PR Newswire
SANDUSKY, Ohio, July 28, 2023
SANDUSKY, Ohio, July 28, 2023 /PRNewswire/ -- Civista Bancshares, Inc. (NASDAQ:CIVB) ("Civista") announced its unaudited financial results for the three and six month periods ending June 30, 2023.
Second quarter and year-to-date 2023 highlights:
- Net income of $10.0 million, or $0.64 per diluted share, for the second quarter of 2023, compared to $7.7 million, or $0.53 per diluted share, for the second quarter of 2022.
- Net income of $22.9 million, or $1.45 per diluted share, compared to $16.2 million, or $1.10 per diluted share, for the six months ended June 30, 2023 and 2022, respectively.
- Low cost of deposits of 107 basis points and total funding costs of 151 basis points for the quarter.
- Based on the June 30, 2023 market close share price of $17.40, the $0.15 second quarter dividend is equivalent to an annualized yield of 3.45% and a dividend payout ratio of 23.44%.
"Our second quarter earnings were impacted by increased rate pressure on deposits and our decision to hold more of our newly originated leases on the balance sheet. Despite this, we continue to post strong profits and our earnings per share has increased 32 percent when compared to the same period a year ago", said Dennis G. Shaffer, CEO and President of Civista.
Results of Operations:
For the three-month periods ended June 30, 2023 and 2022
Net interest income increased $7.1 million, or 29.1%, for the second quarter of 2023 compared to the same period of 2022. Interest income increased $17.3 million while interest expense increased $10.2 million. Both increases were driven by both increases in rates and increases in volumes.
Net interest margin increased 43 basis points to 3.86% for the second quarter of 2023, compared to 3.43% for the same period a year ago.
The increase in interest income was primarily due to a 164 basis point increase in asset yield, which led to $10.4 million of the increase in interest income. Additionally, a $392.4 million increase in average earning assets led to $6.9 million of the increase in interest income. The increase in volume can be attributed to both organic growth and to the acquisitions during 2022 of Comunibanc Corp ("Comunibanc") and Vision Financial group ("VFG").
Interest expense increased $10.2 million, or 567.9%, for the second quarter of 2023, compared to the same period last year. The average rate paid on interest-bearing liabilities increased 171 basis points, while average interest-bearing liabilities increased $458.5 million. The increase in interest-bearing liabilities was primarily in brokered time deposits and short-term borrowings to fund growth. This shift in the funding mix, as well as rising rates, is driving the increase in the funding rate. Interest-bearing deposit costs have increased 140 basis points compared to a year ago.
Average Balance Analysis | |||||||
(Unaudited - Dollars in thousands) | |||||||
Three Months Ended June 30, | |||||||
2023 | 2022 | ||||||
Average | Yield/ | Average | Yield/ | ||||
Assets: | balance | Interest | rate * | balance | Interest | rate * | |
Interest-earning assets: | |||||||
Loans ** | $ 2,593,286 | $ 37,978 | 5.87 % | $ 2,033,378 | $ 21,851 | 4.31 % | |
Taxable securities *** | 370,002 | 2,984 | 2.93 % | 297,256 | 1,775 | 2.23 % | |
Non-taxable securities *** | 288,513 | 2,319 | 3.79 % | 259,096 | 1,882 | 3.52 % | |
Interest-bearing deposits in other banks | 6,937 | 54 | 3.12 % | 276,632 | 556 | 0.81 % | |
Total interest-earning assets *** | $ 3,258,738 | $ 43,335 | 5.31 % | $ 2,866,362 | $ 26,064 | 3.67 % | |
Noninterest-earning assets: | |||||||
Cash and due from financial institutions | 47,560 | 44,538 | |||||
Premises and equipment, net | 61,220 | 22,264 | |||||
Accrued interest receivable | 11,191 | 7,993 | |||||
