Conferencia de resultados del T3 de 2026 de Civista Bancshares (CIVB): El margen y el financiamiento de base mejoran

Puntos clave

• Civista Bancshares registró un beneficio neto en el tercer trimestre de 2026 de 16,0 millones de dólares, o 0,77 dólares por acción diluida, lo que supone un aumento del 26% interanual y del 12% con respecto al trimestre anterior.
• Los ingresos netos por intereses alcanzaron los 39,4 millones de dólares, con un aumento del 2% secuencial. El margen neto de interés se amplió 4 puntos básicos hasta el 3,93%.
• Los préstamos y arrendamientos aumentaron en 38 millones de dólares, lo que equivale a un crecimiento anualizado del 4,7%, a pesar de las amortizaciones anticipadas de más de 47 millones de dólares. La dirección prevé un crecimiento del crédito de un dígito medio hasta finales de 2026 y de cara a 2027.
• La financiación básica mejoró, ya que los depósitos no remunerados aumentaron en 30,3 millones de dólares y los saldos de ahorro y del mercado monetario se incrementaron en 15,8 millones de dólares. La financiación intermediada ha disminuido en 223 millones de dólares, o un 41%, a lo largo de nueve trimestres.
• El ratio de eficiencia mejoró hasta el 55,3%, frente al 58,2% del trimestre anterior y el 61,4% de un año antes, lo que refleja mayores ingresos y gastos controlados.
• La dirección orientó los ingresos por comisiones del T4 a 9,0-9,5 millones de dólares y los gastos no financieros a 28,7-29,5 millones de dólares.

Datos financieros principales

Rendimiento comercial y operativo

La demanda de préstamos se mantuvo firme en los mercados de Civista. Los préstamos residenciales aumentaron en 25 millones de dólares, mientras que la cartera de construcción inmobiliaria creció en 15 millones de dólares. Los compromisos de construcción no dispuestos alcanzaron los 268 millones de dólares, frente a los 250 millones de dólares a 30 de junio, los 208 millones de dólares a 31 de marzo y los 195 millones de dólares a finales de 2025.

Las amortizaciones anticipadas de préstamos superaron los 47 millones de dólares. La dirección lo atribuyó principalmente a ventas de empresas y propiedades, así como a proyectos inmobiliarios completados que pasaron al mercado de valores respaldados por hipotecas comerciales.

Los préstamos comerciales nuevos y renovados registraron un tipo de interés medio del 6,87%. Las originaciones de bienes raíces residenciales promediaron un 6,45%, mientras que las originaciones de la división de arrendamiento promediaron un 9,75%. La dirección también señaló que se prevé la revisión de precios de aproximadamente 270 millones de dólares en préstamos comerciales durante los próximos 12 meses, lo que supone un viento de cola potencial para el rendimiento de los activos.

Los depósitos aumentaron en 19 millones de dólares durante el trimestre, aun cuando los depósitos intermediados cayeron en 25 millones de dólares. El crecimiento provino de un aumento de 30,3 millones de dólares en depósitos no remunerados y de un incremento de 15,8 millones de dólares en cuentas de ahorro y del mercado monetario. Los depósitos a plazo se mantuvieron sin cambios.

Civista atribuyó la mejora de la financiación de menor coste a los clientes empresariales y municipales, junto con las inversiones en gestión de tesorería y banca privada. El banco mantenía más de 544 millones de dólares en fondos públicos en los municipios de su área de actuación.

La cartera de valores ascendió a 640 millones de dólares, es decir, el 15% de los activos totales. Registraba 59,9 millones de dólares en pérdidas no realizadas, equivalentes al 9,3% de la cartera. Civista vendió aproximadamente 8 millones de dólares en valores con un rendimiento del 1,3%, reconociendo una pérdida de 1,6 millones de dólares, y compró unos 6,6 millones de dólares en valores de tipo variable con un rendimiento del 4,6%.

Los elementos extraordinarios incluyeron 1,8 millones de dólares en cobros netos del seguro relacionados con el incendio de una sucursal en diciembre. La empresa también recompró 82.075 acciones a un precio medio de 26,96 dólares y mantuvo su dividendo trimestral en 0,18 dólares por acción.

Los costes crediticios incluyeron una provisión de 823.000 dólares para pérdidas crediticias, una provisión de 472.000 dólares para compromisos no dispuestos y saneamientos netos de 139.000 dólares. La dirección caracterizó las métricas crediticias como bien gestionadas y en proceso de normalización continua.

