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DATE
Thursday, July 24, 2025 at 5:00 p.m. ET
CALL PARTICIPANTS
President and Chief Executive Officer — Dennis Shaffer
Executive Vice President, President and Chief Lending Officer of Civista Bank — Charles Parcher
Senior Vice President, Chief Operating Officer of Civista Bank — Richard Dutton
Senior Vice President, Chief Financial Officer of Civista Bank — Ian Whinnem
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RISKS
Noninterest Income Decline-- Noninterest income (GAAP) decreased $1.3 million, or 16.2%, from the previous quarter and $3.8 million year-over-year, primarily driven by reduced leasing and residential fee revenues, as well as nonrecurring adjustments from a core system conversion.
Earnings Per Share Dilution Near Term-- Management indicated the newly issued shares from the capital raise will "put some pressure on our earnings per share for the next several quarters,"
Unrealized Securities Losses-- Unrealized losses on available-for-sale securities increased by $5.6 million since year-end 2024, reaching $63.1 million at June 30, 2025.
Loan-to-Deposit Ratio Elevated-- The loan-to-deposit ratio increased to 98.6%, which management stated is "higher than we would like it to be" with a reduction expected following deposit initiatives and the Farmers acquisition.
TAKEAWAYS
Net Income-- $11.0 million, or $0.71 per share, increasing 56% year-over-year (GAAP) and $847,000 over the prior quarter; Excluding a $757,000 nonrecurring gain, net income would have been $10.3 million, or $0.66 per share.
Pre-Provision Net Revenue-- Increased by $3.3 million, or 37.5%, year-over-year and Increased pre-provision net revenue by $770,000, or 6.7%, over the linked quarter.
Net Interest Income-- $34.8 million, up $2.0 million, or 6.2%, sequentially, driven by earning asset yields rising 13 basis points to 5.84% while funding costs held at 2.32%.
Net Interest Margin-- Expanded by 13 basis points quarter-over-quarter to 3.64%, supported by repricing brokered deposits to a lower blended rate.
Loan and Lease Growth-- Annualized growth of 6.8% for the loan and lease portfolio, with Total loans and leases increased by $47.1 million (6.1% annualized).
Residential Lending-- Residential loans grew by $42 million, representing the largest segment increase.
Noninterest Expense-- $27.5 million, up $356,000, or 1.3%, over the prior quarter due to compensation increases; efficiency ratio improved to 64.5% from 64.9% in Q1 2025 and 72.6% in Q2 2024.
Deposit Performance-- Total deposits declined $42.7 million, or 1.3%, mainly reflecting the exit of a single municipal customer and ongoing migration to higher-rate accounts.
Capital Actions-- Completed a follow-on capital raise generating $76.3 million net and issuing 3,788,238 new shares in July 2025; additional proceeds will reduce overnight borrowings initially, then fund new loans over time.
Acquisition Announced-- Entered into a definitive agreement to acquire Farmers Savings Bank, bringing $233 million in core deposits and a $161 million security portfolio; deal expected to close in the fourth quarter and is not contingent on the capital raise.
Pro Forma Capital Ratios-- Tangible common equity ratio projected to rise to 8.6% and tier one leverage ratio to 10.6% following the capital raise and Farmers acquisition.
Credit Quality Metrics-- Allowance for credit losses to total loans was 1.28% at June 30, 2025, and allowance for credit losses to nonperforming loans was 175% at Q2 2025, up from 122% at Q4 2024. Criticized credits fell by $2 million in Q2 2025.
Deposit Initiatives-- Launched a new digital account opening platform in July, with marketing aimed at attracting customers outside current branch locations.
CRE Concentration-- Pro forma commercial real estate (CRE) to risk-based capital ratio is projected at 292% following the capital raise and Farmers acquisition. Management aims to keep the CRE to risk-based capital ratio below 325% on a pro forma basis following the capital raise and Farmers acquisition.
