8-K
Civista Bancshares, Inc. (CIVB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENTREPORT
Pursuant to section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
April 24, 2020
CivistaBancshares, Inc.
(Exact name of Registrant as specified in its charter)
| Ohio | 001-36192 | 34-1558688 |
|---|---|---|
| (State or other jurisdiction of<br><br><br>incorporation or organization) | (Commission<br><br><br>File Number) | (IRS Employer<br><br><br>Identification No.) |
100 East Water Street, P.O. Box 5016, Sandusky, Ohio 44870
(Address of principle executive offices)
Registrant’s telephone number, including area code: (419) 625-4121
N/A
(Former name orformer address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17<br>CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on whichregistered |
|---|---|---|
| Common | CIVB | NASDAQ Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Act of 1934 (§240.12b-2 of this chapter)
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On April 24, 2020, Civista Bancshares, Inc. announced preliminary unaudited earnings for the three month period ended March 31, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated here by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 FinancialStatements and Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Civista Bancshares, Inc. | |
|---|---|
| (Registrant) | |
| Date: April 24, 2020 | /s/ Todd A. Michel |
| Todd A. Michel, | |
| Senior Vice President & Controller |
EX-99.1
Exhibit 99.1
Civista Bancshares, Inc. Announces First Quarter 2020 Earnings
Sandusky, Ohio, April 24, 2020 /PRNewswire/– Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) reported net income available to common shareholders of $7.8 million, or $0.47 per diluted share, for the first quarter of 2020, compared to $9.5 million, or $0.57 per diluted share, for the first quarter of 2019.
“We began 2020 with the expectation that one of the biggest challenges we were going to face during the year was an uncertain interest rate environment. The COVID-19 pandemic has created challenges that we, as well as other banks, could not have anticipated. Our organization has risen to the challenge and are working with our customers to assist through these unprecedented times. We have waived overdraft fees, accommodated requests for loan payment deferrals and are participating in the SBA’s Paycheck Protection Program. In light of all of these challenges, we are pleased with our first quarter earnings.” said Dennis G. Shaffer, President and CEO of Civista.
Results of Operations:
Net interest income increased $396 thousand, or 1.8%, for the first quarter of 2020 compared to the same period of 2019.
Interest income increased $418 thousand, or 1.7%, for the first quarter of 2020. Average earning assets increased $214.6 million, which resulted in a $2.3 million increase in interest income. Average yields decreased 40 basis points which resulted in a $1.9 million decrease in interest income. Accretion income associated with purchased loan portfolios totaled $755 thousand for the first quarter of 2020 and $982 for the first quarter of 2019.
Interest expense increased $22 thousand, or 0.8%, for the first quarter of 2020 compared to the same period of 2019. Average interest-bearing liabilities increased $110.4 million, resulting in a $360 thousand increase in interest expense. Average rates decreased 7 basis points, resulting in a $338 thousand decrease in interest expense.
Net interest margin decreased 35 basis points to 4.10% for the first quarter of 2020, compared to 4.45% for the same period a year ago. Accretion income associated with purchased loan portfolios contributed approximately 15 basis points and 22 basis points to net interest margin for the first quarter of 2020 and 2019, respectively.
