Sign in
CB

CIVISTA BANCSHARES, INC. (CIVB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered stronger profitability with diluted EPS of $0.63, up 19% QoQ and 2% YoY, as net interest income rose 7.3% sequentially and net interest margin expanded 20 bps to 3.36% on lower funding costs .
  • Core deposit initiatives and brokered CD repricing drove total funding costs down; management expects further relief in Q1 2025 as $150M of 5.18% brokered CDs mature and are replaced at lower rates, supporting additional margin expansion into the low-to-mid 3.40s by Q2 2025 .
  • Credit quality remains generally stable, but nonperforming assets rose to 0.80% of assets (from 0.45% in Q3) driven by two specific loans totaling $16.4M; allowance-to-NPL fell to ~122% from ~227% in Q3 .
  • Efficiency ratio improved to 68.3% (vs. 70.2% in Q3 and 72.6% in Q2) as expenses stabilized and NII increased; management guided Q1 2025 noninterest expense to about $28.8M and continues cost actions (branch closure, vendor optimization) .
  • The quarterly dividend was increased to $0.17 per share (from $0.16), reflecting confidence in earnings and capital build; target TCE ratio is 7%–7.5% over time, which may constrain buybacks near term .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded to 3.36% in Q4 from 3.19% in Q3, aided by brokered CD repricing and lower wholesale funding; “our margin expanded by 20 basis points during the quarter to 3.36%” (CEO) .
  • Strong noninterest income resiliency: FY noninterest income +$0.6M YoY despite exiting tax refund processing and overdraft changes; Q4 drivers included mortgage gains and BOLI death benefits .
  • Deposit strategy execution: core deposit growth and index-based pricing for high-balance money market accounts reduced reliance on brokered funding, with a focus on relationship deposits and digital onboarding (MANTL) .

What Went Wrong

  • Nonperforming assets increased to $32.6M (0.80% of assets) due to two credits ($8.0M multifamily pending sale, $8.4M C&I out of compliance), reducing allowance-to-NPL coverage to ~122% .
  • Noninterest expense rose YoY (Q4 +11.8%) from professional fees (finance team transition), FDIC accrual, and leasing system conversion reserves; efficiency ratio remains elevated at 68.3% .
  • Deposit mix shift away from noninterest-bearing balances (-$76.6M YoY), reflecting customer migration to interest-bearing accounts and elimination of tax program balances, partially offset by savings/MM growth and program deposits .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total interest and dividend income ($000)$50,593 $52,741 $53,233
Interest expense ($000)$22,842 $23,508 $21,878
Net interest income ($000)$27,751 $29,233 $31,355
Noninterest income ($000)$10,543 $9,686 $9,015
Net income ($000)$7,064 $8,366 $9,893
Diluted EPS ($)$0.45 $0.53 $0.63
Net interest margin (tax eq.) (%)3.09% 3.19% 3.36%
Efficiency ratio (non-GAAP) (%)72.6% 70.2% 68.3%
ROA (%)0.72% 0.83% 0.97%
ROE (%)7.77% 8.73% 10.43%
Loan Book ($000)Q2 2024Q3 2024Q4 2024
Total loans and leases$3,014,996 $3,043,946 $3,081,230
Non-owner occupied CRE$1,213,341 $1,205,453 $1,225,991
Residential real estate$729,213 $751,825 $763,869
Construction$283,446 $318,063 $305,992
Deposits ($000)Q2 2024Q3 2024Q4 2024
Total deposits$2,977,616 $3,223,732 $3,211,870
Noninterest-bearing demand$691,203 $686,316 $695,094
Savings & money market$940,312 $1,111,771 $1,127,765
Time deposits$936,254 $456,973 $469,163
Brokered deposits—$548,339 $500,265
Asset Quality & CapitalQ2 2024Q3 2024Q4 2024
NPA/Assets (%)0.43% 0.45% 0.80%
Allowance to total loans (%)1.32% 1.36% 1.29%
Allowance to NPL (%)233.47% 227.36% 121.58%
Tier 1 leverage (%)8.59% 8.45% 8.60%
Tangible common equity (%)6.18% 6.64% 6.43%
Funding Cost MetricsQ2 2024Q3 2024Q4 2024
Cost of deposits (bps)210 218 220
Total funding cost (bps)261 261 242

