Civista Bancshares, Inc. (CIVB) Earnings

Management highlights

- Completed core system conversion of Farmer's Savings Bank acquired in Q4 2025, with one-time expenses of ~$400K impacting Q1 net income. - Core deposit funding increased organically by over $60M, reducing brokered deposits by $25M for 6th consecutive quarter. - Net interest margin expanded 16 bps to 3.85% due to disciplined asset pricing and funding cost management. Earning asset yield up 5 bps to 5.66%, cost of funds 1.96% (down 35 bps y-o-y, 12 bps q-o-q), cost of deposits 1.81% (down 19 bps y-o-y, 11 bps q-o-q). - Net interest income $37.8M, up 15% y-o-y and 4% q-o-q. Strong loan production ($214M) offset by $83M payoffs. - Non-interest income: declined 4.6% q-o-q but increased 20% y-o-y, driven by service charges, net gains on loan and lease sales, and other income from insurance reserves. Non-interest expense: declined 3.6% q-o-q but increased 10% y-o-y, due to commission accrual adjustment and increased compensation expense. - Efficiency ratio improved to 60.1%. Strong loan pipeline growth: residential mortgage up 25%, commercial up 102% y-o-y. Anticipate mid-single-digit loan growth for rest of year. Deposit base granular, low-cost deposit franchise valuable. Securities portfolio $682M, 16% of balance sheet. Dividend of 18 cents per share declared, stock repurchase program renewed for up to $25M.

Guidance

- Anticipate mid-single-digit deposit and loan growth for remainder of 2026. - For net interest margin: Q2 expected flat to slight expansion (1-2 bps), then mid to upper 380s in Q3 and beyond; if no rate cuts, mid to upper 380s; if rate cut, mid 380s lower; if rate increase, mid 380s higher. ~$60M loans repricing in Q2, ~$140M thereafter. - Earnings: 72 cents per share in Q1, normalized basis likely mid-60s, anticipate reaching 75 cents by end of year or first quarter next year. - Expenses: Q2 anticipated 29.5-30, then slight expansion in Q3 and Q4, with merit increases effective April 1 included.

Segment performance

Net income for Q1 2026 was $15 million, or 72 cents per diluted share, up 47% y-o-y and 22% q-o-q. Pre-provision net revenue increased $3.8 million (29% y-o-y) and $3.2 million (3.8% q-o-q). Net interest margin expanded 16 bps to 3.85%. Net interest income was $37.8 million, up 15% y-o-y and 4% q-o-q. Non-interest income declined 4.6% q-o-q but increased 20% y-o-y. Non-interest expense declined 3.6% q-o-q but increased 10% y-o-y. Efficiency ratio improved to 60.1%. ROA was 1.41%, ROE 10.97%, tangible book value per share $19.76. Core deposit funding increased organically by over $60M, brokered deposits reduced by $25M for 6th consecutive quarter. Loan production $214M but offset by $83M payoffs. CRE to risk-based capital ratio 261%. Residential mortgage loan pipeline up 25%, commercial loan pipeline up 102% y-o-y. Total deposits up $35.4M, core deposits up $60.4M. Securities portfolio $682M, 16% of balance sheet, 7% unrealized losses. Net charge-offs $716K, provision credited $768K.

Risks & headwinds

- Macroeconomic uncertainties pose general concern. Credit quality remains strong but macroeconomic factors could impact. Brokered deposits still present some risk in terms of funding costs if not managed properly. Interest rate changes could impact net interest margin and loan pricing. Potential impact of competition on deposit gathering and market share.

Analyst Q&A

• Q: On loan growth outlook, how confident are you payoff levels will decline to achieve mid-single-digit growth?

  A: Chuck says they watch payoffs closely, have large ones in Q2, pipeline twice as large as last year, undrawn construction funds $14M higher than year end, first quarter typically slower, expect mid-single-digit growth.

• Q: On net interest margin outlook if no more Fed rate cuts this year, how will margin trend?

  A: Ian says Q2 expected flat to slight expansion (1-2 bps), then mid to upper 380s in Q3 and beyond; ~$60M loans repricing in Q2, ~$140M thereafter.

• Q: On earnings lift and buyback, how does it align with previous outlook?

  A: Jeff says earnings lift this time due to provision, normalized basis 72 cents is mid-60s, anticipate reaching 75 cents by end of year or first quarter next year. Expenses: excluding non-recurring items, Q1 at 29.4, Q2 anticipated 29.5-30, then slight expansion in Q3 and Q4, with merit increases effective April 1.

• Q: On deposits, how large a contributor was digital channel to core deposit growth?

  A: Chuck says digital channel helps, but bigger factor is marketplace disruption and team efforts in gathering deposits.

• Q: On deposit competition, any specific geographies or categories intense?

  A: Chuck says competition almost equally intense across major metro markets, Columbus seeing more pressure from rate side, but positioned well with mid-single-digit growth outlook.

• Q: On prepayment fees and NIM, role of prepayment fees in Q1 and outlook?

  A: Matthew says payoffs didn't impact NIM much, but loans repricing from mid-fours to low sixes will affect NIM, biggest NIM lift from repricing brokered CD and reducing it.

• Q: On talent addition from Ohio market disruption, opportunities?

  A: Dan says market disruption has helped in picking up talent from institutions with M&A activities, like from West Banco Premier and Westfield deal.

• Q: On future acquisitions geographically, where targeting?

  A: Chuck says targeting Ohio and adjoining states, first priority on organic initiatives creating sustainable value.