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8-K - FORM 8-K - CIVISTA BANCSHARES, INC.d183448d8k.htm

Exhibit 99.1

Civista Bancshares, Inc. Announces Strong First Quarter 2016 Earnings

Sandusky, Ohio, April 22, 2016 /PRNewswire/– Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) reported net income attributable to common shares of $4.3 million, or $0.43 per diluted share, for the first quarter of 2016, compared with $2.8 million, or $0.29 per diluted share, for the prior year period.

“We increased our first quarter 2016 diluted earnings per share by 48% over the same quarter in 2015. We have also seen the impact of organic and acquisitive growth now that a year has passed since the Dayton acquisition. We have improved noninterest income, primarily due to the large portion of the tax refund processing fees in the first quarter. At the same time, noninterest expenses have increased modestly, largely attributable to growth and the merger.” said James O. Miller, Chairman, President and CEO of Civista.

Results of Operations:

Net interest income for the first quarter of 2016 increased $1.3 million, or 12.1% compared to the same period of 2015. The increase in net interest income for the quarter was due both to an increase in average loans outstanding as well as a decrease in cost of funds. Tax equivalent net interest margin was 3.53% for the first quarter, compared to 3.65% for the same period a year ago. Net interest margin was reduced in both periods due to the impact of additional interest-earning cash on deposit related to the tax refund processing program. Average cash related to the tax refund processing program in the first quarter 2016 and 2015 was $216 million and $111 million, respectively. The reduction to net interest margin was 54 basis points in 2016 and 34 basis points in 2015.

Mr. Miller continued, “Our net interest margin is consistently lower in the first quarter due to the amount of cash the tax refund processing program generates. In spite of the current rate environment, we have maintained a strong core net interest margin, kept our asset duration under two years and have not diluted our lending standards.”


Summary Average Balance Sheet

(Tax-equivalent basis / dollars in thousands)

 

     Three months ended March 31,  
     2016     2015  
     Average
balance
     Interest      Yield /
rate
    Average
balance
     Interest      Yield /
rate
 

Assets

                

Loans

   $ 1,000,720       $ 11,317         4.55   $ 927,105       $ 10,246         4.49

Securities

     211,995         1,456         3.54     211,521         1,456         3.54

Interest-bearing deposits

     227,738         280         0.49     116,298         60         0.21
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest earning assets

   $ 1,440,453       $ 13,053         3.76   $ 1,254,924       $ 11,762         3.93

Liabilities

                

Int-bearing demand and savings

   $ 556,240       $ 113         0.08   $ 525,363       $ 98         0.08

Time deposits

     209,550         377         0.72     224,596         444         0.80

FHLB advances and other borrowings

     91,724         328         1.44     84,079         305         1.47
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing liabilities

   $ 857,514       $ 818         0.38   $ 834,038       $ 847         0.41

Noninterest-bearing deposits

   $ 608,085            $ 414,715         

Net interest income and interest rate spread

  

   $ 12,235         3.38      $ 10,915         3.52

Net interest margin

           3.53           3.65

The provision for loan losses was $400 thousand in the first quarter of 2015 while no provision was made during the first quarter of 2016. The decrease in provision for loan losses for the three months of 2016 is due to improved asset quality, compared to the same period a year ago. Management believes the level of reserve for loan losses is adequate.

During the quarter, noninterest income totaled $5.3 million, an increase of $858 thousand, or 19.5%, compared to the prior year’s first quarter.

Noninterest income

 

(dollars in thousands)    Three months ended
March 31,
 
     2016      2015  

Service charges

   $ 1,129       $ 1,055   

Net gain on sale of securities

     (5      —     

Net gain on sale of loans

     394         204   

ATM fees

     508         449   

Trust fees

     634         767   

Tax refund processing fees

     2,200         1,600   

Other

     400         327   
  

 

 

    

 

 

 

Total noninterest income

   $ 5,260       $ 4,402   
  

 

 

    

 

 

 

Service charge income increased in the first quarter, primarily due to an increase in business service charges, as well as service charge fees instituted in our Dayton market since the acquisition of


TCNB. Gain on sale of mortgage loans increased $190 thousand due to additional volume of mortgage loans sold as well as an increase in the related premium. Trust fees decreased $133 thousand due to a decrease in trust assets. Tax refund processing fees increased $600 thousand, or 37.5% when compared to the three months of 2015, due to an increase in the volume of refunds processed.