Intangible assets | 135,669 | 84,167 | |||||
Bank owned life insurance | 53,878 | 46,966 | |||||
Other assets | 60,253 | 46,608 | |||||
Less allowance for loan losses | (34,668) | (27,174) | |||||
Total Assets | $ 3,593,841 | $ 3,091,724 | |||||
Liabilities and Shareholders' Equity: | |||||||
Interest-bearing liabilities: | |||||||
Demand and savings | $ 1,364,648 | $ 1,546 | 0.45 % | $ 1,401,351 | $ 247 | 0.07 % | |
Time | 548,307 | 5,988 | 4.38 % | 228,733 | 463 | 0.81 % | |
Short-term FHLB borrowings | 242,395 | 3,113 | 5.15 % | 75,000 | 193 | 1.03 % | |
Long-term FHLB borrowings | 3,107 | 17 | 2.19 % | - | - | 0.00 % | |
Other borrowings | 13,018 | 132 | 4.07 % | - | - | 0.00 % | |
Subordinated debentures | 103,854 | 1,198 | 4.62 % | 103,714 | 890 | 3.44 % | |
Repurchase agreements | 13,234 | 2 | 0.06 % | 21,291 | 3 | 0.06 % | |
Total interest-bearing liabilities | $ 2,288,563 | $ 11,996 | 2.10 % | $ 1,830,089 | $ 1,796 | 0.39 % | |
Noninterest-bearing deposits | 904,757 | 894,887 | |||||
Other liabilities | 52,874 | 53,476 | |||||
Shareholders' equity | 347,647 | 313,272 | |||||
Total Liabilities and Shareholders' Equity | $ 3,593,841 | $ 3,091,724 | |||||
Net interest income and interest rate spread | $ 31,339 | 3.22 % | $ 24,268 | 3.28 % | |||
Net interest margin *** | 3.86 % | 3.43 % | |||||
* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $617 thousand and $501 thousand for the periods ended June 30, 2023 and 2022, respectively. | |||||||
** - Average balance includes nonaccrual loans | |||||||
*** - Average yield on investments were calculated by adjusting the average balances of taxable and nontaxable securities by unrealized losses of $60.4 million and $34.3 million, respectively. These adjustments were also made when calculating the yield on earning assets and the margin. | |||||||
For the six-month periods ended June 30, 2023 and 2022
Net interest income increased $16.7 million, or 35.5%, compared to the same period in 2022.
Interest income increased $34.1 million, or 67.3%, for the six months of 2023. Average earning assets increased $394.8 million, resulting in an increase in interest income of $14.2 million. Average yields increased 162 basis points, resulting in an increase in interest income of $19.9 million. The increase in volume can be attributed to both organic growth and to the acquisitions during 2022 of Comunibanc and VFG.
Interest expense increased $17.4 million, or 493.0%, for the six months of 2023 compared to the same period of 2022. Average rates increased 149 basis points compared to 2022, resulting in $8.9 million of the increase in interest expense. Average interest-bearing liabilities increased $419.1 million, resulting in $8.5 million of the increase in interest expense.
Net interest margin increased 59 basis points to 3.99% for the six months of 2023, compared to 3.40% for the same period a year ago.
Average Balance Analysis | |||||||
(Unaudited - Dollars in thousands) | |||||||
Six Months Ended June 30, | |||||||
2023 | 2022 | ||||||
Average | Yield/ | Average | Yield/ | ||||
Assets: | balance | Interest | rate * | balance | Interest | rate * | |
Interest-earning assets: | |||||||
Loans ** | $ 2,571,020 | $ 74,376 | 5.83 % | $ 2,020,254 | $ 42,889 | 4.28 % | |
Taxable securities *** | 372,413 | 5,818 | 2.85 % | 305,827 | 3,495 | 2.21 % | |
Non-taxable securities *** | 284,845 | 4,581 | 3.80 % | 259,976 | 3,671 | 3.59 % | |
Interest-bearing deposits in other banks | 7,166 | 99 | 2.79 % | 254,562 | 675 | 0.53 % | |
Total interest-earning assets *** | $ 3,235,444 | $ 84,874 | 5.27 % | $ 2,840,619 | $ 50,730 | 3.65 % | |
Noninterest-earning assets: | |||||||
Cash and due from financial institutions | 44,584 | 133,452 | |||||
Premises and equipment, net | 62,002 | 22,292 | |||||
