Ryan Payne

Ryan Payne inquired about Civista Bancshares' net interest margin sensitivity to potential rate cuts in late 2025 and 2026, including the expected impact from the Farmers Savings Bank acquisition. He also asked about capital priorities post-Farmers close, focusing on organic growth, repurchases, and M&A interest, and sought clarification on the higher effective tax rate for the quarter.

Answer

Ian Whinnem, SVP and CFO, projected a 5 basis point margin expansion in Q4 due to Farmers, assuming rate cuts in October and December. Dennis Shaffer, President and CEO, emphasized a primary focus on organic growth, increasing tangible book value, and EPS, with capital allocated to technology, people, and infrastructure investments like AI and RPA. He noted M&A remains opportunistic and disciplined, with no increased inbound interest from the Farmers deal. Regarding the tax rate, Dennis Shaffer explained it was adjusted due to increased expected earnings for the year, anticipating a 16-16.5% range year-to-date and for Q4.

Ryan Payne from D.A. Davidson inquired about the higher-than-historical effective tax rate for the quarter and whether this range is expected to continue.

Answer

Dennis Shaffer (President and CEO, Civista Bancshares Inc) explained the increase was due to higher expected earnings for the remainder of the year, anticipating a year-to-date range of 16%-16.5% for the fourth quarter.

Ryan Payne of D.A. Davidson & Co. inquired about the competitive environment for loans, specific areas of focus for 2025, the drivers behind the increase in non-performing assets (NPAs), and sought confirmation on the projected 2025 expenses for the 2UniFi platform.

Answer

President Aldis Birkans and CEO Tim Laney described the competitive loan environment as rational. Regarding NPAs, Mr. Laney identified weakness in the transportation sector, which constitutes less than 2% of total loans, and some small-dollar exposures from a previous acquisition. CFO Nicole Van Denabeele confirmed the projected 2025 expense for 2UniFi is in the range of $27 million to $29 million.

Ryan Payne, on behalf of Jeff Rulis, inquired about the bank's preference for future interest rate cuts regarding net interest margin and asked for the total loan exposure to quick-service restaurants (QSR).

Answer

CFO Chris Navratil stated that the bank's rate sensitivity position remains neutral, prepared for either an up or down rate environment. Chief Credit Officer Krzysztof Slupkowski noted that QSR loans constitute less than 3% of the portfolio and are granular. Chairman and CEO Brad Elliott added that the largest classified QSR credit has a clear plan for resolution.