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Civista Bancshares, Inc. Announces Second Quarter 2020 Earnings

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SANDUSKY, Ohio, July 24, 2020 /PRNewswire/ -- Civista Bancshares, Inc. (NASDAQ:CIVB) ("Civista") reported net income available to common shareholders of $6.5 million, or $0.41 per diluted share, for the second quarter of 2020, compared with $8.5 million, or $0.51 per diluted share, for the prior year period.  For the six-month period ended June 30, 2020, Civista reported net income available to common shareholders of $14.3 million or $0.88 per diluted share, compared to $18.0 million or $1.08 per diluted share, in the same period of 2019. 

"The challenges for 2020 continued through the second quarter.  Much of our market area was under a stay at home order during a large part of the second quarter. We continued to work with customers providing loan payment deferrals as well as relief from overdraft and service charge fees. Along with this economic uncertainty comes the need to increase our provision for loan losses.  Despite these challenging times, we are extremely pleased with our second quarter earnings," said Dennis G. Shaffer, President and CEO of Civista.

Results of Operations:

For the three-month period ended June 30, 2020 and 2019

Net interest income increased $333 thousand, or 1.5%, for the second quarter of 2020 compared to the same period of 2019. The decrease in net interest income is a result of a decrease in interest income, partially offset by a decrease in interest expense. 

Interest income decreased $342 thousand, or 1.4%, for the second quarter of 2020.  Average yields decreased 113 basis points which resulted in a $5.3 million decrease in interest income.  The decrease in average yields was partially offset by an increase in average earning assets of $541.2 million, which resulted in a $4.9 million increase in interest income.  Accretion income associated with purchased loan portfolios totaled $758 thousand for the second quarter of 2020 and $1.1 million for the second quarter of 2019.  During the quarter, the Bank had average Paycheck Protection Program ("PPP") Loans totaling $189.4 million. These loans had an average yield of 3.46% including the amortization of PPP fees.  Removing the impact of PPP loans, Interest income would have decreased $1.6 million and average asset yield would have been 4.29%.

Interest expense decreased $675 thousand, or 21.2%, for the second quarter of 2020 compared to the same period of 2019.  Average interest-bearing liabilities increased $303.5 million, resulting in a $141 thousand increase in interest expense.  Average rates decreased 35 basis points, resulting in an $816 thousand decrease in interest expense.

Net interest margin decreased 88 basis points to 3.61% for the second quarter of 2020, compared to 4.49% for the same period a year ago.  Accretion income associated with purchased loan portfolios contributed approximately 13 basis points and 25 basis points to net interest margin for the second quarter of 2020 and 2019, respectively.

For the six-month period ended June 30, 2020 and 2019

Net interest income increased $730 thousand, or 1.7%, compared to the same period in 2019.

Interest income increased $76 thousand, or 0.2%, for the first six months of 2020.  Average earning assets increased $378.0 million, which resulted in a $7.5 million increase in interest income.  Average yields decreased 78 basis points which resulted in a $7.4 million decrease in interest income.  Year-to-date accretion income associated with purchased loan portfolios totaled $1.5 million for 2020 and $2.1 million for 2019.  During the six-month period, the Bank had average PPP Loans totaling $94.7 million.  These loans had an average yield of 3.46% including the amortization of PPP fees.  Removing the impact of PPP loans Interest income would have decreased $1.6 million and average yields would have been 4.45%.

Interest expense decreased $654 thousand, or 10.8%, for the first six months of 2020 compared to the same period of 2019.  Average interest-bearing liabilities increased $206.9 million, resulting in a $546 thousand increase in interest expense.  Average rates decreased 22 basis points, resulting in a $1.2 million decrease in interest expense.

Net interest margin decreased 63 basis points to 3.84% for the first six months of 2020, compared to 4.47% for the same period a year ago.  Accretion income associated with purchased loan portfolios contributed approximately 14 basis points and 23 basis points to net interest margin for the first six months of 2020 and 2019, respectively.