Noninterest expense totaled $10.9 million, an increase of $304 thousand, or 2.9%, compared to the prior year’s first quarter.

Noninterest expense

 

(dollars in thousands)    Three months ended
March 31,
 
     2016      2015  

Salaries, Wages and benefits

   $ 6,324       $ 5,899   

Net occupancy and equipment

     927         987   

Contracted data processing

     355         448   

Taxes and assessments

     470         476   

Professional services

     501         456   

Amortization of intangible assets

     183         142   

Marketing

     287         236   

Other

     1,860         1,959   
  

 

 

    

 

 

 

Total noninterest expense

   $ 10,907       $ 10,603   
  

 

 

    

 

 

 

Salaries, wages and benefits expense increased $425 thousand for the first quarter of 2016 compared to the same period of 2015. The increase in salaries, wages and benefits expense was primarily due to the addition of TCNB employees, as well as normal merit increases.

The efficiency ratio improved to 60.1% in the first quarter of 2016 compared to 66.9% for the first quarter of 2015. The improvement in the efficiency ratio is due to the increase in net interest income, as well as the increase in noninterest income, partially offset by a modest increase in noninterest expense.

Mr. Miller continued, “While we have had success increasing revenues, the success we have had in minimizing costs is also important in our increase in net income. We added three offices in the acquisition of TCNB, added loans and increased mortgage production. At the same time we were successful in limiting the increase of costs to less than 3%.”

Balance Sheet

Total assets increased $191.9 million, or 14.6%, from December 31, 2015 to March 31, 2016. This was due primarily to the additional cash balances related to the tax refund processing program. Total tax refund processing related cash was $239.2 million, compared to $22.1 million at year-end.

Total loans increased $4.3 million or 0.4% from December 31, 2015 to March 31, 2016. The increase in total loans is due to increased Residential Real Estate and Real Estate Construction lending, offset by declines in our other lending segments.


End of period loan balances

(dollars in thousands)

 

     March 31,
2016
     December 31,
2015
 

Commercial and Agriculture

   $ 122,207       $ 124,402   

Commercial Real Estate - Owner Occupied

     166,859         167,897   

Commercial Real Estate - Non-owner Occupied

     344,717         348,439   

Residential Real Estate

     243,835         236,338   

Real Estate Construction

     64,176         58,898   

Farm Real Estate

     44,960         46,993   

Consumer and Other

     19,049         18,560   
  

 

 

    

 

 

 

Total Loans

   $ 1,005,803       $ 1,001,527   
  

 

 

    

 

 

 

Jim Miller continued, “While we had a very modest increase in loans for the first quarter of 2016, we normally experience seasonal run-off of Agriculture loans during this period.”

Total deposits increased $227.7 million, or 21.6%, from December 31, 2015 to March 31, 2016. This was due primarily to the additional cash balances related to the tax refund processing program.

End of period deposit balances

(dollars in thousands)

 

     March 31,
2016
     December 31,
2015
 

Noninterest-bearing demand

   $ 511,024       $ 300,615   

Interest-bearing demand

     190,815         176,303   

Savings and money market

     373,389         364,067   

Time deposits

     204,552         211,048   
  

 

 

    

 

 

 

Total Deposits

   $ 1,279,780       $ 1,052,033   
  

 

 

    

 

 

 

Total shareholder’s equity increased $5.4 million, or 4.3%, from December 31, 2015 to March 31, 2016 primarily due to increased retained earnings of $3.9 million and a $1.3 million increase in other comprehensive income related to unrealized gains in the investment portfolio.

Asset Quality

Nonperforming assets at March 31, 2016 were $15.5 million, a $2.2 million increase from December 31, 2015, primarily due to two loan relationships. The Company recorded net recoveries of $72 thousand for the first quarter of 2016 compared to net charge-offs of $353 thousand for the same period of 2015.


Non-performing Assets

 

(dollars in thousands)    March 31,
2016
     December 31,
2015
 

Non-accrual loans

   $ 11,252       $ 9,890   

Restructured loans

     4,191         3,294   
  

 

 

    

 

 

 

Total non-performing loans

     15,443         13,184   

Other Real Estate Owned

     56         116   
  

 

 

    

 

 

 

Total non-performing assets

   $ 15,499       $ 13,300   
  

 

 

    

 

 

 

Civista Bancshares, Inc. is a $1.5 billion financial holding company headquartered in Sandusky, Ohio. The Company’s banking subsidiary, Civista Bank, operates 28 locations in North Central, West Central and Southwestern Ohio.

