Civista Bancshares, Inc. Announces Third Quarter 2019 Earnings
SANDUSKY, Ohio, Oct. 25, 2019 /PRNewswire/ -- Civista Bancshares, Inc. (NASDAQ: CIVB) ("Civista") reported net income available to common shareholders of $7.5 million, or $0.46 per diluted share, for the quarter ended September 30, 2019, compared to a net loss of $3.6 million, or ($0.31) per diluted share, for the quarter ended September 30, 2018. Net income available to common shareholders for the nine-month period ended September 30, 2019, was $25.5 million or $1.54 per diluted share, compared to $5.8 million or $0.51 per diluted share, in the same period of 2018.
Adjusted Earnings
Financial results for the third quarter and nine months ended September 30, 2018 included $8.8 million and $12.0 million respectively, in pre-tax acquisition and integration expenses, as well as a pre-tax loss on sale of securities of $392 thousand, which was part of a restructuring of securities after the United Community Bancorp ("UCB") acquisition. Excluding these expenses, adjusted earnings were $4.8 million, or $0.37 diluted earnings per share, for the third quarter of 2018 and $16.8 million, or $1.37 diluted earnings per share, for the nine months ended September 30, 2018.
A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States ("GAAP") is provided in the financial tables at the end of this press release.
"Once again, we have had a great quarter of earnings and growth. Our loan growth for the third quarter was strong, at 12.4% annualized. Our core diluted earnings per share for the quarter are up 24.3% compared to 2018. It has now been a full year since we brought on UCB. The results since the acquisition have exceeded our expectations. We also announced earlier this week that we will be redeeming our convertible preferred shares on December 20th. We believe that the redemption will assist us in aligning our capital structure more fully with our strategic plan," said Dennis G. Shaffer, President and CEO of Civista.
Results of Operations:
Net interest income increased $4.6 million, or 29.0% for the third quarter of 2019, and $18.5 million or 40.8% and for the nine months ended September 30, compared to the same periods of 2018. Interest income increased $6.1 million, or 34.3% for the third quarter of 2019 and $23.6 million or 47.2% for the nine-month period ended September 30. Average earning assets increased $487.7 million for the third quarter of 2019 and $519.5 million for the nine-month period ended September 30. The increase in average earning assets resulted in $5.6 million and $18.6 million of the increase in interest income, for the three and nine-month periods, respectively. Earning asset yields increased 14 basis points for the third quarter and 45 basis points for the nine-month period ended September 30, 2019, accounting for $550 thousand and $5.0 million increase in interest income. Loan yields were impacted by the accretion of UCB related loan purchase accounting adjustments of ($209) thousand for the quarter and $1.8 million year-to-date. During the third quarter, we automated our accretion model related to the purchase accounting adjustments of UCB loans and consequently reviewed our assumptions. Through that process, we determined that we needed to adjust the speed of accretion. Accordingly, we made an adjustment during the quarter of ($209) thousand, which decreased our margin to 4.12%. We estimate that the accretion impact on future quarters will be approximately a positive 15 basis points.
Interest expense increased $1.5 million, or 74.8%, for the third quarter of 2019 and $5.0 million, or 109.5%, for the nine months ended September 30 compared to the same periods of 2018. The cost of interest-bearing liabilities increased 25 basis points and 32 basis points, respectively. The increase in interest expense is due to both an increase in average balances and an increase in rates. Average balances for the third quarter increased $340.9 million, resulting in $653 thousand of the increase, and $378.3 million for the nine-month period, resulting in $2.1 million of the increase. The increase in rate accounted for $890 thousand and $2.9 million of the increase in interest expense.
The tax equivalent net interest margin decreased 3 basis points to 4.12% for the third quarter of 2019, compared to 4.15% for the same period a year ago and increased 21 basis points to 4.35% for the nine months ended September 30, 2019, compared to 4.14% for the same period a year ago. Accretion of the purchase accounting adjustments accounted for the 3 basis point reduction for the third quarter margin, due to the automation of our model, and a 14 basis point increase of the year-to-date margin.
