Banking on Contradictions: Analyzing Deposit Costs, Loan Growth, and Yield Changes in Q1 2025

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Revenue and Profitability Increase:
- Civista Bancshares, Inc. reported net income for Q1 2025 at $10.2 million, representing a 60% increase over their Q1 2024 results and a $275,000 increase over the linked quarter.
- This increase was due to a 47% rise in pre-provision net revenue and a 11.9% increase in ROA.

Deposit Funds and Margin Expansion:
- The bank's core deposit funding excluding brokered deposits grew organically by over $67 million during the quarter, contributing to a reduction in reliance on brokered funding.
- This shift in funding sources led to a 4.5% increase in net interest income and a 15 basis points expansion in the net interest margin.

Loan and Leasing Activity:
- The loan portfolio grew at an annualized rate of 2.8%, with increases in commercial, ag, owner-occupied, and non-owner-occupied commercial real estate segments.
- This growth was supported by disciplined lending practices, with new and renewed commercial loans originated at an average rate of 7.16%.

Cost Management and Expense Reduction:
- Noninterest expense declined by 4.1% from the linked quarter, resulting in an efficiency ratio of 64.9% for the quarter.
- Expense reductions were due to improvements in nearly all categories, including compensation-related expenses and professional fees, despite increased investments in technology and digital initiatives.

Credit Quality and Provisioning:
- The allowance for credit losses to total loans remained consistent at 1.30%, reflecting strong credit quality despite macroeconomic uncertainties.
- The bank made a $1.6 million provision, primarily due to loan growth and low prepayment rates, with capital levels continuing to create capital.