Previsiones de la dirección

• Crecimiento de préstamos y depósitos: La dirección prevé un crecimiento de un dígito medio en los préstamos y depósitos básicos hasta finales de 2026 y de cara a 2027, respaldado por las carteras de préstamos en tramitación, los compromisos de construcción y las incorporaciones al equipo de préstamos.
• Ingresos por comisiones del T4: Se esperan en 9,0-9,5 millones de dólares, dependiendo los ingresos hipotecarios de las condiciones de los tipos de interés. La dirección también prevé un respaldo estacional derivado de la actividad de intercambio asociada a las festividades y una fortaleza continuada en el negocio de arrendamiento.
• Gastos no financieros del T4: Se esperan en 28,7-29,5 millones de dólares, lo que refleja inversiones en plantilla, marketing y tecnología que comenzaron a finales del T3 o principios del T4.
• Margen neto de interés: La dirección prevé que el margen del T4 se sitúe aproximadamente 1-2 puntos básicos por encima o por debajo del nivel del T3 del 3,93%. Esto incluye un impacto estimado en el T4 de 2 puntos básicos por el reajuste de precios de la deuda subordinada durante un mes.
• Sensibilidad a los tipos de interés: La dirección calcula que cada subida adicional de tipos podría añadir entre 1 y 2 puntos básicos al margen, lo que refleja un balance ligeramente sensible a los activos.
• Beta de los depósitos: Civista prevé una beta de aproximadamente el 50% en los depósitos remunerados, con un desfase en el reajuste de precios.

Riesgos y aspectos a vigilar

El tipo de interés de la deuda subordinada se reajustará el 1 de diciembre desde un tipo fijo del 3,25% al SOFR a tres meses más 219 puntos básicos. La dirección calcula el impacto en el margen del trimestre completo en 5-6 puntos básicos, aunque solo unos 2 puntos básicos deberían afectar al T4 porque el tipo más elevado se aplica durante un mes. Civista no tiene planes actualmente de amortizar o reembolsar parcialmente la deuda.

Los tipos de interés más elevados podrían debilitar la actividad hipotecaria y presionar la situación económica de los prestatarios. La dirección afirmó que algunos prestatarios ya han aportado más capital propio para viabilizar las operaciones. Nuevas subidas de tipos también podrían intensificar la competencia por los depósitos y aumentar los costes de financiación.

Las amortizaciones anticipadas de préstamos siguen siendo un freno para el crecimiento registrado del balance. La dirección también citó la incertidumbre macroeconómica, aunque señaló que Ohio y el sureste de Indiana no mostraban signos de deterioro económico al cierre del trimestre.

Puntos destacados de la sesión de preguntas y respuestas con analistas

La dirección declaró que la solidez de los depósitos no remunerados reflejaba en parte la recuperación estacional desde el mínimo del segundo trimestre, así como las inversiones en gestión de tesorería y banca privada.

En cuanto a la demanda de préstamos, los directivos afirmaron que las carteras en tramitación se mantenían sólidas, incluidos los préstamos residenciales, a pesar de la previsión de que el alza de tipos pudiera generar vientos en contra. La empresa se muestra cautelosa en determinadas categorías, como los préstamos para oficinas, pero hizo hincapié en las relaciones con los prestatarios y la estructura de las operaciones en lugar de exclusiones generales.

Civista tiene previsto seguir realizando inversiones generadoras de ingresos en personal, marketing y tecnología a lo largo de 2027. La dirección señaló que estas iniciativas pueden requerir tiempo para alcanzar el umbral de rentabilidad.

En relación con las fusiones y adquisiciones bancarias, el consejero delegado Charles Parcher señaló que no hay ninguna operación inminente, pero la empresa mantiene conversaciones. Civista priorizaría operaciones estratégicamente sólidas y rentables con una dilución limitada y, por lo general, un periodo de recuperación de no más de tres años, salvo que se presente una oportunidad extraordinariamente estratégica.

Transcripción completa de la conferencia de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Thank you. Good afternoon, ladies and gentlemen, and welcome to the Civista Bancshares, Inc. Third Quarter 2026 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 involves risks and uncertainties. These factors could cause actual results to be materially different from any future results expressed or implied by such forward-thinking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements made during the call. Additionally, management may refer to non-GAAP measures which are intended to supplement, but not substitute, the most directly comparable GAAP measures. The press release, also available on the company's website, contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures.

