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, despite an increase in shares outstanding due to capital offerings and acquisitions [4] - The return on assets (ROA) for Q4 was 1.14%, improving to 1.42% when excluding one-time expenses, with a full-year ROA of 1.11% [5] Business Line Data and Key Metrics Changes - Net interest income for Q4 totaled $36.5 million, a 5.5% increase from the linked quarter and a 16% increase from Q4 2024 [6] - Non-interest income increased by $251,000, or 2.6%, from the linked quarter and by $869,000, or 9.6%, from Q4 2024 [8] - Non-interest expense for Q4, after adjusting for non-recurring expenses, was $27.6 million, consistent with the linked quarter [10] 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 and lease portfolio grew by $68.7 million, representing an annualized growth rate of 8.7% during Q4 [7] - The loan-to-deposit ratio was 94.3%, slightly down from the linked quarter, with a target range of 90%-95% [16] Company Strategy and Development Direction - The company aims for mid-single-digit loan growth in 2026, focusing on commercial and industrial (C&I) growth while leveraging Farmers' excess deposits [7][12] - Investments in technology and digital banking solutions are expected to enhance deposit growth and support loan growth [27][40] - The company is committed to maintaining a strong capital position to support organic growth and investments in infrastructure [18] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the company's ability to generate strong earnings despite mixed economic conditions across the country [18] - Credit quality remains solid, with low delinquencies and stable credit metrics, although there was a slight increase in non-performing loans [19] - The management anticipates a gradual expansion of the net interest margin, projecting a 2-3 basis point increase in Q1 and further growth in subsequent quarters [35] Other Important Information - The company announced an increase in its quarterly dividend to $0.18 per share, reflecting confidence in its financial performance [8][17] - The tangible common equity ratio increased from 6.43% a year ago to 9.54% at year-end 2025, indicating strong capital generation [20] Q&A Session Summary Question: Loan growth outlook and composition - Management expects commercial loans to lead growth in 2026, with a focus on C&I and potential leasing growth [25][26] Question: Digital channel growth potential - The digital channel is in early stages, with initial success in opening new accounts, but significant growth is anticipated as more products are launched [31][32] Question: Margin trends and interest rate assumptions - Management expects a slight margin expansion in Q1, with potential further increases depending on interest rate movements [35][36] Question: Expense run rate post-acquisition - First quarter expenses are expected to be similar to current levels, with some reductions anticipated after the Farmers conversion [39] Question: Credit quality and non-performing loans - The increase in non-performing loans was attributed to one isolated credit situation, with overall credit quality remaining stable [46][47]