Civista Bancshares (CIVB) 29 Oct 242024 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Civista Bancshares, Inc.

Third Quarter 2024 Earnings Call. [Operator Instructions].

Before we begin, I would like to remind you that this conference call may contain forward-looking statements with respect to the future performance and financial condition of Civista Bancshares, Inc. that involve risks and uncertainties. actual expressed be forward-looking or cause any different statements. could results future implied factors results materially to from Various by such are These SEC website. in discussed available which factors company's on the the are filings, company's company during call. made The forward-looking the any update obligation any disclaims statements to

any as information but measures. conclusion the measures. company's Bancshares Additionally, may recorded available to team quantitative remarks, The reconciliation as questions and website of also on the the supplement, press contains take the Mr. today non-GAAP Civista to of the most This other are and intended you GAAP measures, release, be non-GAAP and may on management the be call substitute management which directly website he will have. well financial to to At refer discussed not Shaffer's to comparable at GAAP www.civb.com. Civista made will available

to turn I Shaffer. call Mr. over Now, the will

third Financial quarter like and $X.XX Rich company our quarter Operating SVP decline or a over the of you call. net the million increase income reported is share, of $X we of and our quarter of CEO third Whinnem, third members joined company the would in of million a XXXX million executive and This Dennis and diluted Chief $X.X $X.X SVP company morning, the the Parcher, team. This of XX% which Officer joining SVP for for bank; and Officer the for and bank; linked XXXX. our from by or today the and I of President other Chief per afternoon. quarter Officer represents I'm the Lending of Good Chuck Shaffer, us Civista to Dutton, earnings of Chief bank; Ian Bancshares, thank

We with are our results. pleased

replace well changes tax calls, with way a in processor is as we process the revenue we Civista for as for previous of as overdraft look refund mentioned relationship our I year income transition and the charge during to from As this exited the items.

noninterest-bearing the Exiting that former of relationship, tax relationship In our addition, processing over and customer. coupled growth with our with a greater on growth in we interest This byproduct are margin, funding was this replace reliance reliance had we pressure our funding. wholesale strong has years loan put flat to a last resulted has deposit net address. to refund taking several the on which steps

taking impact loan While continues loan be pricing, a approach demand and our our strong our and each which in of growth. are slowing markets, lease in intended the to had of loan lease we disciplined has

of call, slowed to quarter, Our update lease rate core XXX% X June loan a purchase our XX% growth with outcomes at and portfolio X,XXX of X% gather like the Ohio to our we helping of a new aimed during We discussed successful deposit for were program, our last Homebuyer combined deposit Ohio's the XX. when accounts compared number residents I new and during in our at loan-to-deposit efforts initiatives ratio the opening at on would successful to lowered an September to XX, Plus funding, save annualized State provide to which home. quarter. Through an of the during

program, State $XXX million of In of outside moving money were received deposits of to in as $XX.X into we balances the were formerly new bank, basis the cost result deposits to a million Ohio addition a in XX points. management with account XX% at customer held this a the cash which wealth successful in were from million of approximately clients Civista. also bank in our We market of $XX that

continue other remain had these to deposit X be a the the compared interest disciplined or million, income during of quarter. and rate entire reported by cycle. We quarter. growth have the raised linked which and $XX.X through net $XX to for pricing In our deposits million interest of Currently, ability million I to we both of in quarter organic X.X% from addition $X.X encouraged initiatives, our deposits number to represents we this initiatives our of loans underway, an increase

overall our funding expanding points our our unchanged This was at assets quarter. earning our While X.XX%, to of X increased linked X.XX%. resulted to basis points in basis compared yield by X X.XX% cost margin on to by

$XXX of margin second approximately over CDs few our that one next continue a matured out the last over quarter brokered rate with next we will blended rate able the in with While a of a at XX savings to also had points. believe not X.XX% were quarter the the and We do to point X.XX%. we is trend, quarters. that of of troughed them basis half CDs expand million months XXX laddered a that during will in October, I carried that replace

at end that noticed will rate the X.XX% lower a at We a that month, the you this anticipate million at of $XXX CDs brokered we many $XXX filed fourth a offering. of also of shelf mature replacing have cost.  Earlier another that quarter we of million

the that plans have preceding in the place it having us offering, a our immediate as we believe we to shelf prudent maintain is yesterday, and company. we to use the affords shelf While offering manage no expired flexibility offering

Street of also to the scheduled Ohio, branch We our Perry is recently Napoleon, in which early located closure in close announced December.