Average Balance Analysis
(Unaudited - Dollars in thousands)
| Three Months Ended March 31, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||||||||||||
| Average<br>balance | Interest | Yield/<br>rate * | Average<br>balance | Interest | Yield/<br>rate * | |||||||||||
| Assets: | ||||||||||||||||
| Interest-earning assets: | ||||||||||||||||
| Loans** | $ | 1,725,685 | $ | 21,673 | 5.05 | % | $ | 1,564,208 | $ | 20,963 | 5.44 | % | ||||
| Taxable securities | 187,604 | 1,416 | 3.13 | % | 207,600 | 1,748 | 3.43 | % | ||||||||
| Non-taxable securities | 197,583 | 1,512 | 4.22 | % | 157,619 | 1,351 | 4.49 | % | ||||||||
| Interest-bearing deposits in other banks | 121,296 | 401 | 1.33 | % | 88,096 | 522 | 2.40 | % | ||||||||
| Total interest-earning assets | $ | 2,232,168 | 25,002 | 4.62 | % | $ | 2,017,523 | 24,584 | 5.02 | % | ||||||
| Noninterest-earning assets: | ||||||||||||||||
| Cash and due from financial institutions | 168,350 | 92,782 | ||||||||||||||
| Premises and equipment, net | 22,737 | 21,924 | ||||||||||||||
| Accrued interest receivable | 6,751 | 6,534 | ||||||||||||||
| Intangible assets | 85,083 | 86,116 | ||||||||||||||
| Other assets | 28,550 | 20,053 | ||||||||||||||
| Bank owned life insurance | 45,086 | 43,643 | ||||||||||||||
| Less allowance for loan losses | (14,927 | ) | (13,885 | ) | ||||||||||||
| Total Assets | $ | 2,573,798 | $ | 2,274,690 | ||||||||||||
| Liabilities and Shareholders’ Equity: | ||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||
| Demand and savings | $ | 894,892 | $ | 606 | 0.27 | % | $ | 855,666 | $ | 708 | 0.34 | % | ||||
| Time | 280,701 | 1,379 | 1.98 | % | 270,507 | 1,183 | 1.77 | % | ||||||||
| FHLB | 157,749 | 581 | 1.48 | % | 97,267 | 597 | 2.49 | % | ||||||||
| Federal funds purchased | 610 | 2 | 1.32 | % | — | — | 0.00 | % | ||||||||
| Subordinated debentures | 29,427 | 313 | 4.28 | % | 29,427 | 372 | 5.13 | % | ||||||||
| Repurchase agreements | 22,123 | 6 | 0.11 | % | 22,197 | 5 | 0.09 | % | ||||||||
| Total interest-bearing liabilities | $ | 1,385,502 | 2,887 | 0.84 | % | $ | 1,275,064 | 2,865 | 0.91 | % | ||||||
| Noninterest-bearing deposits | 799,540 | 680,929 | ||||||||||||||
| Other liabilities | 56,154 | 17,041 | ||||||||||||||
| Shareholders’ equity | 332,602 | 301,656 | ||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 2,573,798 | $ | 2,274,690 | ||||||||||||
| Net interest income and interest rate spread | $ | 22,115 | 3.78 | % | $ | 21,719 | 4.11 | % | ||||||||
| Net interest margin | 4.10 | % | 4.45 | % | ||||||||||||
| * | - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and<br>investments, included in the yields above, was $406 thousand and 362 thousand for the periods ended March 31, 2020 and 2019, respectively. | |||||||||||||||
| --- | --- | |||||||||||||||
| ** | - Average balance includes nonaccrual loans | |||||||||||||||
| --- | --- |
Provision for loan losses was $2.1 million for the first quarter of 2020 and $0 for the first quarter of 2019. The reserve ratio increased to 0.97% from 0.86% at December 31, 2019 due to an increase in the bank’s qualitative factors related to the economic shutdown that is driven by COVID-19. Economic impacts include the loss of revenue being experience by our business clients, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large percentage of customers requesting payment relief. We expect our Commercial, Commercial Real Estate and Consumer portfolios to be impacted the most.
For the first quarter of 2020, noninterest income totaled $6.9 million, an increase of $592 thousand, or 9.4%, compared to the prior year’s first quarter.
| Noninterest income<br> <br>(unaudited -<br>dollars in thousands) | Three months ended March 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | change | % change | |||||||
| Service charges | $ | 1,468 | $ | 1,456 | 0.8 | % | ||||
| Net gain on sale of securities | — | 4 | ) | –100.0 | % | |||||
| Net gain (loss) on equity securities | (141 | ) | 2 | ) | N/M | |||||
| Net gain on sale of loans | 827 | 331 | 149.8 | % | ||||||
| ATM/Interchange fees | 894 | 906 | ) | –1.3 | % | |||||
| Wealth management fees | 1,006 | 847 | 18.8 | % | ||||||
| Bank owned life insurance | 250 | 247 | 1.2 | % | ||||||
| Tax refund processing fees | 1,900 | 2,200 | ) | –13.6 | % | |||||
| Swap fees | 338 | 73 | 363.0 | % | ||||||
| Other | 334 | 218 | 53.2 | % | ||||||
| Total noninterest income | $ | 6,876 | $ | 6,284 | 9.4 | % |
All values are in US Dollars.