Civista Bancshares, Inc. may be accessed at www.civb.com. The Company’s common shares are traded on the NASDAQ Capital Market under the symbol “CIVB”. The Company’s depositary shares, each representing a 1/40th ownership interest in a Series B Preferred Share, are traded on the NASDAQ Capital Market under the symbol “CIVBP”.

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Civista. For these statements, Civista claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Civista, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Civista’ reports filed with the Securities and Exchange Commission, including those described in “Item 1A Risk Factors” of Part I of Civista’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Civista does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

For additional information, contact:

James O. Miller

Chairman, President and CEO

Civista Bancshares, Inc.

888-645-4121


Civista Bancshares, Inc.

Financial Highlights

(dollars in thousands, except share amounts)

Consolidated Condensed Statement of Income

 

    

Three Months Ended

March 31,

(unaudited)

 
     2016     2015  

Interest income

     13,053        11,762   

Interest expense

     818        847   
  

 

 

   

 

 

 

Net interest income

     12,235        10,915   

Provision for loan losses

     —          400   
  

 

 

   

 

 

 

Net interest income after provision

     12,235        10,515   

Noninterest income

     5,260        4,402   

Noninterest expense

     10,907        10,603   
  

 

 

   

 

 

 

Income before taxes

     6,588        4,314   

Income tax expense

     1,863        1,143   
  

 

 

   

 

 

 

Net income

     4,725        3,171   

Preferred stock dividends

     391        404   
  

 

 

   

 

 

 

Net income available to common shareholders

     4,334        2,767   

Dividends per common share

   $ 0.05      $ 0.05   

Earnings per common share,

    

basic

   $ 0.55      $ 0.36   

diluted

   $ 0.43      $ 0.29   

Average shares outstanding,

    

basic

     7,860,716        7,758,998   

diluted

     10,938,961        10,907,674   

Selected financial ratios:

    

Return on average assets

     1.17     0.93

Return on average equity

     14.97     10.99

Dividend payout ratio

     8.32     12.23

Net interest margin (tax equivalent)

     3.53     3.65


Selected Balance Sheet Items

 

     March 31,
2016
    December 31,
2015
 
     (unaudited)     (unaudited)  

Cash and due from financial institutions

   $ 214,407      $ 35,561   

Investment securities

     201,786        196,249   

Loans held for sale

     2,193        2,698   

Loans

     1,005,803        1,001,527   

Less allowance for loan losses

     14,433        14,361   
  

 

 

   

 

 

 

Net loans

     991,370        987,166   

Other securities

     13,550        13,452   

Fixed assets

     16,773        16,944   

Goodwill and other intangibles

     29,337        29,504   

Bank owned life insurance

     23,218        20,104   

Other assets

     14,262        13,363   
  

 

 

   

 

 

 

Total assets

   $ 1,506,896      $ 1,315,041   
  

 

 

   

 

 

 

Total deposits

   $ 1,279,780      $ 1,052,033   

Federal Home Loan Bank advances

     17,500        71,200   

Securities sold under agreements to repurchase

     24,272        25,040   

Subordinated debentures

     29,427        29,427   

Accrued expenses and other liabilities

     25,377        12,168   

Total shareholders’ equity

     130,540        125,173   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 1,506,896      $ 1,315,041   
  

 

 

   

 

 

 

Shares outstanding at period end

     7,875,172        7,843,578   

Book value per share

   $ 13.75      $ 13.12   

Tangible book value per share

     10.02        9.36   

Equity to asset ratio

     8.66     9.52

Selected asset quality ratios:

    

Allowance for loan losses to total loans

     1.43     1.43

Non-performing assets to total assets

     1.03     1.01

Allowance for loan losses to non-performing loans

     93.46     108.93

Non-performing asset analysis

    

Nonaccrual loans

   $ 11,252      $ 9,890   

Troubled debt restructurings

     4,191        3,294   

Other real estate owned

     56        116   
  

 

 

   

 

 

 

Total

   $ 15,499      $ 13,300   
  

 

 

   