to XXXX. closure in of in annually this result beginning expect We savings $XXX,XXX

no this represents the proximity October price XX locations, other we of deposits. X a change dividend per do XX.X% share a $XX.XX, a Napoleon Given the dividend announced for any of branch quarter. Friday, we payout ratio anticipate not from our which $X.XX prior on Last and X.XX% yield quarter. our third losing of quarterly Based the of share, is

and million of $XXX,XXX quarter, lease decline primary the or quarter increased or $X.X a from During quarter, revenue from of from and $X.X The X.X% non-interest million fees. decline linked third our the in quarter was XX.X% the income linked XXXX. the driver decreased residual

predictable loans and particularly banking leases, less This death is fees, on a was insurance traditional on receipt fees. mortgage the are of $XXX,XXX gain residual than $XXX,XXX with offset quarter. in lease a income on a of for life were receipt and learning, prior partially year's the $XXX,XXX third a increase benefit leases, the employee. increase sale the during decline the $XXX,XXX from former a The policy employee held on held insurance of a policy life more by increase As we in quarter primary drivers former and mortgage death in from income, a and loans of residual $XXX,XXX benefit sale the increase the revenue leasing a and gains

relationship our of in X.X% of represents or non-interest to focus in is replace processing million overdraft, the lost as an onetime income quarter increased expense fee service and in our entering leases, an on XXXX every year. deposit mortgage yield received noninterest managed loans nearly that elimination and of a revenue increasing decline particularly category income. This residual fee and increasing through expense. expense sale continued by to new and Non-interest the customers, year-to-date of charges, given we've the on proud for the increased $XX the new debit for from adding gains lease brand in X.X% the improvement control revenue $X.X We in linked our nearly quarter year, the income are of particularly million $XXX,XXX related to reduction bonus comparison the we prior fact impressive agreement. tax This

of our automation the currently are systems. and We being will tasks to will in this currently systems number process a lease only are consolidate accounting a of we introduce Not converting of performed. servicing it manually number using,

still are As that part of the we identified process, conversion we investigating. reconciling a item

we continue information, is Although other believe we gather a an it's expense. in noninterest against account, which $XXX,XXX prudent to to establish reserve suspense included

fourth Year-to-date, million be or our noninterest the during over completed conversion We X.X% prior $X.X expense year. quarter. the expect to the increased

due other increases, increased over Our the payroll expenses. year merit and prior compensation expense related million to $X.X insurance

was And increases related to depreciation mitigate which new operating software due existing costs equipment included equipment were depreciation. well $XXX,XXX with our ability by to software associated in as up software contracts contracts. contracts, in expense lease at improving offset increases maintenance decline fraud and to is to These we partially related aimed losses, as own, maintenance detect fraud $XXX,XXX a and in

operating of leases. value operating originate do on originating not a insurance leases we to those We reducing have residual and goal eventually fewer operating and related purchasing been eliminating with that leases expense depreciation

efficiency quarter the for would ratio like the reserve, ratio an of improvement have X% linked would quarter, Backing XX.X%, less. $XXX,XXX efficiency which impact the over been our where not was be. out the Our is it we but to

to it operations, to would less. ongoing part ratio is if out leases, equipment efficiency back of While our have X% we related our depreciation been another operating were the

across number company. We the closure, branch very we to opportunities addition In a recently to expenses are of a other the reduce remain tax-efficient investigating announced bank.

XX.X% for rate Our year-to-date. and effective XX.X% tax was quarter the

million our quarter. the sheet. an to and Total during This balance X%. $XX loans rate represents focus annualized of Turning the growth grew leases by

quarter, The bank. portfolio loans. adjustable leases are to that Civista X the all and loans increases our for in we a have by and construction all CRE of partially residential experienced years or virtually continue maturities During loans real were estate lending less. estate in real declines we rate C&I originating CRE our offset be remains and

our risk-based work lending have aggressive CRE been commercial more to pricing capital we and are we real loans disciplined estate as C&I and core we and our However, funding. better how very level remain pricing to align in in loans manage

During an our our X.X% at loans buildings loans originated up were loans the by X.XX%. rate were quarter, residential new portfolio. were and commercial made average and real loans of of loan Portfolio sold originated at at X.X%, and by X.XX%. estate rate XXth average renewed and of total division secured an office leasing leases originated

metro outside production, are Along pipelines single they have offices with or year-to-date central rather to XXth. We further allowing by construction X-story our secured remain in $XXX improve our million not of solid by these loan quarters, the be office were lines loan next continuing secured undrawn at our the previously, we capital and stated located manage to high-rise September As single-digit optimize buildings, are several business predominantly anticipate and ratio. funding loans to for range us low growth our districts.