The call will be recorded and made available on Civista Bancshares' website at www.civb.com. At the conclusion of Mr. Parcher's remarks, he and the Civista management team will take any questions you may have.

Charles Parcher

Good afternoon, this is Chuck Parcher, President and CEO of Civista Bancshares. I'd like to thank you for joining us for our third quarter 2026 earnings call. I am joined today by Rich Dutton, SVP of the company and Chief Operating Officer of the bank, Ian Whinnem, SVP of the company and Chief Financial Officer of the bank, and other members of our executive team.

This morning, we reported net income for the third quarter of $16 million, or $0.77 per diluted share, which represents a $3.3 million, or 26% increase over our third quarter in 2025, and a $1.7 million, or 12% increase over our linked quarter. This also represents an increase in pre-provision net revenue of $5.3 million, or 33% over our third quarter in 2025, and a $2.2 million, or 11% increase, over our linked quarter. Net interest income for the quarter totaled $39.4 million, which is 2% higher than the linked quarter. As a result, our net interest margin expanded by 4 basis points over our linked quarter to 3.93%, and by 35 basis points over the prior year's first 9 months.

Our funding costs for the quarter increased by 3 basis points to 1.97%, which is 30 basis points lower than the previous year's third quarter, as we continue our disciplined approach to managing how we fund our balance sheet. A big part of our funding story during the quarter was our ability to grow non-interest-bearing deposits by $30.3 million and savings and money market accounts by $15.8 million, as we were able to attract new and additional deposits primarily from our business and municipal customers. Our cost of core deposits was 1.61%, excluding brokered funding, which is just a 2 basis point increase compared to our linked quarter, as we were able to replace our recent trend of CD growth with growth in lower cost deposit accounts. This success in attracting core funding allowed us to again reduce our reliance on brokered funding. During the quarter, we replaced $150 million of brokered CDs bearing a weighted average rate of 3.89%, with $125 million of brokered CDs maturing over the next 9 months with an average rate of 4.08%. During the past 9 quarters, we have reduced our brokered funding by $223 million, or 41%.

Another big part of our story is the return of solid organic loan growth. Despite the continued headwinds of $47 million in early payoffs during the quarter, our loan balances grew by $38 million, or at an annual growth rate of 4.7%. Our lending and leasing teams generated $343 million in new organic production during the quarter that was partially offset by those early payoffs in addition to normal principal payouts. Our ROA and ROE for the quarter were 1.48% and 11.21% respectively. Continued strong financial performance and our ability to consistently create capital continues to provide options as we evaluate the most optimal ways to put our capital to use. One of those options is repurchasing shares when we feel the opportunity warrants, as it did during the quarter. During the quarter, we repurchased 82,075 shares of Treasury stock at an average price of $26.96. We ended the quarter with a healthy tangible common equity ratio of 9.88% compared to 9.54% at December 31st, 2025. Earlier this week, we announced a quarterly dividend of 18 cents per share, which is consistent with our prior quarter.

Based on our September 30 closing share price of $26.38, this represents a 2.73% yield and a dividend payout ratio of 24.75%. During the quarter, net interest income increased $644,000, or 7% over the linked quarter, and was consistent with the third quarter of 2025. Controlling expenses is another area of focus and is evidenced by slight declines when comparing non-interest expense to both our linked quarter, which declined $675,000, or 2.4%, in our prior year's quarter, which declined $349,000 or 1.2%. While there was some noise from non-recurring costs associated with our acquisition of Farmers Savings Bank and our leasing division's core conversion in the prior year, there were no other significant changes in our non-interest expense categories. Our efficiency ratio for the quarter improved to 55.3% compared to 58.2% for the linked quarter and 61.4% for the prior year's third quarter. Our effective tax rate was 19.1% for the quarter and 17.6% year-to-date.

Turning our focus to the balance sheet. For the quarter, total loans and leases grew by $38 million for an annualized rate of 4.7%. Loan demand remained solid across our footprint, while early payoffs seemed to subside, we experienced over $47 million of payoffs during the quarter. These early payoffs were primarily the result of businesses and properties being sold and real estate projects leasing up and moving on to the CMBS permanent market. While we view these payoffs as good, due to their successful nature, they continue to present headwinds to growing our loan totals. While loans were steady in nearly every category, we did experience a $25 million increase in our residential loan portfolio and a $15 million increase in our real estate construction portfolio. Loans we originate for our portfolio continue to be virtually all adjustable rate, and our leases primarily all have maturities of 5 years or less. Additionally, our undrawn construction lines were $268 million on September 30th, which compares favorably to $250 million on June 30th, $208 million at March 31st and $195 million at December 31st.

