Civista Bancshares Q4 Earnings Call Highlights

Civista Bancshares (NASDAQ:CIVB) used its fourth-quarter 2025 earnings call to highlight improved profitability, expanding margins, and the completion of its acquisition of Farmers Savings Bank, while outlining expectations for loan growth, expenses, and net interest margin in 2026.

Fourth-quarter and full-year results

President and CEO Dennis Shaffer said Civista reported fourth-quarter 2025 net income of $12.3 million, or $0.61 per diluted share, which was consistent with the linked quarter and up $2.4 million, or 24%, from the fourth quarter of 2024.

Results included non-recurring acquisition-related expenses tied to Farmers Savings Bank that reduced net income by $3.4 million pre-tax and $2.9 million after-tax, or $0.14 per share. Shaffer said the company expects any additional expenses related to the transaction to be minimal going forward.

For full-year 2025, Civista reported net income of $46.2 million, or $2.64 per diluted share, compared with $31.7 million, or $2.01 per diluted share, in 2024. Management noted the year-over-year comparison came despite roughly two million additional average shares outstanding due to a July capital offering and the Farmers transaction. Shaffer added that non-recurring adjustments reduced full-year earnings per share by $0.15.

Shaffer said return on assets (ROA) was 1.14% for the quarter and 1.42% excluding one-time expenses, marking improvement in each quarter of 2025. Full-year ROA was 1.11%.

Margin expansion and interest income outlook

Net interest income totaled $36.5 million in the quarter, up $1.9 million, or 5.5%, from the linked quarter and up $5.1 million, or 16%, from the year-ago period. Management said earning asset yields declined eight basis points during the quarter, while funding costs fell 19 basis points, contributing to an 11-basis-point expansion in net interest margin to 3.69%.

In response to analyst questions, management said it expects net interest margin to expand modestly in 2026. The company forecasted margin expansion of 2 to 3 basis points in the first quarter, followed by an additional 3 to 4 basis points into the second quarter and beyond, “gapping out around there.” That outlook assumes a Federal Reserve rate cut in June and another in the fourth quarter; management said a flat-rate environment would imply a slightly higher year-end level.

Management also said the impact of acquisition-related accretion was “pretty minimal,” describing the Farmers deal as “an immaterial acquisition for the most part.”

Farmers Savings Bank integration and balance sheet trends

Shaffer said Civista closed the Farmers Savings Bank transaction during the quarter, adding $106 million in loans and $236 million in low-cost deposits. He said a system conversion was expected over the weekend of Feb. 7-8 as the teams work toward integration.

Excluding acquired Farmers loans, Civista generated $68.7 million of organic net loan growth in the quarter, an annualized growth rate of 8.7%. Management said it anticipates mid-single-digit loan growth in 2026 as it leverages Farmers’ excess deposits and as pipelines build.

On the mix of that growth, bank President Chuck Parcher told analysts the company expects a return to more “normalized” growth in 2026, led by commercial categories, including C&I and commercial real estate. He said residential loan growth was notable in 2025 in part because Civista held more construction and CRE production on its balance sheet, and he suggested that if rates decline the company could move some residential production to the secondary market.

On pricing, management said new and renewed commercial loans were originated at an average rate of 6.74% in the quarter, while residential real estate originations averaged 6.13% and leasing originations averaged 8.77%. In the Q&A, Parcher said competitive pressures remain in Ohio and Indiana, with “good deals” in CRE coming in around 6.25% to 6.5%. He also said the bank had approximately $225 million of credits on 3- or 5-year adjustables repricing through 2026 and suggested those could increase by roughly 1.5 percentage points from current levels.

Management emphasized continued attention to CRE concentration. At Dec. 31, Civista’s CRE-to-risk-based-capital ratio was 275%, down from 366% at the beginning of 2025. Shaffer said office loans represented 4.5% of the total loan portfolio, and the company noted those loans are “predominantly secured by single or two-story offices located outside of central business districts.” Undrawn construction lines were $162 million at year-end.

Deposits, funding costs, and digital initiatives

On funding, the bank added $236.1 million in low-cost deposits from Farmers and reduced brokered deposits for a fourth consecutive quarter by nearly $30 million. Management said overall cost of funding declined 19 basis points in the quarter to 2.08%. While Civista continued to see some migration from demand accounts into time deposits, the addition of Farmers deposits helped reduce the cost of deposits by four basis points to 1.59%.

