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Press Release: Civista Bancshares, Inc. Announces -3-

· 02/05/2021 08:30
End of period deposit balances (unaudited - dollars in thousands) December 31, December 31, 2020 2019 $ Change % Change Noninterest-bearing demand $ 720,809 $ 512,553 $ 208,256 40.6% Interest-bearing demand 410,139 301,674 108,465 36.0% Savings and money market 771,612 588,697 182,915 31.1% Time deposits 286,838 275,840 10,998 4.0% -------------- -------------- ---------- Total Deposits $ 2,189,398 $ 1,678,764 $ 510,634 30.4%Loans currently modified under COVID-19 programs (unaudited - dollars in thousands) Percent of Number of loans Type of Loan Loans Balance outstanding (1) Commercial and Agriculture 21 $ 4,069 0.22% Commercial Real Estate: Owner Occupied 12 13,072 0.71% Non-owner Occupied 19 51,027 2.77% Real Estate Construction 2 5,438 0.30% Residential Real Estate 1 180 0.01% ---------- ---------- 55 $ 73,786 4.01% (1) excluding PPP loansEnd of period loan balances (unaudited - dollars in thousands) December 31, December 31, 2020 2019 $ Change % Change Commercial and Agriculture (1) $ 409,876 $ 203,110 $ 206,766 101.8% Commercial Real Estate: Owner Occupied 278,413 245,606 32,807 13.4% Non-owner Occupied 705,072 592,222 112,850 19.1% Residential Real Estate 442,588 463,032 (20,444) -4.4% Real Estate Construction 175,609 155,825 19,784 12.7% Farm Real Estate 33,102 34,114 (1,012) -3.0% Consumer and Other 12,842 15,061 (2,219) -14.7% -------------- -------------- --------- Total Loans $ 2,057,502 $ 1,708,970 $ 348,532 20.4% (1) 2020 includes PPP loans totaling $217,295Noninterest expense (unaudited - dollars in thousands) Twelve months ended December 31, 2020 2019 $ change % change Compensation expense $ 42,480 $ 39,156 $ 3,324 8.5% Net occupancy and equipment 6,085 6,081 4 0.1% Contracted data processing 1,880 1,831 49 2.7% Taxes and assessments 2,641 1,981 660 33.3% Professional services 2,795 2,844 (49) -1.7% Amortization of intangible assets 913 945 (32) -3.4% ATM/Interchange expense 1,868 1,887 (19) -1.0% Marketing 1,074 1,411 (337) -23.9% Software maintenance expense 1,833 1,523 310 20.4% Other 9,096 9,288 (192) -2.1% -------- -------- -------- Total noninterest expense $ 70,665 $ 66,947 $ 3,718 5.6%

Civista's effective income tax rate for the fourth quarter 2020 was 15.1% compared to 11.3% in 2019.

For the twelve months ended December 31, 2020, noninterest expense totaled $70.7 million, an increase of $3.7 million, or 5.6%, compared to the same period in the prior year.

The increase in compensation expense was due to increased payroll and commission and incentive based costs, offset by a decrease in employee insurance costs. Annual pay increases in 2020 were an average of 3.3%. Commission and incentive expense increased $1.9 million, or 39.1% as a result of increased loan activity. Employee insurance decreased $505.4 thousand, or 10.0%, for 2020.

The increase in taxes and assessments was primarily attributable to a $456.0 thousand FDIC assessment credits for small banks that was applied to the 2019 assessment charges. The FDIC assessment base also increased, leading to an additional $134.0 thousand increase. State franchise tax increased $71.3 thousand related to a State of Ohio audit of the tax years 2018 and 2019.

The decrease in marketing expense is due to decreases in both advertising and business promotion expenses, primarily related to the COVID-19 pandemic. Event cancellations and postponed outreach efforts contributed to the decrease as our focus was on communicating changes in operations, safety protocols, alternative delivery channels, and economic relief programs with the safety and financial wellness of our employees and customers in mind.

