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Civista Bancshares, Inc. Announces Second Quarter 2021 Financial Results

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SANDUSKY, Ohio, July 23, 2021 /PRNewswire/ -- Civista Bancshares, Inc. (NASDAQ:CIVB) ("Civista") announced its unaudited financial results for the three and six months ending June 30, 2021.

Civista Bancshares, Inc.
Civista Bancshares, Inc.

Second quarter and year-to-date 2021 highlights:

  • Net income of $9.2 million, or $0.59 per diluted share, for the second quarter of 2021, compared to $6.5 million, or $0.41 per diluted share, for the second quarter of 2020.

  • Net income of $19.9 million, or $1.27 per diluted share, compared to $14.3 million, or $0.88 per diluted share, for the six months ended June 30, 2021 and 2020, respectively.

  • COVID–19 loan deferrals decreased to 2.5% of total loans at period end, compared to 3.6% at December 31, 2020 and 21.3% at June 30, 2020.

  • Second quarterly dividend of $0.12 is equivalent to an annualized yield of 2.17% based on the June 30, 2021 market close of $22.10 and a dividend payout ratio of 20.43%.

  • Executed a balance sheet restructuring to deploy excess liquidity which included the prepayment of a 2.05%, $50.0 million FHLB advance, with a $3.7 million prepayment penalty. In addition, we recognized a $1.8 million gain on the sale of our VISA B shares. We also invested $100.0 million dollars into a mix of investment securities yielding 1.50%.

"Our team executed another great quarter financially as well as several key initiatives operationally. On June 9th, we introduced the new Civista Digital Banking which provides for a better customer experience in both the mobile and online platform. We restructured our balance sheet to reduce cost in the future. Our mortgage team had another great quarter and our commercial lending team has seen increases in demand. In July, we also increased our third quarter dividend 17%." said Dennis G. Shaffer, CEO and President of Civista.

Results of Operations:

For the three-month period ended June 30, 2021 and 2020

Net interest income increased $1.8 million, or 8.0%, for the second quarter of 2021 compared to the same period of 2020, due to a $914 thousand increase in interest income of as well as an $852 thousand decrease in interest expense. Interest income included $2.8 million of accretion of PPP loan fees during the quarter.

The increase in interest income was due to an increase in average earning assets of $248.1 million, partially offset by a 24 basis point decrease in average yields. Interest income included $2.8 million of PPP fees as well as accretion income of purchased loan portfolios of $565.3 thousand.

The decrease in interest expense is primarily due to a decrease in average rates of 24 basis points offset by an increase in average interest-bearing liabilities of $118.3 million.

Net interest margin decreased 8 basis points to 3.53% for the second quarter of 2021, compared to 3.61% for the same period a year ago.

PPP loans averaged $207.5 million during the quarter at an average yield of 6.39%, including the related fee accretion, which increased the margin by 23 basis points.

Average Balance Analysis

(Unaudited - Dollars in thousands)










Three Months Ended June 30,


2021


2020


Average


Yield/


Average


Yield/

Assets:

balance

Interest

rate *


balance

Interest

rate *

Interest-earning assets:








Loans **

$ 2,054,784

$ 22,653

4.42%


$ 1,972,969

$ 21,613

4.41%

Taxable securities

204,554

1,230

2.47%


185,956

1,359

3.05%

Non-taxable securities

208,940

1,525

4.04%


200,882

1,541

4.19%

Interest-bearing deposits in other banks

307,853

90

0.12%


168,199

71

0.17%

Total interest-earning assets

$ 2,776,131

25,498

3.77%


$ 2,528,006

24,584

4.01%

Noninterest-earning assets:








Cash and due from financial institutions

45,626




84,961



Premises and equipment, net

22,375




22,535



Accrued interest receivable

8,463




9,312



Intangible assets

84,638




84,906



Bank owned life insurance

46,305




45,334



Other assets

37,173




43,297



Less allowance for loan losses

(26,580)




(17,098)



Total Assets

$ 2,994,131




$ 2,801,253











Liabilities and Shareholders' Equity:








Interest-bearing liabilities:








Demand and savings

$ 1,310,998

$ 334

0.10%


$ 1,027,678

$ 439

0.17%

Time

269,624

802

1.19%


289,658

1,363

1.89%

FHLB

101,923

330

1.30%


125,034

447

1.44%

Other borrowings

-

-

0.00%


124,819

4

0.01%

Subordinated debentures

29,427

185

2.52%


29,427

250

3.42%

Repurchase agreements

25,914

6

0.09%


22,987

6

0.15%

Total interest-bearing liabilities

$ 1,737,886

1,657

0.38%


$ 1,619,603

2,509

0.62%

Noninterest-bearing deposits

867,561




790,891



Other liabilities

39,428




60,235



Shareholders' equity

349,256




330,524



Total Liabilities and Shareholders' Equity

$ 2,994,131




$ 2,801,253











Net interest income and interest rate spread

$ 23,841

3.39%



$ 22,075

3.39%









Net interest margin



3.53%




3.61%









* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $406 thousand and $413 thousand for the periods ended June 30, 2021 and 2020, respectively.









** - Average balance includes nonaccrual loans

For the six-month period ended June 30, 2021 and 2020

Net interest income increased $3.5 million, or 7.9%, compared to the same period in 2020.

Interest income increased $1.6 million, or 3.3%, for the first six months of 2021. Average earning assets increased $510.7 million, which resulted in a $5.3 million increase in interest income. Average yields decreased 64 basis points which resulted in a $3.7 million decrease in interest income. During the six-month period, the Bank had average PPP Loans totaling $228.1 million. These loans had an average yield of 6.22% including the amortization of PPP fees, which increased the margin by 24 basis points.

Interest expense decreased $1.8 million, or 34.1%, for the first six months of 2021 compared to the same period of 2020. Average rates decreased 31 basis points, resulting in a $1.8 million decrease in interest expense. Average interest-bearing liabilities increased $225.6 million, but led to a decrease in interest expense of $20 thousand, primarily due to a mix shift toward interest-bearing demand deposits.

Net interest margin decreased 43 basis points to 3.41% for the first six months of 2021, compared to 3.84% for the same period a year ago.

Average Balance Analysis

(Unaudited - Dollars in thousands)










Six Months Ended June 30,


2021


2020


Average


Yield/


Average


Yield/

Assets:

balance

Interest

rate *


balance

Interest

rate *

Interest-earning assets:








Loans **

$ 2,062,061

$ 45,436

4.44%


$ 1,849,327

$ 43,286

4.71%

Taxable securities

189,729

2,505

2.75%


186,780

2,775

3.10%

Non-taxable securities

208,260

3,044

4.08%


199,233

3,053

4.21%

Interest-bearing deposits in other banks

430,705

239

0.11%


144,748

472

0.66%

Total interest-earning assets

$ 2,890,755

51,224

3.66%


$ 2,380,088

49,586

4.30%

Noninterest-earning assets:








Cash and due from financial institutions

39,777




126,655



Premises and equipment, net

22,442




22,636



Accrued interest receivable

8,515




8,031



Intangible assets

84,749




84,994



Bank owned life insurance

46,185




45,210



Other assets

37,157




36,229



Less allowance for loan losses

(26,087)




(16,013)



Total Assets

$ 3,103,493




$ 2,687,830











Liabilities and Shareholders' Equity:








Interest-bearing liabilities:








Demand and savings

$ 1,280,030

$ 677

0.11%


$ 961,285

$ 1,044

0.22%

Time

276,793

1,719

1.25%


285,179

2,743

1.93%

FHLB

113,398

774

1.38%


141,391

1,028

1.46%

Other borrowings

-

-

0.00%


62,410

4

0.01%

Federal funds purchased

-

-

0.00%


305

3

1.98%

Subordinated debentures

29,427

371

2.54%


29,427

563

3.85%

Repurchase agreements

28,531

14

0.10%


22,555

11

0.10%

Total interest-bearing liabilities

$ 1,728,179

3,555

0.41%


$ 1,502,552

5,396

0.72%

Noninterest-bearing deposits

986,185




795,215



Other liabilities

39,690




58,500



Shareholders' equity

349,439




331,563



Total Liabilities and Shareholders' Equity

$ 3,103,493




$ 2,687,830











Net interest income and interest rate spread

$ 47,669

3.25%



$ 44,190

3.58%









Net interest margin



3.41%




3.84%









* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $814 thousand and $819 thousand for the periods ended June 30, 2021 and 2020, respectively.