Management also pointed to organic core deposit growth: non-brokered deposit funding (excluding acquired Farmers deposits) increased by nearly $30 million during the quarter.

Shaffer said the bank’s loan-to-deposit ratio was 94.3% at quarter end and that management intends to keep it within a 90% to 95% target range. The company described its deposit base as “fairly granular,” noting the average deposit account size excluding CDs was approximately $28,000. Other than $464.4 million of public funds tied to municipalities, management said it had no deposit concentrations at year-end.

Management provided updates on digital banking initiatives launched in 2025. The bank introduced a new digital deposit account opening platform in the third quarter, initially offering only CDs online. In the fourth quarter, Civista expanded online account opening to checking and money market accounts and rolled out a deposit product redesign initiative. Executives said a broader digital marketing push would come after the Farmers system conversion. Parcher said the platform was still in early stages, but noted that after adding checking, the bank opened 28 new checking accounts in one month through the digital channel.

Expenses, credit, capital actions, and guidance items

Non-interest income increased in the fourth quarter, rising $251,000 (2.6%) from the linked quarter and $869,000 (9.6%) from the year-ago quarter. Management attributed the linked-quarter increase mainly to higher interchange fees tied to holiday spending and an increase in leasing-related fees, partially offset by the absence of prior-quarter BOLI proceeds and lower residual income from leasing activity. For the full year, non-interest income fell $3.8 million, or 10%, driven primarily by lease revenue and residual income; Shaffer referenced a $1 million non-recurring adjustment tied to a leasing system conversion during 2025 and said investments in leasing infrastructure should support improved performance in 2026.

After adjusting for $3.4 million in acquisition-related expenses, fourth-quarter non-interest expense was $27.6 million, essentially flat with adjusted third-quarter expense levels. For full-year 2025, adjusted non-interest expense decreased $2.4 million, or 2.1%, primarily due to lower compensation and equipment expenses. The efficiency ratio improved to 57.7% in the quarter from 61.4% in the linked quarter and 68.3% in the year-ago quarter.

Looking to the expense run rate, management guided first-quarter expenses to approximately $29 million to $29.5 million, reflecting overlap costs ahead of the February core conversion, with some reductions expected later in the quarter. Executives said merit increases and continued investments in technology, people, and resources would also factor into the 2026 expense outlook.

Credit metrics were described as stable. Shaffer said delinquencies remained low, net charge-offs were slightly lower in 2025 than the prior year, and the quarterly provision was $585,000. Past-due loans rose $7 million during the quarter and non-performing loans increased $8.5 million to $31.3 million. Non-performing loans were 0.95% of total loans at year-end, up slightly from the linked quarter but down from 1.06% at the end of 2024. Management said the non-performing increase was largely tied to one $8 million participated credit placed on non-accrual after it matured in November; executives said they expect resolution could take “the better part of 2026.”

Capital and shareholder returns were also addressed. Civista increased its quarterly dividend to $0.18 per share, up $0.01 from the prior quarter, which management said implied a 3.2% annualized yield based on the Dec. 31 closing price of $22.22 and a payout ratio of nearly 30%. The company ended the year with a Tier 1 leverage ratio of 11.32% and a tangible common equity ratio of 9.54%, up from 9.21% at Sept. 30. Management said it maintained a $13.5 million share repurchase authorization and a 10b5-1 plan, though it did not repurchase shares during the year and would continue evaluating opportunities.

In Q&A, management also indicated it expects an effective tax rate of about 16.5% for 2026. On non-interest income, the CFO guided first-quarter total non-interest income to roughly $7.8 million to $8.2 million, with an expectation to increase by about $500,000 in the second quarter, noting seasonality and that leasing-related items can be “lumpy.”

About Civista Bancshares (NASDAQ:CIVB)

Civista Bancshares, Inc is a bank holding company headquartered in Saginaw, Michigan, operating through its wholly owned subsidiary, Civista Bank. The company offers a full suite of commercial and retail banking products and services to individuals, small- and mid-sized businesses, governmental entities and nonprofit organizations. Core offerings include deposit accounts, commercial and industrial loans, consumer and residential real estate mortgages, master-planned construction financing and treasury management solutions.

Beyond traditional banking, Civista Bancshares provides wealth management, trust and investment advisory services under the Civista Wealth Enterprises brand.