N/M - not meaningful
The increased gain on sale of loans is primarily due to an increase in volume of loans sold of $18.9 million as well as an increase in the premium on sold loans of 34 basis points. Wealth management fees increased due to an increase in assets under management as a result of new trust accounts and positive market conditions in late 2019 through February of this year. Swap fees increased as a result of the declining interest rate environment and more customers looking to lock in lower fixed rate loans. Tax refund processing fees decreased due to a decline in volume processed.
For the first quarter of 2020, noninterest expense totaled $17.9 million, an increase of $1.4 million, or 8.6%, compared to the prior year’s first quarter
| Noninterest expense<br> <br>(unaudited -<br>dollars in thousands) | Three months ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | change | % change | ||||||
| Compensation expense | $ | 10,871 | $ | 9,805 | 10.9 | % | |||
| Net occupancy and equipment | 1,482 | 1,503 | ) | –1.4 | % | ||||
| Contracted data processing | 450 | 419 | 7.4 | % | |||||
| Taxes and assessments | 579 | 593 | ) | –2.4 | % | ||||
| Professional services | 737 | 694 | 6.2 | % | |||||
| Amortization of intangible assets | 231 | 240 | ) | –3.8 | % | ||||
| ATM/Interchange expense | 447 | 378 | 18.3 | % | |||||
| Marketing | 356 | 340 | 4.7 | % | |||||
| Other | 2,703 | 2,477 | 9.1 | % | |||||
| Total noninterest expense | $ | 17,856 | $ | 16,449 | 8.6 | % |
All values are in US Dollars.
Compensation expense increased due to an increase in employees, annual pay increases and employee insurance. FTE employees increased by 22, or 5.1%, to 452 FTE. Annual pay increases in 2019 were an average of 3.3%. Employee insurance increased 9.1% for 2020.
The increases in ATM/Interchange expense is primarily due to increases in monthly processing fees and increases in monitoring software costs.
The increase in other operating expense is primarily due to increases in software maintenance of $89 thousand and an increase in bad check losses of $79 thousand.
The efficiency ratio was 60.7% for the quarter ended March 31, 2020 compared to 58.0% for the quarter ended March 31, 2019. The change in the efficiency ratio is due primarily to the increase in noninterest expense.
Civista’s effective income tax rate for the first quarter 2020 was 13.1% compared to 16.3% in 2019.
Balance Sheet
Total assets increased $266.3 million, or 11.5%, from December 31, 2019 to March 31, 2020, due to an increase in cash of $207.5 million, primarily related to the temporary impact of our tax refund processing program, as well as a $7.0 million increase in Investment securities and a $34.2 million increase in the loan portfolio.
| End of period loan balances<br> <br>(unaudited<br>- dollars in thousands) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2020 | December 31,<br>2019 | Change | % Change | ||||||
| Commercial and Agriculture | $ | 201,860 | $ | 203,110 | ) | –0.6 | % | ||
| Commercial Real Estate: | |||||||||
| Owner Occupied | 255,633 | 245,606 | 4.1 | % | |||||
| Non-owner Occupied | 616,192 | 592,222 | 4.0 | % | |||||
| Residential Real Estate | 458,478 | 463,032 | ) | –1.0 | % | ||||
| Real Estate Construction | 163,807 | 155,825 | 5.1 | % | |||||
| Farm Real Estate | 32,152 | 34,114 | ) | –5.8 | % | ||||
| Consumer and Other | 15,003 | 15,061 | ) | –0.4 | % | ||||
| Total Loans | $ | 1,743,125 | $ | 1,708,970 | 2.0 | % |
All values are in US Dollars.
Loan growth during 2020 totaled $34.2 million, led by increases of $34.0 million in Commercial Real Estate and $8.0 million in Real Estate Construction. The Commercial Real Estate growth was 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. The mild Midwest winter has also contributed to our growth in the Construction category. The decrease in Residential Real Estate was expected as we refinanced many on balance sheet mortgages into a saleable mortgage product. All regions contributed to the growth in the first quarter with some significant transactions originated outside of our core metro regions.