** - Average balance includes nonaccrual loans

No provision for loan losses was recorded during the second quarter and was $830 thousand for the first six months of 2021. Provision for loan losses was $3.5 million for the second quarter of 2020 and $5.6 million for the first six months of 2020. The reserve ratio increased to 1.30% at June 30, 2021 from 1.22% at December 31, 2020. The reserve ratio without $153.0 million of PPP loans would have been 10 basis points higher.

For the second quarter of 2021, noninterest income totaled $9.0 million, an increase of $2.2 million, or 31.7%, compared to the prior year's second quarter.

Noninterest income








(unaudited - dollars in thousands)

Three months ended June 30,


2021


2020


$ change


% change

Service charges

$ 1,317


$ 930


$ 387


41.6%

Net loss on sale of securities

1,784


-


1,784


0.0%

Net gain/(loss) on equity securities

53


(5)


58


N/M

Net gain on sale of loans

2,218


2,261


(43)


-1.9%

ATM/Interchange fees

1,373


1,149


224


19.5%

Wealth management fees

1,188


904


284


31.4%

Bank owned life insurance

248


240


8


3.3%

Tax refund processing fees

475


475


-


0.0%

Swap fees

17


764


(747)


-97.8%

Other

352


136


216


158.8%

Total noninterest income

$ 9,025


$ 6,854


$ 2,171


31.7%









N/M - not meaningful








Service charges increased as a result of higher overdraft fees and service charges. During 2020, customer behavior changed as a result of the COVID-19 pandemic, resulting in fewer overdrafts. Civista also waived service fees on deposit accounts of $93 thousand during 2020. Overdraft fees are rebounding to pre-pandemic levels.

Net gain on sale of securities increased as a result of the sale of Visa Class B shares.

ATM/Interchange fees increased as a result of increased volume of transactions and incentives from our network providers.

Wealth management fees increased due to an increase in average assets under management as well as an increase in the average rate earned on the assets in 2021.

Swap fees decreased due to the volume. For the quarter, we swapped $4.2 million compared to $44.8 million during the same period last year. We reduced the loans we entered into swaps on as a part of our asset liability management program.

For the six months ended June 30, 2021, noninterest income totaled $18.2 million, an increase of $4.5 million, or 32.7%, compared to the same period in the prior year.

Noninterest income








(unaudited - dollars in thousands)

Six months ended June 30,


2021


2020


$ change


% change

Service charges

$ 2,573


$ 2,398


$ 175


7.3%

Net loss on sale of securities

1,783


-


1,783


0.0%

Net gain/(loss) on equity securities

141


(146)


287


196.6%

Net gain on sale of loans

4,963


3,088


1,875


60.7%

ATM/Interchange fees

2,620


2,043


577


28.2%

Wealth management fees

2,334


1,910


424


22.2%

Bank owned life insurance

491


490


1


0.2%

Tax refund processing fees

2,375


2,375


-


0.0%

Swap fees

94


1,102


(1,008)


-91.5%

Other

841


470


371


78.9%

Total noninterest income

$ 18,215


$ 13,730


$ 4,485


32.7%









Service charges increased as a result of higher overdraft fees and service charges. During 2020, customer behavior changed as a result of the COVID-19 pandemic, resulting in fewer overdrafts. Civista also waived service fees on deposit accounts of $93 thousand during 2020. Overdraft fees are rebounding to pre-pandemic levels.

Net gain on sale of securities increased as a result of the sale of Visa Class B shares.

Net gain (loss) on equity securities increased as a result of market value increases.

Net gain on sale of loans increased due to an increase in loans sold of $21.0 million and an increase in the premium on sold loans of 93 basis points.

ATM/Interchange fees increased as a result of increased volume of transactions and incentives from our network providers.

Wealth management fees increased due to an increase in average assets under management as well as an increase in the average rate earned on the assets in 2021.

Swap fees decreased as a result of a decline in the volume of loans. Year to date we swapped $5.7 million compared to $77.4 million during the same period last year. We reduced the loans we entered into swaps on as a part of our asset liability management program.

For the second quarter of 2021, noninterest expense totaled $22.5 million, an increase of $4.4 million, or 24.0%, compared to the prior year's second quarter.

