Wednesday, Stephens, a financial analyst firm, increased its price target for Civista Bancshares (NASDAQ:CIVB) to $21.00, up from the previous target of $18.00, while maintaining an Equal Weight rating on the stock. The company's third-quarter results for 2024 were cited as showing positive developments in its financial standing, including a stronger funding profile, higher tangible capital, and the rebuilding of fee income.
Civista Bancshares' financial performance in the third quarter of 2024 indicated a strategic reduction in wholesale borrowings by approximately $250 million. Additionally, the bank's deposit initiatives were successful, leading to around $200 million in core deposit growth. However, Civista deliberately moderated its loan growth, which increased by an annualized rate of 3.9% during the third quarter. The bank is also focusing on decreasing its commercial real estate concentration.
The company aims to reach a targeted capital and funding level, after which it expects to accelerate loan growth. The tangible common equity (TCE) capital increased to 6.64%, nearing the target range of 7.00% to 7.75%. Despite the year being described as a transition period for Civista, which has affected earnings with an anticipated 29% decrease in operating earnings per share for 2024, the forecast suggests growth resumption in 2025.
A recent acquisition by Civista Bancshares in Ohio has reportedly opened up new hiring opportunities and is likely to attract new clients. The updated price target reflects these strategic moves and the potential for future growth as outlined by Stephens. The Equal Weight rating suggests that the firm views the stock as fairly valued at its current price.
In other recent news, Ohio-based Civista Bancshares reported a mixed bag of results for the second quarter of 2024. The bank's net income rose by 10% from the first quarter to $7.1 million, despite a year-over-year decrease of $3 million. Amidst a transition period, Civista is actively pursuing growth strategies, including potential acquisitions, while managing a contraction in net interest margin due to higher funding costs.
The bank's loan and lease portfolio witnessed significant growth with a 16% annualized increase. Noninterest income also showed notable improvements, increasing by 24% from the first quarter and 15% from the previous year. However, a fraud event related to a commercial borrower resulted in a $1.7 million provision for the quarter.
Civista anticipates loan growth to persist at a low single-digit pace for the remainder of 2024, with margin compression expected to slow. Despite challenges, credit quality remains robust, with no systemic deterioration.
InvestingPro Insights
Recent data from InvestingPro adds depth to Stephens' analysis of Civista Bancshares (NASDAQ:CIVB). The company's P/E ratio of 9.26 suggests it may be undervalued compared to industry peers, aligning with Stephens' Equal Weight rating. This valuation metric becomes particularly interesting when considering that CIVB is trading near its 52-week high, with a substantial 34.1% price return over the past six months.
InvestingPro Tips highlight CIVB's consistent dividend history, having raised its dividend for 14 consecutive years. This demonstrates the bank's commitment to shareholder returns, even as it navigates a transitional period. The current dividend yield stands at 3.42%, which could be attractive to income-focused investors.
However, it's worth noting that InvestingPro Tips also indicate that four analysts have revised their earnings downwards for the upcoming period, which aligns with Stephens' mention of a 29% decrease in operating earnings per share for 2024. This cautionary note is balanced by the expectation that the company will remain profitable this year.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into CIVB's financial health and future prospects.
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