Civista Bancshares (NASDAQ:CIVB) reported first quarter 2026 net income of $15.0 million, or $0.72 per diluted share, representing a $4.8 million, or 47%, increase from the first quarter of 2025 and a $2.7 million, or 22%, increase from the prior quarter. President and CEO Dennis Shaffer said the quarter also produced a $3.8 million, or 29%, year-over-year increase in pre-provision net revenue, and a $3.2 million, or 3.8%, sequential increase.
Management pointed to several quarterly highlights, including the completion of the core system conversion for Farmers Savings Bank, acquired in the fourth quarter of 2025. Shaffer said the first quarter included what should be the “last expenses associated with the acquisition,” with one-time costs reducing net income by approximately $400,000, or $0.02 per share.
Net interest margin expands as funding costs fall
Funding costs declined, with cost of funds at 1.96%, down 35 basis points year-over-year and 12 basis points from the linked quarter. Cost of deposits was 1.81%, down 19 basis points from the prior year and 11 basis points sequentially. Shaffer attributed much of the improvement to the repricing and reduction of brokered CDs: $125 million in brokered CDs that matured in late December carried a weighted average rate of 4.23%, which Civista replaced and reduced with $100 million of brokered CDs at a weighted average rate of 3.87%.
Net interest income totaled $37.8 million, up $5.1 million, or 15%, from the year-ago quarter and up $1.4 million, or 4%, from the prior quarter. Shaffer noted that loan balances declined, but said loan production was strong and was offset by significant payoffs.
Loan production strong, but payoffs weigh on balances
Shaffer said Civista originated $214 million of new loans in the first quarter, offset by $83 million in early payoffs plus normal principal amortization. He described the payoffs as “good payoffs,” tied to successful real estate projects sold or moved to the permanent market, as well as some operating companies sold during the quarter that paid off their loans.
Management highlighted improving momentum through the quarter, with loan production rising from $49 million in January to $59 million in February and $106 million in March. New and renewed commercial loans were originated at an average rate of 6.52%, while leases were originated at an average rate of 9.03%. Undrawn construction lines were $175 million at quarter-end, up from $161 million at year-end.
Asked about confidence in returning to mid-single-digit loan growth after elevated payoffs, EVP and bank President Charles Parcher said the company closely monitors large payoffs and still expects some growth in the second quarter. Parcher cited a commercial pipeline that was “twice as large as the pipeline was at the same time last year” and higher undrawn construction funds, supporting Civista’s outlook for mid-single-digit loan growth for the remainder of 2026.
The company ended the quarter with a 92% loan-to-deposit ratio. Shaffer also noted office loans represented 4.7% of the total portfolio and said those exposures are “predominantly secured by single or two-story offices located outside of central business districts.” Civista reported a CRE to risk-based capital ratio of 261% at March 31, 2026, and said it continues to diversify given its non-owner-occupied CRE concentration.
Deposit growth supports continued brokered reduction
Total deposits increased $35.4 million, or an annualized 4% growth rate, but the company emphasized stronger organic results excluding brokered deposits. Shaffer said core deposits grew $60.4 million, or 8% for the quarter, allowing Civista to reduce brokered deposits by $25 million. He said it marked the sixth consecutive quarter of reducing brokered funding.
Shaffer described the deposit base as granular, with an average deposit account (excluding CDs) of approximately $28,000. He said that aside from $523 million in public funds—primarily operating accounts with municipalities—there were no deposit concentrations at quarter-end. Growth was said to be driven largely by interest-bearing demand accounts as well as savings and money market accounts.
On the competitive environment, Parcher told analysts deposit pricing pressure has been “almost equally intense across almost all of our…major metro markets,” with somewhat more pressure in Columbus. He said Civista remained comfortable with its pricing and pointed to deposit growth as evidence it is holding its own.
In response to a question about digital channels, Shaffer said technology investments are “aimed at making it easier to do business with us,” including online account opening, but he also credited “disruption within our marketplace” in Ohio as a key driver of organic growth.
Non-interest income up year-over-year; expense outlook includes reinvestment
Non-interest income declined $453,000, or 4.6%, from the linked quarter, which Shaffer attributed mainly to a $336,000 decline in card fees following typical holiday-related spending. Compared to the first quarter of 2025, non-interest income increased $1.6 million, or 20%, driven by a $190,000 increase in service charges, a $1.0 million increase in net gains on loan and lease sales, and a $444,000 increase in other income related to insurance subsidiary reserves for claims that did not materialize.
Non-interest expense fell $1.1 million, or 3.6%, sequentially but rose $2.7 million, or 10%, year-over-year. Shaffer said the sequential decline reflected a commission accrual adjustment recorded in the fourth quarter of 2025, while the year-over-year increase was driven largely by a $2.2 million rise in compensation tied to salaries, commissions, and medical expenses. Average full-time equivalent employees rose to 535 from 520, with part of the increase coming from the Farmers acquisition. Shaffer said the efficiency ratio improved to 60.1% from 64.9% a year earlier, and the effective tax rate was 16.8%.
During the Q&A, CFO Ian Whinnem said that excluding non-recurring items, expenses in the first quarter included some duplicative operating costs tied to running two cores before conversion, plus reinvestment in revenue-generating hires, marketing, and technology improvements. He said management anticipates a second-quarter core expense level of “2.95%-3.0%,” with an expected increase to “3.0%-3.07%” in the third and fourth quarters.
Capital actions, credit metrics, and margin outlook
Civista announced a quarterly dividend of $0.18 per share, consistent with the prior dividend, and renewed its stock repurchase program authorizing up to $25 million in buybacks. Shaffer said the dividend equated to an annualized yield of 3.16% based on a $22.79 quarter-end closing price and reflected a payout ratio of 25%. While Civista has not repurchased shares in recent quarters, management said it continues to evaluate opportunities and views the stock as “at value.”
On credit, Shaffer said the company recorded a $768,000 credit to provision and net charge-offs of $716,000. The allowance for credit losses was 1.26% of total loans at March 31, 2026, compared with 1.28% at year-end, and allowance coverage of non-performing loans was 135%, essentially unchanged. Chief Credit Officer Mike Mulford told analysts the bank is not seeing market- or industry-specific issues that would prompt pullbacks.
Looking ahead, Whinnem said the company expects the net interest margin to be “flat to maybe a little bit of expansion, 1-2 basis points” in the second quarter, moving into the “mid- to upper 380s” and then leveling out in the “high 380s” in the third quarter and beyond, assuming no rate cuts. Shaffer added that about $60 million of loans will reprice in the second quarter and roughly $140 million after that for the remainder of the year, with some loans potentially moving from the “4.75% range” to around 6% if repriced at current levels.
Shaffer closed the call by saying management was “very pleased” with margin expansion, diversified non-interest income, and expense control, while continuing to attract lower-cost funding and reduce reliance on brokered deposits. “Overall, 2026 is off to a good start,” he said, adding that the company remains focused on creating shareholder value.
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.