to continue for cost million total on by the initiatives and growing aimed focus attracting $XXX other quarter. new have lower relationships deepening We deposits that in resulted at our deposits

business is additional balances initiatives. Our and both commercial officers, and treasury and continue to deposits personal secure This bankers compensating from ongoing customers. attributed our management lenders, success to retail private bankers

rates our of our executing continuing to all beta are downward virtually accounts. by decrease strategy We deposit deposit on

basis cost However, X interest-bearing of were points deposits migrated many customers and at higher into from our of quarter accounts accounts, to interest-bearing by our new during the opened X.XX% increased rates. deposit noninterest-bearing as

were at our quarter. our unchanged overall For the X.XX% funding linked quarter, costs to comparison in

be With to end. average fairly CDs, the to focus. made continues in Civista's operating continue be at of base excluding with limits Noninterest-bearing deposits, to $XX,XXX. business deposits deposits deposit accounts, Noninterest-bearing granular XX% insured million Our $XXX.X September excess and total approximately our a up respect deposit deposits accounts XX.X% deposits FDIC XXth. at of quarter of FDIC or excluding were own our deposit account,

covered represents combined net were We than as cash the Other At at valuable deposits. $XXX one with Our represented a million, is with our unpledged was public these securities of XXth, most XX% September no profitability. We of significantly of balances, municipalities liquidity. September million balance concentrations of solid deposit more portfolio our footprint, security uninsured when which XXth. view interest low-cost $XXX.X characteristics, of had funds contributing security portfolio deposits. cash and we overall various September margin across believe which Civista's our our XXth our franchise total $XXX.X deposit million, sheet, our to and our at XX.X% than and source

have adequate overall Civista's decline unrealized represents available to a sale had been remains see At portfolio. the rates capital bond $XX.X our of growth all million relief loss losses maintain unrealized pressure linked support of securities them. quarter continue and in that since from with for $X.X putting the from and of December and to We capital classified potential higher to as our $XX.X goal This September associated continue XXth, million were on interest XX, million our decline and acquisitions. organic earnings a XXXX. create to

with Although we purposes. X.XX%, our shares during a believe did not ratio well-capitalized the real leverage is quarter, repurchase for the X is quarter we Tier deemed at value. We which to regulatory our stock any continue ended

at ratio equity Our at increase XXXX. tangible common an X.XX% from September X.XX% XX, June which XXth, was was

low. screens capital recognize our remain While tangible ratio strong, we our levels equity common

payment to back previous to like rebuild Our focus the economy we between uncertainties to balance economy, ratio continue and guidance remains Southeastern would and the on the up well. across that dividends To will support any end, we to with X% make and and TCE holding Ohio towards earnings to the we that of growth. Despite and will with that X.X%, progress Indiana repurchases is national building target. we continue our capital associated

metrics remains and growth, quality $X the but the did strong We its to loan historically which credit quarter, Our million and net a prepayment our make provision remain impact primarily rates CECL low attributable our model. portfolio was and to curtailment the attributable loan credit during on stable. in partially

is for of is X.XX% model. to quarterly of improving factors ratio XX, at September loans in Our to due and allowance credit within June at losses changes rates primarily XXXX. XX, X.XX% total XXth, X.XX% from updating This change and at interest December the our

increase December year-to-date XX, of summary, with nonperforming in results. during at we loans experienced quarter loans $X.X last that In our is XX, events XXX% are that very was compared pleased of at to to attributable XXXX, nonperforming million addition, discussed call. In credit our losses the XXX% fraud-related XXXX. quarter's clients one our third September allowance we for to

for up you our in customers value your Our be inflection our finish disciplined you afternoon, brought questions believe now remains XXXX. very core happy efforts, deposit And the we net shareholder any approach funding. focused to with Thank investment. margin have. may will our on pricing strong I results communities. serving initiatives lending for in to executing and interest way the address this alignment Civista our yielded loan solid These our between and attention better to on your teams and and creating coupled a us sets that are

Instructions]. [Operator

comes question Piper from Sandler. first line Justin from the of Crowley Our

be mentioned traction further and some of on to how occurred are outlook looks you the in borrowings the deposit wanted the just Just broker And some could margin also reset. about and and with period, start terms in side. nice deposits it saw marry will here. XQ off into of you can And quarter, were thinking continued some But in that tailwind paid that here? on I you the that guess, I the borrowings, of like the that on the paydowns later lift a beyond. off gathering

we're they about at that, level the keeping so bringing with Justin, borrowings. gathering continuing With keep available, relationship beyond to but it's repricing yes, brokered those. expect the on CDs really, deposits. we our down overnight just on as become And same of it that, the

had the We prior lowered time. we And the last lowered of have XX Fed, costs. another got by any X%. points had beginning would -- we deposit I front kind from when XX. of was to Yes. highest add, of time Justin, year, those in We just the the rate rate about came reductions had out lowered that. And our at the lowered Fed this We basis lowered down rates that we

is our of down the of the best actually we're beginning probably from That's rate our, points basis year pricing. X-month CD at our all So, XX on CD.

