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CIVB Civista Bancshares

Filed: 5 Feb 21, 8:35am

Exhibit 99.1

 

LOGO

Civista Bancshares, Inc. Announces Fourth Quarter 2020 Financial Results

Sandusky, Ohio, February 5, 2021 /PRNewswire/ – Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) announced its unaudited financial results for the three and twelve months ending December 31, 2020.

Fourth quarter and year-to-date 2020 highlights

 

  

Earned net income of $10.2 million, or $0.64 per diluted share, for the fourth quarter of 2020, compared to $7.7 million, or $0.47 per diluted share, for the fourth quarter of 2019.

 

  

Earned net income for the year of $32.2 million, or $2.00 per diluted share, compared to $33.2 million, or $2.01 per diluted share, in 2019.

 

  

Earned a record pre-tax, pre-provision net income of $47.2 million for the year, compared to $40.6 million in 2019. See reconciliation of non-GAAP measures at the end of this press release.

 

  

COVID–19 loan deferrals in effect were 4.0% of total loans, net of Paycheck Protection Program (“PPP”) loans, at period end, compared to 24.4% on June 30, 2020. The bank has not experienced any specific loan losses attributed to COVID–19 closures in 2020.

 

  

We increased our dividend in January 2021 to $0.12 per quarter which is equivalent to a dividend yield of 2.65% based on the February 2, 2021 market close of $18.11. The quarterly dividend represents an increase of 9.1%, and based on fourth quarter 2020 earnings per share, translates to a dividend payout ratio of 18.8%.

“While 2020 will most likely go down as the strangest year of my banking career, it is also one that has shown our mettle. The strategies and concerns we had going into the year changed quickly as the pandemic took hold. Our people rose to the occasion and made 2020 one of the more successful years on record for Civista. While our net income is down slightly from 2019, we recognized record pre-tax-pre-provision net income. We built our allowance for loan losses as the pandemic continued through the year. We have consistently been a conservative bank when it comes to looking at our loan portfolio. While we have downgraded ratings on many loans, we have yet to see any specific loan losses. We have continued to manage capital through our stock repurchase program and an increase in our dividend that was announced in January 2021.” said Dennis G. Shaffer, President and CEO of Civista.


Results of Operations:

For the three-month period ended December 31, 2020 and 2019

Net interest income increased $2.3 million, or 10.9%, for the fourth quarter of 2020 compared to the same period of 2019, due to an increase in interest income as well as a decrease in interest expense. Accretion of PPP fees was $2.3 million during the quarter.

Net interest margin decreased 49 basis points to 3.69% for the fourth quarter of 2020, compared to 4.18% for the same period a year ago.

Interest income increased $1.2 million, or 4.9%, for the fourth quarter of 2020. Average yields decreased 79 basis points which resulted in a $3.6 million decrease in interest income. Average earning assets increased $533.8 million, which resulted in a $4.8 million increase in interest income. PPP loans accounted for $242.1 million of the increase in average earning assets at a yield of 3.88%. Removing the impact of PPP loans, the yield on earning assets would have been 9 basis points higher. Included in interest income is $2.3 million of accretion of Paycheck Protection Program (“PPP”) fees as well as accretion income associated with purchased loan portfolios of $688 thousand.

Interest expense decreased $1.1 million, or 33.6%, for the fourth quarter of 2020, compared to the same period last year. The average rate paid on interest-bearing liabilities decreased 43 basis points, while average interest-bearing liabilities increased $323.9 million.


Average Balance Analysis

(Unaudited - Dollars in thousands)

 

   Three Months Ended December 31, 
   2020  2019 

Assets:

  Average
balance
  Interest   Yield/
rate*
  Average
balance
  Interest   Yield/
rate*
 

Interest-earning assets:

         

Loans**

  $2,072,477  $22,853    4.39 $1,676,769  $21,577    5.11

Taxable securities

   178,194   1,259    2.93  190,898   1,429    3.05

Non-taxable securities

   207,985   1,534    4.06  181,741   1,439    4.27

Interest-bearing deposits in other banks

   145,305   75    0.21  20,767   76    1.45
  

 

 

  

 

 

    

 

 

  

 

 

   

Total interest-earning assets

  $ 2,603,961   25,721    4.03 $ 2,070,175   24,521    4.82
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

 

Noninterest-earning assets:

         

Cash and due from financial institutions

   29,502      29,473    

Premises and equipment, net

   22,832      22,248    

Accrued interest receivable

   9,976      7,559    

Intangible assets

   84,919      85,388    

Bank owned life insurance

   45,816      44,841    

Other assets

   35,044      25,829    

Less allowance for loan losses

   (23,614     (14,245   
  

 

 

     

 

 

    

Total Assets

  $2,808,436     $2,271,268    
  

 

 

