Civista Bancshares, Inc. (NASDAQ:CIVB) Q3 2020 Earnings Conference Call - Final Transcript

Good day and welcome to the Civista Bancshares, Inc. Third Quarter 2020 Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]

I would like now to turn the conference over to Dennis Shaffer. Please go ahead.

Good afternoon. This is Dennis Shaffer, President and CEO of Civista Bancshares, and I would like to thank you for joining us for our third quarter 2020 earnings call. I'm joined today by Rich Dutton, Senior Vice President of the Company and Chief Operating Officer of the bank; Chuck Parcher, Senior Vice President of the Company and Chief Lending Officer of the bank; and other members of our executive team.

Before we begin, I would like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition of Civista Bancshares, Inc. that involves risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking 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, available on our website, contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures.

We will record this call and make it available on Civista Bancshares' website at civb.com. Again, welcome to Civista Bancshares' third quarter 2020 earnings call. I would like to begin by discussing our results, which were issued this morning. At the conclusion of my remarks, we will take any questions that you may have. This morning, we reported earnings for the third quarter 2020 of $7.7 million or $0.48 per diluted share and $22 million or $1.36 per diluted share for the nine months ending September 30, 2020. This represents an increase in net income from 2019 of $136,000 for the quarter and a decrease of $3.5 million for the nine-month period.

The COVID-19 pandemic has had several effects on our balance sheet and income statement during 2020. Our balance sheet has grown as a result of the Paycheck Protection Program or PPP. The makeup of our income statement has shifted as well. The largest change on our income statement is an increase in provision for loan losses due to the economic uncertainty created by COVID-19, stay-at-home orders and increased unemployment. Without the increase in provision, our net income would have exceeded 2019 levels for both periods.

Our strong capital position and continued ability to generate core earnings allowed our Board of Directors to once again approve our quarterly dividend of $0.11 per share, earlier this month, which represents a dividend payout ratio of 23%. In addition, after meeting with customers and working through the second round of pandemic related loan