Paycheck Protection Program
We began accepting applications for the Small Business Association’s Paycheck Protection Program (“PPP”) on April 3, 2020 and have processed 1,271 loans totaling $186.6 million. We estimate the SBA fees to be approximately $7.0 million. We have submitted the documentation, which has been reviewed and approved, to borrow from the Paycheck Protection Program Lending Facility. We expect to match this funding with the volume of PPP loans outstanding.
“I am extremely proud of our people and our ability to assist customers through this program. While the parameters of PPP changed frequently, we were able to scale up and streamline our process to assist 1,271 small business customers with $186.6 million in loans, impacting approximately 26,500 jobs. This program will make a real difference in the businesses and lives of our customers and their employees.” said Dennis G. Shaffer, President and CEO of Civista.
COVID-19 Loan Modifications
During the first quarter, Civista modified 66 loans totaling $39.9 million, primarily consisting of the deferral of principal and/or interest payments. Since March 31, Civista has received requests to modify an additional 727 loans totaling $410.6 million, also consisting of deferral of principal and/or interest payments. All of the loans modified were performing at the time of the modification and comply with the provisions of the CARES Act to not be considered a troubled debt restructuring. Details with respect to actual loan modifications processed through March 31, 2020 are as follows:
| Loans modified under COVID-19 programs<br><br><br>(unaudited - dollars in thousands) | |||||||
|---|---|---|---|---|---|---|---|
| Type of Loan | Number of<br>Loans | Balance | Weighted<br>average<br>interest rate | ||||
| Commercial and Agriculture | 26 | $ | 5,449 | 4.65 | % | ||
| Commercial Real Estate: | |||||||
| Owner Occupied | 25 | 10,077 | 4.82 | % | |||
| Non-owner Occupied | 12 | 24,122 | 4.86 | % | |||
| Residential Real Estate | 2 | 184 | 4.91 | % | |||
| Farm Real Estate | 1 | 89 | 5.00 | % | |||
| 66 | $ | 39,921 | 4.82 | % |
“In addition to the loans we modified during the first quarter we are actively working with several of our customers to provide additional relief during these trying times.” said Dennis G. Shaffer, President and CEO of Civista.
Total deposits increased $313.2 million, or 18.7%, from December 31, 2019 to March 31, 2020.
| End of period deposit balances<br><br><br>(unaudited - dollars in thousands) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2020 | December 31,<br>2019 | Change | % Change | ||||||
| Noninterest-bearing demand | $ | 811,976 | $ | 512,553 | 58.4 | % | |||
| Interest-bearing demand | 332,756 | 301,674 | 10.3 | % | |||||
| Savings and money market | 558,936 | 588,697 | ) | –5.1 | % | ||||
| Time deposits | 288,271 | 275,840 | 4.5 | % | |||||
| Total Deposits | $ | 1,991,939 | $ | 1,678,764 | 18.7 | % |
All values are in US Dollars.
The increase in noninterest-bearing demand of $299.4 million was due to the increase in balances related to the tax refund processing program of $307.5 million, which is temporary. Interest-bearing demand deposits increased, primarily due to increases in public fund accounts. The increase in time deposits is centered on our special rate 9 month certificate.
FHLB advances totaled $142.0 million at March 31, 2020, a decrease of $84.5 million, or 37.3%, from December 31, 2019. The increase in deposits reduced the need for wholesale funding.
Stock Repurchase Program
Civista approved a share repurchase plan in December 2019, authorizing the repurchase of up to 672,000 shares of outstanding common stock. During the first quarter of 2020, Civista repurchased 646,703 shares for $11.0 million, which equates to a weighted average price of $17.01 per share. The repurchase plan was fully executed early in April.
Shareholder Equity
Total shareholders’ equity decreased $2.0 million, or 0.6%, from December 31, 2019 to March 31, 2020 as a result of the repurchase of shares. The $11.0 million decrease from stock repurchases was partially offset by a $6.0 million increase in retained earnings and an increase in other comprehensive income of $3.0 million.