     

 

 

    

Liabilities and Shareholders’ Equity:

         

Interest-bearing liabilities:

         

Demand and savings

  $1,169,152  $380    0.13 $890,825  $712    0.32

Time

   289,815   1,083    1.49  269,674   1,382    2.03

FHLB

   125,000   452    1.44  205,040   871    1.69

Other borrowings

   95,820   80    0.33  543   1    0.73

Subordinated debentures

   29,427   188    2.54  29,427   329    4.44

Repurchase agreements

   28,110   7    0.10  17,898   4    0.09
  

 

 

  

 

 

    

 

 

  

 

 

   

Total interest-bearing liabilities

  $1,737,324   2,190    0.50 $1,413,407   3,299    0.93
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

 

Noninterest-bearing deposits

   685,898      500,953    

Other liabilities

   41,879      27,274    

Shareholders’ equity

   343,335      329,634    
  

 

 

     

 

 

    

Total Liabilities and Shareholders’ Equity

  $2,808,436     $2,271,268    
  

 

 

     

 

 

    

Net interest income and interest rate spread

 

 $ 23,531    3.53  $ 21,222    3.89

Net interest margin

      3.69     4.18

 

*

- Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $411 thousand and $386 thousand for the periods ended December 31, 2020 and 2019, respectively.

**

- Average balance includes nonaccrual loans


For the twelve-month period ended December 31, 2020 and 2019

Net interest income increased $4.6 million, or 5.4%, compared to the same period in 2019.

Interest income increased $1.8 million, or 1.8%, for the twelve months of 2020. The increase in interest income was primarily due to an increase in average earning assets of $471.9 million, partially offset by a decrease in yield of 84 basis points. During the twelve-month period, the Bank had average PPP Loans totaling $172.6 million with an average yield of 3.73%, including amortization of fees. Removing the impact of PPP loans, yields would have been 20 basis points higher.

Interest expense decreased $2.8 million, or 21.7%, for the twelve months of 2020 compared to the same period of 2019. Average interest-bearing liabilities increased $279.3 million, resulting in a $455 thousand increase in interest expense. Average rates decreased 34 basis points, resulting in a $3.3 million decrease in interest expense.

Net interest margin decreased 61 basis points to 3.70% for the twelve months of 2020, compared to 4.31% for the same period a year ago due to an increase in average earning assets as well as a decrease in the yield on earning assets.


Average Balance Analysis

(Unaudited - Dollars in thousands)

 

   Twelve Months Ended December 31, 
   2020  2019 

Assets:

  Average
balance
  Interest   Yield/
rate*
  Average
balance
  Interest   Yield/
rate*
 

Interest-earning assets:

         

Loans**

  $1,953,472  $87,777    4.49 $1,612,975  $84,972    5.27

Taxable securities

   183,721   5,359    3.03  200,074   6,584    3.35

Non-taxable securities

   202,982   6,123    4.15  172,812   5,647    4.36

Interest-bearing deposits in other banks

   155,960   606    0.39  38,359   851    2.22
  

 

 

  

 

 

    

 

 

  

 

 

   

Total interest-earning assets

  $2,496,135   99,865    4.10 $2,024,220   98,054    4.95
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

 

Noninterest-earning assets:

         

Cash and due from financial institutions

   77,848      47,472    

Premises and equipment, net

   22,831      21,946    

Accrued interest receivable

   9,043      7,088    

Intangible assets

   84,953      85,744    

Bank owned life insurance

   45,454      44,352    

Other assets

   37,675      24,273    

Less allowance for loan losses

   (19,231     (13,984   
  

 

 

     

 

 

    

Total Assets

  $2,754,708     $2,241,111    
  

 

 

     

 

 

    

Liabilities and Shareholders’ Equity:

         

Interest-bearing liabilities:

         

Demand and savings

  $1,050,544  $1,813    0.17 $869,340  $2,871    0.33

Time

   288,262   5,068    1.76  269,823   5,186    1.92

FHLB

   133,151   1,932    1.45  161,047   3,452    2.14

Other borrowings

   101,295   354    0.35  —     —      0.00

Federal funds purchased

   288   1    0.35  137   3    2.19

Subordinated debentures

   29,427   945    3.21  29,427   1,423    4.84

Repurchase agreements

   24,390   25    0.10  18,321   19    0.10
  

 

 

  

 

 

    

 

 

  

 

 

   

Total interest-bearing liabilities

  $1,627,357   10,138    0.62 $1,348,095   12,954    0.96
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

 

Noninterest-bearing deposits

   739,648      550,638    

Other liabilities

   51,242      24,072    

Shareholders’ equity

   336,461      318,306    
  

 

 

     

 

 

    

Total Liabilities and Shareholders’ Equity

  $2,754,708     $2,241,111    
  

 

 

     

 

 

    

Net interest income and interest rate spread

 

 $89,727    3.48  $85,100    3.99

Net interest margin

      3.70     4.31

 

*

- Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1.64 million and $1.52 million for the periods ended December 31, 2020 and 2019, respectively.