This trend, coupled with additions to our lending team and the solid economic performance of Ohio and the greater Midwest, give us confidence that we will continue with mid single digit growth as we finish out 2026 and move into 2027. During the quarter, new and renewed commercial loans originated at an average rate of 6.87%, residential real estate loans originated at 6.45%, and loans and leases originated by our leasing division were at an average rate of 9.75%. With the rapid increase in interest rates during the second quarter of September, we anticipate that these rates will continue increasing during the fourth quarter. On the funding side, total deposits grew by $19 million, which is meaningful given that we were able to further reduce our dependence on broker deposits by $25 million during the quarter. As I mentioned, this growth was a result of a $30 million increase in non-interest-bearing accounts and a nearly $16 million increase in savings and money market accounts. This represents a $44 million increase in core deposit funding during the quarter as we continue to focus on core deposit generating initiatives. And while a quarter does not imply a trend, migration from non-interest-bearing and interest-bearing demand accounts into higher-rate time deposits subsided during the quarter, with our time deposit balances remaining unchanged during the quarter. The result, our total funding costs increased by only 3 basis points during the quarter as we continue to focus on attracting lower cost for deposits from our retail customers and operating accounts from our business and municipal customers.

Our deposit base continues to be fairly granular, with our average deposit account excluding CDs of approximately $29,000. At quarter end, our loan to deposit ratio was 94.7%, which is consistent with our linked quarter. With more than $544 million of public funds with various municipalities across our footprint, we had no deposit concentrations at September 30th. We believe our low-cost deposit franchise is one of Civista's most valuable characteristics, contributing significantly to our solid net interest margin and overall profitability. We view our securities portfolio as a significant source of liquidity. At quarter end, our securities portfolio totaled $640 million, which represented 15% of our balance sheet, and when combined with our cash balances, represents 20% of our total deposits. Our securities are classified as available for sale and had $59.9 million or 9.3% of unrealized losses associated with them.

A few of the more significant non-recurring items during the quarter included the receipt of $1.8 million of net insurance proceeds related to last December's branch fire, which was recorded as other income. Separately, we sold approximately $8 million of 1.3%, recognizing a $1.6 million loss and purchased approximately $6.6 million of floating rate securities, currently yielding 4.6%. This is an example of the kind of opportunistic improvement in our securities portfolio that we think makes sense for Civista and our shareholders. As I mentioned, we purchased 82,075 shares of Treasury stock during the quarter at an average price of $26.96. We continue to believe our stock is of value and will continue to evaluate repurchase opportunities. Thus, this earnings continue to create capital, and our overall goal remains to maintain adequate capital to support organic growth and prudent investment into our company. We will continue to focus on earnings and will balance the payments of dividends and annual repurchases with building capital to support our growth. During the quarter, we made an $823,000 provision to our allowance for credit losses and a $472,000 provision for unfunded commitment and had net charge-offs of $139,000.

Our ratio of the allowance for credit loss total loans is 1.29% at September 30, 2026, which is consistent with the 1.28% at December 31, 2025. Our ratio of allowance to non-performing loans of almost 153.3% and impaired improved when compared to the same period. This was largely the result of charging off a relationship that had been in workout for some time and had been fully reserved during 2025. Other than general concern over the impact of macroeconomic uncertainties, the economy across Ohio and Southeastern Indiana is showing no signs of deterioration. Overall, I would characterize our credit metrics as well managed and continuing to normalize.

In summary, this was another solid, sophisticated quarter. We are pleased with the increase in our pre-provisioned net revenue, which was the result of continued expansion in our net interest margin, our ability to generate non-interest income from diversified revenue streams, and our continued control of non-interest expense. The growth in core funding allowed us to further reduce our reliance on broker funding and loan demand across our footprint continues to build, giving us confidence in our ability to grow both core deposits and loans at a mid single digit rate as we end 2026 and beyond. The first 3 quarters of 2026 have set us up for what should be another good year. I don't know what I could have asked for for a better start to my tenure as President and CEO. Civista will continue taking care of our customers, supporting our communities, investing in our people, and creating value for our shareholders. Thank you for your attention this afternoon and your investment, and now we will be happy to address any questions you may have.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. [Operator Instructions] One moment please for your first question. Thank you. And your first question comes from the line of Brendan Nosal from Hovde Group. Please go ahead.