Average Balance Analysis | ||||||||
(Unaudited - Dollars in thousands except share data) | ||||||||
Three Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Average | Yield/ | Average | Yield/ | |||||
Assets: | balance | Interest | rate * | balance | Interest | rate * | ||
Interest-earning assets: | ||||||||
Loans ** | $ 1,626,010 | $ 20,776 | 5.07% | $ 1,256,680 | $ 15,833 | 5.00% | ||
Taxable securities | 198,994 | 1,712 | 3.50% | 145,621 | 1,042 | 2.81% | ||
Non-taxable securities | 180,531 | 1,449 | 4.33% | 107,211 | 908 | 4.29% | ||
Interest-bearing deposits in other banks | 16,245 | 86 | 2.10% | 24,527 | 103 | 1.67% | ||
Total interest-earning assets | $ 2,021,780 | 24,023 | 4.83% | $ 1,534,039 | 17,886 | 4.69% | ||
Noninterest-earning assets: | ||||||||
Cash and due from financial institutions | 29,745 | 22,399 | ||||||
Premises and equipment, net | 21,790 | 18,219 | ||||||
Accrued interest receivable | 6,926 | 5,120 | ||||||
Intangible assets | 85,617 | 38,920 | ||||||
Other assets | 25,432 | 16,929 | ||||||
Bank owned life insurance | 44,579 | 28,452 | ||||||
Less allowance for loan losses | (13,920) | (13,303) | ||||||
Total Assets | $ 2,221,949 | $ 1,650,775 | ||||||
Liabilities and Shareholders Equity: | ||||||||
Interest-bearing liabilities: | ||||||||
Demand and savings | $ 871,673 | $ 730 | 0.33% | $ 653,537 | $ 317 | 0.19% | ||
Time | 267,959 | 1,369 | 2.03% | 163,236 | 466 | 1.13% | ||
FHLB | 201,977 | 1,152 | 2.26% | 180,073 | 925 | 2.04% | ||
Subordinated debentures | 29,427 | 350 | 4.72% | 29,427 | 349 | 4.71% | ||
Repurchase Agreements | 14,831 | 4 | 0.11% | 18,664 | 5 | 0.11% | ||
Total interest-bearing liabilities | $ 1,385,867 | 3,605 | 1.03% | $ 1,044,937 | 2,062 | 0.78% | ||
Noninterest-bearing deposits | 482,895 | 385,646 | ||||||
Other liabilities | 27,084 | 14,591 | ||||||
Shareholders' Equity | 326,103 | 205,601 | ||||||
Total Liabilities and Shareholders' Equity | $ 2,221,949 | $ 1,650,775 | ||||||
Net interest income and interest rate spread | $ 20,418 | 3.80% | $ 15,824 | 3.91% | ||||
Net interest margin | 4.12% | 4.15% | ||||||
* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $389 thousand and $242 thousand for the periods ended September 30, 2019 and 2018, respectively. | ||||||||
** - Average balance includes nonaccrual loans | ||||||||
Average Balance Analysis | ||||||||
(Unaudited - Dollars in thousands except share data) | ||||||||
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Average | Yield/ | Average | Yield/ | |||||
Assets: | balance | Interest | rate * | balance | Interest | rate * | ||
Interest-earning assets: | ||||||||
Loans ** | $ 1,591,477 | $ 63,395 | 5.33% | $ 1,188,093 | $ 43,615 | 4.91% | ||
Taxable securities | 203,165 | 5,155 | 3.44% | 144,036 | 3,069 | 2.83% | ||
Non-taxable securities | 169,802 | 4,208 | 4.40% | 103,540 | 2,672 | 4.42% | ||
Interest-bearing deposits in other banks | 44,287 | 775 | 2.34% | 53,566 | 614 | 1.53% | ||
Total interest-earning assets | $ 2,008,731 | 73,533 | 5.00% | $ 1,489,235 | 49,970 | 4.55% | ||
Noninterest-earning assets: | ||||||||
Cash and due from financial institutions | 53,517 | 49,330 | ||||||
Premises and equipment, net | 21,844 | 17,836 | ||||||
Accrued interest receivable | 6,929 | 4,947 | ||||||
Intangible assets | 85,863 | 31,918 | ||||||
Other assets | 22,607 | 14,539 | ||||||
Bank owned life insurance | 44,186 | 26,327 | ||||||
Less allowance for loan losses | (13,896) | (13,127) | ||||||
Total Assets | $ 2,229,781 | $ 1,621,005 | ||||||
Liabilities and Shareholders Equity: | ||||||||
Interest-bearing liabilities: | ||||||||
Demand and savings | $ 862,098 | $ 2,159 | 0.33% | $ 628,610 | $ 819 | 0.17% | ||
Time | 269,874 | 3,807 | 1.89% | 163,660 | 1,241 | 1.01% | ||
FHLB | 146,222 | 2,581 | 2.36% | 108,239 | 1,560 | 1.93% | ||
Subordinated debentures | 29,427 | 1,094 | 4.97% | 29,427 | 975 | 4.43% | ||
Repurchase Agreements | 18,463 | 14 | 0.10% | 17,871 | 13 | 0.10% | ||
Total interest-bearing liabilities | $ 1,326,084 | 9,655 | 0.97% | $ 947,807 | 4,608 | 0.65% | ||
Noninterest-bearing deposits | 567,365 | 465,448 | ||||||
Other liabilities | 21,843 | 14,889 | ||||||
Shareholders' Equity | 314,489 | 192,861 | ||||||
Total Liabilities and Shareholders' Equity | $ 2,229,781 | $ 1,621,005 | ||||||
Net interest income and interest rate spread | $ 63,878 | 4.03% | $ 45,362 | 3.90% | ||||
Net interest margin | 4.35% | 4.14% | ||||||
* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1.13 million and $712 thousand for the periods ended September 30, 2019 and 2018, respectively. | ||||||||
** - Average balance includes nonaccrual loans | ||||||||
Provision for loan losses was $150 thousand for the three and nine-month periods ended September 30, 2019 and $390 thousand for the three and nine-month periods ended September 30, 2018.