**

- Average balance includes nonaccrual loans


Provision for loan losses was $2.3 million for the fourth quarter of 2020 and $10.1 million for the year ended December 31, 2020. Provision for loan losses was $885 thousand for the fourth-quarter and $1.0 million for the year ended December 31, 2019. The increase in provision is due to an increase in the bank’s qualitative factors related to the economic shutdown that is driven by COVID-19 and the ongoing payment deferrals on loans modified under the CARES Act. Economic impacts include the loss of revenue experienced 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.

For the fourth quarter of 2020, noninterest income totaled $7.7 million, an increase of $2.0 million, or 36.2%, compared to the prior year’s fourth quarter.

Noninterest income

 

(unaudited - dollars in thousands)  Three months ended December 31, 
   2020   2019   $ change   % change 

Service charges

  $1,476   $1,662   $(186   -11.2

Net gain on sale of securities

   2    15    (13   -86.7

Net gain on equity securities

   69    40    29    72.5

Net gain on sale of loans

   3,062    1,006    2,056    204.4

ATM/Interchange fees

   1,246    1,185    61    5.1

Wealth management fees

   1,065    937    128    13.7

Bank owned life insurance

   244    254    (10   -3.9

Swap fees

   199    230    (31   -13.5

Other

   303    298    5    1.7
  

 

 

   

 

 

   

 

 

   

Total noninterest income

  $7,666   $5,627   $2,039    36.2
  

 

 

   

 

 

   

 

 

   

Service charge income decreased primarily due to a $273.4 thousand decrease in overdraft fees. Customer behavior changed during the COVID-19 pandemic, resulting in fewer overdrafts.    

Net gain on sale of loans increased due to an increase in the volume of loans sold of $46.7 million as well as an increase in the premium on sold loans of 112 basis points.

Wealth management fees increased as a result of increased assets under management, primarily driven by market gains, as well as an increase in the conversion ratio.    


For the twelve months ended December 31, 2020, noninterest income increased $5.7 million, or 25.6%, compared to the same period in the prior year.

Noninterest income

 

(unaudited - dollars in thousands)  Twelve months ended December 31, 
   2020   2019   $ change   % change 

Service charges

  $5,288   $6,395   $(1,107   -17.3

Net gain on sale of securities

   94    32    62    193.8

Net gain/(loss) on equity securities

   (57   121    (178   -147.1

Net gain on sale of loans

   8,563    2,707    5,856    216.3

ATM/Interchange fees

   4,472    4,056    416    10.3

Wealth management fees

   3,981    3,670    311    8.5

Bank owned life insurance

   977    1,007    (30   -3.0

Tax refund processing fees

   2,375    2,750    (375   -13.6

Swap fees

   1,459    516    943    182.8

Other

   1,030    1,189    (159   -13.4
  

 

 

   

 

 

   

 

 

   

Total noninterest income

  $28,182   $22,443   $5,739    25.6
  

 

 

   

 

 

   

 

 

   

Service charge income decreased primarily due a $1.1 million decrease in overdraft fees.    Customer behavior changed during the COVID-19 pandemic, resulting in fewer overdrafts.    

During the twelve months ended December 31, 2020, Civista sold $304.0 million of mortgage loans, an increase of $178.2 million from the same period in 2019. The premium on sold loans also increased by 67 basis points during the twelve months this year compared to last year. These two factors contributed to the increase in net gain on sale of loans.

ATM/Interchange fees increased as a result of increased transaction volume.

Swap fees increased as a result of the declining interest rate environment and more customers looking to lock in lower fixed rate loans. During 2020, Civista entered into swap agreements with a notional value of $104.4 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.

Wealth management fees increased as a result of increased assets under management, primarily driven by market gains, as well as an increase in the conversion ratio.                


For the fourth quarter of 2020, noninterest expense totaled $17.0 million, a decrease of $160 thousand, or 0.9%, compared to the prior year’s fourth quarter.