Noninterest expense








(unaudited - dollars in thousands)

Three months ended June 30,


2021


2020


$ change


% change

Compensation expense

$ 11,406


$ 10,597


$ 809


7.6%

Net occupancy and equipment

1,489


1,571


(82)


-5.2%

Contracted data processing

490


475


15


3.2%

Taxes and assessments

793


631


162


25.7%

Professional services

741


883


(142)


-16.1%

Amortization of intangible assets

223


228


(5)


-2.2%

ATM/Interchange expense

656


331


325


98.2%

Marketing

343


339


4


1.2%

Software maintenance expense

545


407


138


33.9%

Other

5,781


2,652


3,129


118.0%

Total noninterest expense

$ 22,467


$ 18,114


$ 4,353


24.0%









The increase in other expense is due to the prepayment penalty of $3.7 million related to the early payoff of an FHLB long-term advance. This was partially offset by a $465 thousand credit valuation adjustment to mortgage servicing rights.

Compensation expense included increases in commissions of $465 thousand as well as salaries of $183 thousand. The increase in commissions is due to increased mortgage loan activity. The increase in salaries is due to annual pay increases, which occur every year in April.

Taxes and assessments increased due to an increase in the FDIC assessment base, as well as a $64 thousand credit for small banks that was applied to the June 2020 assessments.

The increase in ATM/Interchange expense is primarily due to additional volume and to a settlement received in the second quarter of 2020.

The increase in software maintenance expense is due to both increases in software maintenance contracts the implementation of our new digital banking.

The efficiency ratio was 67.5% for the quarter ended June 30, 2021 compared to 61.7% for the quarter ended June 30, 2020. Removing the effect of the FHLB prepayment and the gain on the sale of the VISA B shares, the efficiency ratio would have been 59.5%.

Civista's effective income tax rate for the second quarter 2021 was 11.9% compared to 11.3% in 2020.

For the six months ended June 30, 2021, noninterest expense totaled $41.9 million, an increase of $5.9 million, or 16.4%, compared to the same period in the prior year.

Noninterest expense








(unaudited - dollars in thousands)

Six months ended June 30,


2021


2020


$ change


% change

Compensation expense

$ 23,188


$ 21,468


$ 1,720


8.0%

Net occupancy and equipment

3,127


3,053


74


2.4%

Contracted data processing

933


925


8


0.9%

Taxes and assessments

1,678


1,210


468


38.7%

Professional services

1,479


1,620


(141)


-8.7%

Amortization of intangible assets

445


459


(14)


-3.1%

ATM/Interchange expense

1,249


778


471


60.5%

Marketing

641


695


(54)


-7.8%

Software maintenance expense

1,053


844


209


24.8%

Other

8,064


4,918


3,146


64.0%

Total noninterest expense

$ 41,857


$ 35,970


$ 5,887


16.4%









The increase in other expense is due to the prepayment penalty of $3.7 million related to the early payoff of an FHLB long-term advance. This was partially offset by a $465 thousand credit valuation adjustment to mortgage servicing rights.

Compensation expense included increases in commissions of $1.1 million as well as salaries of $375 thousand. The increase in commission expense is a result of increased mortgage loan activity. The increase in salaries is due to annual pay increases which occur in April.

The increase in ATM/Interchange expense is primarily due to additional volume and to a settlement received in the second quarter of 2020.

The increase in software maintenance expense is due to both increases in software maintenance contracts as well as the implementation of the new digital banking platform.

The efficiency ratio was 62.8% for the six months ended June 30, 2021 compared to 61.2% for the six months ended June 30, 2020. Removing the effect of the FHLB prepayment and the gain on the sale of the VISA B shares, the efficiency ratio would have been 58.8%.

Civista's effective income tax rate for the first six months of 2021 was 14.1% compared to 12.2% in same period in 2020.

Balance Sheet

Total assets increased $155.8 million, or 5.6%, from December 31, 2020 to June 30, 2021, primarily due to an increase in cash of $105.8 million, or 75.8%. Securities available for sale increased $94.3 million, or 26.0%. The loan portfolio decreased $38.3 million, which includes a decrease in PPP loans of $64.3 million.

