Civista Bancshares Inc., the holding company of Civitsta Bank, reported a profit of $4.3 million, or $0.43 per diluted share, for the first quarter of 2016, compared with $2.8 million, or $0.29 per diluted share, for the prior year period.
Civista is the eighth largest bank in Crawford County with an office in New Washington. Headquartered in Sandusky, the bank operates 28 locations in North Central, West Central and Southwestern Ohio.
“We increased our first quarter 2016 diluted earnings per share by 48 percent over the same quarter in 2015. We have also seen the impact of organic and acquisitive growth now that a year has passed since the Dayton acquisition. We have improved noninterest income, primarily due to the large portion of the tax refund processing fees in the first quarter. At the same time, noninterest expenses have increased modestly, largely attributable to growth and the merger,” said James O. Miller, chairman, president and chief executive officer of Civista, in a statement.
Net interest income for the first quarter of 2016 increased $1.3 million, or 12.1 percent compared with the same period of 2015. The increase in net interest income for the quarter was due both to an increase in average loans outstanding as well as a decrease in cost of funds. Tax equivalent net interest margin was 3.53 percent for the first quarter, compared with 3.65 percent for the same period a year ago. Net interest margin was reduced in both periods due to the impact of additional interest-earning cash on deposit related to the tax refund processing program. Average cash related to the tax refund processing program in the first quarter 2016 and 2015 was $216 million and $111 million, respectively. The reduction to net interest margin was 54 basis points in 2016 and 34 basis points in 2015.
“Our net interest margin is consistently lower in the first quarter due to the amount of cash the tax refund processing program generates. In spite of the current rate environment, we have maintained a strong core net interest margin, kept our asset duration under two years and have not diluted our lending standards,” Miller said.
Salaries, wages and benefits expense increased $425 thousand for the first quarter of 2016 compared with the same period of 2015. The increase in salaries, wages and benefits expense was primarily due to the addition of TCNB employees, as well as normal merit increases.
The efficiency ratio improved to 60.1 percent in the first quarter of 2016 compared with 66.9 percent for the first quarter of 2015. The improvement in the efficiency ratio is due to the increase in net interest income, as well as the increase in noninterest income, partially offset by a modest increase in noninterest expense.
“While we have had success increasing revenues, the success we have had in minimizing costs is also important in our increase in net income. We added three offices in the acquisition of TCNB, added loans and increased mortgage production. At the same time we were successful in limiting the increase of costs to less than 3 percent,” Miller said.
