CIVISTA BANCSHARES, INC. Q1 FY2025 earnings call

• Net income increased with pre-provision net revenue up $4.3 million or 47% over first quarter 2024. - Core deposit funding was a priority, with organic growth excluding broker deposits. - Net interest income increased due to higher yield and lower funding costs from brokered CD maturities and repricing. - Loan and lease growth was disciplined to manage loan-to-deposit ratio. - Margin expanded 15 basis points. - Stock repurchase program renewed, quarterly dividend declared. - Noninterest expense declined, with improvements in nearly all categories. - Noninterest income had declines but some segments like lease revenue increased. - Balance sheet: Loans and leases grew, deposits increased, security portfolio had unrealized losses, capital ratios were strong, credit quality remained good.

Net income for the first quarter was $10.2 million, or $0.66 per diluted share, a $3.8 million or 60% increase over February and a $275,000 increase over linked quarter. Net interest income was $32.8 million, an increase of $1.4 million or 4.5% compared to linked quarter, due to earning asset yield increasing six basis points to 5.71% and overall funding cost decreasing by 11 basis points to 2.31%. Noninterest expense was $27.1 million, a $1.2 million or 4.1% decline from linked quarter. Loan and lease portfolio grew at an annualized rate of 2.8%. Core deposit funding grew organically by over $67 million. Margin grew by 15 basis points to 3.51%. ROA was 1%, ROE was 10.39%.

• Anticipate margin expansion of 4-5 basis points in the second quarter, with further potential in subsequent quarters. - Expect loan growth to be in the mid-single-digit range for the balance of 2025. - Fee income expected to bounce back in the second quarter, with pipelines looking good. - Leasing volume projected to pick up as the year progresses. - Digital account opening in the back half of the year could support deposit growth and funding.

• Macroeconomic uncertainties could impact loan demand. - Market volatility may affect wealth management fees and AUMs. - Economic conditions could slow CapEx spending by commercial borrowers.

Q: Justin Crowley asked about margin inputs, opportunity for further funding cost reduction, and expense normalization.

A: Dennis Shaffer said there's still opportunity, anticipating 4-5 basis points margin expansion in next quarter, with loans repricing and new loan yields contributing. Ian Whinnem discussed expense normalization, expecting second quarter to be around first quarter level with reinvestment in future quarters.

Q: Brendan Nosal inquired about fee base outlook.

A: Dennis Shaffer said fee income should bounce back in second quarter, with mortgage and leasing volumes expected to pick up, and wealth management fees affected by market volatility.

Q: Terry McEvoy asked about gain on sales split and loan status.

A: Dennis Shaffer provided gain on sales split between mortgage and CLF, and updated on loan statuses, including a multifamily loan expected to resolve and another community loan in progress.

Q: Manuel Navas asked about pipeline impact of CapEx slowdown and growth guide.

A: Dennis Shaffer said CapEx slowdown not significantly in current pipeline, with economic activities in Ohio and Indiana fueling growth, and leasing volume expected to pick up later in the year.

Q: Emily Lee asked about deposit repricing and credit expectations.

A: Ian Whinnem discussed deposit repricing with renewals expected to pick up rates, and Dennis Shaffer noted credit metrics were strong with low delinquencies and healthy allowance.