For the third quarter of 2019, noninterest income totaled $5.4 million, an increase of $2.1 million, or 65.1%, compared to the prior year's third quarter. Noninterest income for the first nine months of 2019 totaled $16.8 million, an increase of $3.5 million, or 26.5%, compared to the prior year's first nine months.
Noninterest income | |||||||
(unaudited - dollars in thousands) | Three months ended September 30, | ||||||
2019 | 2018 | $ change | % change | ||||
Service charges | $ 1,726 | $ 1,219 | $ 507 | 41.6% | |||
Net gain on sale of securities | 115 | (365) | 480 | 131.5% | |||
Net gain on sale of loans | 815 | 428 | 387 | 90.4% | |||
ATM/Interchange fees | 1,014 | 622 | 392 | 63.0% | |||
Wealth management fees | 975 | 873 | 102 | 11.7% | |||
Bank owned life insurance | 254 | 147 | 107 | 72.8% | |||
Other | 530 | 364 | 166 | 45.6% | |||
Total noninterest income | $ 5,429 | $ 3,288 | $ 2,141 | 65.1% | |||
Noninterest income | |||||||
(unaudited - dollars in thousands) | Nine months ended September 30, | ||||||
2019 | 2018 | $ change | % change | ||||
Service charges | $ 4,733 | $ 3,712 | $ 1,021 | 27.5% | |||
Net gain (loss) on sale of securities | 98 | (284) | 382 | 134.5% | |||
Net gain on sale of loans | 1,701 | 1,235 | 466 | 37.7% | |||
ATM/Interchange fees | 2,871 | 1,764 | 1,107 | 62.8% | |||
Wealth management fees | 2,733 | 2,561 | 172 | 6.7% | |||
Bank owned life insurance | 753 | 432 | 321 | 74.3% | |||
Tax refund processing fees | 2,750 | 2,750 | - | 0.0% | |||
Other | 1,177 | 1,123 | 54 | 4.8% | |||
Total noninterest income | $ 16,816 | $ 13,293 | $ 3,523 | 26.5% | |||
The increases in service charge fee income, ATM/Interchange fees and bank owned life insurance income for both the quarter and nine-month periods are primarily attributable to the Company's acquisition of UCB during the third quarter of 2018. The net gain on sale of securities was affected by a loss of $392 thousand in 2018, which was part of a restructuring of securities after the UCB acquisition. The net gain on sale of loans increased due to an increase in mortgage lending in the third quarter of 2019. During the quarter, mortgage loans sold on the secondary market totaled $36.0 million as a result of lower market rates. The third quarter represented 44.8% of our 2019 volume.
For the third quarter of 2019, noninterest expense totaled $16.7 million, a decrease of $5.4 million, or 24.5%, compared to the prior year's third quarter. Noninterest expense for the first nine months of 2019 decreased $470 thousand, or 0.9%, when compared to the first nine months of 2018.
Noninterest expense | |||||||
(unaudited - dollars in thousands) | Three months ended September 30, | ||||||
2019 | 2018 | $ change | % change | ||||
Compensation expense | $ 9,707 | $ 12,054 | $ (2,347) | -19.5% | |||
Net occupancy and equipment | 1,463 | 1,122 | 341 | 30.4% | |||
Contracted data processing | 435 | 3,150 | (2,715) | -86.2% | |||
Taxes and assessments | 498 | 472 | 26 | 5.5% | |||
Professional services | 756 | 2,198 | (1,442) | -65.6% | |||
Amortization of intangible assets | 235 | 26 | 209 | 803.8% | |||
Marketing | 404 | 350 | 54 | 15.4% | |||
Other | 3,233 | 2,784 | 449 | 16.1% | |||
Total noninterest expense | $ 16,731 | $ 22,156 | $ (5,425) | -24.5% | |||
Noninterest expense | |||||||
(unaudited - dollars in thousands) | Nine months ended September 30, | ||||||
2019 | 2018 | $ change | % change | ||||
Compensation expense | $ 29,059 | $ 26,812 | $ 2,247 | 8.4% | |||
Net occupancy and equipment | 4,410 | 3,444 | 966 | 28.0% | |||
Contracted data processing | 1,301 | 6,237 | (4,936) | -79.1% | |||
Taxes and assessments | 1,695 | 1,419 | 276 | 19.5% | |||
Professional services | 2,151 | 4,233 | (2,082) | -49.2% | |||
Amortization of intangible assets | 710 | 85 | 625 | 735.3% | |||
Marketing | 1,111 | 988 | 123 | 12.4% | |||
Other | 9,381 | 7,070 | 2,311 | 32.7% | |||
Total noninterest expense | $ 49,818 | $ 50,288 | $ (470) | -0.9% | |||
Compensation expense for both periods of 2018 includes $4.2 million of acquisition related expenses. The $2.3 million decrease in compensation expense for the three months was partially offset by increases in salaries, incentives and employee insurance. The $2.2 million increase for the nine months included increases to salaries, commissions and incentives, and employee insurance, which were partially offset by the acquisition expenses. The increases for both periods are primarily due to the increased size of the company due to the UCB acquisition. Year-to-date average FTE employees were 440.8 at September 30, 2019, an increase of 90.4 FTEs over 2018. Net occupancy and equipment expense increased for the three and nine-month periods ended September 30, 2019, primarily due to the addition of 9 locations from the UCB acquisition. The decrease in contracted data processing expenses for the three and nine-month periods ended September 30, 2019, was primarily due to expenses incurred in 2018 for the data processing conversion of UCB, which totaled approximately $2.8 million for the three-month and $5.3 million for the nine-month periods. The decrease in professional services costs, for the third quarter and nine-month period ended September 30, 2019 is primarily due to legal and consulting expenses related to the UCB acquisition of approximately $1.6 million and $2.1 million, respectively which were included in the 2018 periods.
