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27.04.2018 14:29:00
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Civista Bancshares, Inc. Announces Strong First Quarter 2018 Earnings
SANDUSKY, Ohio, April 27, 2018/PRNewswire/ -- Civista Bancshares, Inc. (NASDAQ: CIVB) ("Civista") reported net income available to common shareholders of $6.7 million, or $0.55 per diluted share, for the first quarter of 2018, compared with $4.3 million, or $0.40 per diluted share, for the prior year period. In addition, we issued approximately 1.6 million new shares in February 2017 related to raising $32.8 million of additional capital, net of costs.
"The first quarter of 2018 produced very strong results. The increases to our net interest margin and net income show the impact that growth can have on our organization. On March 12th we announced the acquisition of United Community Bancorp in Lawrenceburg, Indiana. We are excited about our partnership with UCB and the prospects it brings. While our loan balances have backed up a little in the first quarter, our loan production has remained steady. Our loan pipelines remain strong and we are optimistic about our loan production for the remainder of 2018." said Dennis G. Shaffer, President and CEO of Civista.
Results of Operations:
Net interest income for the first quarter of 2018 increased $1.9 million, or 14.6% compared to the same period of 2017. Interest income increased $2.2 million primarily due to a $79.5 million increase in average loans outstanding, along with a 35 basis point increase in the yield on loans. The yield on interest-earning assets increased across all categories with the exception of non-taxable securities. The reduction in the corporate tax rate was the primary reason for the decrease in the tax-equivalent yield on non-taxable securities.
Interest expense increased $352 thousand primarily due to an increase in rates of 14 basis points as well as an increase in average balances of $41.8 million. The tax equivalent net interest margin was 4.05% for the first quarter, compared to 3.67% for the same period a year ago.
Average Balance Analysis (Unaudited - Dollars in thousands except share data) Three Months Ended March 31, 2018 2017 Average Yield/ Average Yield/ Assets: balance Interest rate * balance Interest rate * Interest-earning assets: Loans $ 1,147,441 $ 13,639 4.82% $ 1,067,903 $ 11,777 4.47% Taxable securities 140,999 986 2.83% 132,152 847 2.62% Non-taxable securities 101,478 878 4.53% 78,810 712 5.69% Interest-bearing deposits in other banks 113,025 421 1.51% 188,813 356 0.76% Total interest-earning assets $ 1,502,943 15,924 4.37% $ 1,467,678 13,692 3.89% Noninterest-earning assets: Cash and due from financial institutions 90,358 98,472 Premises and equipment, net 17,529 18,124 Accrued interest receivable 4,445 3,933 Intangible assets 28,368 28,827 Other assets 11,243 10,328 Bank owned life insurance 25,175 24,602 Less allowance for loan losses (13,141) (13,311) Total Assets $ 1,666,920 $ 1,638,653 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Demand and savings $ 616,213 $ 252 0.17% $ 577,809 $ 123 0.09% Time 187,391 455 0.98% 189,985 342 0.73% FHLB 39,642 152 1.56% 28,440 88 1.25% Subordinated debentures 29,427 288 3.97% 29,427 241 3.32% Repurchase agreements 18,398 5 0.11% 23,581 6 0.10% Total interest-bearing liabilities $ 891,071 1,152 0.52% $ 849,242 800 0.38% Noninterest-bearing deposits 576,809 624,315 Other liabilities 14,608 13,168 Shareholders' equity 184,432 151,928 Total Liabilities and Shareholders' Equity $ 1,666,920 $ 1,638,653 Net interest income and interest rate spread $ 14,772 3.85% $ 12,892 3.51% Net interest margin 4.05% 3.67% * - Interest yields are calculated using a 21% tax-equivalent adjustment for 2018 and a 35% tax-equivalent adjustment for 2017
No provision for loan losses was made during 2018 and 2017.
During the quarter, noninterest income totaled $5.6 million, an increase of $478 thousand, or 9.3%, compared to the prior year's first quarter.