Average Balance Analysis


(Unaudited - Dollars in thousands)












Three Months Ended June 30,



2020


2019



Average


Yield/


Average


Yield/


Assets:

balance

Interest

rate *


balance

Interest

rate *


Interest-earning assets:









Loans **

$   1,972,969

$ 21,613

4.41%


$   1,583,533

$ 21,657

5.49%


Taxable securities

185,956

1,359

3.05%


202,995

1,694

3.39%


Non-taxable securities

200,882

1,541

4.19%


171,004

1,408

4.39%


Interest-bearing deposits in other banks

168,199

71

0.17%


29,309

167

2.29%


Total interest-earning assets

$   2,528,006

24,584

4.01%


$   1,986,841

24,926

5.14%


Noninterest-earning assets:









Cash and due from financial institutions

84,961




38,558




Premises and equipment, net

22,535




21,819




Accrued interest receivable

9,312




7,324




Intangible assets

84,906




85,865




Bank owned life insurance

45,334




44,328




Other assets

43,297




22,193




Less allowance for loan losses

(17,098)




(13,884)




      Total Assets

$   2,801,253




$   2,193,044













Liabilities and Shareholders' Equity:









Interest-bearing liabilities:









Demand and savings

$   1,027,678

$      439

0.17%


$      858,781

$      721

0.34%


Time

289,658

1,363

1.89%


271,183

1,255

1.86%


FHLB

125,034

447

1.44%


138,271

831

2.41%


Other borrowings

124,819

4

0.01%


-

-

0.00%


Subordinated debentures

29,427

250

3.42%


29,427

372

5.07%


Repurchase agreements

22,987

6

0.15%


18,442

5

0.11%


Total interest-bearing liabilities

$   1,619,603

2,509

0.62%


$   1,316,104

3,184

0.97%


Noninterest-bearing deposits

790,891




540,283




Other liabilities

60,235




21,219




Shareholders' equity

330,524




315,438




Total Liabilities and Shareholders' Equity

$   2,801,253




$   2,193,044













Net interest income and interest rate spread

$ 22,075

3.39%



$ 21,742

4.17%











Net interest margin



3.61%




4.49%











* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $413 thousand and $378 thousand for the periods ended June 30, 2020 and 2019, respectively.  











** - Average balance includes nonaccrual loans


 

Average Balance Analysis


(Unaudited - Dollars in thousands)












Six Months Ended June 30,



2020


2019



Average


Yield/


Average


Yield/


Assets:

balance

Interest

rate *


balance

Interest

rate *


Interest-earning assets:









Loans **

$   1,849,327

$ 43,286

4.71%


$   1,573,924

$ 42,619

5.46%


Taxable securities

186,780

2,775

3.10%


205,285

3,442

3.41%


Non-taxable securities

199,233

3,053

4.21%


164,349

2,760

4.44%


Interest-bearing deposits in other banks

144,748

472

0.66%


58,541

689

2.37%


Total interest-earning assets

$   2,380,088

49,586

4.30%


$   2,002,099

49,510

5.08%


Noninterest-earning assets:









Cash and due from financial institutions

126,655




65,567




Premises and equipment, net

22,636




21,872




Accrued interest receivable

8,031




6,931




Intangible assets

84,994




85,990




Bank owned life insurance

45,210




43,987




Other assets

36,229




22,394




Less allowance for loan losses

(16,013)




(13,885)




      Total Assets

$   2,687,830




$   2,234,955













Liabilities and Shareholders' Equity:









Interest-bearing liabilities:









Demand and savings

$      961,285

$   1,044

0.22%


$      857,232

$   1,429

0.34%


Time

285,179

2,743

1.93%


270,847

2,438

1.82%


FHLB

141,391

1,028

1.46%


117,882

1,429

2.44%


Other borrowings

62,410

4

0.01%


-

-

0.00%


Federal funds purchased

305

3

1.98%


-

-

0.00%


Subordinated debentures

29,427

563

3.85%


29,427

744

5.10%


Repurchase agreements

22,555

11

0.10%


20,309

10

0.10%


Total interest-bearing liabilities

$   1,502,552

5,396

0.72%


$   1,295,697

6,050

0.94%


Noninterest-bearing deposits

795,215




610,265




Other liabilities

58,500




20,408




Shareholders' equity

331,563




308,585




Total Liabilities and Shareholders' Equity

$   2,687,830




$   2,234,955













Net interest income and interest rate spread

$ 44,190

3.58%



$ 43,460

4.14%











Net interest margin



3.84%




4.47%











* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $819 thousand and $741 thousand for the periods ended June 30, 2020 and 2019, respectively.  











** - Average balance includes nonaccrual loans


Provision for loan losses was $3.5 million for the second quarter of 2020 and $5.6 million for the six months ended June 30, 2020.  No provision was recorded during the first six months of 2019.  The reserve ratio increased to 1.01% from 0.86% at December 31, 2019 due to an increase in the bank's qualitative factors related to the economic shutdown that is driven by COVID-19.  The reserve ratio without $257.6 million of PPP loans would have been 1.16% at June 30, 2020.  Economic impacts include the loss of revenue being experience by our business clients, disruption of supply chains, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large number of customers requesting payment relief.  We expect our Commercial, Commercial Real Estate and Consumer portfolios to be impacted the most.