Asset Quality
Civista recorded net recoveries of $55 thousand for the three months of 2020 compared to net recoveries of $143 thousand for the same period of 2019. The allowance for loan losses to loans was 0.97% at March 31, 2020 and 0.86% at December 31, 2019.
| Allowance for Loan Losses<br> <br>(unaudited -<br>dollars in thousands) | ||||||
|---|---|---|---|---|---|---|
| March 31,<br>2020 | March 31,<br>2019 | |||||
| Beginning of period | $ | 14,767 | $ | 13,679 | ||
| Charge-offs | (24 | ) | (239 | ) | ||
| Recoveries | 79 | 382 | ||||
| Provision | 2,126 | — | ||||
| End of period | $ | 16,948 | $ | 13,822 |
Non-performing assets at March 31, 2020 were $8.6 million, a 6.1% decrease from December 31, 2019. The non-performing assets to assets ratio decreased to 0.33% from 0.39% at December 31, 2019. The allowance for loan losses to non-performing loans increased to 197.97% from 161.95% At December 31, 2019.
| Non-performing Assets<br><br><br>(unaudited - dollars in thousands) | March 31,<br>2020 | December 31,<br>2019 | ||
|---|---|---|---|---|
| Non-accrual loans | $ | 6,072 | $ | 6,115 |
| Restructured loans | 2,489 | 3,004 | ||
| Total non-performing loans | 8,561 | 9,119 | ||
| Other Real Estate Owned | — | — | ||
| Total non-performing assets | $ | 8,561 | $ | 9,119 |
Conference Call and Webcast
Civista Bancshares, Inc. will also host a conference call to discuss the Company’s financial results for the first quarter of 2020 at 1:00 p.m. ET on Friday, April 24, 2020. 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. first quarter 2020 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 Statements
This 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, 2019. 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 $2.6 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 HUwww.civb.comUH. The Company’s common shares are traded on the NASDAQ Capital Market under the symbol “CIVB”.
For additional information, contact:
Dennis G. Shaffer
President and CEO
Civista Bancshares, Inc.
888-645-4121
Civista Bancshares, Inc.
Financial Highlights
(dollars in thousands, except share and per share amounts)
Consolidated Condensed Statement of Operations
| Three Months Ended<br><br><br>March 31,<br> <br>(unaudited) | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Interest and dividend income | $ | 25,002 | $ | 24,584 | ||
| Interest expense | 2,887 | 2,865 | ||||
| Net interest income | 22,115 | 21,719 | ||||
| Provision for loan losses | 2,126 | — | ||||
| Net interest income after provision | 19,989 | 21,719 | ||||
| Noninterest income | 6,876 | 6,284 | ||||
| Noninterest expense | 17,856 | 16,449 | ||||
| Income before taxes | 9,009 | 11,554 | ||||
| Income tax expense | 1,176 | 1,885 | ||||
| Net income | 7,833 | 9,669 | ||||
| Preferred stock dividends | — | 164 | ||||
| Net income available to common shareholders | $ | 7,833 | $ | 9,505 | ||
| Dividends per common share | $ | 0.11 | $ | 0.09 | ||
| Earnings per common share, | ||||||
| basic | $ | 0.47 | $ | 0.61 | ||
| diluted | $ | 0.47 | $ | 0.57 | ||
| Average shares outstanding, | ||||||
| basic | 16,517,745 | 15,607,655 | ||||
| diluted | 16,517,745 | 16,901,830 | ||||
| Selected financial ratios: | ||||||
| Return on average assets | 1.22 | % | 1.72 | % | ||
| Return on average equity | 9.47 | % | 13.00 | % | ||
| Dividend payout ratio | 23.20 | % | 14.53 | % | ||