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginQ1–Q2 2025Margin troughed in Q2 2024 Expand to low-to-mid 3.40s by Q2 2025 Raised
Funding CostsQ1 2025N/AFurther decline from $150M brokered CDs (5.18%) maturing end of Q1, to be replaced at lower cost Lowered
Noninterest ExpenseQ1 2025N/A~$28.8M expected; cost savings visible from Q2 as conversion completes New
DividendQ1 2025$0.16 per share $0.17 per share starting Q1 2025 Raised
Capital/TCE TargetFY 2025N/ATarget TCE 7%–7.5% over time; aim closer to 7% by year-end New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Deposit strategy & mixDeposits flat; mix shifting; higher brokered/time; cost of deposits 210 bps Deposits +$239M YTD; launched deposit initiatives; cost of deposits 218 bps Core deposits focus; index-based pricing for high-balance MM; digital onboarding (MANTL); L/D ~96% Improving core mix; tech-enabled growth
Margin outlookNIM 3.09%; pressure from higher funding costs NIM 3.19%; inflection; brokered CD laddering NIM 3.36%; expect low–mid 3.40s by Q2 2025 Uptrend
Noninterest income driversLeasing revenue +60% YoY; exit tax refund fees; mortgage gains Leasing shift to finance leases; trust cash deposits added Mortgage gains and BOLI death benefit; leasing residual unpredictable; FY noninterest income +$0.6M YoY Stable with variability
Credit & NPAsNPA/Assets 0.43%; reserve ratio 1.32% NPA/Assets 0.45%; reserve 1.36% NPA/Assets 0.80% on two loans; reserve/NPL down to ~122% Deteriorated due to idiosyncratic credits
Expenses & efficiencyEfficiency 72.6%; software costs rising; leasing depreciation falling Efficiency 70.2%; conversion reserve, professional fees Efficiency 68.3%; Q1’25 opex ~$28.8M; cost actions underway Improving yet elevated
Securities & liquidityAFS portfolio ~16% assets; NPL coverage strong Unrealized losses up; AFS 100%; liquidity emphasized AFS $652M; unrealized loss $53.4M; liquidity covers uninsured deposits Stable; watch AOCI
CRE multifamilyGrowth across Ohio metros Continued demand, pipelines solid Rents above appraisals; absorption solid in major “3 Cs” Robust

Management Commentary

  • “Our margin expanded by 20 basis points during the quarter to 3.36%… our decline in funding cost was largely attributable to $200 million in brokered CDs… laddered… at a blended rate of 4.32%.” (CEO) .
  • “We have another $150 million of brokered CDs at 5.18% that will mature at the end of the first quarter… we anticipate being able to replace at a lower cost.” (CEO) .
  • “We remain a CRE lending bank… new and renewed commercial loans originated at 7.72%; portfolio and sold residential at 6.41%; leasing at 9.32%.” (Management) .
  • “Our deposit base continues to be fairly granular… noninterest-bearing deposits made up 21.9% of total deposits.” (CEO) .
  • “We would like to rebuild our TCE ratio back to between 7% and 7.5%… hopefully migrate closer to 7% by the end of the year.” (CEO) .

Q&A Highlights

  • Fee income outlook: Leasing traction expected to continue; mortgage gain-on-sale is the wildcard depending on rates; trust/wealth fees growing with ~$800M AUM .
  • Gain-on-sale split: In Q4, ~$1.3M gains split 40% leasing ($510k) / 60% mortgage ($750k); mortgage volume ~$40M; leasing sales just under $12M .
  • Margin drivers: ~$700M repricing pool; ~$180M fixed loans likely to reprice from high-4s/low-5s into low-7s; brokered CD repricing lowers funding costs .
  • Expenses: Q1 2025 noninterest expense ~$28.8M; cost savings ramp in Q2; some offset from marketing/software for digital deposits .
  • Credit clarification: Two specific Q4 downgrades explain NPA spike; no systemic geographic or segment risk identified .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was not available due to access limits at the time of this analysis; therefore, estimate comparisons cannot be provided. Values retrieved from S&P Global were unavailable due to daily request limit errors.*

Key Takeaways for Investors

  • Margin expansion likely to continue near term, driven by brokered CD repricing and adjustable-rate loan repricing; management targets low-to-mid 3.40s NIM by Q2 2025 .
  • Deposit franchise remains a differentiator; index-based pricing for high-balance money markets and digital onboarding (MANTL) should improve core mix and reduce wholesale reliance .
  • Watch credit normalization: NPA ratio rose to 0.80% on two credits; follow resolution of ~$8.0M multifamily sale and $8.4M C&I compliance in Q1 2025 .
  • Operating leverage improving: efficiency ratio moved to 68.3%; Q1 opex guide ~$28.8M with cost actions (branch consolidation, call center automation) supporting further progress .
  • Capital build over buybacks: dividend raised to $0.17; TCE target 7%–7.5% suggests prioritizing retained earnings and deposit-led funding over immediate repurchases .
  • Loan growth expected low single digits to align with core funding; strong pipelines (construction lines $238M undrawn) but funding discipline governs pace .
  • Near-term catalysts: confirmation of funding cost declines in Q1, stabilization of NPAs as the two credits resolve, and traction in digital deposit initiatives to support L/D near 90–95% .