lowered and markets everything. down. We So, we're money

And we the the those deposits, some we'll mentioned, in late quarter. repricing happened some brokered So, there. of I think lift as get

So, forward. improvement so would further hopefully, margin, I lift we anticipate basis there think, as We points as go we into in or we the enter get the X fourth quarter. do we

you hear it. further? lowering you to And Got that, lower? XX enable has the thinking will basis on on about keep how competitive Fed done so but deposit rates thoughts how are the moving you've by be on I I beyond aggressive since Okay. you can environment just points, far guess how just you moved then what

the we'll aggressive mean, Well, we to I I think going as we Fed lower. lowers, be are as try when to can.

But CD our maintain XX% customer XX% we retain we probably reacts. how your general, in and of depends of those Some are customers, or it most to customers. on sensitive

bank, -- So, advertised not have the bank. we we've relationship the transaction we -- We've bank rates. a that's never been feel a for been highest we're a

somebody really that, to than that's of little I So, rates. bit able more pricing, a we is value a service. think lower are deposit our transactional maybe advertising do relationship, think And our or that that bank that's our customers more deposit for less because so we

So, our continue of lowers we to depend on do deposit think rates. will a but the lower deposit if pricing side, lot on can what Fed the do we it we

maybe a helpful. Okay. then here. little That's And just pivoting

end of you at Just as that's X% goal. mentioned you've far beyond shelf just September, where TCE considering the as perhaps what I X.X% registration, more about you the if the in past? else. to actions, stood growth as -- how procedural kind than mentioned And any, are just anything know you the just tempering stated you are of more contemplating you management? broadly, thinking But capital

been we've back laser-focused, back up, that that on I up. Well, building ratio ratio think, TCE

haven't really management to there. our ratio on capital laid the why repurchases. And think want so important back we target think that's still TCE that's And focused out done But we I that we're we've to strategy. for not share We that stay up. building

our So, foremost, first building priority is really I that's -- is back think and up. that

lower Rich. this been think maybe is that of Brendan, kind one Yes, of of fact the has to TCE it thought that, been I on price, stock the we we'd That's little our be. things than kind like a of the has one governors

for So, repurchases. that of kind stock treating we're

served stock to that by says, public the they're I where stock much dilute us there to we'd the a do TCE back know raise our a out going are think not buy love investing now As of as getting back, shareholders okay, better rest us. point and to we that

the drove tick quickly And credit. last look and on the clean some allowance. appreciate here, one one the up just then I That's Things what Okay. pretty helpful. commentary on of in

well on some imagine the your out, that from just directionally But think we here today, here? the factors about you sit what mind looking of on reserved so, for. allowance, as feel I as you And reserve are

Mike, do Credit to our come? you want Chief Officer. Mike Mulford,

that continue economic reserve trends just the the portfolio from standpoint an to look changes. at We as in concentrations and and industries we and various at where look any consider we're we

Yes.

increase a the it the both we as as down is healthy. loans. allocate couple this you reserve, said, -- commercial And to on did The that pretty really have prepayments and slowed basis related feel that's we just but model, Our all was that. model we residential of points for quarter,

is just We none It's really, So, quality strong. prepayments we're credit-related. was credit growth. our and those accounting still for really of it feel for more

of Nosal Hovde from Our from next line the Brendan comes Group. question

Homebuyers off million balances that just starting Maybe those state you on the Ohio offering for $XXX That program. from of got accounts. the

I long that's how correct? the think then around get First, you max state, do stick from And that can those balances two, number the for?

is balances it amount for get. Those the around maximum stick will X Yes, to we years. could up

it of for depend when were Some will targeted homebuyers. they

those the program a or So, do that million people whatever, But house, we X to $XXX,XXX overall, state. deposit if years. buy give will back deposit $X the runs

state's to should cross-sell the we're So, to around, and we cheap a buy funding does portion not up, of we but return should XX% of go that source people get it on significantly and deposits. customers deposit hope homes, stick be money. bank, able they deposits. good to would and additional on for But to the cost new hopefully, were as have relationships. loans, But mortgage those relatively them the us. be we those The of building those

at those premium rate deposits while bank. on the are a they're paying We

confident they're that money leave don't to that even what on right So to deposit going rate that. a if in paying now home that bank. buy, I we're the X%. know It's doesn't we're find

that stay for there's mean might I a there. So, reason

$XX for million And pretty exchange Even paying trade. that of thought of XX Ohio that customer at a good dumb X% points. from on $XX $XXX guys million a in was couple so, we're or deposits basis million

yes, up points color. helpful That's think right. on higher I for the basis makes the the $XXX cost $XX on All million. XX And million the

that true-up you there, kind even made. base from that kind Moving of accounting $XXX,XXX about quarter, sequentially down the on expense this with of thinking

through Just trajects kind on and cost of your number the XXXX? early curious, thoughts where into year-end

a up relatively fill next Brendan, into quarter, bit I vacancies. maybe expenses, so as yes, little would we say, flat some

into year. not in next would into giving but our point have merit we normal increases going investments Beyond this plan We some XXXX. that, we are technology, guidance do at

with we'll closure costs mention And again, just branch have might would with I that. December, not that associated that in Brendan, that, significantly. elevate Yes, some