Noninterest expense

 

(unaudited - dollars in thousands)  Three months ended December 31, 
   2020   2019   $ change   % change 

Compensation expense

  $10,417   $10,097   $320    3.2

Net occupancy and equipment

   1,528    1,671    (143   -8.6

Contracted data processing

   540    530    10    1.9

Taxes and assessments

   716    286    430    150.3

Professional services

   506    693    (187   -27.0

Amortization of intangible assets

   227    235    (8   -3.4

ATM/Interchange expense

   552    450    102    22.7

Marketing

   18    300    (282   -94.0

Software maintenance expense

   483    422    61    14.5

Other

   1,981    2,444    (463   -18.9
  

 

 

   

 

 

   

 

 

   

Total noninterest expense

  $16,968   $17,128   $(160   -0.9
  

 

 

   

 

 

   

 

 

   

Compensation expense increased primarily due to annual pay increases and commission and incentive expense. Annual pay increases in 2020 were an average of 3.3%. Employee insurance decreased $270.1 thousand, or 26.7%, for the fourth quarter 2020, compared to the same period in 2019. Commission and incentive expense increased $400.1 thousand, or 24.5% as a result of increased loan activity.

The quarter-over-quarter increase in taxes and assessments was attributable to an increase in the FDIC assessment base and a $159.0 thousand credit for small banks, applied to the December 2019 assessments. State franchise tax increased $73.6 thousand related to a State of Ohio audit of the tax years 2018 and 2019.

The decrease in marketing expense is due to decreases in both advertising and business promotion expenses, primarily related to the COVID-19 pandemic. Event cancellations and postponed outreach efforts contributed to the decrease as our focus was on communicating changes in operations, safety protocols, alternative delivery channels, and economic relief programs with the safety and financial wellness of our employees and customers in mind.

The decrease in other operating expense is primarily due to a decreases in travel and lodging expense of $264.4 thousand, education and training of $164.9 thousand and donations of $149.4 thousand. These decreases were partially offset by increases in loan origination expenses of $126.5 thousand.

The efficiency ratio was 53.7% for the quarter ended December 31, 2020 compared to 62.9% for the quarter ended December 31, 2019. The change in the efficiency ratio is due to increases in both noninterest income and the increase in net interest income.

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


For the twelve months ended December 31, 2020, noninterest expense totaled $70.7 million, an increase of $3.7 million, or 5.6%, compared to the same period in the prior year.

Noninterest expense

 

(unaudited - dollars in thousands)  Twelve months ended December 31, 
   2020   2019   $ change   % change 

Compensation expense

  $42,480   $39,156   $3,324    8.5

Net occupancy and equipment

   6,085    6,081    4    0.1

Contracted data processing

   1,880    1,831    49    2.7

Taxes and assessments

   2,641    1,981    660    33.3

Professional services

   2,795    2,844    (49   -1.7

Amortization of intangible assets

   913    945    (32   -3.4

ATM/Interchange expense

   1,868    1,887    (19   -1.0

Marketing

   1,074    1,411    (337   -23.9

Software maintenance expense

   1,833    1,523    310    20.4

Other

   9,096    9,288    (192   -2.1
  

 

 

   

 

 

   

 

 

   

Total noninterest expense

  $70,665   $66,947   $3,718    5.6
  

 

 

   

 

 

   

 

 

   

The increase in compensation expense was due to increased payroll and commission and incentive based costs, offset by a decrease in employee insurance costs. Annual pay increases in 2020 were an average of 3.3%. Commission and incentive expense increased $1.9 million, or 39.1% as a result of increased loan activity. Employee insurance decreased $505.4 thousand, or 10.0%, for 2020.

The increase in taxes and assessments was primarily attributable to a $456.0 thousand FDIC assessment credits for small banks that was applied to the 2019 assessment charges. The FDIC assessment base also increased, leading to an additional $134.0 thousand increase.    State franchise tax increased $71.3 thousand related to a State of Ohio audit of the tax years 2018 and 2019.

The decrease in marketing expense is due to decreases in both advertising and business promotion expenses, primarily related to the COVID-19 pandemic. Event cancellations and postponed outreach efforts contributed to the decrease as our focus was on communicating changes in operations, safety protocols, alternative delivery channels, and economic relief programs with the safety and financial wellness of our employees and customers in mind.

The increase in software maintenance expense is due to contracts related to new services.

The decrease in other operating expense is primarily due to a decreases in travel and lodging expense of $742.7 thousand, education and training of $169.2 thousand and donations of $147.8 thousand. These decreases were partially offset by increases in loan origination expenses of $463.4 thousand.

The efficiency ratio was 59.1% for the twelve months ended December 31, 2020 compared to 61.4% for the twelve months ended December 31, 2019. The improvement in the efficiency ratio is due primarily to the increase in noninterest income and the accretion of PPP fees.

Civista’s effective income tax rate for the year ended December 31, 2020 was 13.3% compared to 14.4% in 2019.


Balance Sheet

Total assets increased $453.4 million, or 19.6%, from December 31, 2019 to December 31, 2020, due to a $348.5 million, or 20.4%, increase in the loan portfolio, $4.7 million, or 206.4%increase in loans held for sale, and a $91.0 million increase in cash. The asset increases were primarily funded by an increase in deposits, which includes the remaining proceeds from PPP loans still held on deposit.

