Civista Bancshares, Inc. (NASDAQ: CIVB) on Thursday reported fourth-quarter 2025 net income of $12.3 million, a 24% increase from the $9.9 million recorded in the same period a year earlier. The results were driven by expanding interest margins and the inclusion of operations from a recent acquisition, though non-recurring merger costs weighed on per-share earnings. Following the release, Civista shares rose 3.4% in pre-market trading to $24.09.
Strategic Acquisition and Asset Integration
The quarter’s performance was significantly influenced by the completion of the acquisition of The Farmers Savings Bank (FSB) on November 6, 2025. The transaction contributed approximately $268.1 million in total assets, including $106.2 million in loans and leases and $236.1 million in deposits.
The acquisition resulted in $3.4 million in pre-tax non-recurring merger expenses, which reduced net income by approximately $0.14 per common share. Technical integration, including the core system conversion for the acquired branches, is scheduled for completion in February 2026.
Q4 and Full-Year Financial Results
For the three months ended December 31, 2025, diluted earnings per share (EPS) were $0.61, compared to $0.63 in the prior-year quarter. The slight decline in EPS, despite higher total net income, reflects an increased weighted average share count following a 3.79 million share public offering conducted in July 2025. Excluding the $2.9 million after-tax impact of merger costs, adjusted EPS reached $0.75, surpassing the analyst consensus estimate of $0.62.
For the full year 2025, Civista reported record net income of $46.2 million, or $2.64 per diluted share, representing a 46% increase in total profit over the $31.7 million, or $2.01 per share, reported in 2024.
Key Performance Indicators:
Net Interest Income: Increased 16% year-over-year to $36.5 million.
Net Interest Margin (NIM): Expanded to 3.69%, an 11-basis-point increase from the third quarter of 2025 and up from 3.36% in Q4 2024.
Efficiency Ratio: Improved to 57.7% from 68.3% in the prior-year period, marking the sixth consecutive quarterly improvement.
Cost of Funds: Declined to 208 basis points, down 34 basis points from Q4 2024, aided by the influx of low-cost deposits from the FSB transaction.
Asset Quality and 2026 Outlook
Asset quality remained relatively stable, though non-performing loans rose to $31.3 million from $22.8 million in the previous quarter, a change management attributed to a single, isolated credit participation. The allowance for credit losses to total loans stood at 1.28% at year-end.
For 2026, management provided guidance for mid-single-digit organic loan growth. Excluding the acquired FSB portfolio, organic loan growth in Q4 was $68.7 million, an annualized rate of 8.7%. The company also expects further NIM expansion of approximately 5 to 7 basis points through the first half of 2026, assuming a stabilizing interest rate environment.
Macroeconomic Context
Civista’s results align with broader trends in the regional banking sector, where institutions are prioritizing low-cost deposit acquisition to offset previous spikes in funding costs. The bank’s focus on non-interest income—including interchange fees, which rose by $287,000 sequentially, and leasing fees—reflects an industry-wide effort to diversify revenue streams as net interest income growth faces potential headwinds from shifting monetary policy.
The Board of Directors declared a quarterly dividend of $0.18 per share, a 5.9% increase from the previous quarter, and maintained a $13.5 million share repurchase authorization.
Reasons to Pass on CIVB
- EPS dilution: Diluted EPS declined year over year due to a higher share count following the July 2025 equity offering.
- Acquisition-driven growth: Recent asset, deposit, and margin gains were largely supported by the Farmers Savings Bank acquisition rather than organic expansion.
- Merger-related earnings drag: $3.4 million in non-recurring merger costs reduced reported Q4 earnings.
- Ongoing integration risk: Core system conversion for the acquired branches remains incomplete, extending execution risk into 2026.
- Deterioration in asset quality: Non-performing loans rose sequentially to $31.3 million from $22.8 million.
- Modest organic growth outlook: Management guided to only mid-single-digit organic loan growth for 2026.
- Limited margin upside: Expected NIM expansion of 5–7 basis points is incremental and rate-dependent.
- Sector headwinds: Potential pressure on net interest income as funding costs and competitive dynamics persist in regional banking.