For the second quarter of 2020, noninterest income totaled $6.9 million, an increase of $1.8 million, or 34.3%, compared to the prior year's second quarter. 

Noninterest income








(unaudited - dollars in thousands)

Three months ended June 30,


2020


2019


$ change


% change

Service charges

$       930


$    1,552


$      (622)


-40.1%

Net gain on sale of securities

-


10


(10)


-100.0%

Net loss on equity securities

(5)


(33)


28


84.8%

Net gain on sale of loans

2,261


555


1,706


307.4%

ATM/Interchange fees

1,149


951


198


20.8%

Wealth management fees

904


911


(7)


-0.8%

Bank owned life insurance

240


252


(12)


-4.8%

Tax refund processing fees

475


550


(75)


-13.6%

Swap fees

764


15


749


NM

Other

136


341


(205)


-60.1%

Total noninterest income

$    6,854


$    5,104


$    1,750


34.3%









N/M - not meaningful
















Service charge income decreased primarily due to a $476.8 thousand decrease in overdraft fees.  The Company also waived $93 thousand in service charges related to the COVID-19 pandemic.  

Gain on sale of loans increased due to an increase in the volume of loans sold of $63.5 million, from $27.9 million in the second quarter of 2019 to $91.4 million in the second quarter of 2020.  The premium on sold loans also increased by 49 basis points in the second quarter this year compared to last year. 

ATM/Interchange fees increased as a result of increased transaction fees and the receipt of MasterCard fees. 

Swap fees increased as a result of the declining interest rate environment and more customers looking to lock in lower fixed rate loans.  During the quarter, we swapped $44.8 million in loans.

Tax refund processing fees decreased due to a decline in volume processed. 

For the six months ended June 30, 2020, noninterest income totaled $13.7 million, an increase of $2.3 million, or 20.6%, compared to the same period in the prior year. 

Noninterest income








(unaudited - dollars in thousands)

Six months ended June 30,


2020


2019


$ change


% change

Service charges

$    2,398


$    3,008


$      (610)


-20.3%

Net gain on sale of securities

-


14


(14)


-100.0%

Net loss on equity securities

(146)


(31)


(115)


-371.0%

Net gain on sale of loans

3,088


886


2,202


248.5%

ATM/Interchange fees

2,043


1,857


186


10.0%

Wealth management fees

1,910


1,758


152


8.6%

Bank owned life insurance

490


499


(9)


-1.8%

Tax refund processing fees

2,375


2,750


(375)


-13.6%

Swap fees

1,102


88


1,014


NM

Other

470


559


(89)


-15.9%

Total noninterest income

$  13,730


$  11,388


$    2,342


20.6%









N/M - not meaningful
















Service charge income decreased primarily due to a $447.5 thousand decrease in overdraft fees.  The Company also waived $93 thousand in service charges related to the COVID-19 pandemic. 

The increased gain on sale of loans is primarily due to an increase in volume of loans sold of $82.4 million, from $44.4 million year-to-date in 2019 to $126.8 million year-to-date in 2020.  The premium on sold loans also increased by 44 basis points during the six months this year compared to last year. 

ATM/Interchange fees increased as a result of increased transaction fees and the receipt of MasterCard fees. 

Wealth management fees increased due to an increase in average assets under management as well as a 5 basis point increase in the conversion ratio, to 0.71%, in 2020. 

Swap fees increased as a result of the declining interest rate environment and more customers looking to lock in lower fixed rate loans.  Year to date we have swapped $77.4 million in loans to provide low fixed rate loans for customers and variable rate loans for Civista. 

Tax refund processing fees decreased due to a decline in volume processed. 

For the second quarter of 2020, noninterest expense totaled $18.1 million, an increase of $1.5 million, or 8.9%, compared to the prior year's second quarter.

Noninterest expense








(unaudited - dollars in thousands)

Three months ended June 30,


2020


2019


$ change


% change

Compensation expense

$  10,597


$    9,548


$    1,049


11.0%

Net occupancy and equipment 

1,571


1,444


127


8.8%

Contracted data processing

475


447


28


6.3%

Taxes and assessments

631


605


26


4.3%

Professional services

883


700


183


26.1%

Amortization of intangible assets

228


235


(7)


-3.0%

ATM/Interchange expense

331


546


(215)


-39.4%

Marketing

339


367


(28)


-7.6%

Software maintenance expense

407


356


51


14.3%

Other

2,652


2,391


261


10.9%

Total noninterest expense

$  18,114


$  16,639


$    1,475


8.9%









Compensation expense increased due to an increase in employees, annual pay increases and commission expense.  Full time equivalent ("FTE") employees increased by 20, or 4.6%, to 456 FTE.  Annual pay increases in 2020 were an average of 3.3%.  Employee insurance decreased 4.1% for 2020.  Commission expense increased $418.1 thousand, or 88.7%, and overtime expense increased $166.2 thousand, or 119.2%, both as a result of increased loan activity.