| Net interest margin (tax equivalent) | 4.10 | % | 4.45 | % |
Selected Balance Sheet Items
| March 31,<br>2020 | December 31,<br>2019 | |||||
|---|---|---|---|---|---|---|
| (unaudited) | (unaudited) | |||||
| Cash and due from financial institutions | $ | 256,023 | $ | 48,535 | ||
| Investment securities | 366,689 | 359,690 | ||||
| Loans held for sale | 7,632 | 2,285 | ||||
| Loans | 1,743,125 | 1,708,970 | ||||
| Less allowance for loan losses | 16,948 | 14,767 | ||||
| Net loans | 1,726,177 | 1,694,203 | ||||
| Other securities | 20,280 | 20,280 | ||||
| Premises and equipment, net | 22,443 | 22,871 | ||||
| Goodwill and other intangibles | 84,919 | 85,156 | ||||
| Bank owned life insurance | 45,249 | 44,999 | ||||
| Other assets | 46,444 | 31,538 | ||||
| Total assets | $ | 2,575,856 | $ | 2,309,557 | ||
| Total deposits | $ | 1,991,939 | $ | 1,678,764 | ||
| Federal Home Loan Bank advances | 142,000 | 226,500 | ||||
| Securities sold under agreements to repurchase | 22,699 | 18,674 | ||||
| Subordinated debentures | 29,427 | 29,427 | ||||
| Accrued expenses and other liabilities | 61,624 | 26,066 | ||||
| Total shareholders’ equity | 328,167 | 330,126 | ||||
| Total liabilities and shareholders’ equity | $ | 2,575,856 | $ | 2,309,557 | ||
| Shares outstanding at period end | 16,064,010 | 16,687,542 | ||||
| Book value per share | $ | 20.43 | $ | 19.78 | ||
| Equity to asset ratio | 12.74 | % | 14.29 | % | ||
| Selected asset quality ratios: | ||||||
| Allowance for loan losses to total loans | 0.97 | % | 0.86 | % | ||
| Non-performing assets to total assets | 0.33 | % | 0.39 | % | ||
| Allowance for loan losses to non-performing loans | 197.97 | % | 161.95 | % | ||
| Non-performing asset analysis | ||||||
| Nonaccrual loans | $ | 6,072 | $ | 6,115 | ||
| Troubled debt restructurings | 2,489 | 3,004 | ||||
| Other real estate owned | — | — | ||||
| Total | $ | 8,561 | $ | 9,119 |
Supplemental Financial Information
(Unaudited - Dollars in thousands except share data)
| End of Period Balances | March 31,<br>2020 | December 31,<br>2019 | September 30,<br>2019 | June 30,<br>2019 | March 31,<br>2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | |||||||||||||||
| Cash and due from banks | $ | 256,023 | $ | 48,535 | $ | 62,219 | $ | 49,839 | $ | 164,094 | |||||
| Investment securities | 366,689 | 359,690 | 356,439 | 360,512 | 351,006 | ||||||||||
| Loans held for sale | 7,632 | 2,285 | 8,983 | 2,563 | 1,444 | ||||||||||
| Loans | 1,743,125 | 1,708,970 | 1,648,640 | 1,598,770 | 1,573,193 | ||||||||||
| Allowance for loan losses | (16,948 | ) | (14,767 | ) | (14,144 | ) | (13,786 | ) | (13,822 | ) | |||||
| Net Loans | 1,726,177 | 1,694,203 | 1,634,496 | 1,584,984 | 1,559,371 | ||||||||||
| Other securities | 20,280 | 20,280 | 20,280 | 20,280 | 20,280 | ||||||||||
| Premises and equipment, net | 22,443 | 22,871 | 22,201 | 21,720 | 21,772 | ||||||||||
| Goodwill and other intangibles | 84,919 | 85,156 | 85,461 | 85,706 | 85,955 | ||||||||||
| Bank owned life insurance | 45,249 | 44,999 | 44,745 | 44,491 | 44,239 | ||||||||||
| Other assets | 46,444 | 31,538 | 34,241 | 32,900 | 29,541 | ||||||||||
| Total Assets | $ | 2,575,856 | $ | 2,309,557 | $ | 2,269,065 | $ | 2,202,995 | $ | 2,277,702 | |||||
| Liabilities | |||||||||||||||
| Total deposits | $ | 1,991,939 | $ | 1,678,764 | $ | 1,632,621 | $ | 1,632,720 | $ | 1,765,801 | |||||