Noninterest income (unaudited - dollars in thousands) Three months ended March 31, 2018 2017 Service charges $ 1,134 $ 1,045 Net gain on sale of securities - - Net gain on equity securities 40 - Net gain on sale of loans 333 257 ATM/Interchange fees 554 510 Wealth management fees 852 707 Bank owned life insurance 142 144 Tax refund processing fees 2,200 2,200 Other 361 275 Total noninterest income $ 5,616 $ 5,138
Service charge income increased $89 thousand, or 8.5%, for the first quarter primarily due to a change in the business account earnings credits, along with an increase in overdraft charges. Gain on sale of loans increased $76 thousand, or 29.6%, for the first quarter 2018 compared to the same period in 2017. The increase is due to an increase in the volume of loans sold from $12.2 million in 2017 to $14.6 million in 2018. Wealth management fees increased $145 thousand, or 20.5%, for the quarter ended March 31, 2018 due primarily to an additional $34.0 million in assets under management compared to the first quarter of 2017. Other income increased $86 thousand for the quarter ended March 31, 2018, compared to 2017, primarily due to an increase in swap fees.
During the quarter, noninterest expense totaled $12.2 million, an increase of $703 thousand, or 6.1%, compared to the prior year's first quarter.
Noninterest expense (unaudited - dollars in thousands) Three months ended March 31, 2018 2017 Compensation expense $ 7,374 $ 6,982 Net occupancy and equipment 1,135 987 Contracted data processing 348 388 Taxes and assessments 469 422 Professional services 552 451 Amortization of intangible assets 33 167 Marketing 318 252 Other 1,976 1,853 Total noninterest expense $ 12,205 $ 11,502
Compensation expense increased $392 thousand, or 5.6%, for the first quarter compared to the same period in 2017. The increase in compensation expense is mainly due to a $165 thousand increase in salaries, a $123 thousand increase in commissions and a $145 thousand increase in employee insurance. Net occupancy and equipment expense increased $148, or 15.0%, from the same period of 2017. The increase was attributable to $45 thousand increase in equipment expense, largely related to purchases and maintenance. Grounds maintenance increased $41 thousand and utilities increased $17 thousand, both as a result of the extended winter weather we experienced in our region. Professional services costs increased $101 thousand, or 22.4% for the first quarter 2018, primarily attributable to an $82 thousand increase in consulting fees and a $25 thousand increase in examination fees. Amortization of intangible assets decreased $134 thousand or 80.2% due to the final amortization of intangibles related to the acquisition of Futura Banc Corp. Other expenses increased $123 thousand, or 6.6% for the quarter ended March 31, 2018 compared to 2017, spread across several items.
The efficiency ratio was 59.2% for the three months ended March 31, 2018 compared to 62.5% for the three months ended March 31, 2017.
The 2018 impact of the Tax Cut and Jobs Act was a reduction of income tax expense of approximately $797 thousand, which increased net income available to common shareholders approximately $0.06 per diluted share.
Balance Sheet
Total assets increased $74.4 million, or 4.9%, from December 31, 2017 to March 31, 2018, primarily due to increased cash balances of $78.5 million, primarily related to the tax refund processing program, offset by a decrease in the loan portfolio of $10.9 million.
End of period loan balances (unaudited - dollars in thousands) March 31, December 31, 2018 2017 $ Change % Change Commercial and Agriculture $ 137,076 $ 152,473 $ (15,397) -10.1% Commercial Real Estate: Owner Occupied 162,985 164,099 (1,114) -0.7% Non-owner Occupied 436,160 425,623 10,537 2.5% Residential Real Estate 267,430 268,735 (1,305) -0.5% Real Estate Construction 95,856 97,531 (1,675) -1.7% Farm Real Estate 37,928 39,461 (1,533) -3.9% Consumer and Other 16,323 16,739 (416) -2.5% Total Loans $ 1,153,758 $ 1,164,661 $ (10,903) -0.9%
The $10.9 million decrease in the loan portfolio from December 31, 2017 to March 31, 2018, was largely due to Commercial and Agriculture loans, however all others categories showed small decreases, with the exception of Commercial Real Estate. During the first quarter we had approximately $76.0 million in loan pay downs and approximately $97.7 million in new loans originated, some of which are lines of credit which have not yet been drawn upon.