The increase in net occupancy is a result of the COVID-19 pandemic related increases in janitorial services and supplies of $123 thousand.

The increase in professional services costs is the result of increased consulting services to implement cost savings and customer services.

The decrease in ATM/interchange expense is primarily due to a settlement received in the second quarter of 2020 and savings realized by a vendor change. 

The increase in software maintenance expense is due to a general increase in software maintenance contracts.

The increase in other operating expense is primarily due to increases in loan origination expense of $137.4 thousand, Mortgage Servicing Rights ("MSR") valuation expense of $121.6 thousand, postage expense of $50.4 thousand, communications expense of $38.6 thousand and education and training expense of $25.0 thousand.  These increases were partially offset by a decrease in travel and lodging expense of $182.3 thousand.

The efficiency ratio was 61.7% for the quarter ended June 30, 2020 compared to 61.1% for the quarter ended June 30, 2019.  The change in the efficiency ratio is due primarily to the increase in noninterest expense.

Civista's effective income tax rate for the second quarter 2020 was 11.3% compared to 15.1% in 2019.

For the six months ended June 30, 2020, noninterest expense totaled $36.0 million, an increase of $2.9 million, or 8.7%, compared to the same period in the prior year.

Noninterest expense








(unaudited - dollars in thousands)

Six months ended June 30,


2020


2019


$ change


% change

Compensation expense

$  21,468


$  19,353


$    2,115


10.9%

Net occupancy and equipment 

3,053


2,947


106


3.6%

Contracted data processing

925


866


59


6.8%

Taxes and assessments

1,210


1,197


13


1.1%

Professional services

1,620


1,395


225


16.1%

Amortization of intangible assets

459


475


(16)


-3.4%

ATM/Interchange expense

778


924


(146)


-15.8%

Marketing

695


707


(12)


-1.7%

Software maintenance expense

844


705


139


19.7%

Other

4,918


4,519


399


8.8%

Total noninterest expense

$  35,970


$  33,088


$    2,882


8.7%









Compensation expense increased due to an increase in employees, annual pay increases and commission expense.  FTE employees increased by 21, or 4.8%, to 454 FTE.  Annual pay increases in 2020 were an average of 3.3%.  Employee insurance increased 2.6% for 2020.  Commission expense increased $508.7 thousand, or 54.8%, and overtime expense increased $189.6 thousand, or 78.5%, both as a result of increased loan activity.

The decrease in ATM/Interchange expense is primarily due to a settlement received in the second quarter of 2020 and savings realized by a vendor change. 

The increase in software maintenance expense is due to a general increase in software maintenance contracts.

The increase in other operating expense is primarily due to increases in loan origination expense of $207.5 thousand, MSR valuation expense of $162.7 thousand, postage expense of $100.9 thousand, communications expense of $55.2 thousand, ATM/debit card losses of $51.5 thousand and education and training expense of $50.0 thousand.  These increases were partially offset by a decrease in travel and lodging expense of $255.4 thousand.

The efficiency ratio was 61.2% for the six months ended June 30, 2020 compared to 59.5% for the six months ended June 30, 2019.  The change in the efficiency ratio is due primarily to the increase in noninterest expense.

Civista's effective income tax rate for the first six months of 2020 was 12.2% compared to 15.8% in same period in 2019.   

Balance Sheet

Total assets increased $502.6 million, or 21.8%, from December 31, 2019 to June 30, 2020, due primarily to a $314.0 million, or 18.4%, increase in the loan portfolio.  Loans that are held for sale increased $16.2 million, or 710.6%, and cash increased $148.0 million, primarily related to the proceeds from Small Business Association's ("SBA") Paycheck Protection Program ("PPP") loans held on deposit.       