The efficiency ratio was 60.9% for the nine months ended September 30, 2019, compared to 84.7% for the nine months ended September 30, 2018. The improvement in the efficiency ratio is due primarily to $12.0 million of pre-tax expenses related to the merger with UCB, as well as an increase in net interest income. Without the merger related expenses in 2018, the efficiency ratio would have improved from 64.2% to 60.9%. See the Non-GAAP reconciliation at the end of this press release.
Civista's effective income tax rate for the nine months ended September 30, 2019 was 15.3% compared to 17.6% for the same period in 2018. The effective income tax rate for third quarter 2019 was 14.0% compared to 0.0% in 2018. The 2018 effective tax rate was affected by expenses incurred related to the UCB acquisition.
Balance Sheet
Total assets increased $130.1 million, or 6.1%, from December 31, 2018 to September 30, 2019, primarily due to increases in cash and cash equivalents of $19.4 million, investment securities of $9.1 million, loans held for sale of $7.6 million, loans of $86.7 million and other assets of $7.4 million.
End of period loan balances | |||||||
(unaudited - dollars in thousands) | |||||||
September 30, | December 31, | ||||||
2019 | 2018 | $ Change | % Change | ||||
Commercial and Agriculture | $ 196,833 | $ 177,101 | $ 19,732 | 11.1% | |||
Commercial Real Estate: | |||||||
Owner Occupied | 226,501 | 210,121 | 16,380 | 7.8% | |||
Non-owner Occupied | 558,804 | 523,598 | 35,206 | 6.7% | |||
Residential Real Estate | 465,455 | 457,850 | 7,605 | 1.7% | |||
Real Estate Construction | 149,018 | 135,195 | 13,823 | 10.2% | |||
Farm Real Estate | 36,286 | 38,513 | (2,227) | -5.8% | |||
Consumer and Other | 15,743 | 19,563 | (3,820) | -19.5% | |||
Total Loans | $ 1,648,640 | $ 1,561,941 | $ 86,699 | 5.6% | |||
There continues to be strong growth across all commercial areas. The new focus on treasury management has aided in the substantial increase in commercial and agriculture loans. The commercial real estate and real estate construction loan growth has been led by the urban markets, including better than expected growth from the Cincinnati MSA.
Total deposits increased $52.7 million, or 3.3%, from December 31, 2018 to September 30, 2019. The increase was due primarily to increases in both noninterest-bearing and interest-bearing demand deposits. A reduction of brokered deposits partially offset these increases.
End of period deposit balances | |||||||
(unaudited - dollars in thousands) | |||||||
September 30, | December 31, | ||||||
2019 | 2018 | $ Change | % Change | ||||
Noninterest-bearing demand | $ 497,244 | $ 468,083 | $ 29,161 | 6.2% | |||
Interest-bearing demand | 297,144 | 261,996 | 35,148 | 13.4% | |||
Savings and money market | 571,308 | 582,128 | (10,820) | -1.9% | |||
Time deposits | 263,201 | 258,832 | 4,369 | 1.7% | |||
Brokered deposits | 3,725 | 8,854 | (5,129) | -57.9% | |||
Total Deposits | $ 1,632,622 | $ 1,579,893 | $ 52,729 | 3.3% | |||
The increase in noninterest-bearing demand is due to an increase in business and public fund demand deposits, primarily in Northern Ohio. Interest-bearing demand deposits increased due to a $30.8 million increase in public funds accounts, primarily in Northern Ohio and Southeastern Indiana. Brokered deposits decreased $5.1 million and Federal Home Loan Bank advances increased $42.5 million due to a shift in wholesale funding.
Stock Repurchase Program
During the third quarter, Civista repurchased 188,200 shares for $3.9 million, which equates to an average price of $20.77 per share. The repurchases are a part of the share repurchase program that was approved in December 2018. There are 281,800 shares that remain as part of the current approved repurchase program.
