Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Civista Bancshares Inc (CIVB, Financial) reported a net income increase of 18% over the previous quarter, reaching $8.4 million.
- The company successfully opened 1,000 new deposit accounts through the Ohio home buyer plus program, resulting in $10.5 million in customer deposits.
- Net interest income for the quarter increased by 5.3% to $29.2 million, with a margin expansion of seven basis points to 3.16%.
- Civista Bancshares Inc (CIVB) achieved $49 million in organic deposit growth during the quarter.
- The company maintained a strong credit quality with a ratio of allowance for credit losses to total loans at 1.36%.
Negative Points
- Net income declined by $2 million compared to the third quarter of 2023.
- The reliance on wholesale funding has put pressure on the net interest margin.
- Non-interest income decreased by 8.1% from the linked quarter, primarily due to a decline in lease revenue and residual fees.
- Non-interest expense increased by 3.1% year-to-date, driven by higher compensation and software maintenance costs.
- The efficiency ratio, although improved, remains high at 70.2%, indicating room for further cost control.
Q & A Highlights
Q: How are you thinking about further pay downs on borrowings and the outlook on deposit gathering?
A: Dennis Shaffer, President and CEO, mentioned that Civista is focused on relationship gathering of deposits, which will help reduce overnight borrowings. They are also repricing brokered CDs as they become available, maintaining their level but at lower costs.
Q: How aggressive can you be on lowering deposit rates further given the competitive environment?
A: Dennis Shaffer explained that Civista aims to be as aggressive as possible in lowering deposit rates when the Fed reduces rates. They retain 90-95% of CD customers and believe their relationship banking model allows them to lower deposit pricing more than transactional banks.
Q: What are your thoughts on capital management and the TCE ratio target?
A: Dennis Shaffer stated that Civista is focused on building the TCE ratio back to the target of 7% to 7.5%. They have not repurchased shares to prioritize this goal, believing it will better serve shareholders by addressing concerns about the TCE ratio's impact on stock price.
Q: What factors are influencing the allowance for credit losses, and how do you feel about the current reserve levels?
A: Mike Mulford, Chief Credit Officer, noted that the reserve is healthy, with recent increases due to slowed prepayments rather than credit issues. Dennis Shaffer added that credit quality remains strong, and the allowance increase was primarily due to accounting for prepayments and growth.
Q: Can you provide more details on the Ohio home buyers program and its impact on deposits?
A: Dennis Shaffer confirmed that the program reached its maximum of $100 million from the state, with balances expected to remain for up to five years. The program has been a good source of funding, and Civista aims to cross-sell additional products to new customers acquired through this initiative.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