End of period loan balances

(unaudited - dollars in thousands)

 

   December 31,
2020
   December 31,
2019
   $ Change   %
Change
 

Commercial and Agriculture 1

  $409,876   $203,110   $206,766    101.8

Commercial Real Estate:

        

Owner Occupied

   278,413    245,606    32,807    13.4

Non-owner Occupied

   705,072    592,222    112,850    19.1

Residential Real Estate

   442,588    463,032    (20,444   -4.4

Real Estate Construction

   175,609    155,825    19,784    12.7

Farm Real Estate

   33,102    34,114    (1,012   -3.0

Consumer and Other

   12,842    15,061    (2,219   -14.7
  

 

 

   

 

 

   

 

 

   

Total Loans

  $2,057,502   $1,708,970   $348,532    20.4
  

 

 

   

 

 

   

 

 

   

 

1 

2020 includes PPP loans totaling $217,295

Loan growth during 2020 totaled $348.5 million, including $217.3 million of PPP loans. Removing the effect of PPP loans, the loan portfolio grew $131.2 million or 7.7%. Loan growth was led by increases of $145.7 million in Commercial Real Estate and $19.8 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 metro markets. The decrease in Residential Real Estate is a result of loans refinanced into saleable mortgage products. All regions have contributed to the growth, aided by many new clients and prospects from our success in PPP originations.

Paycheck Protection Program

During 2020, we processed over 2,300 loans totaling $259.1 million, of which $41.8 million have been forgiven or have paid off.    SBA fees total approximately $9.9 million, which are being recognized in interest income over the life of the PPP loans. During the year, $4.7 million of PPP fees were accreted to income. We borrowed $183.7 million from the Paycheck Protection Program Lending Facility (“PPPLF”), anticipating an additional funding source for PPP landing. We have since determined this source was no longer needed and have paid off the PPPLF in full.

“We believe that the PPP program has been instrumental in assisting small businesses and their employees. We expect to continue to support our customers in the next round of PPP approved prior to year-end. We have seen a number of customers begin the forgiveness process, however, that has been delayed somewhat due to the ever changing rules for the program. The new simplified rules should be helpful to streamline the process for our customers and the bank.” said Dennis G. Shaffer, President and CEO of Civista.


COVID-19 Loan Modifications

During 2020, Civista modified a total of 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 December 31, 2019 and comply with the provisions of the CARES Act to not be considered a troubled debt restructuring. As of December 31, 2020, the remaining loans modified under the CARES Act total $73.8 million.

Details with respect to the loan modifications that remain on deferred status are as follows:

Loans currently modified under COVID-19 programs

(unaudited - dollars in thousands)

 

Type of Loan

  Number of
Loans
   Balance   Percent of
loans
outstanding 1
 

Commercial and Agriculture

   21   $4,069    0.22

Commercial Real Estate:

      

Owner Occupied

   12    13,072    0.71

Non-owner Occupied

   19    51,027    2.77

Real Estate Construction

   2    5,438    0.30

Residential Real Estate

   1    180    0.01
  

 

 

   

 

 

   
   55   $ 73,786    4.01
  

 

 

   

 

 

   

 

1 

excluding PPP loans

Deposits

Total deposits increased $510.6 million, or 30.4%, from December 31, 2019 to December 31, 2020.

End of period deposit balances

(unaudited - dollars in thousands)

 

   December 31,
2020
   December 31,
2019
   $ Change   % Change 

Noninterest-bearing demand

  $720,809   $512,553   $208,256    40.6

Interest-bearing demand

   410,139    301,674    108,465    36.0

Savings and money market

   771,612    588,697    182,915    31.1

Time deposits

   286,838    275,840    10,998    4.0
  

 

 

   

 

 

   

 

 

   

Total Deposits

  $2,189,398   $1,678,764   $510,634    30.4
  

 

 

   

 

 

   

 

 

   

The increase in noninterest-bearing demand of $208.3 million was primarily due to a $164.4 million increase in business demand deposit accounts and a $16.5 million increase in tax refund processing deposit accounts. Interest-bearing demand deposits increased, split nearly evenly between increases in public fund accounts non-public fund accounts. The increase in savings and money market was primarily due to a $46.6 million increase in statement savings, a $45.6 million increase in personal money markets, a $47.3 million increase in business money markets and a $29.8 million increase in brokered money market accounts.


FHLB advances totaled $125.0 million at December 31, 2020, a decrease of $101.5 million, or 44.8%, from December 31, 2019. The increase in deposits reduced the need for wholesale funding.