Accrued interest receivable | 10,924 | 7,577 | |||||
Intangible assets | 135,625 | 84,270 | |||||
Bank owned life insurance | 53,754 | 46,847 | |||||
Other assets | 60,478 | 41,838 | |||||
Less allowance for loan losses | (32,555) | (26,976) | |||||
Total Assets | $ 3,570,256 | $ 3,149,919 | |||||
Liabilities and Shareholders' Equity: | |||||||
Interest-bearing liabilities: | |||||||
Demand and savings | $ 1,374,305 | $ 2,629 | 0.39 % | $ 1,392,411 | $ 481 | 0.07 % | |
Time | 429,016 | 8,137 | 3.82 % | 234,640 | 934 | 0.80 % | |
Short-term FHLB borrowings | 306,952 | 7,370 | 4.84 % | 178 | - | 0.00 % | |
Long-term FHLB borrowings | 3,274 | 37 | 2.28 % | 75,000 | 383 | 1.03 % | |
Other borrowings | 13,918 | 390 | 5.66 % | - | - | 0.00 % | |
Subordinated debentures | 103,834 | 2,367 | 4.60 % | 103,713 | 1,726 | 3.36 % | |
Repurchase agreements | 17,008 | 4 | 0.05 % | 23,249 | 6 | 0.05 % | |
Total interest-bearing liabilities | $ 2,248,307 | $ 20,934 | 1.88 % | $ 1,829,191 | $ 3,530 | 0.39 % | |
Noninterest-bearing deposits | 926,929 | 914,163 | |||||
Other liabilities | 50,599 | 76,372 | |||||
Shareholders' equity | 344,421 | 330,193 | |||||
Total Liabilities and Shareholders' Equity | $ 3,570,256 | $ 3,149,919 | |||||
Net interest income and interest rate spread | $ 63,940 | 3.39 % | $ 47,200 | 3.26 % | |||
Net interest margin *** | 3.99 % | 3.40 % | |||||
* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1.2 million and $977 thousand for the periods ended June 30, 2023 and 2022, respectively. | |||||||
** - Average balance includes nonaccrual loans | |||||||
*** - 2023 and 2022 average yield on investments were calculated by adjusting the average balances of taxable and nontaxable securities by unrealized losses of $61.8 million and $13.4 million, respectively. These adjustments were also made when calculating the yield on earning assets and the margin. | |||||||
Provision for credit losses for the second quarter of 2023 was $861 thousand compared to $400 thousand for the second quarter of 2022, primarily related to loan and lease growth.
On January 1, 2023, Civista adopted CECL, which resulted in an adjustment to the reserve of approximately $4.3 million. For the six months ended June 30, 2023, provision for credit losses was $1.5 million, compared to $700 thousand for the same period of 2022. The reserve ratio increased to 1.33% as of June 30, 2023 from 1.12% at December 31, 2022.
The adoption of CECL also resulted in an additional $3.4 million reserve for unfunded commitments, which is reflected as a liability in the consolidated financial statements. Provision for unfunded commitments for the second quarter of 2023 was $264 thousand and $465 thousand for the six months ended June 30, 2023. There was no provision for unfunded commitments during the first six months of 2022.
For the second quarter of 2023, noninterest income totaled $9.1 million, an increase of $3.5 million, or 62.4%, compared to the prior year's second quarter.
Noninterest income | |||||||
(unaudited - dollars in thousands) | Three months ended June 30, | ||||||
2023 | 2022 | $ change | % change | ||||
Service charges | $ 1,831 | $ 1,540 | $ 291 | 18.9 % | |||
Net gain on sale of securities | - | 6 | (6) | -100.0 % | |||
Net gain/(loss) on equity securities | (170) | 39 | (209) | -535.9 % | |||
Net gain on sale of loans | 615 | 573 | 42 | 7.3 % | |||
ATM/Interchange fees | 1,450 | 1,355 | 95 | 7.0 % | |||
Wealth management fees | 1,180 | 1,228 | (48) | -3.9 % | |||
Lease revenue and residual income | 2,201 | - | 2,201 | 0.0 % | |||
Bank owned life insurance | 311 | 233 | 78 | 33.5 % | |||
Tax refund processing fees | 475 | 475 | - | 0.0 % | |||
Other | 1,256 | 186 | 1,070 | 575.3 % | |||
Total noninterest income | $ 9,149 | $ 5,635 | |||||