End of period loan balances








(unaudited - dollars in thousands)









June 30,


December 31,






2020


2019


$ Change


% Change

Commercial and Agriculture

$           442,444


$           203,110


$  239,334


117.8%

Commercial Real Estate:








Owner Occupied

252,914


245,606


7,308


3.0%

Non-owner Occupied

646,792


592,222


54,570


9.2%

Residential Real Estate

453,067


463,032


(9,965)


-2.2%

Real Estate Construction

178,318


155,825


22,493


14.4%

Farm Real Estate

35,441


34,114


1,327


3.9%

Consumer and Other

13,989


15,061


(1,072)


-7.1%

Total Loans

$        2,022,965


$        1,708,970


$  313,995


18.4%









Loan growth during 2020 totaled $314.0 million, including $257.6 million of PPP loans.  Otherwise, loan growth was led by increases of $61.9 million in Commercial Real Estate and $22.5 million in Real Estate Construction.  The Commercial Real Estate growth continues to be aided by some successful real estate projects we kept on balance sheet by using longer term swaps that might otherwise have been refinanced on the commercial mortgage-backed securities market. Our construction portfolio continues to be vibrant, especially in the Central Ohio market.  The decrease in Residential Real Estate was expected as we successfully refinance many on balance sheet mortgages and home equity loans into saleable mortgage products.  All regions have contributed to the growth in the first six months, aided by many new clients and prospects from our success in PPP originations.

Paycheck Protection Program

We began accepting applications for the PPP loans on April 3, 2020 and during the first six months of 2020 processed 2,290 loans totaling $257.6 million.  SBA fees, which will be earned over the life of the PPP loans, total approximately $9.8 million, which are being recognized in interest income over the life of the loans.  We are approved to borrow from the Paycheck Protection Program Lending Facility ("PPPLF"), and have borrowed $183.7 million.

"By participating in the SBA PPP lending program we were able to directly assist our small business customers, impacting more than 36,000 jobs.  This program will make a real difference in the businesses and lives of our customers and their employees," said Dennis G. Shaffer, President and CEO of Civista.

COVID-19 Loan Modifications

During the first six months, Civista modified 813 loans totaling $431.3 million, primarily consisting of the deferral of principal and/or interest payments.  All of the loans modified were performing at the time of the modification and comply with the provisions of the CARES Act to not be considered a troubled debt restructuring.  Details with respect to actual loan modifications processed through June 30, 2020 are as follows:

Loans modified under COVID-19 programs





(unaudited - dollars in thousands)





Type of Loan


Number of
Loans


Balance


Weighted
average
interest rate








Commercial and Agriculture


229


$      47,686


4.56%

Commercial Real Estate:







Owner Occupied


193


91,831


4.82%

Non-owner Occupied


179


234,543


4.47%

Residential Real Estate


170


29,012


4.67%

Real Estate Construction


18


26,296


4.39%

Farm Real Estate


9


1,783


4.94%

Consumer and Other


15


132


8.01%



813


$    431,283


4.57%








"We took a very proactive approach with our customers to offer deferrals with the onset of COVID-19 and the stay at home orders. The deferrals were for 90 days and many are expiring late this month," said Dennis G. Shaffer, President and CEO of Civista.

Total deposits increased $390.5 million, or 23.3%, from December 31, 2019 to June 30, 2020. 

End of period deposit balances








(unaudited - dollars in thousands)









June 30,


December 31,






2020


2019


$ Change


% Change

Noninterest-bearing demand

$             693,848


$             512,553


$    181,295


35.4%

Interest-bearing demand

408,980


301,674


107,306


35.6%

Savings and money market

673,524


588,697


84,827


14.4%

Time deposits

292,909


275,840


17,069


6.2%

Total Deposits

$         2,069,261


$         1,678,764


$    390,497


23.3%









The increase in noninterest-bearing demand of $181.3 million was due to a $134.1 million increase in business demand deposit accounts and a $21.4 million increase in personal demand deposit accounts.  Much of the increase in the business demand deposit accounts is due to the PPP loan proceeds.  Interest-bearing demand deposits increased, primarily due to increases in non-public fund accounts.  The increase in savings and money market was primarily due to an increases in money markets and brokered money market accounts.  The increase in time deposits is due to public fund time deposit accounts.  

FHLB advances totaled $125.0 million at June 30, 2020, a decrease of $101.5 million, or 44.8%, from December 31, 2019.  The increase in deposits reduced the need for wholesale funding.  The Company also borrowed $183.7 million from the PPPLF to help fund PPP loans.

Stock Repurchase Program

Civista approved a share repurchase plan in December 2019, authorizing the repurchase of up to 672,000 shares of outstanding common stock.  As of April 4 2020, Civista repurchased all 672,000 shares for $11.4 million, which equates to a weighted average price of $16.90 per share.  A new share repurchase program for $13.5 million was approved in April 2020.  There have not been any share repurchases under this new program. 

Shareholder Equity

Total shareholders' equity increased $6.5 million, or 2.0%, from December 31, 2019 to June 30, 2020 as a result of a $10.7 million increase in retained earnings and an increase in other comprehensive income of $6.8 million.  These increases were partially offset by an $11.5 million decrease related to the repurchase of shares.         