 

 

 


Average Balance Analysis

(Unaudited - Dollars in thousands except share data)

 

     Three Months Ended March 31,  
     2016     2015  
     Average
balance
    Interest      Yield/
rate *
    Average
balance
    Interest      Yield/
rate *
 

Assets:

              

Interest-earning assets:

              

Loans

   $ 1,000,720      $ 11,317         4.55   $ 927,105      $ 10,246         4.49

Taxable securities

     137,795        801         2.38     141,902        832         2.42

Non-taxable securities

     74,200        655         5.69     69,619        624         5.82

Interest-bearing deposits in other banks

     227,738        280         0.49     116,298        60         0.21
  

 

 

   

 

 

      

 

 

   

 

 

    

Total interest-earning assets

   $ 1,440,453        13,053         3.76   $ 1,254,924        11,762         3.93
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Noninterest-earning assets:

              

Cash and due from financial institutions

     114,551             66,687        

Premises and equipment, net

     16,871             15,407        

Accrued interest receivable

     4,019             3,885        

Intangible assets

     29,447             24,760        

Other assets

     9,906             9,512        

Bank owned life insurance

     21,562             19,678        

Less allowance for loan losses

     (14,504          (14,446     
  

 

 

        

 

 

      

Total Assets

   $ 1,622,305           $ 1,380,407        
  

 

 

        

 

 

      

Liabilities and Shareholders Equity:

              

Interest-bearing liabilities:

              

Demand and savings

   $ 556,240      $ 113         0.08   $ 525,363      $ 98         0.08

Time

     209,550        377         0.72     224,596        444         0.80

FHLB

     38,436        110         1.15     34,447        121         1.42

Subordinated debentures

     29,427        212         2.90     29,427        179         2.47

Repurchase Agreements

     23,861        6         0.10     20,205        5         0.10
  

 

 

   

 

 

      

 

 

   

 

 

    

Total interest-bearing liabilities

   $ 857,514        818         0.38   $ 834,038        847         0.41
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Noninterest-bearing deposits

     608,085             414,715        

Other liabilities

     29,730             14,633        

Shareholders’ Equity

     126,976             117,021        
  

 

 

        

 

 

      

Total Liabilities and Shareholders’ Equity

   $ 1,622,305           $ 1,380,407        
  

 

 

        

 

 

      

Net interest income and interest rate spread

  

  $ 12,235         3.38     $ 10,915         3.52

Net interest margin

          3.53          3.65

* - All yields and costs are presented on an annualized basis


Supplemental Financial Information

(Unaudited - Dollars in thousands except share data)

 

     March 31,     December 31,     September 30,     June 30,     March 31,  

End of Period Balances

   2016     2015     2015     2015     2015  

Assets

          

Cash and due from banks

   $ 214,407      $ 35,561      $ 33,619      $ 35,092      $ 142,339   

Securities available for sale

     201,786        196,249        198,655        197,429        199,693   

Loans held for sale

     2,193        2,698        1,223        4,034        2,919   

Loans

     1,005,803        1,001,527        1,000,275        1,002,917        984,105   

Allowance for loan losses

     (14,433     (14,361     (14,760     (14,707     (14,315
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Loans

     991,370        987,166        985,515        988,210        969,790   

Other securities

     13,550        13,452        13,324        13,261        13,400   

Fixed assets

     16,773        16,944        16,200        16,308        16,163   

Goodwill and other intangibles

     29,337        29,504        29,683        29,608        29,790   

Bank owned life insurance

     23,218        20,104        19,987        19,870        19,754   

Other assets

     14,262        13,363        15,125        13,460        13,391   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 1,506,896      $ 1,315,041      $ 1,313,331      $ 1,317,272      $ 1,407,239   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

          

Total Deposits

   $ 1,279,780      $ 1,052,033      $ 1,055,959      $ 1,075,806      $ 1,197,316   

Federal Home Loan Bank advances

     17,500        71,200        72,200        55,300        17,500   

Securities sold under agreement to repurchase

     24,272        25,040        20,887        17,460        21,488   

Subordinated debentures

     29,427        29,427        29,427        29,427        29,427   

Accrued expenses and other liabilities

     25,377        12,168        11,521        19,257        22,581   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     1,376,356        1,189,868        1,189,994        1,197,250        1,288,312   

Shareholders’ equity

          

