Executive Summary

EPS of $0.53, up 18% q/q from $0.45 and down vs $0.66 y/y; net interest margin inflected higher sequentially (3.19% tax-equivalent; 3.16% in average balance table) and management expects continued expansion into Q4 2024, aided by lower-cost funding resets .
Core funding pivot delivered a $246M deposit increase and a $213.5M reduction in overnight FHLB borrowings; net interest income rose 5.3% q/q despite deposit migration to interest-bearing accounts .
Noninterest income fell $0.9M q/q on leasing residual volatility but was up 19% y/y; efficiency ratio improved q/q to 70.2% though remains elevated y/y .
Catalysts ahead: repricing of $200M matured brokered CDs to 4.32% (126 bps savings) and another $150M maturing by year-end, plus aggressive “downward beta” on deposits to support NIM expansion into early 2025 .
Capital remains sound (Tier 1 leverage 8.45%); management prioritizes rebuilding TCE to 7–7.5% and tempering CRE concentration and wholesale funding, with dividends maintained at $0.16/share .

What Went Well and What Went Wrong

What Went Well

Deposit initiatives succeeded: $100M low-cost state deposits via Ohio Homebuyer Plus and ~1,000 new accounts; $87M wealth cash moved onto the balance sheet; $49M organic growth, driving loan-to-deposit ratio down to 95% from 102% .
Margin turned the corner: NIM expanded ~7 bps q/q to 3.16%/3.19%, with net interest income up 5.3% q/q; management believes margin troughed in Q2 and will continue to expand over next few quarters (“we believe that our margin troughed…will continue to expand”) .
Noninterest income resilience: despite overdraft, tax processing exit, and prior-year one-time MasterCard fee, YTD noninterest income up $391k; Q3 y/y growth driven by mortgage/lease gains and BOLI death benefit .

What Went Wrong

Sequential noninterest income softness: down $857k q/q (8.1%) on lower leasing residuals; management flagged leasing residuals as less predictable vs traditional fees .
Efficiency ratio elevated: 70.2% in Q3 vs 65.3% y/y; includes $800k reserve related to lease system conversion; ex-reserve, efficiency would be ~2% lower per management .
Asset quality optics: nonperforming assets rose to $18.2M (0.45% of assets) vs year-end; allowance to NPLs eased to 227% from 246% at year-end; provision increased vs Q3’23 driven by slower prepayments in CECL model .

Financial Results

Metric	Q1 2024	Q2 2024	Q3 2024
Diluted EPS ($)	$0.41	$0.45	$0.53
Net Income ($MM)	$6.360	$7.064	$8.366
Total Interest & Dividend Income ($MM)	$50.128	$50.593	$52.741
Net Interest Income ($MM)	$28.372	$27.751	$29.233
Noninterest Income ($MM)	$8.504	$10.543	$9.686
Provision for Credit Losses ($MM)	$1.992	$1.800	$1.346
Net Interest Margin (tax-equivalent, %)	3.22%	3.09%	3.19%
Efficiency Ratio (non-GAAP, %)	73.8%	72.6%	70.2%

Loan Portfolio (End of Period, $MM)	Q1 2024	Q2 2024	Q3 2024
Commercial & Agriculture	$302.663	$318.499	$304.639
CRE – Owner Occupied	$367.419	$377.308	$375.751
CRE – Non-owner Occupied	$1,185.688	$1,213.341	$1,205.453
Residential Real Estate	$676.800	$729.213	$751.825
Real Estate Construction	$267.737	$283.446	$318.063
Farm Real Estate	$24.908	$24.376	$24.122
Lease Financing Receivable	$56.680	$53.461	$49.453
Consumer & Other	$16.244	$15.352	$14.640
Total Loans	$2,898.139	$3,014.996	$3,043.946

KPIs & Balance Sheet	Q1 2024	Q2 2024	Q3 2024
Total Deposits ($MM)	$2,980.695	$2,977.616	$3,223.732
Total Assets ($MM)	$3,880.258	$4,011.914	$4,061.423
Allowance for Credit Losses / Loans (%)	1.34%	1.32%	1.36%
Tier 1 Leverage Ratio (%)	8.62%	8.59%	8.45%
ROAA (annualized, %)	0.66%	0.72%	0.83%
ROAE (annualized, %)	6.89%	7.77%	8.73%