Stock Repurchase Program

An important part of capital management are share repurchases. During the second half of 2020, Civista repurchased 154,947 shares for $2.0 million at a weighted average price of $12.94 per share. These repurchases were part of the $13.5 million repurchase authorization which was approved in April 2020. Prior to this plan, Civista repurchased 672,000 shares for $11.4 million, at a weighted average price of $16.90 per share. Year to date, Civista has repurchased a total of 826,947 shares for $13.4 million, at a weighted average price of $16.16 per share. In addition, Civista liquidated 3,808 shares held by employees, at $24.07 per share, to satisfy tax obligations stemming from vesting of restricted shares.

Shareholder Equity

Total shareholders’ equity increased $20.0 million, or 6.1%, from December 31, 2019 to December 31, 2020, as a result of a $25.1 million increase in retained earnings and an increase in other comprehensive income of $7.7 million. These increases were partially offset by a $13.5 million repurchase of treasury shares.                

Asset Quality

Civista recorded net recoveries of $149 thousand for the twelve months of 2020 compared to net recoveries of $53 thousand for the same period of 2019. The allowance for loan losses to loans was 1.22% at December 31, 2020 and 0.86% at December 31, 2019. Without the PPP loans, the allowance ratio would have been 14 basis points higher.    

 

Allowance for Loan Losses        
(dollars in thousands)        
   December 31,
2020
   December 31,
2019
 

Beginning of period

  $14,767   $13,679 

Charge-offs

   (465   (776

Recoveries

   614    829 

Provision

   10,112    1,035 
  

 

 

   

 

 

 

End of period

  $25,028   $14,767 
  

 

 

   

 

 

 

Non-performing assets at December 31, 2020 were $7.3 million, a 19.7% decrease from December 31, 2019. The non-performing assets to assets ratio decreased to 0.27% from 0.39% at December 31, 2019. The allowance for loan losses to non-performing loans increased to 343.05% from 161.95% at December 31, 2019.    


Non-performing Assets        
(dollars in thousands)  December 31,   December 31, 
   2020   2019 

Non-accrual loans

  $5,399   $6,115 

Restructured loans

   1,897    3,004 
  

 

 

   

 

 

 

Total non-performing loans

   7,296    9,119 

Other Real Estate Owned

   31    —   
  

 

 

   

 

 

 

Total non-performing assets

  $7,327   $9,119 
  

 

 

   

 

 

 


Conference Call and Webcast

Civista Bancshares, Inc. will also host a conference call to discuss the Company’s financial results for the fourth quarter of 2020 at 1:00 p.m. ET on Friday, February 5, 2021. 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. fourth 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 HUwww.civb.comUH. The Company’s common shares are traded on the NASDAQ Capital Market under the symbol “CIVB”.

For additional information, contact:

Dennis G. Shaffer    

President and CEO

Civista Bancshares, Inc.

888-645-4121


Civista Bancshares, Inc.

Financial Highlights

(Unaudited, dollars in thousands, except share and per share amounts)

Consolidated Condensed Statement of Income

 

   Three Months Ended
December 31,
  Twelve Months Ended
December 31,
 
   2020  2019  2020  2019 

Interest income

  $25,721  $24,521  $99,865  $98,054 

Interest expense

   2,190   3,299   10,138   12,954 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net interest income

   23,531   21,222   89,727   85,100 

Provision for loan losses

   2,250   885   10,112   1,035 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net interest income after provision

   21,281   20,337   79,615   84,065 

Noninterest income

   7,666   5,627   28,182   22,443 

Noninterest expense

   16,968   17,128   70,665   66,947 
  

 

 

  

 

 

  

 

 

  

 

 

 

Income before taxes

   11,979   8,836   37,132   39,561 

Income tax expense

   1,806   995   4,940   5,683 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net income

   10,173   7,841   32,192   33,878 

Preferred stock dividends

   —     157   —     647 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net income available to common shareholders

  $10,173  $7,684  $32,192  $33,231 

Dividends paid per common share

  $0.11  $0.11  $0.44  $0.42 

Earnings per common share,

     

basic

  $0.64  $0.49  $2.00  $2.12 

diluted

  $0.64  $0.47  $2.00  $2.01 

Average shares outstanding,

     

basic

   15,915,369   15,796,713   16,129,875   15,652,881 

diluted

   15,915,369   16,734,391   16,129,875   16,851,740 

Selected financial ratios:

     

Return on average assets (annualized)

   1.44  1.37  1.17  1.51

Return on average equity (annualized)

   11.79  9.44  9.57  10.64

Dividend payout ratio

   17.21  22.16  22.05  19.41

Net interest margin (tax equivalent)

   3.69  4.18  3.70  4.31


Selected Balance Sheet Items

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

 

   December 31, 2020  December 31, 2019 
   (unaudited)    

Cash and due from financial institutions

  $139,522  $48,535 

Investment securities

   364,350   359,690 

Loans held for sale

   7,001   2,285 

Loans

   2,057,502   1,708,970 

Less: allowance for loan losses

   (25,028  (14,767
  

 