| Federal Home Loan Bank advances | 142,000 | 226,500 | 236,100 | 176,300 | 127,100 | ||||||||||
| Securities sold under agreement to repurchase | 22,699 | 18,674 | 15,088 | 15,554 | 21,970 | ||||||||||
| Subordinated debentures | 29,427 | 29,427 | 29,427 | 29,427 | 29,427 | ||||||||||
| Accrued expenses and other liabilities | 61,624 | 26,066 | 26,566 | 24,782 | 21,347 | ||||||||||
| Total liabilities | 2,247,689 | 1,979,431 | 1,939,802 | 1,878,783 | 1,965,645 | ||||||||||
| Shareholders’ Equity | |||||||||||||||
| Preferred shares, Series B | — | — | 9,158 | 9,364 | 9,364 | ||||||||||
| Common shares | 276,546 | 276,422 | 267,559 | 267,275 | 266,990 | ||||||||||
| Retained earnings | 73,972 | 67,974 | 62,023 | 56,199 | 49,421 | ||||||||||
| Treasury shares | (32,239 | ) | (21,144 | ) | (21,144 | ) | (17,235 | ) | (17,235 | ) | |||||
| Accumulated other comprehensive income | 9,888 | 6,874 | 11,667 | 8,609 | 3,517 | ||||||||||
| Total shareholders’ equity | 328,167 | 330,126 | 329,263 | 324,212 | 312,057 | ||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 2,575,856 | $ | 2,309,557 | $ | 2,269,065 | $ | 2,202,995 | $ | 2,277,702 | |||||
| Quarterly Average Balances | |||||||||||||||
| Assets: | |||||||||||||||
| Earning assets | $ | 2,232,168 | $ | 2,070,175 | $ | 2,021,780 | $ | 1,986,841 | $ | 2,017,523 | |||||
| Securities | 385,187 | 372,639 | 379,525 | 373,999 | 365,219 | ||||||||||
| Loans | 1,725,685 | 1,676,769 | 1,626,010 | 1,583,533 | 1,564,208 | ||||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||||
| Total deposits | $ | 1,975,133 | $ | 1,661,452 | $ | 1,622,527 | $ | 1,670,247 | $ | 1,807,102 | |||||
| Interest-bearing deposits | 1,175,593 | 1,160,499 | 1,139,632 | 1,129,964 | 1,126,173 | ||||||||||
| Other interest-bearing liabilities | 209,909 | 252,908 | 246,235 | 186,140 | 148,891 | ||||||||||
| Total shareholders’ equity | 332,602 | 329,634 | 326,103 | 315,438 | 301,656 |
Supplemental Financial Information
(Unaudited - Dollars in thousands except share data)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income statement | March 31,<br>2020 | December 31,<br>2019 | September 30,<br>2019 | June 30,<br>2019 | March 31,<br>2019 | ||||||||||
| Total interest and dividend income | $ | 25,002 | $ | 24,521 | $ | 24,023 | $ | 24,926 | $ | 24,584 | |||||
| Total interest expense | 2,887 | 3,299 | 3,605 | 3,184 | 2,865 | ||||||||||
| Net interest income | 22,115 | 21,222 | 20,418 | 21,742 | 21,719 | ||||||||||
| Provision for loan losses | 2,126 | 885 | 150 | — | — | ||||||||||
| Noninterest income | 6,876 | 5,627 | 5,429 | 5,104 | 6,284 | ||||||||||
| Noninterest expense | 17,856 | 17,128 | 16,731 | 16,639 | 16,449 | ||||||||||
| Income before taxes | 9,009 | 8,836 | 8,966 | 10,207 | 11,554 | ||||||||||
| Income tax expense | 1,176 | 995 | 1,258 | 1,546 | 1,885 | ||||||||||
| Net income | 7,833 | 7,841 | 7,708 | 8,661 | 9,669 | ||||||||||
| Preferred stock dividends | — | 157 | 162 | 164 | 164 | ||||||||||
| Net income available to common shareholders | $ | 7,833 | $ | 7,684 | $ | 7,546 | $ | 8,497 | $ | 9,505 | |||||
| Common shares dividend paid | $ | 1,835 | $ | 1,702 | $ | 1,722 | $ | 1,719 | $ | 1,404 | |||||
| Per share data | |||||||||||||||
| Basic earnings per common share | $ | 0.47 | $ | 0.49 | $ | 0.48 | $ | 0.54 | $ | 0.61 | |||||
