Timothy Jeffrey Switzer

Timothy Jeffrey Switzer asked for the expected closing date of the Farmers acquisition in November to aid modeling. He also sought quantification of the purchase accounting impact on the net interest margin for Q4 and on a full-quarter basis. Additionally, he inquired about current loan pricing competition in Civista Bancshares' markets and whether it's driven more by slowing borrower demand or lower Fed rates.

Answer

Dennis Shaffer, President and CEO, stated the Farmers acquisition is expected to close shortly after the November 4th shareholder meeting, likely before mid-month, suggesting at least 45 days for Q4 modeling. Ian Whinnem, SVP and CFO, later provided the purchase accounting impact on NIM as approximately $150,000 for Q4 and around $280,000 for a full quarter. Regarding loan competition, Ian Whinnem noted increased aggressiveness with rates falling to 6-6.5% for better deals across Ohio and Indiana. Dennis Shaffer added that market disruption from larger banks' activities and recent mergers benefits Civista. Both executives agreed that consistent demand in Ohio's strong economy, coupled with lower Fed rates and increased confidence in commercial real estate, are driving the competitive pricing.

Timothy Jeffrey Switzer inquired about the drivers behind the higher loss of net fair value adjustment, the possibility of modeling the impact of the extended seasoning portfolio, and the dynamics of the loan reserve increase despite lower loss expectations for legacy vintages and limited held-for-investment growth. He also asked about the increase in diluted shares.

Answer

CFO Drew LaBenne explained that the fair value adjustment was positive in Q2 ($9 million) and Q3 ($5 million), with the larger extended seasoning portfolio contributing to natural roll-down. He offered to discuss modeling the extended seasoning portfolio offline. For loan reserves, he cited a one-time positive benefit of $11 million in Q2 from a re-estimation, which was absent in Q3, and higher upfront CECL charges for the growing purchase finance business due to longer duration. The increase in diluted shares was primarily attributed to the higher share price impacting the treasury stock method.