Preferred shares, Series B

     22,273        22,273        22,273        22,273        22,309   

Common Stock

     115,442        115,330        115,267        115,248        115,193   

Accumulated earnings (deficit)

     9,242        5,300        2,884        414        (1,924

Treasury stock

     (17,235     (17,235     (17,235     (17,235     (17,235

Accumulated other comprehensive income (loss)

     818        (495     148        (678     584   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     130,540        125,173        123,337        120,022        118,927   

Total liabilities and shareholders’ equity

   $ 1,506,896      $ 1,315,041      $ 1,313,331      $ 1,317,272      $ 1,407,239   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Quarterly Average Balances

                              

Assets:

          

Earning assets

   $ 1,440,453      $ 1,218,797      $ 1,230,249      $ 1,246,731      $ 1,254,924   

Securities

     211,995        212,463        210,209        211,553        211,521   

Loans

     1,000,720        996,861        1,009,372        991,487        927,105   

Liabilities and shareholders’ equity

          

Total deposits

   $ 1,373,875      $ 1,059,271      $ 1,073,930      $ 1,133,432      $ 1,164,674   

Interest-bearing deposits

     765,790        756,422        773,625        788,191        749,959   

Interest-bearing liabilities

     91,724        111,481        111,797        72,687        84,079   

Total shareholders’ equity

     126,976        124,025        121,057        119,212        117,021   


Supplemental Financial Information

(Unaudited - Dollars in thousands except share data)

 

     Three Months Ended  

Income statement

   March 31,
2016
    December 31,
2015
    September 30,
2015
    June 30,
2015
    March 31,
2015
 

Total interest income

   $ 13,053      $ 12,976      $ 13,223      $ 12,740      $ 11,762   

Total interest expense

     818        815        821        824        847   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     12,235        12,161        12,402        11,916        10,915   

Provision for loan losses

     —          —          400        400        400   

Noninterest income

     5,260        3,146        3,076        3,652        4,402   

Noninterest expense

     10,907        10,741        10,666        10,933        10,603   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     6,588        4,566        4,412        4,235        4,314   

Income tax expense

     1,863        1,367        1,159        1,113        1,143   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     4,725        3,199        3,253        3,122        3,171   

Preferred stock dividends

     391        391        391        391        404   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common shareholders

   $ 4,334      $ 2,808      $ 2,862      $ 2,731      $ 2,767   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common stock dividend paid

   $ 393      $ 392      $ 392      $ 392      $ 385   

Per share data

                              

Basic net income per common share

   $ 0.55      $ 0.36      $ 0.36      $ 0.35      $ 0.36   

Diluted net income per common share

     0.43        0.29        0.30        0.29        0.29   

Dividends per common share

     0.05        0.05        0.05        0.05        0.05   

Average common shares outstanding - basic

     7,860,716        7,843,578        7,843,578        7,842,159        7,758,998   

Average common shares outstanding - diluted

     10,938,961        10,921,823        10,921,823        10,921,824        10,907,674   

Asset quality

                              

Allowance for loan losses, beginning of period

   $ 14,361      $ 14,760      $ 14,707      $ 14,315      $ 14,268   

Charge-offs

     (126     (525     (634     (305     (585

Recoveries

     198        126        287        297        232   

Provision

     —          —          400        400        400   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses, end of period

   $ 14,433      $ 14,361      $ 14,760      $ 14,707      $ 14,315   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios

          

Allowance to total loans

     1.43     1.43     1.48     1.47     1.45

Allowance to nonperforming assets

     93.12     107.98     102.90     86.33     74.69

Allowance to nonperforming loans

     93.46     108.93     106.57     88.80     76.81

Nonperforming assets

          

Nonperforming loans

   $ 15,443      $ 13,184      $ 13,851      $ 16,562      $ 18,638   

Other real estate owned

     56        116        494        474        528   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 15,499      $ 13,300      $ 14,345      $ 17,036      $ 19,166   

Capital and liquidity

          

Tier 1 leverage ratio

     8.24     9.96     9.68     9.38     8.91

Tier 1 risk-based capital ratio

     12.52     12.70     12.47     12.20     12.10

Total risk-based capital ratio

     13.77     13.96     13.72     13.45     13.35

Tangible common equity ratio

     5.34     5.71     5.56     5.29     4.79