Preguntas y respuestas

Brendan Nosal

Hey, good afternoon, folks. Thanks for taking the questions.

Ian Whinnem

Hi, Brendan.

Brendan Nosal

Hey, maybe just starting off on fee income here. I think you folks restated some of your fee lines, and if I were to guess, you took the lease gain on sale income out of the gain on sale line and put it into the lease revenue. Is that the right way to interpret that change broadly?

Ian Whinnem

Yes, we separated out the gain on sale into both the mortgage and the leasing lines.

Brendan Nosal

Okay, perfect. And then just kind of on a related follow-up, you know, nice strong fee income result this quarter at almost $9.4 million. Any thoughts on kind of the major drivers for fee income as we kind of move through the next few quarters?

Ian Whinnem

Yes, I think for the most part, you know, the fourth quarter will end up being a little bit stronger for interchange income just because of holiday spending. Interest rates can be a big driver on the mortgage side. The leasing side really had a strong third quarter as well as we're anticipating a strong fourth quarter from them also. Now, from a guidance standpoint, Q3 was strong. We came in a little bit above the guidance that we provided back in July. I think for the fourth quarter, we'd anticipate by $9 million to $9.5 million, the fourth quarter, with that being dependent on just really what interest rates do to the mortgage business.

Brendan Nosal

Yep, that's helpful. I'm going to sneak one more in here. Just to the expense base. Just came in a lot lower than your outlook from last call for the, you know, what was the third and fourth quarter at the time. When we look forward to next quarter, does the cost run rate stay at this $28 million level, or does it revert back to the prior outlook, which I think was $29.6 million to $30 million?

Ian Whinnem

Yes, it's, you know, the $28 million did come in better than expected as a result of good expense management, as well as we ended up with slightly better operating losses than what we anticipated. You know, some of the investments that we talked about back in July for colleagues, some marketing and some IT spend, those would have occurred late in the third quarter, even early in the fourth quarter. And so what we do anticipate is probably that expense being in the fourth quarter being closer to the $28.7 million to $29.5 million range.

Brendan Nosal

Got it. Thanks so much for taking my questions. Thank you. Thanks.

Operator

Thank you. And your next question comes from the line of Jeff Rulis from DA-Davidson. Please go ahead.

Jeff Rulis

Thanks. Appreciate it. On the non-interest bearing, the strength there, really a strong quarter. I guess... you outlined kind of both commercial and public funds. I gotta assume maybe some seasonal trends in there, but also just any other detail about the trend, that strength in the quarter.

Ian Whinnem

Yes, this is Ian again. I think from a deposit standpoint, we do seasonality hit our kind of low point in deposits at the end of second quarter. And so that's primarily kind of a rundown in those public funds as maybe some consumer spending that occurs around that too. So in that third quarter, we end up with a rebound and an additional in the fourth quarter. We've done a nice investment over the last year within treasury management colleagues, as well as private banking. And that's done a nice contributor into building up those non-interest-bearing and non-maturity deposits.

Jeff Rulis

That's great. And I guess I'll kind of roll the deposit strength into the next question on the margin. You've got some pieces there where running down the brokerage, you talked about the asset repricing tailwinds. Maybe I'd step back, the securities repositioning is timing of when that occurred in the quarter and is there a tail of maybe benefit that you didn't fully capture in the third quarter from that piece alone.

Ian Whinnem

Yes, there is a tail to that. It happened towards the end of the quarter.

Jeff Rulis

Okay, so Ian, if I package a lot of these sort of tailwinds of into the fourth quarter. Sounds like a nice margin uptick late quarter in the third quarter, but safe to assume there's still some upward trajectory here.

Ian Whinnem

Yes, I think that the headwind that we're going to have, or at least for one item, is going to be that subordinated debt that reprices. It moves from a 3 and a quarter fixed rate on December 1st to a variable rate of 3 months SOFR plus 219. And so that's going to cost us on a quarterly basis is between 5 and 6 basis points is what we're anticipating now. In the fourth quarter alone, it's only there for 1 month. So it's really only a 2 basis point impact for that. So we think that for the fourth quarter, we came in in line with the guidance we had for July. Going forward, we anticipate probably plus or minus 1 to 2 basis points above where we came in for third quarter, including that offset for the subject. And then as with any kind of a rate increase that happens in December, heading into 2027, probably another 1 to 2 basis points improvement there.