End of period loan balances








(unaudited - dollars in thousands)









June 30,


December 31,






2021


2020


$ Change


% Change

Commercial and Agriculture 1

$ 328,871


$ 409,876


$ (81,005)


-19.8%

Commercial Real Estate:








Owner Occupied

271,667


278,413


(6,746)


-2.4%

Non-owner Occupied

762,983


705,072


57,911


8.2%

Residential Real Estate

426,731


442,588


(15,857)


-3.6%

Real Estate Construction

188,368


175,609


12,759


7.3%

Farm Real Estate

28,616


33,102


(4,486)


-13.6%

Consumer and Other

11,960


12,842


(882)


-6.9%

Total Loans

$ 2,019,196


$ 2,057,502


$ (38,306)


-1.9%









1June 30, 2021 includes PPP loans totaling $153,007 and December 31, 2020 includes PPP loans totaling $217,295.









Loan balances have declined during the first half of 2021, primarily due to a net decline in PPP loans. Removing the effects of PPP loans, the loan portfolio would have increased $26.0 million, or 1.4%. Commercial Real Estate continued to grow due to consistent demand in the Non-owner Occupied category. Real Estate Construction loans increased as the construction season got underway during the second quarter. Construction availability remains near all-time highs. Commercial and Agriculture loans have been negatively impacted by the amount of governmental stimulus money. The decrease in Residential Real Estate continues as a result of portfolio loans refinanced into saleable mortgage products.

Paycheck Protection Program

During 2021, we processed approximately 1,300 loans totaling $131.1 million of PPP loans as part of the second round of the PPP. This is in addition to the $268.3 million that we processed in round one during 2020. Of the total PPP loans we have originated, $246.4 million have been forgiven or have paid off. We recognized $2.8 million of PPP fees in income during the quarter, and $5.9 million for the six months ended June 30, 2021. At June 30, 2021, $5.9 million of prepaid SBA fees remain.

COVID-19 Loan Modifications

As of June 30, 2021, the remaining loans modified under the CARES Act total $50.4 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








Commercial and Agriculture


13


$ 4,222


0.21%

Commercial Real Estate:







Owner Occupied


5


8,185


0.41%

Non-owner Occupied


15


37,544


1.86%

Real Estate Construction


1


485


0.02%



34


$ 50,436


2.50%

Deposits

Total deposits increased $213.6 million, or 9.8%, from December 31, 2020 to June 30, 2021.

End of period deposit balances








(unaudited - dollars in thousands)









June 30,


December 31,






2021


2020


$ Change


% Change

Noninterest-bearing demand

$ 853,724


$ 720,809


$ 132,915


18.4%

Interest-bearing demand

480,281


410,139


70,142


17.1%

Savings and money market

809,530


771,612


37,918


4.9%

Time deposits

259,457


286,838


(27,381)


-9.5%

Total Deposits

$ 2,402,992


$ 2,189,398


$ 213,594


9.8%

The increase in noninterest-bearing demand of $132.9 million was primarily due to a $61.1 million increase in business demand deposit accounts, primarily due to the deposit of PPP loan proceeds. Additionally, balances related to the tax refund processing program increased $50.8 million, which is temporary, and is expected to return to levels more consistent with December 31, 2020 over the next two quarters. Interest-bearing demand deposits increased due to a $47.6 million increase in public fund accounts and a $26.7 million increase in non-public fund accounts. The increase in savings and money market was primarily due to a $40.9 million increase in statement savings, a $26.7 million increase in personal money markets and a $14.8 million increase in public fund money markets. These increases were partially offset by a decrease of $40.1 million increase in brokered money market accounts.

FHLB advances totaled $75.0 million at June 30, 2021, down $50.0 million from December 31, 2020. The decrease was due to the prepayment of a $50 million, 2.05% long-term advance.

Stock Repurchase Program

During the first six months of 2021, Civista repurchased 505,239 shares for $11.3 million at a weighted average price of $22.30 per share. We have approximately $7.4 million remaining of the current $13.5 million repurchase authorization, which was approved in April 2021. In addition, Civista liquidated 5,065 shares held by employees, at $17.71 per share, to satisfy tax obligations stemming from vesting of restricted shares.

Shareholder Equity

Total shareholders' equity increased $2.3 million from December 31, 2020 to June 30, 2021. Retained earnings increased $16.1 million and was partially offset by an $11.4 million repurchase of treasury shares and a $3.1 million decrease in accumulated other comprehensive income.

Asset Quality

Civista recorded net recoveries of $339 thousand for the six months of 2021 compared to net recoveries of $41 thousand for the same period of 2020. The allowance for loan losses to loans was 1.30% at June 30, 2021 and 1.22% at December 31, 2020. Removing the PPP loans, the allowance ratio would have been 10 basis points higher.

