Filing summary
Entity and period: The supplied filing is First Citizens Banc Corp’s unaudited Form 10-Q for the quarter ended September 30, 2011, not a filing identified as Civista Bancshares, Inc. This entity mismatch should be verified before relying on the figures. Unless stated otherwise, dollar amounts below are in millions; the filing reports amounts in thousands.
Financial results and position
| Metric | Q3 2011 | Nine months 2011 | Comparable 2010 |
|---|---|---|---|
| Net interest income | $10.439 | $30.964 | $10.450 Q3; $31.091 YTD |
| Provision for loan losses | $2.000 | $7.700 | $6.100 Q3; $14.440 YTD |
| Noninterest income | $2.664 | $7.858 | $2.520 Q3; $7.268 YTD |
| Noninterest expense | $9.599 | $28.269 | $9.266 Q3; $27.254 YTD |
| Net income (loss) | $1.193 | $2.469 | $(1.393) Q3; $(1.616) YTD |
| Income available to common shareholders | $0.900 | $1.588 | $(1.682) Q3; $(2.483) YTD |
| EPS, basic and diluted | $0.12 | $0.21 | $(0.22) Q3; $(0.32) YTD |
- Net interest margin was 3.93% in Q3 versus 3.95% a year earlier, and 3.91% YTD versus 3.96%.
- At September 30, total assets were $1,145.185, up 4.0% from year-end 2010; net loans were $755.564, up 1.3%; deposits were $911.762, up $19.299; and shareholders’ equity was $102.536, or 9.0% of assets.
- Cash and due from financial institutions totaled $85.749. For the nine months, operating cash flow was $12.977, investing cash flow was $(42.436), and financing cash flow was $36.178; cash increased $6.719.
- Borrowings included $70.303 of FHLB advances, $29.427 of subordinated debentures, $19.283 of repurchase agreements, and $2.339 due on a U.S. Treasury demand note. FHLB credit availability was $104.961, of which $70.303 was outstanding. Net loan-to-deposit ratio was 82.9%.
- Regulatory capital ratios at September 30 were 15.1% total risk-based, 13.3% Tier 1 risk-based, and 8.9% leverage; the filing states each exceeded applicable minimums.
Changes and credit quality
- Results turned profitable versus losses in Q3 and the first nine months of 2010. The largest contributor was a lower loan-loss provision; YTD provision fell by $6.740. Net interest income was nearly flat, while YTD noninterest income rose 8.1% and noninterest expense rose $1.015.
- Commercial real estate loans increased $23.480 from year-end; residential mortgage loans declined $12.626. Management attributed mortgage and construction loan weakness partly to local economic conditions, high unemployment, and a strategy of originating and selling most mortgage loans.
- The allowance for loan losses was $22.687, or 2.92% of total loans, versus 2.84% at year-end. YTD net charge-offs were $6.781 versus $8.111 in 2010. Management considered the allowance adequate, while noting continued stress from the local economy.
- Nonaccrual loans were $24.986 versus $22.175 at year-end; total past-due loans were $10.614. The filing reports nonperforming loans increased by $1.946 overall. Substandard graded loans totaled $70.409, and one residential mortgage TDR of $0.143 was recorded YTD; no recent TDR modifications defaulted during the period.
Management commentary, outlook, and risks
- No quantified earnings or financial guidance is provided. Management’s forward-looking statements are subject to regional and national economic conditions, interest-rate movements, credit risks, regulatory and accounting changes, client financial condition, and FDIC assessments.
- Management cited lower FHLB funding costs, higher trust fees, and income from bank-owned life insurance (BOLI) as factors supporting results. BOLI increased by $5.477 after a $5.000 purchase and contributed $0.477 to YTD noninterest income. Other YTD income included fees from a tax-refund facilitation program; the filing does not clearly quantify that program’s contribution.
- Salary and employee costs rose 12.6% YTD, mainly from increased credit and special-assets staffing and higher commissions; full-time-equivalent employees increased by 8.7 to 303.3. Management also reported reduced professional-service costs and FDIC assessments.
- Interest-rate risk is the principal market risk. The filing’s sensitivity analysis indicates net portfolio value declined under hypothetical rate increases and rose under a 100-basis-point decrease. The table’s date headings are internally unclear, so the specific comparison should be checked in the original filing. The company reported no derivatives and no near-term intention to use them.
- The company paid no common dividends; it paid approximately $0.290 quarterly on Treasury preferred shares. The preferred stock carries a 5% annual dividend rate for its first five years, rising to 9% thereafter under the described CPP terms.
- No new material legal proceedings or material risk-factor changes were reported. Management concluded disclosure controls were effective and reported no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Confirm the registrant: the filing names First Citizens Banc Corp, while the request identifies Civista Bancshares, Inc.
- Review the original filing’s credit-quality disclosures, including the nonperforming-loan change, nonaccrual balances, and allowance methodology; management adjusted certain beginning portfolio-segment balances to align with its revised analysis.
- Check the date labels and assumptions in the interest-rate sensitivity table, which appear unclear in the supplied text.
- Assess whether lower loan-loss provisioning is sustainable given rising nonaccrual balances, local economic exposure, and real-estate concentration.
- Evaluate the earnings contribution and durability of the tax-refund facilitation fees, BOLI income, and securities-related unrealized gains; comprehensive income included substantial unrealized securities gains.