Jeff Rulis

Okay, and then, Ian, I guess the full sub-debt impact is maybe an offset for the full quarter in the first quarter then? Is that right?

Ian Whinnem

That's correct. Yeah, that's the right way to think of that.

Charles Parcher

Okay. And Jeff, we do feel we have some tailwinds too on the repricing of some of our commercial portfolio. Bob can speak to it, but I mean, I think we've got about $270 million over the next 12 months, 930 to 930. They're going to reprice off of a roughly 5% rate into something 250 to 300 over the 5-year Treasury.

Jeff Rulis

No, that's great. Sounds positive. Thank you.

Charles Parcher

Thank you.

Operator

Thank you. And your next question comes from the line of Adam Kroll from Piper Sandler. Please go ahead.

Adam Kroll

Hope you're doing well. Thank you. Maybe starting out for Ian on funding costs. 50% interest rate and deposit beta. But I'd be curious to hear just sort of expectations for deposit betas, with this hike and potentially additional hikes, just given some of the optimization you've had within your funding base over the past several quarters.

Ian Whinnem

Yeah, from a beta standpoint, we've put into place our playbook, which anticipates both a lag as well as a beta approach. I think 50% is probably about right, with a lag associated with that. We have had some customers that are asking for some exceptions or rate increases, but for the most part, we haven't had to move our RAC rates. Our best rates are still on the 15 to 36 month at 4% and less than 1 year at 375 for our CDs.

Adam Kroll

Got it. And maybe moving to loan growth on the mid-single-digit loan growth guide, I'd just be curious to hear which segments you kind of expect to drive that over the next several quarters and just how the pipelines are shaking out today.

Unknown Speaker

Yes, this is Papi Titus. And, you know, I think from a general perspective, we are, um, there's not really any specific lines. I mean, you know, you have office and, you know, you have some categories that we're definitely more bearish in, but overall, it's really more about the relationship for us. So I'm not sure there's any segments that we truly shy away from per se. As far as the pipelines, the pipelines are actually quite strong. Feel really good about where we're at there, including the residential pipeline, which we expect some headwinds with increased rates. So, so far, so good from that perspective.

Charles Parcher

We do feel good about what we talked about with the amount of unfunded construction loans that are out there right now. It's built back up to $270 million on our balance sheet at quarter end. That's funds that will go out the door, some through the balance of the year. It'll be winter pretty soon, and the construction will slow down a little bit. It'll give us a nice jump start into the end of the first quarter, second quarter of next year.

Adam Kroll

Got it. I appreciate the color there. And maybe just one last one for me, follow up on expenses. You know, you've had another quarter of really strong cost controls. But I was just curious how you're thinking about expenses in 2027. If there's any significant investments within tech or talent additions planned within that?

Ian Whinnem

Yes, I think that's the plan. You know, we are looking at revenue generating investments. So whether that be colleagues, marketing, or in technology investments that drive revenue. So some of those do have a little bit of a period where it takes time to get to that break-even point. We do anticipate the continuation of those investments.

Adam Kroll

Got it. Thanks for taking my questions.

Operator

Thank you. Once again, should you have a question, please press star 4, then the 1 on your telephone keypad. Your next question comes from the line of Timothy Switzer from KBW. Please go ahead.

Timothy Switzer

Hey, good afternoon. Thanks for taking my questions and Chuck, congrats on the good first quarter.

Charles Parcher

Hey, thanks Tim.

Timothy Switzer

I had to follow up on the beta, deposit beta real quick. Can you repeat what that number was? I didn't hear it. And then was that for total deposits or just interest bearing?

Ian Whinnem

So that'd be just the interest bearing side of things. I think we're anticipating what will work out to be about a 50% beta. We're, you know, our playbook has both a lag as well as a beta assigned to it, so those get factored in.

Timothy Switzer

Okay, so it sounds like that beta kind of picks up over the course of the rate hike cycle, assuming you get several.

Ian Whinnem

Yes. Yes, we're, like, as I mentioned earlier, we're seeing, you know, good results and not a lot of pressure to raise our RAC rates or even exceptions right now. So we're staying positive with that. But as more rate increases come, whether it be later this year into next year, might do a little more pressure on that. But we, you know, we think our playbook is going to work, allowing us to keep that lag going.