Asset Quality

Civista recorded net recoveries of $41 thousand for the six months of 2020 compared to net recoveries of $107 thousand for the same period of 2019.  The allowance for loan losses to loans was 1.01% at June 30, 2020 and 0.86% at December 31, 2019.   The allowance ratio at June 30, 2020, without the PPP loans was 1.16%.     

Allowance for Loan Losses





(unaudited - dollars in thousands)






Six months ended June 30,



2020


2019


Beginning of period

$         14,767


$         13,679


Charge-offs

(140)


(395)


Recoveries

181


502


Provision

5,612


-


End of period

$         20,420


$         13,786







Non-performing assets at June 30, 2020 were $7.8 million, a 14.6% decrease from December 31, 2019. The non-performing assets to assets ratio decreased to 0.28% from 0.39% at December 31, 2019.  The allowance for loan losses to non-performing loans increased to 262.13% from 161.95% At December 31, 2019.   

Non-performing Assets





(unaudited - dollars in thousands)

June 30,


December 31,



2020


2019


Non-accrual loans

$          5,441


$          6,115


Restructured loans

2,349


3,004


Total non-performing loans

7,790


9,119


Other Real Estate Owned

-


-


Total non-performing assets

$          7,790


$          9,119







Conference Call and Webcast
Civista Bancshares, Inc. will also host a conference call to discuss the Company's financial results for the second quarter of 2020 at 1:00 p.m. ET on Friday, July 24, 2020.  Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company's website, www.civb.com.  Participants can also listen to the conference call by dialing 855-238-2712 and ask to be joined into the Civista Bancshares, Inc. second quarter 2020 earnings call.  Please log in or dial in at least 10 minutes prior to the start time to ensure a connection.

An archive of the webcast will be available for one year on the Investor Relations section of the Company's website (www.civb.com).

Forward Looking Statements
This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Civista.  For these statements, Civista claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.   Statements in this press release should be considered in conjunction with the other information available about Civista, including the information in the filings we make with the Securities and Exchange Commission.  Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance.  The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties.  We have tried, wherever possible, to identify such statements by using words such as "anticipate," "estimate," "project," "intend," "plan," "believe," "will" and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.  Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Civista' reports filed with the Securities and Exchange Commission, including those described in "Item 1A Risk Factors" of Part I of Civista's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and any additional risks identified in the Company's subsequent Form 10-Q's.  Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof.  Civista does not undertake, and specifically disclaims any obligation, to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Civista Bancshares, Inc. is a $2.8 billion financial holding company headquartered in Sandusky, Ohio.  The Company's banking subsidiary, Civista Bank, operates 37 locations in Northern, Central and Southwestern Ohio, Southeastern Indiana and Northern Kentucky.  Civista Bancshares, Inc. may be accessed at www.civb.com.  The Company's common shares are traded on the NASDAQ Capital Market under the symbol "CIVB". 

Civista Bancshares, Inc.
Financial Highlights
(Unaudited, dollars in thousands, except share and per share amounts)

Consolidated Condensed Statement of Income










Three Months Ended


Six Months Ended


June 30,


June 30,


2020


2019


2020


2019









Interest income

$         24,584


$         24,926


$         49,586


$         49,510

Interest expense

2,509


3,184


5,396


6,050

Net interest income

22,075


21,742


44,190


43,460

Provision for loan losses

3,486


-


5,612


-

Net interest income after provision

18,589


21,742


38,578


43,460

Noninterest income

6,854


5,104


13,730


11,388

Noninterest expense

18,114


16,639


35,970


33,088

Income before taxes

7,329


10,207


16,338


21,760

Income tax expense

825


1,546


2,001


3,430

Net income

6,504


8,661


14,337


18,330

Preferred stock dividends 

-


164


-


328

Net income available 








to common shareholders

$           6,504


$           8,497


$         14,337


$         18,002









Dividends paid per common share

$             0.11


$             0.11


$             0.22


$             0.20









Earnings per common share,








basic

$             0.41


$             0.54


$             0.88


$             1.15

diluted

$             0.41


$             0.51


$             0.88


$             1.08









Average shares outstanding,








basic

16,044,125


15,628,537


16,280,935


15,618,154

diluted

16,044,125


16,922,712


16,280,935


16,912,329









Selected financial ratios:








Return on average assets

0.93%


1.58%


1.07%


1.65%

Return on average equity

7.91%


11.01%


8.70%


11.98%

Dividend payout ratio

27.13%


19.85%


24.98%


17.04%

Net interest margin (tax equivalent)

3.61%


4.49%


3.84%


4.47%











 

 Selected Balance Sheet Items 

(Dollars in thousands, except share and per share amounts)






