Civista Bancshares, Inc. (CIVB) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents a mixed picture. Positive aspects include improved efficiency ratios, cost reductions, and a decrease in the cost of funding. However, the decline in full-year noninterest income and vague guidance on digital channel growth are concerning. The Q&A session reveals some uncertainty in digital growth and leasing revenue, but positive sentiment about market disruptions and share repurchases. Overall, the positive and negative factors balance each other out, resulting in a neutral sentiment.
Key Financial Performance
Net Income (Q4 2025) $12.3 million or $0.61 per diluted share, a $2.4 million or 24% increase over Q4 2024. The increase was despite $3.4 million in nonrecurring expenses related to the acquisition of Farmers Savings Bank.
Net Income (Full Year 2025) $46.2 million or $2.64 per diluted share, compared to $31.7 million or $2.01 per diluted share in 2024. The increase was achieved despite 2 million additional shares outstanding due to a capital offering and acquisition.
Pre-Provision Net Revenue (Q4 2025) Increased by $6.7 million or 55% over Q4 2024, after adjusting for nonrecurring expenses.
Return on Assets (ROA) (Q4 2025) 1.14%, or 1.42% excluding one-time expenses, showing improvement throughout 2025.
Net Interest Income (Q4 2025) $36.5 million, a $1.9 million or 5.5% increase over the linked quarter and a $5.1 million or 16% increase over Q4 2024. This was driven by an 11 basis point expansion in net interest margin to 3.69%.
Noninterest Income (Q4 2025) Increased by $251,000 or 2.6% from the linked quarter and $869,000 or 9.6% from Q4 2024, driven by higher interchange fees and leasing activity.
Noninterest Income (Full Year 2025) Decreased by $3.8 million or 10% from 2024, primarily due to a decline in lease revenue and residual income.
Noninterest Expense (Q4 2025) $27.6 million after adjusting for $3.4 million in nonrecurring expenses, consistent with the linked quarter.
Noninterest Expense (Full Year 2025) Decreased by $2.4 million or 2.1% from 2024, driven by declines in compensation and equipment expenses.
Efficiency Ratio (Q4 2025) Improved to 57.7% from 61.4% in the linked quarter and 68.3% in Q4 2024.
Loan and Lease Portfolio Growth (Q4 2025) Grew by $68.7 million (8.7% annualized growth rate), excluding loans acquired from Farmers Savings Bank.
Cost of Funding (Q4 2025) Decreased by 19 basis points to 2.08%, aided by a reduction in brokered deposits and addition of lower-cost deposits from Farmers Savings Bank.
Allowance for Credit Losses to Total Loans (2025 Year-End) 1.28%, consistent with 1.29% at the end of 2024.
Nonperforming Loans to Total Loans (2025 Year-End) 0.95%, slightly up from the linked quarter but down from 1.06% at the end of 2024.
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Operating Highlights
Digital deposit account opening platform: Launched during Q3 2025, initially limited to CDs, expanded in Q4 to include checking and money market accounts. A comprehensive digital marketing campaign is planned post-Farmers' system conversion.
Leasing infrastructure: Investments made in 2025 to enhance operational efficiency, expected to improve leasing team performance in 2026.
Farmers Savings Bank acquisition: Closed transaction, adding $106 million in loans and $236 million in low-cost deposits. System conversion scheduled for February 2026.
Loan growth: Excluding Farmers loans, organic loan and lease portfolio grew by $68.7 million in Q4 2025, representing an annualized growth rate of 8.7%. Anticipates mid-single-digit loan growth in 2026.
Net interest margin: Expanded by 11 basis points to 3.69% in Q4 2025 due to a decline in funding costs and earning asset yield.
Efficiency ratio: Improved to 57.7% in Q4 2025 from 61.4% in the linked quarter and 68.3% in Q4 2024.
Noninterest expense: Decreased by $2.4 million (2.1%) year-to-date after adjusting for nonrecurring expenses, driven by declines in compensation and equipment expenses.
Capital offering and CRE ratio: Capital offering in July 2025 and Farmers acquisition reduced CRE to risk-based capital ratio from 366% to 275% by year-end.
Dividend increase: Quarterly dividend increased to $0.18 per share, reflecting confidence in earnings stability.