Mr. Shaffer added, "Since the stock repurchase program was approved last December, we have been up-front that we believe stock repurchases to be another tool in our tool-box to maximize shareholder value. We will continue to be opportunistic while maintaining sufficient liquidity and capital to execute our other business strategies."
Asset Quality
The Company recorded net recoveries of $315 thousand for the first nine months of 2019 compared to net charge-offs $193 thousand for the same period of 2018.
Allowance for Loan Losses | |||
(dollars in thousands) | |||
September 30, | September 30, | ||
2019 | 2018 | ||
Beginning of period | $ 13,679 | $ 13,134 | |
Charge-offs | (431) | (784) | |
Recoveries | 746 | 591 | |
Provision | 150 | 390 | |
End of period | $ 14,144 | $ 13,331 | |
The allowance for loan losses to loans was 0.86% at September 30, 2019 and 0.88% at December 31, 2018. The non-performing assets to assets ratio decreased to 0.42% from 0.46% in 2018. The allowance for loan losses to non-performing loans increased to 149.9% from 137.9% in 2018.
Non-performing assets at September 30, 2019 were $9.4 million, a 4.9% decrease from December 31, 2018. Nonaccrual loans include $533 thousand and $1.0 million of purchased credit-impaired ("PCI") loans at September 30, 2019 and December 31, 2018, respectively.
Non-performing Assets | |||
(dollars in thousands) | September 30, | December 31, | |
2019 | 2018 | ||
Non-accrual loans | $ 6,154 | $ 6,898 | |
Restructured loans | 3,281 | 3,024 | |
Total non-performing loans | 9,435 | 9,922 | |
Other Real Estate Owned | - | - | |
Total non-performing assets | $ 9,435 | $ 9,922 | |
Mr. Shaffer concluded, "During the third quarter, we closed a limited service branch in Urbana, Ohio and are set to migrate our loan production office in Mayfield Heights, Ohio into a full service branch in Beachwood, Ohio. That transition will occur in the last week of October. We are very pleased to make the transition to a full-service branch in Cuyahoga County and are excited for its potential."
Conference Call and WebcastCivista Bancshares, Inc. will also host a conference call to discuss the Company's financial results for the third quarter of 2019 at 1:00 p.m. ET on Friday, October 25, 2019. Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company's website, www.civb.com. Participants can also listen to the conference call by dialing 855-238-2712 and ask to be joined into the Civista Bancshares, Inc. Third Quarter 2019 Earnings call. Please log in or dial in at least 10 minutes prior to the start time to ensure a connection.
An archive of the webcast will be available for one year on the Investor Relations section of the Company's website (www.civb.com).
Forward Looking StatementsThis 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, 2018. 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 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.
Civista Bancshares, Inc. is a $2.3 billion financial holding company headquartered in Sandusky, Ohio. The Company's banking subsidiary, Civista Bank, operates 37 locations in Northern, Central and Southwestern Ohio, Southeastern Indiana and Northern Kentucky. 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".
Civista Bancshares, Inc. | |||||||
Financial Highlights | |||||||
(unaudited - dollars in thousands, except share amounts) | |||||||
Consolidated Condensed Statement of Income | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Interest income | 24,023 | 17,886 | 73,533 | 49,970 | |||
Interest expense | 3,605 | 2,062 | 9,655 | 4,608 | |||
Net interest income | 20,418 | 15,824 | 63,878 | 45,362 | |||
Provision for loan losses | 150 | 390 | 150 | 390 | |||
Net interest income after provision | 20,268 | 15,434 | 63,728 | 44,972 | |||
Noninterest income | 5,429 | 3,288 | 16,816 | 13,293 | |||
Noninterest expense | 16,731 | 22,156 | 49,818 | 50,288 | |||
Income (loss) before taxes | 8,966 | (3,434) | 30,726 | 7,977 | |||