Allowance for Loan Losses




(unaudited - dollars in thousands)





Six months ended June 30,


2021


2020

Beginning of period

$ 25,028


$ 14,767

Charge-offs

(71)


(140)

Recoveries

410


181

Provision

830


5,612

End of period

$ 26,197


$ 20,420

Non-performing assets at June 30, 2021 were $5.9 million, a 19.4% decrease from December 31, 2020. The non-performing assets to assets ratio decreased to 0.20 % from 0.27% at December 31, 2020. The allowance for loan losses to non-performing loans increased to 443.50% from 343.05% at December 31, 2020.

Non-performing Assets




(dollars in thousands)

June 30,


December 31,


2021


2020

Non-accrual loans

$ 4,288


$ 5,399

Restructured loans

1,619


1,897

Total non-performing loans

5,907


7,296

Other Real Estate Owned

-


31

Total non-performing assets

$ 5,907


$ 7,327

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 2021 at 1:00 p.m. ET on Friday, July 23, 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. second quarter 2021 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, 2020, 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 $2.9 billion financial holding company headquartered in Sandusky, Ohio. The Company's banking subsidiary, Civista Bank, operates 35 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,


2021


2020


2021


2020









Interest income

$ 25,498


$ 24,584


$ 51,224


$ 49,586

Interest expense

1,657


2,509


3,555


5,396

Net interest income

23,841


22,075


47,669


44,190

Provision for loan losses

-


3,486


830


5,612

Net interest income after provision

23,841


18,589


46,839


38,578

Noninterest income

9,025


6,854


18,215


13,730

Noninterest expense

22,467


18,114


41,857


35,970

Income before taxes

10,399


7,329


23,197


16,338

Income tax expense

1,235


825


3,275


2,001

Net income

9,164


6,504


19,922


14,337









Dividends paid per common share

$ 0.12


$ 0.11


$ 0.24


$ 0.22









Earnings per common share,








basic

$ 0.59


$ 0.41


$ 1.27


$ 0.88

diluted

$ 0.59


$ 0.41


$ 1.27


$ 0.88









Average shares outstanding, (1)








basic

15,529,766


15,989,851


15,674,231


16,237,242

diluted

15,529,766


15,989,851


15,674,231


16,237,242









Selected financial ratios:








Return on average assets

1.23%


0.93%


1.29%


1.07%

Return on average equity

10.52%


7.91%


11.50%


8.70%

Dividend payout ratio

20.34%


27.04%


18.88%


24.92%

Net interest margin (tax equivalent)

3.53%


3.61%


3.41%


3.84%









(1) The Company is now presenting earnings per share using the two-class method. As such, the presentation for the prior periods have been revised. Earnings per share for the prior periods did not change as a result of using the two-class method.

Selected Balance Sheet Items

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






June 30,


December 31,


2021


2020


(unaudited)


(unaudited)





Cash and due from financial institutions

$ 245,306


$ 139,522

Investment securities

458,831


364,350

Loans held for sale

6,618


7,001

Loans

2,019,196


2,057,502

Less: allowance for loan losses

(26,197)


(25,028)

Net loans

1,992,999


2,032,474

Other securities

20,537


20,537

Premises and equipment, net

22,817


22,580

Goodwill and other intangibles

84,980


84,926

Bank owned life insurance

46,467


45,976

Other assets

46,088


51,496

Total assets

$ 2,924,643


$ 2,768,862





Total deposits

$ 2,402,992


$ 2,189,398

Federal Home Loan Bank advances

75,000


125,000

Securities sold under agreements to repurchase

24,916


28,914

Subordinated debentures

29,427


29,427

Accrued expenses and other liabilities

39,895


46,015

Total shareholders' equity

352,413


350,108

Total liabilities and shareholders' equity

$ 2,924,643


$ 2,768,862





Shares outstanding at period end

15,434,592


15,898,032





Book value per share

$ 22.83


$ 22.02

Equity to asset ratio

12.05%


12.64%





Selected asset quality ratios:




Allowance for loan losses to total loans

1.30%


1.22%

Non-performing assets to total assets

0.20%


0.26%

Allowance for loan losses to non-performing loans

443.50%


343.05%





Non-performing asset analysis




Nonaccrual loans

$ 4,288


$ 5,399

Troubled debt restructurings

1,619


1,897

Other real estate owned

-


31

Total

$ 5,907


$ 7,327

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)