$XX.X I like think for budgeted we million quarter. the

I million, I that's But put a time came reasonable think probably under it. I and in to think, we your guided last $XX.X think number model. in

next question Terence the McEvoy comes Our line of from from Stephens.

call it of, balance the strategic a Just within actions lot sheet.

back, Any real ask Do CDs? like a come you funding, funding? to maybe where have like be concentration. And relative kind you to relative has loan-to-deposit brokered areas estate you the you'd Just total a ratio, there I'll CRE those targeted taking Where step of loans would would wholesale also portfolio? like be it where to to commercial down? target

Yes.

regulators XX% what think years that's up to because continue overnight, our loan-to-deposit the that the that reduce The ratio, brokerage that a to into managing that down of interest because are high do of regulators is exams how manage that's to no have stock I We'd of and us, maybe not stuff, XX% get our in portfolio, that have the to think like think. at deposits with it's wholesale I the we focus, gives want for focused get probably also we were we're get of been all number. time.  And improve flexibility, doing to somewhere we happen pushback to bit that that. net portfolio be I been We like XXX%. being a like XX% and for price. more a think will going the kind just to of over and What then we've down would ideally, next drag to from on we'd Their range. that. concentration, there. appropriate talk little liquidity to provides over on on but I some we XXX, we on around marks us to think couple shooting We we under also about our we on least XX% the CRE all on portfolio. think mean, comfortable But margin a way gather that. But being regard. I there's around to XX% range. the lot That get that guided but we That's

under to we'd be get but like getting we'd is So, XXX, could X, comfortable to target we a think, be to. realistic I that

a And in as what new yields quarter? from the maybe comments then maybe You fourth had the X.XX%. maturing importantly, much production fixed when that And follow-up, as margin earlier? as the the higher? more quarter was baked were benefit loans and said on the And you rate what's look those loans you ahead is into into reprice beyond, that how

baked we've roll comments. haven't Chuck. the got $XXX margin that million exact I'll lot what margin But you This of baked from coming anticipate. into obviously number, really a an if I rolling margins. give over rolls. haven't feel that really We know the piece will think, those about We it will they're is that do it Rich, have but don't from quarters of number, X you Terry. some what get forward to that we uplift to I new and we we next, over

and X. CRE, going XXXX XXXX Xs, probably so did high are the them and in at X.XX low, treasuries were to our books of our when because rates those roll Xs, Many were rates and the to Yes. we low the on back

what's right at here rolling now. looking we're So,

next X months. the guess, actually. I over Almost XX million out X years, about $XXX we If million $XXX go to

million over over $XXX XX $XXX the and months. million more. million next XX next the months $XXX

So, next for a over months. XX million the of total $XXX

FHLB XX%, on tied why repricing. number we margin being a going just prime on That's us So we're lower, of million is $XXX going brokers. things paying have aggressive between those because SOFR, those of of that the offset a loans in to Fed. Fed fairly with offset the down lowering get if that to to about think going them, And going they're The going lot we're brokerage combination Us to we It's down more or things. of the other borrowings. but we're all a the repricing XXX down than daily some floats that improvement.

significant some up picked we So, dollars there.

I don't really rates is adverse X% We that, credit even or work cash feel it. think have Terry, We team those in like roll any good done are of we're those I the looking flow pretty a lot feel of piece much X% going about feel the around credit of other to the credit -- of great probably though or And to because higher. forward. actions going projects credit pretty good have that.

ability growth of that? when being back more right competitive? loan accelerate Okay. have And Are again And time historical you've that your what the do you just all out to changes markets I'm spreadsheet is in banks the your is any of at asking to there the to with terms the among of larger here. maybe metro some that level stepping that that business observed would compete in model

XX over that, especially tried good most We side, got keep them rates, probably months of last projects, lending is We've CRE ever that. We've have good a feel Xs, this walked those We've more Terry, X. the away really to Chuck. from a obviously, about before. really to really lot we north high than the machine. of XX

we So, single-digit it's really growth back getting don't somewhat. like our really into on, want high to rate spigot any to tempered growth we as back we have. feel if far normally turn more issues that as the But that really mid- see back we

from comes line Switzer question of KBW. Tim from next the Our

NIM some follow-up quick commentary. a of wanted the I on

less trajectory course great. of aggressively more think the It does aggressively details. broadly, lot or a you how how cycle? do been like the cut if Fed change more of given have decides the has guys granular to You And But the margin over either the reacts?

answer that? want you do Ian,

is this Tim, Yes. Ian.