Timothy Switzer

Okay, I guess that's kind of a reflection maybe of pretty rational deposit pricing in your markets right now?

Ian Whinnem

You know, there's some of that. We still see some irrational offers. There's a lot of fine print on them. And so our sales team is, you know, knowledgeable about that and teaching our customers about the fine print and the value of the relationship that Civista brings. A lot of those customers not necessarily move for a small change.

Charles Parcher

I'd love to say there was not any irrational competition out there, but it seems like every market's got one or two.

Timothy Switzer

Okay, yeah, make sense. And then the last one is, you know, any updated thoughts you guys have on participating in Bank M&A, just your level of interest generally, and then maybe what criteria you'd be looking for.

Charles Parcher

I don't think really, Tim, our criteria has changed much. You know, obviously, I'm talking to a lot of people and I think it'll be interesting to see what the sentiment is coming out the back side of the election because it seems like some people are starting to at least think about what the future of their banks are. But we don't have anything imminent right now, but we're continuing to have dialogue. And if it makes sense to us, you know, we're not going to, unless it was a massively strategic thing, we're not going to get outside of any parameters that would be considered, you know, any, anything really longer than 3 years or very diluted. We really want to protect our shareholders. But if we can do the right deals that are profitable for them with a short payback, you know, we'll consider them.

Timothy Switzer

Okay, great. Thank you.

Operator

Thank you. And your next question comes from the line of Tyler Cacciatori from Stephens. Please go ahead.

Tyler Cacciatori

Hey, good morning. This is Tyler from Apprise.

Charles Parcher

Enjoy, Tyler.

Tyler Cacciatori

Just starting on loan demands, with the higher rates, are you starting to see any impact on borrower activity or the pipeline? And then just on overall yields, can you talk a little bit about roll-on versus roll-off dynamics?

Unknown Speaker

Yes, I mean, we really haven't seen a whole lot of pullback so far, and I think we're expecting it. But so far, the pipelines continue to increase, and, you know, we feel good about the right now where things are going. So again, I remain bullish in that single digit growth.

Charles Parcher

That's very achievable. And I think Tyler, if we get a much more increase, I think some of the deals will become, you're going to have to see some pullback or you're going to have to put more equity in the deals. I mean, a couple of deals we've seen already that got a little tight, they've agreed to put more equity in to make the deals work, but obviously, you know, depending on where the Fed goes and where the long-term Treasury goes, that'll kind of affect that going forward.

Unknown Speaker

Great, so we're putting one in. Oh, great, I'm sorry. Right, so we're putting them on. We're in the mid to high 7s right now on a 5 year. I'm trying to hold that 275 tight margin and following the market. If anything, we might be coming down on duration a little bit.

Tyler Cacciatori

Just to remain competitive. Got it. That's helpful. And then just on the sub debt, I hear you on the impacts there, but any thoughts on redeeming that when it comes due in December? Or are you prioritizing buybacks and organic growth ahead of that?

Ian Whinnem

Yes, Ian. We've done our analysis, kind of looked at different scenarios. As of now, there's no plans to redeem the sub-debt nor even do a partial pay down of it. We just think that as, you know, even though the capital efficacy is declining on December 1st, still a good rate in terms of the borrowing side of it and for the amount of capital that we get from it. So we'll continue to evaluate that, but right now we think the best use for capital is either to have it there for organic growth or for some of that stock buyback.

Tyler Cacciatori

Got it. And then, sorry if I missed it. But, you know, how do more hikes affect the margin here?

Ian Whinnem

Yes, for each rate hike, we would anticipate 1 to 2 basis points per quarter, or with each hike, I should say, of expansion, yes. We may be in a slightly asset sensitive position.

Tyler Cacciatori

Thanks. That'll be it for me.

Charles Parcher

Thanks, Tyler.

Ian Whinnem

Thank you.

Charles Parcher

Thank you.

Operator

Thank you. And there are no further questions at this time. I will now hand the call back to Mr. Parcher for any closing remarks.

Charles Parcher

In closing, I'd like to thank everyone for joining me today for my first earnings call as the President, CEO, and for your investment in Civista. I remain confident that this quarter's list of accomplishments, strong financial results, and our disciplined approach to managing the company position us well for long-term future success. I look forward to talking to you again in a few months to share our year-end results. Thank you for your time today.

Operator

And this does conclude today's call. Thank you for participating. You may all disconnect.

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