SUMMARY
The company paired a $76.3 million capital raise (rounded from $76.274 million) with the announced acquisition of Farmers Savings Bank. Anticipating improved capital ratios and deeper core deposit funding upon closing of the Farmers Savings Bank acquisition and follow-on capital offering. Management expects net interest margin to move to the low-to-mid 3.50% range in Q3 2025, on the back of loan repricing and lower-cost deposit funding. Operational efficiency, as measured by the efficiency ratio, improved to 64.5% from 64.9% in Q1 2025, and The security portfolio's unrealized losses grew $5.6 million since December 2024 (Q4 2024).
The company expects the additional earnings from the Farmers acquisition to offset the earnings dilution created by issuing additional shares related to the follow-on capital raise.
Digital initiatives and targeted deposit campaigns were highlighted as core to reducing the loan-to-deposit ratio toward a 90%-95% target.
Nonrecurring system conversion costs and timing of lease fee income materially affected noninterest results, with management "hoping the back half of the leasing year will be a little bit better."
Leadership stated, "our credit quality remains strong, and our credit metrics remain stable," pointing to a payoff on a $7.2 million substandard loan and no deterioration in office loan portfolios.
INDUSTRY GLOSSARY
CRE Ratio: The ratio of commercial real estate loans to risk-based capital, used to assess regulatory concentration risk.
Efficiency Ratio: Noninterest expense divided by the sum of net interest income and noninterest income, measuring cost efficiency of banking operations.
Criticized Credits: Loans identified by bank examiners or management as showing higher-than-normal risk, but not yet classified as nonperforming.
Tangible Common Equity Ratio: Tangible common equity divided by tangible assets, reflecting core capital adequacy.
Tier One Leverage Ratio: Tier 1 capital divided by average total consolidated assets, used for regulatory capital requirements.
Full Conference Call Transcript
Dennis Shaffer: Good afternoon. This is Dennis Shaffer, President and CEO of Civista Bancshares, Inc., and I would like to thank you for joining us for our second quarter 2025 earnings call. I'm joined today by Chuck Parcher, EVP of the company and President and Chief Lending Officer of the bank; Richard 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 for the second quarter of $11 million or $0.71 per share, which represents a $4 million or 56% increase over our second quarter in 2024 and an $847,000 increase over our linked quarter.
This also represents an increase in pre-provision net revenue of $3.3 million or 37.5% over our second quarter in 2024 and a $770,000 or 6.7% increase over our linked quarter. Our second quarter results included a $757,000 positive nonrecurring adjustment related to finalizing the conversion of our leasing division's core system. Absent this adjustment, net income for the second quarter would have been $10.3 million or $0.66 per diluted share. Net interest income for the quarter was $34.8 million, which represents an increase of $2 million or 6.2% compared to our linked quarter. The increase was attributable to our earning asset yield increasing 13 basis points to 5.84% while holding our overall funding cost steady at 2.32%.
Our cost of core deposits increased by six basis points to 1.48%, which was offset by the repricing of a $150 million brokered CD that matured in late March that carried a rate of 5.18%. We were also able to reduce and replace these deposits with $125 million of CDs laddered over the next twelve months at a blended rate of 4.26%, representing a savings of 92 basis points. This resulted in our margin expanding by 13 basis points to 3.64% compared to the linked quarter. We continue to have solid loan demand across our footprint. Our loan and lease portfolio grew at an annualized rate of 6.8% during the quarter.
This was organic growth, and we believe it is indicative of the continued strength of our markets and our organization. We continued our focus on holding loan rates at higher levels to ensure an appropriate return for the use of our liquidity and capital. Earlier this week, we announced a quarterly dividend of $0.17 per share, consistent with the prior quarter. Based on our July 22 dividend declaration date, closing share price of $21.26, this represents a 3.2% yield and a dividend payout ratio of nearly 24%. This month, we also announced entering into a definitive agreement to acquire the Farmers Savings Bank based in Spencer, Ohio, and the announcement of an $88.5 million follow-on capital offer.
The acquisition was not contingent on raising capital; we felt that the additional earnings the acquisition will provide would offset the earnings dilution created by issuing additional shares. We have been considering raising capital for some time and viewed pairing it with an acquisition as a great opportunity to improve our TCE ratio above 8% and reduce our CRE ratio below 300%. The additional capital will allow us to grow our franchise by accelerating organic loan and deposit growth, investing in technology and infrastructure, and future acquisitions. We were presented with the Farmers' opportunity early this year and felt it was both strategically and financially compelling.