Mr. Shaffer continued, "The prolonged cold weather that we experienced in the first quarter of 2018 slowed some of our lending activity. We expect to see increased activity during the second quarter in both new originations and draws on lines of credit."
Total deposits increased $85.7 million, or 7.1%, from December 31, 2017 to March 31, 2018. The increase was due primarily to the additional cash balances related to the tax refund processing program which increased noninterest-bearing demand accounts $173.3 million. Fewer Brokered deposits were needed resulting in a decrease of $109.4 million.
End of period deposit balances (dollars in thousands) March 31, December 31, 2018 2017 $ Change % Change Noninterest-bearing demand $ 535,225 $ 361,964 $ 173,261 47.9% Interest-bearing demand 202,264 183,680 18,584 10.1% Savings and money market 410,433 404,690 5,743 1.4% Time deposits 136,158 138,557 (2,399) -1.7% Brokered deposits 6,591 116,032 (109,441) -94.3% Total Deposits $ 1,290,671 $ 1,204,923 $ 85,748 7.1%
Federal Home Loan Bank advances decreased $11.9 million or 16.6% from December 31, 2017 to March 31, 2018, primarily due to reduced funding needs.
Total shareholders' equity increased $3.6 million, or 1.9%, from December 31, 2017 to March 31, 2018, primarily due to a $6.3 million increase in retained earnings, partially offset by a $2.7 million decrease in accumulated other comprehensive income.
Asset Quality
The Company recorded net charge-offs of $320 thousand and $5 thousand for the three months ended March 31. 2018 and 2017, respectively.
Allowance for Loan Losses (dollars in thousands) March 31, March 31, 2018 2017 Beginning of period $ 13,134 $ 13,305 Charge-offs (425) (131) Recoveries 105 126 Provision - - End of period $ 12,814 $ 13,300
The allowance for loan losses to loans was 1.11% for 2018 and 1.24% for 2017. The decrease in the ratio is primarily due to our continued improvement in asset quality during 2018. The non-performing assets to assets ratio decreased to 0.52% from 0.63% in 2017. The allowance for loan losses to non-performing loans increased to 154.42% from 137.82% in 2017.
Non-performing assets at March 31, 2018 were $8.3 million, a 13.0% decrease from December 31, 2017.
Non-performing Assets (unaudited - dollars in thousands) March 31, December 31, 2018 2017 Non-accrual loans $ 5,448 $ 6,648 Restructured loans 2,850 2,888 Total non-performing loans 8,298 9,536 Other Real Estate Owned 11 16 Total non-performing assets $ 8,309 $ 9,552
Conference Call and Webcast
Civista Bancshares, Inc. will also host a conference call to discuss the Company's financial results for the first quarter of 2018 at 1:00 p.m. ET on Friday April 27, 2018. 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 853-238-2712 and ask to be joined into the Civista Bancshares, Inc. First Quarter 2018 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, 2017. 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 $1.6 billion financial holding company headquartered in Sandusky, Ohio. The Company's banking subsidiary, Civista Bank, operates 29 locations in Northern, Central and Southwestern Ohio.
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". The Company's depositary shares, each representing a 1/40th ownership interest in a Series B Preferred Share, are traded on the NASDAQ Capital Market under the symbol "CIVBP".