So, loan on have the reprice will side. pricing million on we immediately about $XXX lending that the side,

being strategy, Dennis downward also really of promos. our any of On the of too side beta aggressive and kind in alluded we things, our long on deposit on deposit downward a have long as side, to, then not locking

able then be still to advantage aggressively, does Fed just the less, at our that the deposit if right based putting on an And be where be and is down. now. able we're pricing more we cuts brokered curve we'll par the to we it if So, and be think now that stay should in right also, cut aggressive on at from CD

FHLB. some still borrowing we're Tim, from funds

we're get of that million hundred time to every will couple So, reprice dollars going too. a

So, That's that but loans those from. were that float, money. thing we immediate see also we borrowing we benefit have another

was deposit Okay. if $XXX beat that million mentioned few upside guys deposit And you like helpful. you the there's guys different you've looks at I provide you initiatives X opportunity. number. think believe given more that here, had if But Yes, then the all? I just about was it love when the far? I'm initiatives further other of on kind you you some a some deposit details about have mentioned there last you there And doing math talked you underway. I'd Could those comments seen already on success then so quarter,

deposits grew so. We Yes. or the $XXX million for quarter

on customers. some is of those one organic kicked no really So, to just $XX those our initiatives we off focusing really now, that reaching relationships and in out that stuff. of growth low of we've balance deposit have by million was and Right that

came have years, As lenders bigger we've on stuff. grown kind focused our loans, of loans bigger and and bigger with over deposits the

deposit didn't we just didn't and And that have they an may some stay had go but relationship. $XX,XXX with somebody wayside, the in of one touch those clients loan smaller by

we're back to reaching folks. out So, those

that because handled a those place branches now other in business day small loan that's kicked is off we to feel big area, going that bankers for start and originating and small initiative every and those those our are loans. we through our better our those was commercial see a business customers branches, retail The we

small business that, and Some to sheet both educate deposits some they're under those be customers those that doing be $XXX,XXX to to smaller them we sides the in going to with attract are we of of they're able branches, make more able loans so think and loans. bankers talk rounded and we're those the develop going to and with think balance handled by going to our one,

focused there. those we'll some really no on and low throughout initiative, lift balance get one and customers. that's we're bank, deposit So We the think

at focusing into that of those in to a we good our have the bit customers funds or some We're at little some and quite larger happen area treasury on the institutions. deposits from other better, were when some really having Civista. our all in of drawing have the bankers in Tim, regionals held our -- bank of success private and of are people a they that get touch feel bit really

of out relationships larger some of Great out bank, institutions. really last did these them lending banks. cut what Recession, those of are a of their a folks their we've they some off, cases, did kick years, commercial seen the job coming our Particularly, them customers at the the coming in doing good lending, or those number borrowing over bigger community XX When the institutions from started because

bank, were XX% may are you XX% borrowing there? from So kicked XX% deposits that many deposits do saying, Why that of your are laser-focused with. institution. we like their those still they on they bank, borrowers, them at of and when bank with community out, another Are them?" them, They us really XX% look that another with with "Look, us tell they we are and deposits you're not borrowing. of They not their community have with and

them community because those So, ones we're "Look, from banks laser-focused us on saying, money." that benefit should getting the we're you the to move accounts lending the to and

the quarters. had we've last over X loans balances some That's obviously, bit, with of done to And the that too, quite compensating some with Yes. X new a Tim. success, conditioning helped we've

that we're from. going a we just to number of think that benefit initiatives there's have we underway So,

have single-digit growth upside that low Yes, quarters. few that landing, all details. ability loan What's your on for over lower follow-up really Fed and the your is demand side take Does outlook was the rates? help get there only the really next great. soft loans? to I we Okay. on there to other the The Appreciate continues a if more

ways out that to we're CRE said, looking bring and Like think down. Tim, concentration I I really figuring at