Note: Comparison vs Wall Street consensus estimates was unavailable due to S&P Global data access limits at time of writing; therefore, beat/miss vs consensus cannot be assessed.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin	Q4 2024	Indicated Q2 trough (prior commentary)	Expand to low 3.20s by Q4; continued expansion into early 2025	Raised trajectory
Brokered CDs Repricing	Q4 2024	N/A	$200M matured late Oct repriced to 4.32% (−126 bps); $150M matures end-Q4 at lower rates	New detail
Deposit Pricing (“downward beta”)	Q4 2024 onward	Actively lowering rates	Aggressive reductions tied to Fed cuts; 70 bps down YTD on CDs; further cuts expected	Maintained, detailed execution
Wholesale/Brokered Funding Mix	Multi-year	N/A	Target 15–17% of total funding over next couple years	Introduced target
Loan-to-Deposit Ratio	Ongoing	Comfortable up to 100%	Target ~90% medium term	New target (lower)
CRE Concentration (to RBC)	Ongoing	Reduce over time	Aim <300%; comfortable at ~325% near term	Clarified target
TCE Ratio	Ongoing	Rebuild to 7–7.5%	Focus on reaching 7–7.5%; prioritizing capital build over buybacks	Maintained
Expenses	Q4 2024 and 2025	N/A	Q4 relatively flat/slightly up as vacancies filled; branch closure saves ~$234k annually starting 2025	New detail
Dividend	Q4 2024	$0.16/share	Maintained $0.16/share for Q4 (paid Nov 19)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2024)	Trend
Funding pivot and deposits	Deposits flat to slightly down; mix shift to interest-bearing; exit tax refund processing reduced noninterest-bearing	+$246M deposits; $87M trust cash; $100M Ohio Homebuyer Plus deposits at 0.89% cost	Improving core funding
Margin trajectory	NIM fell to 3.09% in Q2 from 3.22% in Q1	NIM up to 3.16%/3.19%; management expects low 3.20s by Q4	Inflecting upward
Fee income replacement	Headwinds from overdraft/tax processing exit; Q1 noninterest income −23% y/y	YTD noninterest income +$391k; Q3 noninterest income +19% y/y	Replacement achieved
CRE concentration and pricing discipline	CRE growth continued; cautious growth posture	Target <300% RBC; temper CRE growth; push C&I; maintain high pricing for CRE	De-risking portfolio mix
Technology/digital banking and operations	Higher software maintenance; digital banking investments	New platform implementation; $800k reserve linked to lease system conversion; fraud mitigation tools	Investing; resolving conversion
Capital management	No buybacks; TCE ~6.28–6.19% in H1	TCE 6.64%; shelf registration renewed ($200M) for flexibility; focus on TCE 7–7.5%	Building capital
Risk/credit	Allowance/ACL ratio up modestly; NPA ratio ~0.39–0.41%	NPA 0.45%; allowance/NPL 227%; provision driven by slower prepayments, not credit deterioration	Stable credit, model-driven reserve

Management Commentary

“We increased deposits by $246 million and reduced wholesale borrowings by $213 million, contributing to an EPS of $0.53, up from $0.45 last quarter.” — Dennis G. Shaffer, CEO .
“We believe that our margin troughed during the second quarter and will continue to expand over the next few quarters.” — Management prepared remarks .
“We were able to replace [~$200M brokered CDs] with CDs laddered over the next 12 months at a blended rate of 4.32% with a savings of 126 basis points.” — CFO .
“We would like to rebuild our TCE ratio back to between 7% and 7.5%…we’re prioritizing that over repurchases.” — CEO/COO .
“We are executing our downward beta strategy by continuing to decrease deposit rates on virtually all deposit accounts.” — Management .

Q&A Highlights

Margin outlook: Expect NIM to reach low 3.20s in Q4 and continue expanding; deposit “downward beta” and funding repricing key drivers .
Funding strategy: Ongoing paydown of overnight FHLB borrowings and repricing brokered CDs at lower rates; maintain brokered CD level but at cheaper cost .
Capital priorities: Focus on rebuilding TCE to 7–7.5% over buybacks; shelf registration renewed for flexibility .
CRE concentration: Target <300% of RBC over time; discipline on CRE pricing; prefer shifting mix toward C&I .
Expenses: Q4 near-flat/slightly up with vacancies and branch closure costs; ~$234k annual savings from Napoleon branch closure beginning 2025; $800k reserve tied to system conversion unlikely to rise .
Credit: Allowance increase driven by slower prepayments in CECL model; criticized loans stable; charge-offs expected to normalize modestly in coming quarters .

Estimates Context

S&P Global consensus estimates for EPS and revenue were unavailable due to data access limits at time of writing; as a result, we cannot determine an official beat/miss for Q3 2024 relative to Wall Street consensus. Management’s sequential EPS/NIM improvement, funding cost relief, and deposit inflows suggest upward pressure on forward NIM and EPS trajectories, but formal estimate revisions should be monitored as brokers update models post-call .

Key Takeaways for Investors

Sequential earnings acceleration with a clear path to near-term NIM expansion via funding cost resets, aggressive deposit pricing, and fixed-rate loan repricing; watch Q4 brokered CD maturities and deposit rate moves as key catalysts .
Core funding momentum materially improved (deposits +$246M; L/D down to 95%), reducing reliance on wholesale funding and supporting margin resilience even if the Fed cuts more aggressively .
Elevated efficiency ratio should moderate as the $800k conversion reserve rolls off and branch optimization yields ~$234k annual savings; monitor Q4 expense run-rate and 2025 tech spend .
Credit quality remains stable with provisioning driven by model mechanics (slower prepayments); allowance/NPL still robust at 227% and NPAs contained at 0.45% of assets .
Strategic mix shift: temper CRE growth; pursue C&I; maintain disciplined pricing—positioning for sustainable ROA uplift as capital builds toward 7–7.5% TCE .
Dividend continuity and capital discipline (no buybacks) underscore priority to rebuild TCE; shelf registration adds optionality without signaling near-term issuance .
Near-term trading: stock sensitive to confirmation of Q4 NIM in low 3.20s and evidence of continued deposit growth; medium-term thesis hinges on capital rebuild, funding mix normalization, and sustained core fee replacement .

Additional references: Full Q3 press release and 8-K exhibits provide comprehensive financial tables and reconciliations .

CIVISTA BANCSHARES, INC. (CIVB)·Q3 2024 Earnings Summary