| Diluted earnings per common share | 0.47 | 0.47 | 0.46 | 0.51 | 0.57 | ||||||||||
| Dividends per common share | 0.11 | 0.11 | 0.11 | 0.11 | 0.09 | ||||||||||
| Average common shares outstanding - basic | 16,517,745 | 15,796,713 | 15,577,371 | 15,628,537 | 15,607,655 | ||||||||||
| Average common shares outstanding - diluted | 16,517,745 | 16,734,391 | 16,849,887 | 16,922,712 | 16,901,830 | ||||||||||
| Asset quality | |||||||||||||||
| Allowance for loan losses, beginning of period | $ | 14,767 | $ | 14,144 | $ | 13,786 | $ | 13,822 | $ | 13,679 | |||||
| Charge-offs | (24 | ) | (345 | ) | (36 | ) | (156 | ) | (239 | ) | |||||
| Recoveries | 79 | 83 | 244 | 120 | 382 | ||||||||||
| Provision | 2,126 | 885 | 150 | — | — | ||||||||||
| Allowance for loan losses, end of period | $ | 16,948 | $ | 14,767 | $ | 14,144 | $ | 13,786 | $ | 13,822 | |||||
| Ratios | |||||||||||||||
| Allowance to total loans | 0.97 | % | 0.86 | % | 0.86 | % | 0.86 | % | 0.88 | % | |||||
| Allowance to nonperforming assets | 197.97 | % | 161.95 | % | 149.91 | % | 164.69 | % | 150.60 | % | |||||
| Allowance to nonperforming loans | 197.97 | % | 161.95 | % | 149.91 | % | 164.69 | % | 150.60 | % | |||||
| Nonperforming assets | |||||||||||||||
| Nonperforming loans | $ | 8,561 | $ | 9,119 | $ | 9,435 | $ | 8,371 | $ | 9,178 | |||||
| Other real estate owned | — | — | — | — | — | ||||||||||
| Total nonperforming assets | $ | 8,561 | $ | 9,119 | $ | 9,435 | $ | 8,371 | $ | 9,178 | |||||
| Capital and liquidity | |||||||||||||||
| Tier 1 leverage ratio | 10.66 | % | 12.35 | % | 12.37 | % | 12.44 | % | 11.64 | % | |||||
| Tier 1 risk-based capital ratio | 14.33 | % | 15.26 | % | 15.50 | % | 15.94 | % | 15.64 | % | |||||
| Total risk-based capital ratio | 15.25 | % | 16.10 | % | 16.32 | % | 16.78 | % | 16.48 | % | |||||
| Tangible common equity ratio ^(1)^ | 9.82 | % | 11.08 | % | 10.81 | % | 10.89 | % | 9.96 | % | |||||
| (1) | See reconciliation of non-GAAP measures at the end of this press release. | ||||||||||||||
| --- | --- |
Reconciliation of Non-GAAP Financial Measures
(Unaudited - Dollars in thousands except share data)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2020 | December 31,<br>2019 | September 30,<br>2019 | June 30,<br>2019 | March 31,<br>2019 | |||||||||||
| Tangible Common Equity | |||||||||||||||
| Total Shareholder’s Equity - GAAP | $ | 328,167 | $ | 330,126 | $ | 329,263 | $ | 324,212 | $ | 312,057 | |||||
| Less: Preferred Equity | — | — | 9,158 | 9,364 | 9,364 | ||||||||||
| Less: Goodwill and intangible assets | 83,363 | 83,595 | 83,829 | 84,064 | 84,299 | ||||||||||
| Tangible common equity (Non-GAAP) | $ | 244,804 | $ | 246,531 | $ | 236,276 | $ | 230,784 | $ | 218,394 | |||||
| Total Shares Outstanding | 16,064,010 | 16,687,542 | 15,473,275 | 15,633,059 | 15,624,113 | ||||||||||
| Tangible book value per share | $ | 15.24 | $ | 14.77 | $ | 15.27 | $ | 14.76 | $ | 13.98 | |||||
| Tangible Assets | |||||||||||||||
| Total Assets - GAAP | $ | 2,575,856 | $ | 2,309,557 | $ | 2,269,065 | $ | 2,202,995 | $ | 2,277,702 | |||||
| Less: Goodwill and intangible assets | 83,363 | 83,595 | 83,829 | 84,064 | 84,299 | ||||||||||
| Tangible assets (Non-GAAP) | $ | 2,492,493 | $ | 2,225,962 | $ | 2,185,236 | $ | 2,118,931 | $ | 2,193,403 | |||||
| Tangible common equity to tangible assets | 9.82 | % | 11.08 | % | 10.81 | % | 10.89 | % | 9.96 | % |