June 30,


March 31,


December 31,


September 30,


June 30,

End of Period Balances

2021


2021


2020


2020


2020











Assets










Cash and due from banks

$ 245,306


$ 437,238


$ 139,522


$ 194,773


$ 196,520

Investment securities

458,831


357,798


364,350


366,691


369,181

Loans held for sale

6,618


10,769


7,001


13,256


18,523

Loans

2,019,196


2,060,239


2,057,502


2,040,940


2,022,965

Allowance for loan losses

(26,197)


(26,133)


(25,028)


(22,637)


(20,420)

Net Loans

1,992,999


2,034,106


2,032,474


2,018,303


2,002,545

Other securities

20,537


20,537


20,537


20,537


20,537

Premises and equipment, net

22,817


22,265


22,580


22,958


23,137

Goodwill and other intangibles

84,980


84,682


84,926


84,896


84,852

Bank owned life insurance

46,467


46,219


45,976


45,732


45,489

Other assets

46,088


43,754


51,496


50,847


51,369

Total Assets

$ 2,924,643


$ 3,057,368


$ 2,768,862


$ 2,817,993


$ 2,812,153











Liabilities










Total deposits

$ 2,402,992


$ 2,475,907


$ 2,189,398


$ 2,068,769


$ 2,069,261

Federal Home Loan Bank advances

75,000


125,000


125,000


125,000


125,000

Securities sold under agreement to repurchase

24,916


29,513


28,914


25,813


23,608

Other borrowings

-


-


-


183,695


183,695

Subordinated debentures

29,427


29,427


29,427


29,427


29,427

Accrued expenses and other liabilities

39,895


47,463


46015


43,234


44,549

Total liabilities

2,572,230


2,707,310


2,418,754


2,475,938


2,475,540











Shareholders' Equity










Common shares

277,495


277,164


277,039


276,940


276,841

Retained earnings

109,178


101,899


93,048


84,628


78,712

Treasury shares

(45,953)


(38,574)


(34,598)


(33,900)


(32,594)

Accumulated other comprehensive income

11,693


9,569


14,619


14,387


13,654

Total shareholders' equity

352,413


350,058


350,108


342,055


336,613











Total Liabilities and Shareholders' Equity

$ 2,924,643


$ 3,057,368


$ 2,768,862


$ 2,817,993


$ 2,812,153











Quarterly Average Balances










Assets:










Earning assets

$ 2,776,131


$ 3,006,653


$ 2,603,961


$ 2,617,884


$ 2,528,006

Securities

413,494


382,313


386,179


388,594


386,838

Loans

2,054,784


2,069,419


2,072,477


2,040,492


1,972,969

Liabilities and Shareholders' Equity










Total deposits

$ 2,448,183


$ 2,632,782


$ 2,144,865


$ 2,084,791


$ 2,108,227

Interest-bearing deposits

1,580,622


1,532,759


1,458,967


1,401,318


1,317,336

Other interest-bearing liabilities

157,264


185,605


278,357


362,965


302,267

Total shareholders' equity

349,256


349,625


343,335


339,278


330,524

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

2021


2021


2020


2020


2020











Total interest and dividend income

$ 25,498


$ 25,725


$ 25,721


$ 24,558


$ 24,584

Total interest expense

1,657


1,897


2,190


2,552


2,509

Net interest income

23,841


23,828


23,531


22,006


22,075

Provision for loan losses

-


830


2,250


2,250


3,486

Noninterest income

9,025


9,190


7,666


6,786


6,854

Noninterest expense

22,467


19,390


16,968


17,727


18,114

Income before taxes

10,399


12,798


11,979


8,815


7,329

Income tax expense

1,235


2,040


1,806


1,133


825

Net income

$ 9,164


$ 10,758


$ 10,173


$ 7,682


$ 6,504











Common shares dividend paid

$ 1,885


$ 1,907


$ 1,753


$ 1,766


$ 1,764











Per share data




















Earnings per common share










Basic

$ 0.59


$ 0.68


$ 0.64


$ 0.48


$ 0.41

Diluted

0.59


0.68


0.64


0.48


0.41











Dividends paid per common share

0.12


0.12


0.11


0.11


0.11

Average common shares outstanding, (1)










