Civista Bancshares, Inc. Announces Third Quarter 2018 Earnings

SANDUSKY, OhioNov. 2, 2018 /PRNewswire/ — Civista Bancshares, Inc. (NASDAQ: CIVB) (“Civista”) reported net loss available to common shareholders of $3.6 million, or ($0.31) per diluted share, for the third quarter of 2018.  This compares to net income available to common shareholders of $3.4 million, or $0.29 per diluted share, for the prior year period.

For the nine-month period ended September 30, 2018, Civista reported net income available to common shareholders of $5.8 million or $0.51 per diluted share.  This compares to $11.0 million or $0.97 per diluted share, in the same period of 2017.

“The third quarter of 2018 was a very busy quarter.  We closed on the acquisition of United Community Bancorp and completed the integration of their systems.  While those two items are big accomplishments by themselves, we also originated $36.7 million of loans.  With our organic growth and the acquisition, our loans are now over $1.5 billion.  Our annualized organic loan growth was 12.5% for the quarter,” said Dennis G. Shaffer, President and CEO of Civista.

Factors Affecting Comparability

Most recently, Civista acquired United Community Bancorp (“UCB”) in September 2018.  The financial position and results of operations of UCB prior to its acquisition date are not included in the Company’s financial results for periods prior to the acquisition date.

Adjusted Earnings

Financial results for the third quarter and nine months ended September 30, 2018 included $8.8 million and $12.0 millionrespectively, in acquisition and integration expenses, as well as a loss on sale of securities of $392 thousand.  Excluding these expenses, adjusted earnings were $4.8 million, or $0.37 diluted earnings per share, for the third quarter of 2018 and $16.8 million, or $1.37 diluted earnings per share, for the nine months ended September 30, 2018.

A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States (“GAAP”) is provided in the financial tables at the end of this press release.

Results of Operations:

Net interest income increased $2.1 million, or 15.7%, for the third quarter of 2018, and $5.4 million, or 13.6%, for the nine months ended September 30, compared to the same periods of 2017.  Interest income increased $3.1 million, or 20.6%, for the third quarter of 2018 and $7.2 million or 16.9% for the nine-month period ended September 30.  For both periods, an increase in average loans outstanding, as well as an increase in loan yields, contributed to the increase in interest income compared to 2017.  Interest expense increased $906 thousand, or 78.4 %, for the third quarter of 2018 and $1.8 million, or 63.6%, for the nine months ended September 30 compared to the same periods of 2017.  The increase in interest expense is due to both an increase in average balances and an increase in the cost of interest-bearing liabilities.  The tax equivalent net interest margin increased 7 basis points to 4.15% for the third quarter of 2018, compared to 4.08% for the same period a year ago and increased 21 basis points to 4.14% for the nine months ended September 30, 2018, compared to 3.93% for the same period a year ago.

Mr. Shaffer continued, “We have been positioned for some time for an increase in interest rates.  We have seen the benefits through the increase in our net interest margin.  The addition of UCB provides core low-cost funding for the future.”

 

Average Balance Analysis

(Unaudited – Dollars in thousands except share data)

Three Months Ended September 30,

2018

2017

Average

Yield/

Average

Yield/

Assets:

balance

Interest

rate *

balance

Interest

rate *

Interest-earning assets:

Loans

$   1,256,680

$ 15,833

5.00%

$   1,122,131

$ 13,022

4.60%

Taxable securities

145,621

1,042

2.81%

150,534

977

2.61%

Non-taxable securities

107,211

908

4.29%

93,022

812

5.44%

Interest-bearing deposits in other banks

24,527

103

1.67%

11,450

25

0.87%

Total interest-earning assets

$   1,534,039

17,886

4.69%

$   1,377,137

14,836

4.41%

Noninterest-earning assets:

Cash and due from financial institutions

22,399

24,652

Premises and equipment, net

18,219

18,000

Accrued interest receivable

5,120

4,460

Intangible assets

38,920

28,541

Other assets

16,929

10,352

Bank owned life insurance

28,452

24,889

Less allowance for loan losses

(13,303)

(12,988)

Total Asset

$   1,650,775

$   1,475,043

Liabilities and Shareholders Equity:

Interest-bearing liabilities:

Demand and savings

$      653,537

$      317

0.19%

$      594,088

$      160

0.11%

Time

163,236

466

1.13%

194,364

447

0.91%

FHLB advances

180,073

925

2.04%

85,840

276

1.28%

Federal funds purchased

0.00%

462

2

1.72%

Subordinated debentures

29,427

349

4.71%

29,427

268

3.61%

Repurchase Agreements

18,664

5

0.11%

14,328

3

0.08%

Total interest-bearing liabilities

$   1,044,937

2,062

0.78%

$      918,509

1,156

0.50%

Noninterest-bearing deposits

385,646

363,783

Other liabilities

14,591

12,826

Shareholders’ Equity

205,601

179,925

Total Liabilities and Shareholders’ Equity

$   1,650,775

$   1,475,043

Net interest income and interest rate spread

$ 15,824

3.91%

$ 13,680

3.91%

Net interest margin

4.15%

4.08%

* – Interest yields are calculated using a 21% tax-equivalent adjustment for 2018 and a 35% tax-equivalent adjustment for 2017