The increase in software maintenance expense is due to contracts related to new services.

The decrease in other operating expense is primarily due to a decreases in travel and lodging expense of $742.7 thousand, education and training of $169.2 thousand and donations of $147.8 thousand. These decreases were partially offset by increases in loan origination expenses of $463.4 thousand.

The efficiency ratio was 59.1% for the twelve months ended December 31, 2020 compared to 61.4% for the twelve months ended December 31, 2019. The improvement in the efficiency ratio is due primarily to the increase in noninterest income and the accretion of PPP fees.

Civista's effective income tax rate for the year ended December 31, 2020 was 13.3% compared to 14.4% in 2019.

Balance Sheet

Total assets increased $453.4 million, or 19.6%, from December 31, 2019 to December 31, 2020, due to a $348.5 million, or 20.4%, increase in the loan portfolio, $4.7 million, or 206.4%increase in loans held for sale, and a $91.0 million increase in cash. The asset increases were primarily funded by an increase in deposits, which includes the remaining proceeds from PPP loans still held on deposit.

Loan growth during 2020 totaled $348.5 million, including $217.3 million of PPP loans. Removing the effect of PPP loans, the loan portfolio grew $131.2 million or 7.7%. Loan growth was led by increases of $145.7 million in Commercial Real Estate and $19.8 million in Real Estate Construction. The Commercial Real Estate growth continues to be aided by some successful real estate projects we kept on balance sheet by using longer term swaps that might otherwise have been refinanced on the commercial mortgage-backed securities market. Our construction portfolio continues to be vibrant, especially in the metro markets. The decrease in Residential Real Estate is a result of loans refinanced into saleable mortgage products. All regions have contributed to the growth, aided by many new clients and prospects from our success in PPP originations.

Paycheck Protection Program

During 2020, we processed over 2,300 loans totaling $259.1 million, of which $41.8 million have been forgiven or have paid off. SBA fees total approximately $9.9 million, which are being recognized in interest income over the life of the PPP loans. During the year, $4.7 million of PPP fees were accreted to income. We borrowed $183.7 million from the Paycheck Protection Program Lending Facility ("PPPLF"), anticipating an additional funding source for PPP landing. We have since determined this source was no longer needed and have paid off the PPPLF in full.

"We believe that the PPP program has been instrumental in assisting small businesses and their employees. We expect to continue to support our customers in the next round of PPP approved prior to year-end. We have seen a number of customers begin the forgiveness process, however, that has been delayed somewhat due to the ever changing rules for the program. The new simplified rules should be helpful to streamline the process for our customers and the bank." said Dennis G. Shaffer, President and CEO of Civista.

COVID-19 Loan Modifications

During 2020, Civista modified a total of 813 loans totaling $431.3 million, primarily consisting of the deferral of principal and/or interest payments. All of the loans modified were performing at December 31, 2019 and comply with the provisions of the CARES Act to not be considered a troubled debt restructuring. As of December 31, 2020, the remaining loans modified under the CARES Act total $73.8 million.

Details with respect to the loan modifications that remain on deferred status are as follows:

Deposits

Total deposits increased $510.6 million, or 30.4%, from December 31, 2019 to December 31, 2020.

The increase in noninterest-bearing demand of $208.3 million was primarily due to a $164.4 million increase in business demand deposit accounts and a $16.5 million increase in tax refund processing deposit accounts. Interest-bearing demand deposits increased, split nearly evenly between increases in public fund accounts non-public fund accounts. The increase in savings and money market was primarily due to a $46.6 million increase in statement savings, a $45.6 million increase in personal money markets, a $47.3 million increase in business money markets and a $29.8 million increase in brokered money market accounts.

FHLB advances totaled $125.0 million at December 31, 2020, a decrease of $101.5 million, or 44.8%, from December 31, 2019. The increase in deposits reduced the need for wholesale funding.

Stock Repurchase Program

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February 05, 2021 08:30 ET (13:30 GMT)