 June 30,


 December 31,


2020


2019


(unaudited)







 Cash and due from financial institutions 

$               196,520


$                  48,535

 Investment securities 

369,181


359,690

 Loans held for sale 

18,523


2,285

 Loans 

2,022,965


1,708,970

 Less: allowance for loan losses 

(20,420)


(14,767)

 Net loans 

2,002,545


1,694,203

 Other securities 

20,537


20,280

 Premises and equipment, net 

23,137


22,871

 Goodwill and other intangibles 

84,852


85,156

 Bank owned life insurance 

45,489


44,999

 Other assets 

51,369


31,538

 Total assets 

$            2,812,153


$            2,309,557





 Total deposits 

$            2,069,261


$            1,678,764

 Federal Home Loan Bank advances 

125,000


226,500

 Securities sold under agreements to repurchase 

23,608


18,674

 Other borrowings 

183,695


-

 Subordinated debentures 

29,427


29,427

 Accrued expenses and other liabilities 

44,549


26,066

 Total shareholders' equity 

336,613


330,126

 Total liabilities and shareholders' equity 

$            2,812,153


$            2,309,557





 Shares outstanding at period end 

16,052,979


16,687,542





 Book value per share 

$                    20.97


$                    19.78

 Equity to asset ratio 

11.97%


14.29%





Selected asset quality ratios:




Allowance for loan losses to total loans

1.01%


0.86%

Non-performing assets to total assets

0.28%


0.39%

Allowance for loan losses to non-performing loans

262.13%


161.95%





Non-performing asset analysis




Nonaccrual loans

$                    5,441


$                    6,115

Troubled debt restructurings

2,349


3,004

Other real estate owned

-


-

Total

$                    7,790


$                    9,119





 

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)












June 30,


March 31,


December 31,


September 30,


June 30,

End of Period Balances

2020


2020


2019


2019


2019











Assets










Cash and due from banks

$     196,520


$     256,023


$       48,535


$       62,219


$        49,839

Investment securities

369,181


366,689


359,690


356,439


360,512

Loans held for sale

18,523


7,632


2,285


8,983


2,563

Loans

2,022,965


1,743,125


1,708,970


1,648,640


1,598,770

Allowance for loan losses

(20,420)


(16,948)


(14,767)


(14,144)


(13,786)

Net Loans

2,002,545


1,726,177


1,694,203


1,634,496


1,584,984

Other securities

20,537


20,280


20,280


20,280


20,280

Premises and equipment, net

23,137


22,443


22,871


22,201


21,720

Goodwill and other intangibles

84,852


84,919


85,156


85,461


85,706

Bank owned life insurance

45,489


45,249


44,999


44,745


44,491

Other assets

51,369


46,444


31,538


34,241


32,900

Total Assets

$  2,812,153


$  2,575,856


$  2,309,557


$  2,269,065


$  2,202,995











Liabilities










Total deposits

$  2,069,261


$  1,991,939


$  1,678,764


$  1,632,621


$  1,632,720

Federal Home Loan Bank advances

125,000


142,000


226,500


236,100


176,300

Securities sold under agreement to repurchase

23,608


22,699


18,674


15,088


15,554

Other borrowings

183,695


-


-


-


-

Subordinated debentures

29,427


29,427


29,427


29,427


29,427

Accrued expenses and other liabilities

44,549


61,624


26,066


26,566


24,782

Total liabilities

2,475,540


2,247,689


1,979,431


1,939,802


1,878,783











Shareholders' Equity










Preferred shares, Series B

-


-


-


9,158


9,364

Common shares

276,841


276,546


276,422


267,559


267,275

Retained earnings

78,712


73,972


67,974


62,023


56,199

Treasury shares

(32,594)


(32,239)


(21,144)


(21,144)


(17,235)

Accumulated other comprehensive income

13,654


9,888


6,874


11,667


8,609

Total shareholders' equity

336,613


328,167


330,126


329,263


324,212











Total Liabilities and Shareholders' Equity

$  2,812,153


$  2,575,856


$  2,309,557


$  2,269,065


$  2,202,995











Quarterly Average Balances










Assets:










Earning assets

$  2,528,006


$  2,232,168


$  2,070,175


$  2,021,780


$  1,986,841

Securities

386,838


385,187


372,639


379,525


373,999

Loans

1,972,969


1,725,685


1,676,769


1,626,010


1,583,533

Liabilities and Shareholders' Equity










Total deposits

$  2,108,227


$  1,975,133


$  1,661,452


$  1,622,527


$  1,670,247

Interest-bearing deposits

1,317,336


1,175,593


1,160,499


1,139,632


1,129,964

Other interest-bearing liabilities

302,267


209,909


252,908


246,235


186,140

Total shareholders' equity

330,524


332,602


329,634


326,103


315,438











 