Income tax expense (benefit) | 1,258 | (1) | 4,688 | 1,407 | |||
Net income (loss) | 7,708 | (3,433) | 26,038 | 6,570 | |||
Preferred stock dividends | 162 | 192 | 490 | 794 | |||
Net income (loss) available | |||||||
to common shareholders | 7,546 | (3,625) | 25,548 | 5,776 | |||
Dividends per common share | $ 0.11 | $ 0.09 | $ 0.31 | $ 0.23 | |||
Earnings per common share, | |||||||
basic | $ 0.48 | $ (0.31) | $ 1.64 | $ 0.54 | |||
diluted | $ 0.46 | $ (0.31) | $ 1.54 | $ 0.51 | |||
Average shares outstanding, | |||||||
basic | 15,577,371 | 11,627,093 | 15,604,410 | 10,775,577 | |||
diluted | 16,849,887 | 13,271,073 | 16,891,286 | 12,830,402 | |||
Selected financial ratios: | |||||||
Return on average assets | 1.38% | -0.83% | 1.56% | 0.54% | |||
Return on average equity | 9.38% | -6.62% | 11.07% | 4.55% | |||
Dividend payout ratio | 22.23% | -30.48% | 18.58% | 37.72% | |||
Net interest margin (tax equivalent) | 4.12% | 4.15% | 4.35% | 4.14% | |||
Selected Balance Sheet Items | |||
(unaudited - dollars in thousands, except share amounts) | |||
September 30, | December 31, | ||
2019 | 2018 | ||
(unaudited) | (unaudited) | ||
Cash and due from financial institutions | $ 62,219 | $ 42,779 | |
Investment securities | 356,439 | 347,364 | |
Loans held for sale | 8,983 | 1,391 | |
Loans | 1,648,640 | 1,561,941 | |
Less allowance for loan losses | 14,144 | 13,679 | |
Net loans | 1,634,496 | 1,548,262 | |
Other securities | 20,280 | 21,021 | |
Premises and equipment, net | 22,201 | 22,021 | |
Goodwill and other intangibles | 85,461 | 86,203 | |
Bank owned life insurance | 44,745 | 43,037 | |
Other assets | 34,241 | 26,876 | |
Total assets | $ 2,269,065 | $ 2,138,954 | |
Total deposits | $ 1,632,621 | $ 1,579,893 | |
Federal Home Loan Bank advances | 236,100 | 193,600 | |
Securities sold under agreements to repurchase | 15,088 | 22,199 | |
Subordinated debentures | 29,427 | 29,427 | |
Accrued expenses and other liabilities | 26,566 | 14,937 | |
Total shareholders' equity | 329,263 | 298,898 | |
Total liabilities and shareholders' equity | $ 2,269,065 | $ 2,138,954 | |
Shares outstanding at period end | 15,473,275 | 15,603,499 | |
Book value per share | $ 20.69 | $ 18.56 | |
Equity to asset ratio | 14.51% | 13.97% | |
Selected asset quality ratios: | |||
Allowance for loan losses to total loans | 0.86% | 0.88% | |
Non-performing assets to total assets | 0.42% | 0.46% | |
Allowance for loan losses to non-performing loans | 149.91% | 137.87% | |
Non-performing asset analysis: | |||
Nonaccrual loans | $ 6,154 | $ 6,898 | |
Troubled debt restructurings | 3,281 | 3,024 | |
Other real estate owned | - | - | |
Total | $ 9,435 | $ 9,922 | |
Supplemental Financial Information | |||||||||
(Unaudited - Dollars in thousands except share data) | |||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||
End of Period Balances | 2019 | 2019 | 2019 | 2018 | 2018 | ||||
Assets | |||||||||
Cash and due from banks | $ 62,219 | $ 49,839 | $ 164,094 | $ 42,779 | $ 64,754 | ||||
Investment securities | 356,439 | 360,512 | 351,006 | 347,364 | 318,112 | ||||
Loans held for sale | 8,983 | 2,563 | 1,444 | 1,391 | 4,025 | ||||
Loans | 1,648,640 | 1,598,770 | 1,573,193 | 1,561,941 | 1,515,644 | ||||
Allowance for loan losses | (14,144) | (13,786) | (13,822) | (13,679) | (13,331) | ||||
Net Loans | 1,634,496 | 1,584,984 | 1,559,371 | 1,548,262 | 1,502,313 | ||||
Other securities | 20,280 | 20,280 | 20,280 | 21,021 | 17,774 | ||||
Premises and equipment, net | 22,201 | 21,720 | 21,772 | 22,021 | 22,518 | ||||
Goodwill and other intangibles | 85,461 | 85,706 | 85,955 | 86,203 | 85,964 | ||||
Bank owned life insurance | 44,745 | 44,491 | 44,239 | 43,037 | 42,750 | ||||
Other assets | 34,241 | 32,900 | 29,541 | 26,876 | 27,325 | ||||
Total Assets | $ 2,269,065 | $ 2,202,995 | $ 2,277,702 | $ 2,138,954 | $ 2,085,535 | ||||
Liabilities | |||||||||
Total deposits | $ 1,632,621 | $ 1,632,720 | $ 1,765,801 | $ 1,579,893 | $ 1,577,755 | ||||