 

 

 

Average Balance Analysis

(Unaudited – Dollars in thousands except share data)

Nine Months Ended September 30,

2018

2017

Average

Yield/

Average

Yield/

Assets:

balance

Interest

rate *

balance

Interest

rate *

Interest-earning assets:

Loans

$   1,188,093

$ 43,615

4.91%

$   1,094,401

$ 37,211

4.55%

Taxable securities

144,036

3,069

2.83%

144,379

2,764

2.59%

Non-taxable securities

103,540

2,672

4.42%

86,713

2,307

5.56%

Interest-bearing deposits in other banks

53,566

614

1.53%

78,576

473

0.80%

Total interest-earning assets

$   1,489,235

49,970

4.55%

$   1,404,069

42,755

4.20%

Noninterest-earning assets:

Cash and due from financial institutions

49,330

53,487

Premises and equipment, net

17,836

18,084

Accrued interest receivable

4,947

4,446

Intangible assets

31,918

28,682

Other assets

14,539

10,164

Bank owned life insurance

26,327

24,747

Less allowance for loan losses

(13,127)

(13,156)

      Total Assets

$   1,621,005

$   1,530,523

Liabilities and Shareholders Equity:

Interest-bearing liabilities:

Demand and savings

$      628,610

$      819

0.17%

$      582,716

$      413

0.09%

Time

163,660

1,241

1.01%

181,931

1,087

0.80%

FHLB

108,239

1,560

1.93%

57,195

534

1.25%

Federal funds purchased

0.00%

156

2

1.71%

Subordinated debentures

29,427

975

4.43%

29,427

766

3.48%

Repurchase Agreements

17,871

13

0.10%

18,597

14

0.10%

Total interest-bearing liabilities

$      947,807

4,608

0.65%

$      870,022

2,816

0.43%

Noninterest-bearing deposits

465,448

478,137

Other liabilities

14,889

12,881

Shareholders’ Equity

192,861

169,483

Total Liabilities and Shareholders’ Equity

$   1,621,005

$   1,530,523

Net interest income and interest rate spread

$ 45,362

3.90%

$ 39,939

3.77%

Net interest margin

4.14%

3.93%

* – Interest yields are calculated using a 21% tax-equivalent adjustment for 2018 and a 35% tax-equivalent adjustment for 2017

 

Provision for loan losses was $390 thousand for the nine months ended September 30, 2018.  No provision was recorded during 2017.

For the third quarter of 2018, noninterest income totaled $3.3 million, a decrease of $177 thousand, or 5.1%, compared to the prior year’s third quarter.  Noninterest income for the first nine months of 2018 totaled $13.3 million, an increase of $589 thousand, or 4.6%, compared to the prior year’s first nine months.

 

Noninterest income

(dollars in thousands)

Three months ended
September 30,

Nine months ended
September 30,

2018

2017

2018

2017

Service charges

$    1,219

$    1,177

$    3,712

$    3,609

Net gain on sale of securities

(392)

(9)

(386)

(9)

Net gain on equity securities

27

102

Net gain on sale of loans

428

472

1,235

1,207

ATM/Interchange fees

622

567

1,764

1,643

Wealth management fees

873

787

2,561

2,233

Bank owned life insurance

147

142

432

429

Tax refund processing fees

2,750

2,750

Other

364

329

1,123

842

Total noninterest income

$    3,288

$    3,465

$  13,293

$  12,704

 

For the third quarter of 2018, we recorded a loss on securities sold of $392 thousand as a result of selling three securities to improve the structure and to gain future yield.  ATM/Interchange fees increased $55 thousand, or 9.7%, and $121 thousand, or 7.4%, for the third quarter and nine-month periods ended September 30, 2018 and 2017, primarily due to increased interchange income.  Wealth management fees increased $86 thousand, or 10.9%, and $328 thousand, or 14.7%, for the third quarter and nine-month period ended September 30, 2018 and 2017.  Assets under management totaled $468.2 million, representing an increase of $2.8 million in the third quarter of 2018 and $5.0 million, or 1.1%, since the end of the third quarter 2017.  Other noninterest income increased for the nine-month period due primarily to an increase in swap related income of $164 thousand.

Mr. Shaffer continued, “During the third quarter we took a look at our investment portfolio and determined that by repositioning a couple of securities we could improve the structure of our portfolio as well as add yield.  In the short-term, that resulted in a $392 thousand loss.  In the long-term, this transaction should result in the pick-up of approximately 146 basis points in yield.”

For the third quarter of 2018, noninterest expense totaled $22.2 million, an increase of $10.0 million, or 82.1%, compared to the prior year’s third quarter.  Noninterest expense for the first nine months of 2018 increased $14.1 million, or 38.9%, when compared to the first nine months of 2017.

Leave a Reply

Your email address will not be published. Required fields are marked *