CRE some growth will So I little things now to that. on we we a will that do more, we're continue some the up our being If focused beforehand, our that temper to doing faster. is look really think little back loan clear more growth. and the bit line But on our little be tempering bit of as side at bit bottom a C&I aggressive growth right a

cure we grow we're back manageable we need growth lot as though some when where a faster think would concern from manageable comfortable back of to I that get. we we're perspective. that on more want getting the to we call very bring and levels, don't spigot that I or even that to down So, have what I more guess, levels, to turn of at we'll

rates question Okay. concentration? appetite is that more I move lower, and don't appropriate CRE, worry does if increase as the your much guess CRE about for you maybe a do

it of is from think more the think line went what going But into the and rates lower, they quite I it. project. comes the people don't make just really the got work grow found the of have to to mean, as don't rates. when much that's because going I I we're don't piece it money in is lowering projects. I reflective think higher, need situation put projects bottom When is faster of a rate money that to the we so. where rates don't

portfolio. very worried from a not worried about about worried credit somebody credit stock From perspective, CRE value We're a our think it We because credit a perception have as perspective, perspective. not quality we from doesn't concentration We're basis. from CRE. maybe a the in confident that much that our we're we're more

D.A. from Davidson. from comes of question next the line Our Navas Manuel

basis if could increase have less then little a of what of big you XX stable. less? meaning a XX are or And range are Could we you some better And see likely and aggressive, points kind you you'd discussion? every cut? a your there? like basis aggressive, me just clarify could cuts, bit talking you outcomes by If meeting of there's stay are how NIM give NIM of points about cuts like versus you Fed of would Can pretty constitute

Yes.

fourth I Ian. had low expand. probably expansion into we offset quarter we the to Like continued expansion. get what said, a in expecting expansion. this going on beginning to can the We're could part into would not but Fed X.XXs and pricing $XXX of the second the higher FHLB from at QX, our the Probably we of we part and NIM quarter, we is much probably slightly with as So, to of QX then the Manuel, be on side cuts, by repricing think expect to be help deposit that. slower We each think as we've as loans, troughed aggressive repricing of having plenty XXXX, loans our But loans some rates pace, down. well of million are as the repricing, in

remember, itself. And is short-term lowers curve Fed when rates. the the starting correct yield Right now, to the

going short-term So, are which rates they're loans If on as X-year not X%. as our new down coming treasury something, or quick lending that's not XX%, is come down a come because tied to down rates moving. to

So, your repricing rates short-term quickly now loan be. rates as are your not as will

I on and cuts you appreciate you rate into next CDs, couple the assumption? the January, Can details the and help the you kind that of helpful. and just with quarter of broker Are are that. then assuming year? rate of all on assuming forecast? December the What a And into first that's November all

Yes.

and and 'XX, stopping by December, XXXX. than of X then middle think expecting probably closer November maybe in I X to we're probably no more

blue-chip But for X on basis that We predict is to XX high Yes. to that. to least XXXX. think really blue us follow be to forecast able probability months the points. We'll follow the in budget for sure, chip just now. at XXXX. for working pretty that going they're next give down here there in come We forecast I We're the as trying opposed better November guidance

of rates. we to end are So, year, them expecting reduce the I think until the

as probably rates much have, are Yes. in Manuel, where the as you clarity as far go have as to future. going we

of expectation. kind our that's So

difficult. get something I up it What that, give Can I the it's go and little appreciate. came expenses. is a It's it found lot reserve? and I OpEx. in me of $XXX,XXX guesswork on higher? it for? A is like exactly more you it Can you think in color

bit you talk a can more? Just about that

one. actually And Sure, Manuel. or we're account to things we get And This that we process, couple go of several systems a is couldn't just a from reconciled. in through as Rich. one suspense we that moving system found

why We I you guys we higher, make. of you won't some can us I it it We think money we probably finding as certainly give a would that guess in know. during go it quarter think good will how be rather that that probably million allowed mean, is higher. can of you color that. more recover go good whole I as -- lot But to our I don't where I believe surprise quarter. a number. suppose, a we for it. and it. than about I tell but a lot were next $XXX believe That's good of picked we don't reserve making feel we I conservative fortune pretty we can't

leasing. balance which leasing? back Is quarter. quarter on sale And gain to talk leasing that lease love on growth, this and on its you fees much a then then And in I'd that rates potential mortgage of a Okay. if moment. potentially, about mortgage-related, much fourth and wasn't of direction terms for stronger to there's hear the developing Usually, was for in next in sale Can next how talk substantially lower? thoughts that about gain year? because And are year your that

would exact Ian will we're year, let good strong about the last still but in But be it sure second. I'll at. as growing you pipelines where leasing you numbers Well, as quarter. are for the sitting give Not a the that the quite in I tell fourth

piece little it. sales more to things and some in sales play have in We loan-to-deposit division, a put be the -- sale aggressive based the leasing whole tried on the the of gain on to on side just

the gain actual growth mortgages, look you the that you talk anticipate on let And sale more Ian, would fourth I portfolio than the I'll So, on cetera. sale will numbers when of the on the et what at about gain be quarter.