Federal Home Loan Bank advances | 236,100 | 176,300 | 127,100 | 193,600 | 145,100 | ||||
Securities sold under agreement to repurchase | 15,088 | 15,554 | 21,970 | 22,199 | 18,515 | ||||
Subordinated debentures | 29,427 | 29,427 | 29,427 | 29,427 | 29,427 | ||||
Accrued expenses and other liabilities | 26,566 | 24,782 | 21,347 | 14,937 | 25,350 | ||||
Total liabilities | 1,939,802 | 1,878,783 | 1,965,645 | 1,840,056 | 1,796,147 | ||||
Shareholders' Equity | |||||||||
Preferred shares, Series B | 9,158 | 9,364 | 9,364 | 9,364 | 10,878 | ||||
Common shares | 267,559 | 267,275 | 266,990 | 266,901 | 265,324 | ||||
Accumulated earnings | 62,023 | 56,199 | 49,421 | 41,320 | 35,302 | ||||
Treasury shares | (21,144) | (17,235) | (17,235) | (17,235) | (17,235) | ||||
Accumulated other comprehensive income(loss) | 11,667 | 8,609 | 3,517 | (1,452) | (4,881) | ||||
Total shareholders' equity | 329,263 | 324,212 | 312,057 | 298,898 | 289,388 | ||||
Total Liabilities and Shareholders' Equity | $ 2,269,065 | $ 2,202,995 | $ 2,277,702 | $ 2,138,954 | $ 2,085,535 | ||||
Quarterly Average Balances | |||||||||
Assets: | |||||||||
Earning assets | $ 2,021,780 | $ 1,986,841 | $ 2,017,523 | $ 1,907,966 | $ 1,534,039 | ||||
Securities | 379,525 | 373,999 | 365,219 | 352,412 | 252,832 | ||||
Loans | 1,626,010 | 1,583,533 | 1,564,208 | 1,532,012 | 1,256,680 | ||||
Liabilities and Shareholders' Equity | |||||||||
Total deposits | $ 1,622,527 | $ 1,670,247 | $ 1,807,102 | $ 1,591,521 | $ 1,202,419 | ||||
Interest-bearing deposits | 1,139,632 | 1,129,964 | 1,126,173 | 1,120,876 | 816,773 | ||||
Other interest-bearing liabilities | 246,235 | 186,140 | 148,891 | 204,002 | 228,164 | ||||
Total shareholders' equity | 326,103 | 315,438 | 301,656 | 290,096 | 205,601 | ||||
Supplemental Financial Information | |||||||||
(Unaudited - Dollars in thousands except share data) | |||||||||
Three Months Ended | |||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||
Income statement | 2019 | 2019 | 2019 | 2018 | 2018 | ||||
Total interest and dividend income | $ 24,023 | $ 24,926 | $ 24,584 | $ 23,707 | $ 17,886 | ||||
Total interest expense | 3,605 | 3,184 | 2,865 | 2,962 | 2,062 | ||||
Net interest income | 20,418 | 21,742 | 21,719 | 20,745 | 15,824 | ||||
Provision for loan losses | 150 | - | - | 390 | 390 | ||||
Noninterest income | 5,429 | 5,104 | 6,284 | 4,838 | 3,288 | ||||
Noninterest expense | 16,731 | 16,639 | 16,449 | 16,391 | 22,156 | ||||
Income (loss) before taxes | 8,966 | 10,207 | 11,554 | 8,802 | (3,434) | ||||
Income tax expense (benefit) | 1,258 | 1,546 | 1,885 | 1,233 | (1) | ||||
Net income (loss) | 7,708 | 8,661 | 9,669 | 7,569 | (3,433) | ||||
Preferred stock dividends | 162 | 164 | 164 | 165 | 192 | ||||
Net income (loss) available to | |||||||||
common shareholders | $ 7,546 | $ 8,497 | $ 9,505 | $ 7,404 | $ (3,625) | ||||
Common shares dividend paid | $ 1,722 | $ 1,719 | $ 1,404 | $ 1,386 | $ 971 | ||||
Per share data | |||||||||
Basic earnings per common share | $ 0.48 | $ 0.54 | $ 0.61 | $ 0.48 | $ (0.31) | ||||
Diluted earnings per common share | 0.46 | 0.51 | 0.57 | 0.45 | (0.31) | ||||
Dividends per common share | 0.11 | 0.11 | 0.09 | 0.09 | 0.09 | ||||
Average common shares outstanding - basic | 15,577,371 | 15,628,537 | 15,607,655 | 15,521,404 | 11,627,093 | ||||
Average common shares outstanding - diluted | 16,849,887 | 16,922,712 | 16,901,830 | 16,898,186 | 13,271,073 | ||||
Asset quality | |||||||||
Allowance for loan losses, beginning of period | $ 13,786 | $ 13,822 | $ 13,679 | $ 13,331 | $ 12,867 | ||||
Charge-offs | (36) | (156) | (239) | (119) | (133) | ||||
Recoveries | 244 | 120 | 382 | 77 | 207 | ||||
Provision | 150 | - | - | 390 | 390 | ||||
Allowance for loan losses, end of period | $ 14,144 | $ 13,786 | $ 13,822 | $ 13,679 | $ 13,331 | ||||
Ratios | |||||||||
Allowance to total loans | 0.86% | 0.86% | 0.88% | 0.88% | 0.88% | ||||
Allowance to nonperforming assets | 149.91% | 164.69% | 150.60% | 137.87% | 132.86% | ||||