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)












Three Months Ended


June 30,


March 31,


December 31,


September 30,


June 30,

Income statement

2020


2020


2019


2019


2019











Total interest and dividend income

$         24,584


$         25,002


$         24,521


$         24,023


$         24,926

Total interest expense

2,509


2,887


3,299


3,605


3,184

Net interest income

22,075


22,115


21,222


20,418


21,742

Provision for loan losses

3,486


2,126


885


150


-

Noninterest income

6,854


6,876


5,627


5,429


5,104

Noninterest expense

18,114


17,856


17,128


16,731


16,639

Income before taxes

7,329


9,009


8,836


8,966


10,207

Income tax expense

825


1,176


995


1,258


1,546

Net income

6,504


7,833


7,841


7,708


8,661

Preferred stock dividends

-


-


157


162


164

Net income available to 










common shareholders

$            6,504


$            7,833


$            7,684


$            7,546


$            8,497











Common shares dividend paid

$            1,764


$            1,835


$            1,702


$            1,722


$            1,719











Per share data




















Basic earnings per common share

$              0.41


$              0.47


$              0.49


$              0.48


$              0.54

Diluted earnings per common share

0.41


0.47


0.47


0.46


0.51

Dividends paid per common share

0.11


0.11


0.11


0.11


0.11

Average common shares outstanding - basic

16,044,125


16,517,745


15,796,713


15,577,371


15,628,537

Average common shares outstanding - diluted

16,044,125


16,517,745


16,734,391


16,849,887


16,922,712











Asset quality










Allowance for loan losses, beginning of period

$         16,948


$         14,767


$         14,144


$         13,786


$         13,822

Charge-offs

(116)


(24)


(345)


(36)


(156)

Recoveries

102


79


83


244


120

Provision

3,486


2,126


885


150


-

Allowance for loan losses, end of period

$         20,420


$         16,948


$         14,767


$         14,144


$         13,786











Ratios










Allowance to total loans

1.01%


0.97%


0.86%


0.86%


0.86%

Allowance to nonperforming assets

262.14%


197.97%


161.95%


149.91%


164.69%

Allowance to nonperforming loans

262.14%


197.97%


161.95%


149.91%


164.69%











Nonperforming assets










Nonperforming loans

$            7,790


$            8,561


$            9,119


$            9,435


$            8,371

Other real estate owned

-


-


-


-


-

Total nonperforming assets

$            7,790


$            8,561


$            9,119


$            9,435


$            8,371











Capital and liquidity










Tier 1 leverage ratio

10.43%


10.66%


12.35%


12.37%


12.44%

Tier 1 risk-based capital ratio

12.99%


14.33%


15.26%


15.50%


15.94%

Total risk-based capital ratio

13.97%


15.25%


16.10%


16.32%


16.78%

Tangible common equity ratio (1)

9.29%


9.82%


11.08%


10.81%


10.89%











(1) See reconciliation of non-GAAP measures at the end of this press release.







 

Reconciliation of Non-GAAP Financial Measures

(Unaudited - dollars in thousands except share data)












Three Months Ended


June 30,


March 31,


December 31,


September 30,


June 30,


2020


2020


2019


2019


2019











Tangible Common Equity










Total Shareholder's Equity - GAAP

$       336,613


$       328,167


$       330,126


$       329,263


$       324,212

Less: Preferred Equity

-


-


-


9,158


9,364

Less: Goodwill and intangible assets

83,135


83,363


83,595


83,829


84,064

Tangible common equity (Non-GAAP)

$       253,478


$       244,804


$       246,531


$       236,276


$       230,784











Total Shares Outstanding

16,052,979


16,064,010


16,687,542


15,473,275


15,633,059











Tangible book value per share

$            15.79


$            15.24


$            14.77


$            15.27


$            14.76











Tangible Assets










Total Assets - GAAP

$    2,812,153


$    2,575,856


$    2,309,557


$    2,269,065


$    2,202,995

Less: Goodwill and intangible assets

83,135


83,363


83,595


83,829


84,064

Tangible assets (Non-GAAP)

$    2,729,018


$    2,492,493


$    2,225,962


$    2,185,236


$    2,118,931











Tangible common equity to tangible assets

9.29%


9.82%


11.08%


10.81%


10.89%











 

Cision View original content:http://www.prnewswire.com/news-releases/civista-bancshares-inc-announces-second-quarter-2020-earnings-301099053.html

SOURCE Civista Bancshares, Inc.

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