 

  

 

 

 

Net loans

   2,032,474   1,694,203 

Other securities

   20,537   20,280 

Premises and equipment, net

   22,580   22,871 

Goodwill and other intangibles

   84,926   85,156 

Bank owned life insurance

   45,976   44,999 

Other assets

   45,552   31,538 
  

 

 

  

 

 

 

Total assets

  $2,762,918  $2,309,557 
  

 

 

  

 

 

 

Total deposits

  $2,189,398  $1,678,764 

Federal Home Loan Bank advances

   125,000   226,500 

Securities sold under agreements to repurchase

   28,914   18,674 

Subordinated debentures

   29,427   29,427 

Accrued expenses and other liabilities

   40,071   26,066 

Total shareholders’ equity

   350,108   330,126 
  

 

 

  

 

 

 

Total liabilities and shareholders’ equity

  $2,762,918  $2,309,557 
  

 

 

  

 

 

 

Shares outstanding at period end

   15,898,032   16,687,542 

Book value per share

  $22.02  $19.78 

Equity to asset ratio

   12.67  14.29

Selected asset quality ratios:

   

Allowance for loan losses to total loans

   1.22  0.86

Non-performing assets to total assets

   0.27  0.39

Allowance for loan losses to non-performing loans

   343.05  161.95

Non-performing asset analysis

   

Nonaccrual loans

  $5,399  $6,115 

Troubled debt restructurings

   1,897   3,004 

Other real estate owned

   31   —   
  

 

 

  

 

 

 

Total

  $7,327  $9,119 
  

 

 

  

 

 

 


Supplemental Financial Information

(Unaudited - dollars in thousands except share data)

 

End of Period Balances

  December 31,
2020
  September 30,
2020
  June 30, 2020  March 31,
2020
  December 31,
2019
 

Assets

      

Cash and due from banks

  $139,522  $194,773  $196,520  $256,023  $48,535 

Investment securities

   364,350   366,691   369,181   366,689   359,690 

Loans held for sale

   7,001   13,256   18,523   7,632   2,285 

Loans

   2,057,502   2,040,940   2,022,965   1,743,125   1,708,970 

Allowance for loan losses

   (25,028  (22,637  (20,420  (16,948  (14,767
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net Loans

   2,032,474   2,018,303   2,002,545   1,726,177   1,694,203 

Other securities

   20,537   20,537   20,537   20,280   20,280 

Premises and equipment, net

   22,580   22,958   23,137   22,443   22,871 

Goodwill and other intangibles

   84,926   84,896   84,852   84,919   85,156 

Bank owned life insurance

   45,976   45,732   45,489   45,249   44,999 

Other assets

   45,552   50,847   51,369   46,444   31,538 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Assets

  $2,762,918  $2,817,993  $2,812,153  $2,575,856  $2,309,557 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Liabilities

      

Total deposits

  $2,189,398  $2,068,769  $2,069,261  $1,991,939  $1,678,764 

Federal Home Loan Bank advances

   125,000   125,000   125,000   142,000   226,500 

Securities sold under agreement to repurchase

   28,914   25,813   23,608   22,699   18,674 

Other borrowings

   —     183,695   183,695   —     —   

Subordinated debentures

   29,427   29,427   29,427   29,427   29,427 

Accrued expenses and other liabilities

   40,071   43,234   44,549   61,624   26,066 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total liabilities

   2,412,810   2,475,938   2,475,540   2,247,689   1,979,431 

Shareholders’ Equity

      

Common shares

   277,039   276,940   276,841   276,546   276,422 

Retained earnings

   93,048   84,628   78,712   73,972   67,974 

Treasury shares

   (34,598  (33,900  (32,594  (32,239  (21,144

Accumulated other comprehensive income

   14,619   14,387   13,654   9,888   6,874 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total shareholders’ equity

   350,108   342,055   336,613   328,167   330,126 

Total Liabilities and Shareholders’ Equity

  $2,762,918  $2,817,993  $2,812,153  $2,575,856  $2,309,557 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Quarterly Average Balances

      

Assets:

      

Earning assets

  $2,603,961  $2,617,884  $2,528,006  $2,232,168  $2,070,175 

Securities

   386,179   388,594   386,838   385,187   372,639 

Loans

   2,072,477   2,040,492   1,972,969   1,725,685   1,676,769 

Liabilities and Shareholders’ Equity

      

Total deposits

  $2,144,865  $2,084,791  $2,108,227  $1,975,133  $1,661,452 

Interest-bearing deposits

   1,458,967   1,401,318   1,317,336   1,175,593   1,160,499 

Other interest-bearing liabilities

   278,357   362,965   302,267   209,909   252,908 

Total shareholders’ equity

   343,335   339,278   330,524   332,602   329,634 


Supplemental Financial Information

(Unaudited - dollars in thousands except share data)