Allowance to nonperforming loans | 149.91% | 164.69% | 150.60% | 137.87% | 132.86% | ||||
Nonperforming assets | |||||||||
Nonperforming loans | $ 9,435 | $ 8,371 | $ 9,178 | $ 9,140 | $ 10,034 | ||||
Other real estate owned | - | - | - | - | - | ||||
Total nonperforming assets | $ 9,435 | $ 8,371 | $ 9,178 | $ 9,140 | $ 10,034 | ||||
Capital and liquidity | |||||||||
Tier 1 leverage ratio | 12.37% | 12.44% | 11.64% | 12.22% | 15.37% | ||||
Tier 1 risk-based capital ratio | 15.50% | 15.94% | 15.64% | 15.30% | 15.43% | ||||
Total risk-based capital ratio | 16.32% | 16.78% | 16.48% | 16.15% | 16.29% | ||||
Tangible common equity ratio (1) | 10.81% | 10.89% | 9.96% | 9.98% | 9.71% | ||||
(1) See reconciliation of GAAP measures at the end of this press release. | |||||||||
Non-GAAP Reconciliation | |||||||||
Tangible Common Equity and Tangible Assets | |||||||||
(Unaudited - Dollars in thousands except share data) | |||||||||
Three Months Ended | |||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||
Tangible Common Equity | 2019 | 2019 | 2019 | 2018 | 2018 | ||||
Total Equity | $ 329,263 | $ 324,212 | $ 312,057 | $ 298,898 | $ 289,388 | ||||
Less: Preferred Equity | 9,158 | 9,364 | 9,364 | 9,364 | 10,878 | ||||
Less: Goodwill and intangible assets | 83,829 | 84,065 | 84,299 | 84,540 | 84,286 | ||||
Tangible common equity | $ 236,276 | $ 230,783 | $ 218,394 | $ 204,994 | $ 194,224 | ||||
Total Shares Outstanding | 15,473,275 | 15,633,059 | 15,624,113 | 15,603,499 | 15,395,064 | ||||
Tangible book value per share | $ 15.27 | $ 14.76 | $ 13.98 | $ 13.14 | $ 12.62 | ||||
Tangible Assets | |||||||||
Total Assets | $2,269,065 | $2,202,995 | $2,277,702 | $2,138,954 | $2,085,535 | ||||
Less: Goodwill and intangible assets | 83,829 | 84,065 | 84,299 | 84,540 | 84,286 | ||||
Tangible assets | $2,185,236 | $2,118,930 | $2,193,403 | $2,054,414 | $2,001,249 | ||||
Tangible common equity ratio | 10.81% | 10.89% | 9.96% | 9.98% | 9.71% | ||||
Reconciliation of Non-GAAP Financial Measures | |||||||
(Unaudited - Dollars in thousands except share data) | |||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | ||||
September 30, | September 30, | September 30, | September 30, | ||||
Adjusted earnings | 2019 | 2018 | 2019 | 2018 | |||
Income before taxes (GAAP) | 8,966 | (3,434) | 30,735 | 7,977 | |||
Loss on sale of investment securities | - | (392) | - | (392) | |||
Acquisition and integration expenses | - | 8,801 | - | 11,952 | |||
Adjusted earnings, pretax | 8,966 | 5,759 | 30,735 | 20,321 | |||
Adjusted income tax expense | 1,258 | 821 | 4,690 | 2,897 | |||
Adjusted net income (Non-GAAP) | 7,708 | 4,938 | 26,045 | 17,424 | |||
Preferred stock dividends | 162 | 192 | 490 | 794 | |||
Adjusted net income available to | |||||||
common shareholders | $ 7,546 | $ 4,746 | $ 25,555 | $ 16,630 | |||
Adjusted earnings per common share - basic | $ 0.48 | $ 0.41 | $ 1.64 | $ 1.54 | |||
Adjusted earnings per common share - diluted | 0.46 | 0.37 | 1.54 | 1.36 | |||
Average common shares outstanding - basic | 15,577,371 | 11,627,093 | 15,604,410 | 10,775,577 | |||
Average common shares outstanding - diluted | 16,849,887 | 13,271,073 | 16,891,286 | 12,830,402 | |||
Adjusted Efficiency ratio | |||||||
Nine Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2019 | 2018 | ||||||
Noninterest expense (GAAP) | 49,818 | 50,288 | |||||
Acquisition and integration expense | - | (11,952) | |||||
Adjusted noninterest expense | 49,818 | 38,336 | |||||
Net interest income (GAAP) | 63,878 | 45,362 | |||||
Effect of tax-exempt income | 1,130 | 712 | |||||
Adjusted net interest income | 65,008 | 46,074 | |||||
Noninterest Income - GAAP | 16,816 | 13,293 | |||||
Loss(gain) on sales of investment securities, net | - | 392 | |||||
Adjusted Non-interest Income | 16,816 | 13,685 | |||||
Adjusted total revenue | 81,824 | 59,759 | |||||
Adjusted Efficiency ratio | 60.9% | 64.2% | |||||
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SOURCE Civista Bancshares, Inc.