Basic

15,529,766


15,820,301


15,861,095


15,991,270


15,989,851

Diluted

15,529,766


15,820,301


15,861,095


15,991,270


15,989,851











Asset quality










Allowance for loan losses, beginning of period

$ 26,133


$ 25,028


$ 22,637


$ 20,420


$ 16,948

Charge-offs

(25)


(46)


(139)


(185)


(116)

Recoveries

89


321


280


152


102

Provision

-


830


2,250


2,250


3,486

Allowance for loan losses, end of period

$ 26,197


$ 26,133


$ 25,028


$ 22,637


$ 20,420











Ratios










Allowance to total loans

1.30%


1.27%


1.22%


1.11%


1.01%

Allowance to nonperforming assets

443.50%


423.09%


341.59%


292.88%


262.14%

Allowance to nonperforming loans

443.50%


423.09%


343.05%


292.88%


262.14%











Nonperforming assets










Nonperforming loans

$ 5,907


$ 6,177


$ 7,296


$ 7,729


$ 7,790

Other real estate owned

-


-


31


-


-

Total nonperforming assets

$ 5,907


$ 6,177


$ 7,327


$ 7,729


$ 7,790











Capital and liquidity










Tier 1 leverage ratio

9.92%


9.23%


10.77%


10.73%


10.43%

Tier 1 risk-based capital ratio

14.65%


15.20%


14.74%


14.73%


12.99%

Total risk-based capital ratio

15.90%


16.45%


15.99%


15.94%


13.97%

Tangible common equity ratio (2)

9.51%


9.00%


9.98%


9.47%


9.29%











(1) The Company is now presenting earnings per share using the two-class method. As such, the presentation for the prior periods have been revised. Earnings per share for the prior periods did not change as a result of using the two-class method.











(2) 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,


2021


2021


2020


2020


2020











Tangible Common Equity










Total Shareholder's Equity - GAAP

$ 352,413


$ 350,058


$ 350,108


$ 342,055


$ 336,613

Less: Goodwill and intangible assets

82,235


82,458


82,681


82,907


83,135

Tangible common equity (Non-GAAP)

$ 270,178


$ 267,600


$ 267,427


$ 259,148


$ 253,478











Total Shares Outstanding

15,434,592


15,750,479


15,898,032


15,945,479


16,052,979











Tangible book value per share

$ 17.50


$ 16.99


$ 16.82


$ 16.25


$ 15.79











Tangible Assets










Total Assets - GAAP

$ 2,924,643


$ 3,057,368


$ 2,762,918


$ 2,817,993


$ 2,812,153

Less: Goodwill and intangible assets

82,235


82,458


82,681


82,907


83,135

Tangible assets (Non-GAAP)

$ 2,842,408


$ 2,974,910


$ 2,680,237


$ 2,735,086


$ 2,729,018











Tangible common equity to tangible assets

9.51%


9.00%


9.98%


9.47%


9.29%

Reconciliation of Non-GAAP Efficiency Ratio



(Unaudited - dollars in thousands except share data)
















For the three months ended :

June 30, 2021


June 30, 2020















GAAP


Non-GAAP
adjustment



Non-
GAAP


GAAP


Non-GAAP
adjustment


Non-
GAAP

Noninterest expense

22,467


(3,717)

(1)


18,750


18,114


-


18,114














Net interest income (FTE)

24,247


-



24,247


22,488


-


22,488

Noninterest income

9,025


(1,785)

(2)


7,240


6,854


-


6,854














Efficiency ratio

67.5%





59.5%


61.7%




61.7%



























For the six months ended:

June 30, 2021


June 30, 2020















GAAP


Non-GAAP
adjustment



Non-GAAP


GAAP


Non-GAAP
adjustment


Non-
GAAP

Noninterest expense

41,857


(3,717)

(1)


38,140


35,970


-


35,970














Net interest income (FTE)

48,483


-



48,483


45,009


-


45,009

Noninterest income

18,215


(1,785)

(2)


16,430


13,730


-


13,730














Efficiency ratio

62.8%





58.8%


61.2%




61.2%














(1) FHLB prepayment penalty













(2) Gain on sale of VISA B shares













Cision
Cision

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SOURCE Civista Bancshares, Inc.