Civista Bancshares, Inc. Financial Highlights (dollars in thousands, except share amounts) Consolidated Condensed Statement of Income Three Months Ended March 31, (unaudited) 2018 2017 Interest income 15,924 13,692 Interest expense 1,152 800 Net interest income 14,772 12,892 Provision for loan losses - - Net interest income after provision 14,772 12,892 Noninterest income 5,616 5,138 Noninterest expense 12,205 11,502 Income before taxes 8,183 6,528 Income tax expense 1,194 1,893 Net income 6,989 4,635 Preferred stock dividends 303 319 Net income available to common shareholders 6,686 4,316 Dividends per common share $ 0.07 $ 0.06 Earnings per common share, basic $ 0.65 $ 0.47 diluted $ 0.55 $ 0.40 Average shares outstanding, basic 10,213,264 9,100,330 diluted 12,597,394 11,608,333 Selected financial ratios: Return on average assets 1.70% 1.15% Return on average equity 15.37% 12.37% Dividend payout ratio 10.23% 11.78% Net interest margin (tax equivalent) 4.05% 3.67%
Selected Balance Sheet Items March 31, December 31, 2018 2017 (unaudited) (unaudited) Cash and due from financial institutions $ 118,970 $ 40,519 Investment securities 234,915 231,062 Loans held for sale 2,379 2,197 Loans 1,153,758 1,164,661 Less allowance for loan losses 12,814 13,134 Net loans 1,140,944 1,151,527 Other securities 14,247 14,247 Fixed assets 17,424 17,611 Goodwill and other intangibles 28,354 28,374 Bank owned life insurance 25,267 25,125 Other assets 17,805 15,195 Total assets $ 1,600,305 $ 1,525,857 Total deposits $ 1,290,671 $ 1,204,923 Federal Home Loan Bank advances 60,000 71,900 Securities sold under agreements to repurchase 17,452 21,755 Subordinated debentures 29,427 29,427 Accrued expenses and other liabilities 14,712 13,391 Total shareholders' equity 188,043 184,461 Total liabilities and shareholders' equity $ 1,600,305 $ 1,525,857 Shares outstanding at period end 10,243,274 10,198,475 Book value per share $ 16.69 $ 16.39 Equity to asset ratio 11.75% 12.09% Selected asset quality ratios: Allowance for loan losses to total loans 1.11% 1.13% Non-performing assets to total assets 0.52% 0.63% Allowance for loan losses to non-performing loans 154.42% 137.82% Non-performing asset analysis Nonaccrual loans $ 5,448 $ 6,648 Troubled debt restructurings 2,850 2,888 Other real estate owned 11 16 Total $ 8,309 $ 9,552
Supplemental Financial Information (Unaudited - Dollars in thousands except share data) March 31, December 31, September 30, June 30, March 31, End of Period Balances 2018 2017 2017 2017 2017 Assets Cash and due from banks $ 118,970 $ 40,519 $ 33,394 $ 39,515 $ 182,446 Securities available for sale 234,915 231,062 229,419 230,197 223,245 Loans held for sale 2,379 2,197 4,662 4,728 1,740 Loans 1,153,758 1,164,661 1,141,992 1,100,817 1,075,240 Allowance for loan losses (12,814) (13,134) (12,946) (13,047) (13,300) Net Loans 1,140,944 1,151,527 1,129,046 1,087,770 1,061,940 Other securities 14,247 14,247 14,247 14,225 14,072 Fixed assets 17,424 17,611 17,688 17,777 17,952 Goodwill and other intangibles 28,354 28,374 28,455 28,589 28,727 Bank owned life insurance 25,268 25,125 24,981 24,839 24,696 Other assets 17,805 15,195 14,196 14,375 14,197 Total Assets $ 1,600,305 $ 1,525,857 $ 1,496,088 $ 1,462,015 $ 1,569,015 Liabilities Total deposits $ 1,290,671 $ 1,204,923 $ 1,201,289 $ 1,164,888 $ 1,311,453 Federal Home Loan Bank advances 60,000 71,900 56,750 63,300 15,000 Securities sold under agreement to repurchase 17,452 21,755 15,148 12,730 23,674 Subordinated debentures 29,427 29,427 