: Margin trends and interest rate assumptions - The company anticipates a slight margin expansion in Q1 and further increases in subsequent quarters, assuming rate cuts [26][27] Question: Credit quality and non-performing loans - The increase in non-performing loans was attributed to one specific credit issue, with overall credit quality remaining stable [30][31] Question: Capital optimization and share repurchase plans - The company has a $13.5 million share repurchase authorization and will consider repurchases if they see value [39] Question: Leasing revenue expectations - Leasing revenue is expected to be lumpy, with a potential drop in the first quarter but an increase in subsequent quarters [40]