 

   Three Months Ended 

Income statement

  December 31,
2020
  September 30,
2020
  June 30, 2020  March 31,
2020
  December 31,
2019
 

Total interest and dividend income

  $25,721  $24,558  $24,584  $25,002  $24,521 

Total interest expense

   2,190   2,552   2,509   2,887   3,299 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net interest income

   23,531   22,006   22,075   22,115   21,222 

Provision for loan losses

   2,250   2,250   3,486   2,126   885 

Noninterest income

   7,666   6,786   6,854   6,876   5,627 

Noninterest expense

   16,968   17,727   18,114   17,856   17,128 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income before taxes

   11,979   8,815   7,329   9,009   8,836 

Income tax expense

   1,806   1,133   825   1,176   995 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income

   10,173   7,682   6,504   7,833   7,841 

Preferred stock dividends

   —     —     —     —     157 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income available to common shareholders

  $10,173  $7,682  $6,504  $7,833  $7,684 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Common shares dividend paid

  $1,753  $1,766  $1,764  $1,835  $1,702 

Per share data

      

Basic earnings per common share

  $0.64  $0.48  $0.41  $0.47  $0.49 

Diluted earnings per common share

   0.64   0.48   0.41   0.47   0.47 

Dividends paid per common share

   0.11   0.11   0.11   0.11   0.11 

Average common shares outstanding - basic

   15,915,369   16,045,544   16,044,125   16,517,745   15,796,713 

Average common shares outstanding - diluted

   15,915,369   16,045,544   16,044,125   16,517,745   16,734,391 

Asset quality

      

Allowance for loan losses, beginning of period

  $22,637  $20,420  $16,948  $14,767  $14,144 

Charge-offs

   (139  (185  (116  (24  (345

Recoveries

   280   152   102   79   83 

Provision

   2,250   2,250   3,486   2,126   885 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Allowance for loan losses, end of period

  $25,028  $22,637  $20,420  $16,948  $14,767 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Ratios

      

Allowance to total loans

   1.22  1.11  1.01  0.97  0.86

Allowance to nonperforming assets

   341.59  292.88  262.14  197.97  161.95

Allowance to nonperforming loans

   343.05  292.88  262.14  197.97  161.95

Nonperforming assets

      

Nonperforming loans

  $7,296  $7,729  $7,790  $8,561  $9,119 

Other real estate owned

   31   —     —     —     —   
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total nonperforming assets

  $7,327  $7,729  $7,790  $8,561  $9,119 

Capital and liquidity

      

Tier 1 leverage ratio

   10.77  10.73  10.43  10.66  12.35

Tier 1 risk-based capital ratio

   14.74  14.73  12.99  14.33  15.26

Total risk-based capital ratio

   15.99  15.94  13.97  15.25  16.10

Tangible common equity ratio (1)

   9.98  9.47  9.29  9.82  11.08

 

(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
December 31,
   Twelve Months Ended
December 31,
 
   2020   2019   2020   2019 

Net income (GAAP)

  $10,173   $7,841   $32,192   $33,878 

Add back: income tax expense

   1,806    995    4,940    5,683 

Add back: provision for loan losses

   2,250    885    10,112    1,035 
  

 

 

   

 

 

   

 

 

   

 

 

 

Pre-tax, pre-provision net income (Non-GAAP)

  $14,229   $9,721   $47,244   $40,596 

Reconciliation of Non-GAAP Financial Measures

(Unaudited - dollars in thousands except share data)

 

   Three Months Ended 
   December 31,
2020
  September 30,
2020
  June 30, 2020  March 31,
2020
  December 31,
2019
 

Tangible Common Equity

      

Total Shareholder’s Equity - GAAP

  $350,108  $342,055  $336,613  $328,167  $330,126 

Less: Preferred Equity

   —     —     —     —     —   

Less: Goodwill and intangible assets

   82,681   82,907   83,135   83,363   83,595 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Tangible common equity (Non-GAAP)

  $267,427  $259,148  $253,478  $244,804  $246,531 

Total Shares Outstanding

   15,898,032   15,945,479   16,052,979   16,064,010   16,687,542 

Tangible book value per share

  $16.82  $16.25  $15.79  $15.24  $14.77 

Tangible Assets

      

Total Assets - GAAP

  $2,762,918  $2,817,993  $2,812,153  $2,575,856  $2,309,557 

Less: Goodwill and intangible assets

   82,681   82,907   83,135   83,363   83,595 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Tangible assets (Non-GAAP)

  $2,680,237  $2,735,086  $2,729,018  $2,492,493  $2,225,962 

Tangible common equity to tangible assets

   9.98  9.47  9.29  9.82  11.08