29,427 29,427 29,427 Accrued expenses and other liabilities 14,712 13,391 11,493 12,827 14,724 Total liabilities 1,412,262 1,341,396 1,314,107 1,283,172 1,394,278 Shareholders' Equity Preferred shares, Series B 17,034 17,358 17,557 17,568 17,708 Common stock 154,170 153,810 153,562 153,495 153,167 Accumulated earnings 37,902 31,652 28,494 25,751 23,073 Treasury stock (17,235) (17,235) (17,235) (17,235) (17,235) Accumulated other comprehensive income (loss) (3,828) (1,124) (397) (736) (1,976) Total shareholders' equity 188,043 184,461 181,981 178,843 174,737 Total Liabilities and Shareholders' Equity $ 1,600,305 $ 1,525,857 $ 1,496,088 $ 1,462,015 $ 1,569,015 Quarterly Average Balances Assets: Earning assets $ 1,502,943 $ 1,408,479 $ 1,377,137 $ 1,368,387 $ 1,467,678 Securities 242,477 243,623 243,556 238,400 210,962 Loans 1,147,441 1,152,595 1,122,131 1,092,574 1,067,903 Liabilities and Shareholders' Equity Total deposits $ 1,380,413 $ 1,218,502 $ 1,152,235 $ 1,186,640 $ 1,392,109 Interest-bearing deposits 803,604 849,423 788,452 737,470 767,794 Interest-bearing liabilities 87,467 91,515 130,057 104,084 81,448 Total shareholders' equity 184,432 182,495 179,925 176,285 151,928
Supplemental Financial Information (Unaudited - Dollars in thousands except share data) Three Months Ended March 31, December 31, September 30, June 30, March 31, Income statement 2018 2017 2017 2017 2017 Total interest income $ 15,924 $ 15,839 $ 14,836 $ 14,228 $ 13,692 Total interest expense 1,152 1,276 1,156 861 800 Net interest income 14,772 14,563 13,680 13,367 12,892 Provision for loan losses - - - - - Noninterest income 5,616 3,630 3,465 4,101 5,138 Noninterest expense 12,205 12,387 12,167 12,549 11,502 Income before taxes 8,183 5,806 4,978 4,919 6,528 Income tax expense 1,194 1,826 1,318 1,323 1,893 Net income 6,989 3,980 3,660 3,596 4,635 Preferred stock dividends 303 308 308 308 319 Net income available to common shareholders $ 6,686 $ 3,672 $ 3,352 $ 3,288 $ 4,316 Common shares dividend paid $ 714 $ 712 $ 610 $ 609 $ 507 Per share data Basic net income per common share $ 0.65 $ 0.36 $ 0.33 $ 0.32 $ 0.47 Diluted net income per common share 0.55 0.32 0.29 0.29 0.40 Dividends per common share 0.07 0.07 0.06 0.06 0.06 Average common shares outstanding - basic 10,213,264 10,179,079 10,170,734 10,162,527 9,100,330 Average common shares outstanding - diluted 12,597,394 12,597,396 12,597,299 12,593,876 11,608,333 Asset quality Allowance for loan losses, beginning of period $ 13,134 $ 12,946 $ 13,047 $ 13,300 $ 13,305 Charge-offs (425) (145) (309) (357) (131) Recoveries 105 333 208 104 126 Provision - - - - - Allowance for loan losses, end of period $ 12,814 $ 13,134 $ 12,946 $ 13,047 $ 13,300 Ratios Allowance to total loans 1.11% 1.13% 1.13% 1.19% 1.24% Allowance to nonperforming assets 154.21% 137.50% 117.19% 120.25% 113.48% Allowance to nonperforming loans 154.41% 137.73% 117.47% 120.54% 114.34% Nonperforming assets Nonperforming loans $ 8,298 $ 9,530 $ 11,021 $ 10,823 $ 11,632 Other real estate owned 11 16 27 27 17 Total nonperforming assets $ 8,309 $ 9,546 $ 11,048 $ 10,850 $ 11,649 Capital and liquidity Tier 1 leverage ratio 11.82% 12.69% 12.74% 12.50% 11.08% Tier 1 risk-based capital ratio 15.87% 15.45% 15.54% 15.87% 15.93% Total risk-based capital ratio 16.92% 16.53% 16.63% 17.01% 17.12% Tangible common equity ratio 9.12% 9.33% 9.31% 9.30% 8.37%
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SOURCE Civista Bancshares, Inc.
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