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Risk or Challenges
Nonrecurring Expenses from Acquisition: The acquisition of Farmers Savings Bank resulted in $3.4 million in nonrecurring expenses on a pretax basis, negatively impacting net income by $2.9 million after tax. While future expenses are expected to be minimal, the integration process poses potential risks.
Decline in Lease-Related Revenues: Noninterest income decreased by $3.8 million or 10% from 2024, primarily due to a decline in lease revenue and residual income. This was attributed to a $1 million nonrecurring adjustment and reduced lease production, which could impact future revenue streams.
Nonperforming Loans Increase: Nonperforming loans increased by $8.5 million to $31.3 million, with total nonperforming loans to total loans at 0.95%. This represents a slight increase from the linked quarter, indicating potential credit quality concerns.
Past Due Loans Increase: Past due loans increased by $7 million during the quarter, which could signal emerging credit risks and potential future losses.
Unrealized Losses in Securities Portfolio: The securities portfolio had $45 million in unrealized losses as of December 31, 2025. While this represents a decline from prior periods, it still poses a risk to the company's financial stability.
Economic Conditions and Credit Quality: While economic conditions in Ohio and Southeastern Indiana remain stable, mixed national economic conditions could pose risks to credit quality and overall performance.
Migration to Higher-Rate Deposits: There is ongoing migration from lower-rate demand accounts to higher-rate time deposits, which could increase funding costs and pressure margins.
Integration of Farmers Savings Bank: The integration of Farmers Savings Bank, including the system conversion, poses operational risks and challenges, particularly in ensuring a seamless transition.
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Guidance & Outlook
Loan Growth: Anticipate mid-single-digit loan growth in 2026, leveraging Farmers' excess deposits and building loan pipelines.
Core Deposit Funding: Focus on attracting and retaining lower-cost funding to enhance the value of the core deposit franchise.
Digital Banking: Plan to launch a comprehensive digital marketing campaign for online deposits after Farmers' system conversion.
Dividend Increase: Increased quarterly dividend to $0.18 per share, representing a 3.2% annualized yield and a payout ratio of nearly 30%.
Capital Allocation: Maintain capital levels to support organic growth, invest in technology, people, and infrastructure, and evaluate share repurchase opportunities.
Net Interest Margin: Continued focus on expanding net interest margin through strategic funding and lending practices.
Credit Quality: Credit quality remains solid with stable metrics, low delinquencies, and consistent allowance for credit losses.
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Shareholder Return Plan
Quarterly Dividend Increase: Earlier this week, we announced an increase in our quarterly dividend to $0.18 per share, which represents a $0.01 increase over the prior quarter. Based on the December 31 closing market price of $22.22, this represents an annualized yield of 3.2% and a dividend payout ratio of nearly 30%.
Dividend Confidence: We were happy to announce an $0.18 per share dividend earlier this week, which represents a $0.01 per share increase in our quarterly dividend. We view this as a sign of confidence, management and our Board has in Civista's ability to continue generating strong earnings.
Share Repurchase Authorization: We continue to operate with a $13.5 million repurchase authorization and a 10b5 share repurchase plan in place. While we have not repurchased any shares during the year, we believe our stock is a value, and we will continue to evaluate repurchase opportunity.
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Key Q&A
Q:What is the expected loan growth and its composition?
A:The company expects mid-single-digit loan growth, with a focus on commercial and C&I growth. Residential growth was significant in 2025 due to holding construction and CRE products on the books, but some of this may move to the secondary market if interest rates drop.
Q:Can the digital channel drive growth beyond mid-single digits?
A:Management does not expect the digital channel to substantially increase growth beyond mid-single digits at this time. They are excited about potential accelerated growth through digital channels in 2026 but find it hard to quantify until all products are operational.
Q:What is the current status of the digital channel?
A:The digital channel is in its early stages. It initially offered CDs online and has now added checking, savings, and money market accounts. In the last month, 28 new checking accounts were opened through the digital platform. Management plans to provide updates on balances as the year progresses.
Q:How is the net interest margin (NIM) expected to trend?