Thanks, Chuck. Yes.

and it of So, on remaining XX% we third in sale about that was million quarter, the leasing $X.X was gain mortgage. XX% the had the of

mortgage. $XXX,XXX it, $XXX,XXX call leasing, So,

year? capability on mortgage from If down your add to the could XXX to Okay. here any mortgage side? be points we're funds, basis desire where Fed Is in next there

when I really into the boom add to the back. Manuel, mortgage the in have more probably comes consideration we've we contemplated to Well, one We guess Yes. take that really But know it refinance that. you some got is area of if piece those people it, X, X, to at we sitting going are of us is be only on Those really X, XX X% a years. boom mortgage years refinance you're over looking been the got originated rates. X.X have still the last what's ago,

our of moved we the year the up instead So, or we some don't stuff We were But in to want hoping X- and to seen will other be on this you've have they are or down. of knock debt actually unless But to quarter feel really there that got see get buy fourth they we off refinance to do into a books. mortgage. we treasuries refi that so, to home some of they've going as like new in that the wood; last the moving it book expansion. have XX-year of on week an

place the but don't if refinance in the will second quarter next like -- appropriately. we the hopefully, take in boom move quarter, fourth rates year of probably feel or we So, first not

are commission-based expense sales side folks. origination And of the side that is, also those most side the of on the on

volume. and So, like the that, it's there adding room right expense do base we have now ton a back feel more to capacity to do of not we're in we

next Our from Cardenas comes question the Scott. from of Daniel Montgomery line Janney

questions on the increase? they've the QX they categorically, have but maybe Just down? kind they the up, quarter? loans driving color are which versus a of I give Can categories know look if you come QX, couple up then of stabilized, come at any criticized like And us in were here. end what of

to have question. Mulford, I'll Officer answer our Chief that Mike Credit

did have Criticized been stable past move. quarter. some fairly the We loans have

quarter. were move of that pay deals it. large of a the other criticized relationship that that with But smaller couple we had into along then off a replaced other that category during We other some downgraded loans relationships the one -- or kind have was

a criticized. one couple loan increase, quarter, related had So, was -- mostly for other that an the of some to came relationships. other relationship but of there was out it we again, And

to There's a hoping stable. off remain loan pay that's happen. if We this we're see sure going that to not but quarter, expect relationship to fairly

commercial So, a loans? us of those the portfolio, on color the were you give little loans Can criticized that migrated to bit there?

warranted that commercial category. to just And just commercial financially the criticized in monitoring. just downgrade been relationships Yes, loans, nothing It's a that's litigation we've anything. or

Were they concentrated in any one industry?

No.

care, was there maybe think I remember. can't want in a there. health to something. I say going And be home one hospitality was to nursing I or

Definitely we're in the no. what and say out. that move things systemic seeing would I is

we moving a no couple then that's back happened And that towards pretty think. third you have move And to what I in normal, what's of in, forward. quarter. anticipate Again, the office. we much kind we're always There as and kind that are out, of of but moving close creeping may stuff credits be

right. All

move with then historical expectation So, charge-off towards a forward as more normalization look that of level kind is levels of kind to normal we begin into the 'XX? is

Yes.

was bit very elevate quarter next standpoint. charge-offs a that from normal to little a in we'll quarter couple This of quarters. But good the think I back see

Yes.

those levels, back towards migrates I would say. quarter First probably Yes. and second

how And to And kind those Are tax a your front. deposit if and much of remnants in still when program expect so, on off? any question then deposit the the base? you follow-up there of float do

the if that accounts there. before were the end of end that get the the folks on not at I tell million of And still the we've out. $XX were there believe week, been those I closed the today you phone will to with quarter

if by not all week gone already. certainly the they're or of they'll this next, end be So,

then of All or? kind customer Is customer I what relatively the percentage base. right. that make initiative up? grow mean, small, does to low/no of on small And that base that your balance

probably you. we there. base We number, customer somewhere. a don't do for the not you probably for can know. to sure. but sure. number It's handy. have Yes. There have are majority We there's We don't opportunity of that number that have our a don't actually But get for a I

would that Okay. Yes, be good if can. you

to closing further to I'd remarks. no final Mr. time. like the this are at call turn back for over questions now There Shaffer

say with from just that a We'll participated believe quarter. due joining, dedication results those for Have we the quarter deposit disciplined company well thank afternoon, work share to to and in call. you you. I and growing all be approach few in Really franchise of great part rest and take team. the and I the just talking of and we the today's to continue to strong I'd focus to months us like large a on on were and discipline Civista closing, hard want positions right as in forward pleased future. pricing the on our our of the to lot I Well, just quarter's deposits, for everyone The very focused And managing improving core our thank a results. with our look loans just and fourth way.

call disconnect thank Thank you, day. today. conference sir. your for and Ladies a lovely you and concludes you lines. gentlemen, your We that this for Have participating please ask