A:The NIM is expected to expand by 2-3 basis points in the first quarter and another 3-4 basis points in the second quarter, capping out around there. This forecast assumes a rate cut in June and another in the fourth quarter. If rates remain flat, the NIM will be slightly higher by year-end.
Q:What are the anticipated expenses for the first quarter and beyond?
A:First-quarter expenses are expected to be similar to the current 29%-29.5% range, with reductions after the Farmers acquisition conversion in February. However, merit increases and investments in technology and personnel will offset some reductions in the second quarter.
Q:What is the credit quality of the Farmers acquisition?
A:The credit quality from Farmers was very good and did not contribute to the increase in nonperforming loans. The increase was due to one $8 million credit that was put on nonaccrual status, which is being resolved with the lead bank.
Q:What are the new commercial loan yields and competition levels?
A:New and renewed commercial loans in December came in at 6.7%, with larger deals slightly lower at 6.25%-6.5%. The 5-year treasury has been stable, and margins are around 2.75% over the 5-year treasury. Approximately $225 million in loans will reprice in 2026, likely increasing by 1.5 points.
Q:How is the company planning to capitalize on market disruptions?
A:The company is hiring new lenders and receiving interest from employees and clients of disrupted institutions. They feel optimistic about opportunities arising from market disruptions and have included these additions in their expense projections.
Q:What are the plans for share repurchases and capital optimization?
A:The company has a $13.5 million share repurchase authorization in place and considers it a good way to deploy capital. They evaluate repurchases based on value and earnings strength.
Q:What is the guidance for leasing revenue and noninterest income?
A:Leasing revenue is expected to drop in the first quarter due to slower mortgage and leasing gains on sale. Total noninterest income is guided at $7.8-$8.2 million for the first quarter, increasing by $0.5 million in the second quarter.
Q:Review of Unclear Management Responses
A:Management avoided providing specific balances for the digital channel, stating they are in the early stages and will provide updates later. They also used vague language regarding the potential growth impact of the digital channel, stating it is hard to quantify until all products are operational.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Bancshares Inc
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Dennis President
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CIVB Transcript
Civista Bancshares, Inc. (CIVB) Q4 2025 Earnings Call Transcript
Unknown1-29
The earnings call summary presents a mixed picture. Positive aspects include improved efficiency ratios, cost reductions, and a decrease in the cost of funding. However, the decline in full-year noninterest income and vague guidance on digital channel growth are concerning. The Q&A session reveals some uncertainty in digital growth and leasing revenue, but positive sentiment about market disruptions and share repurchases. Overall, the positive and negative factors balance each other out, resulting in a neutral sentiment.
Civista Bancshares, Inc. (CIVB) Q3 2025 Earnings Call Transcript
Positive10-23
The earnings call summary and Q&A indicate strong financial performance with improved efficiency ratios and stable credit quality. Despite a decline in total loans, the company has a robust pipeline and expects fewer payoffs in the future. The merger with Farmers Savings is anticipated to enhance margins and contribute to growth. The management's focus on organic growth and strategic investments further supports a positive outlook. While some nonrecurring expenses and competitive loan pricing are noted, overall sentiment is positive, likely resulting in a 2% to 8% stock price increase.
Civista Bancshares, Inc. (CIVB) Q1 2025 Earnings Call Transcript
Positive4-24
The earnings call shows a solid financial performance with a 60% increase in net income, expanding net interest margin, and improved efficiency ratio. The dividend increase and stock repurchase program further enhance shareholder value. Despite some concerns about economic uncertainty and regulatory capital levels, the Q&A suggests optimism with anticipated margin expansion and a rebound in fee income. The company’s strategic initiatives in cost control and technology investments also bode well. Overall, the positive elements outweigh the risks, suggesting a positive stock price movement.
Earnings call transcript: Civista Bancshares Q1 2025 beats EPS forecast
Positive4-24
Savista Bancshares shows strong financial performance with a 60% YoY increase in net income and a 15 basis point rise in net interest margin. The company is implementing cost control measures, increasing dividends, and authorizing a substantial stock repurchase program. Despite a slight decline in non-interest income, the Q&A suggests potential for future margin expansion and stable expenses. The market strategy and financial health indicate a positive outlook, likely leading to a stock price increase of 2% to 8% over the next two weeks.
CIVB Report
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