We have very similar philosophies on how we view our employees, our customers, and the communities that we serve. As we have in prior acquisitions, our strategy will be to leverage Farmers' $233 million in low-cost core deposits and their $161 million security portfolio to fund loan growth into Farmers' current markets, Greater Northeast Ohio, and across Civista's footprint. We look forward to closing the transaction during the fourth quarter and welcoming them into the Civista family. With respect to the capital raise, we have said for some time we would need to raise capital to support our strong organic growth. Ideally, we wanted to raise that additional capital in conjunction with an acquisition.
The Farmers transaction presented us with that opportunity. We successfully closed our follow-on offering, raising $76.274 million of additional capital net of offering costs and issuing 3,788,238 additional shares. Immediate use of the proceeds generated from the offering will be to reduce overnight borrowings; the longer-term strategy is to convert these funds into loans over the next several quarters. We'll work as quickly as possible to close the Farmers transaction and begin including the additional earnings it will provide to offset the dilution in earnings created by the additional shares. During the quarter, noninterest income declined $1.3 million or 16.2% from the first quarter and $3.8 million from the second quarter of 2024.
The primary drivers of the decline from our linked quarter were $1.4 million in fees related to leasing operations at Civista Leasing and Finance. This decline was primarily attributable to the nonrecurring adjustments related to our leasing and finance division's core system conversion. The primary drivers for the $3.8 million decline from the prior year's second quarter were a $2 million decline in fees generated from leasing operations due to stronger lease originations in '24 and lower residential fee revenue in 2025 along with the nonrecurring adjustments that occurred in the second quarter. Noninterest expense for the quarter was $27.5 million and represents a $356,000 or 1.3% increase over the first quarter.
This was due to an increase in compensation and is primarily attributable to merit increases which take effect in April of each year. In addition, we made a few individual salary adjustments for in-demand positions to get those employees into an appropriate salary range. This increase was partially offset by declines in professional fees as we concluded our annual audit during the first quarter and equipment expense as we continue to execute our residual value insurance strategy, reducing depreciation expense related to operating leases. Compared to the prior year's second quarter, noninterest expense declined $907,000 or 3.2%.
The decline is attributable to a reduction in equipment expense for the reason previously mentioned and a reduction in compensation expense as the result of 11 fewer FTEs. This reflects closing a branch during the fourth quarter of last year, shutting down our call center in the first quarter of this year, and not replacing a few positions. Our efficiency ratio for the quarter improved to 64.5% compared to 64.9% for the linked quarter and 72.6% from the prior year's second quarter. Our effective tax rate was 14.6% for the quarter and 14.7% year to date. Turning our focus to the balance sheet, for the quarter, total loans and leases grew by $47.1 million.
This represents an annualized growth rate of 6.1%. While we experienced increases in nearly every loan category, our most significant increase was in residential loans, which increased by $42 million. The loans we originate for our portfolio continue to be virtually all adjustable rate, and our leases all have maturities of five years or less. As we have shared on previous calls, we continue to price commercial and ag loan opportunities aggressively and are being more conservative in how we price commercial real estate opportunities as we try to manage the overall mix in our loan portfolio.
During the quarter, new and renewed commercial loans were originated at an average rate of 7.48%, residential real estate loans were originated at 6.53%, and loans and leases originated by our leasing division at an average rate of 9.05%. Loans secured by office buildings make up 4.8% of our total loan portfolio. As we have stated previously, these loans are not secured by high-rise metro office buildings; they are predominantly secured by single or two-story offices located outside of Central Business Districts. Along with year-to-date loan production, our pipelines are steady, and our undrawn construction lines were $188 million at June 30. Post capital raise and Farmers acquisition, our pro forma CRE to risk-based capital ratio will be 292%.
And while we anticipate maintaining this ratio at no more than 325%, this will allow us to be a little bit more aggressive in our CRE lending. We anticipate loan growth will remain in the mid-single digits for the balance of 2025 and accelerate into the high single digits in 2026 as we leverage the excess Farmers deposits and our loan pipeline to build. On the funding side, total deposits were mostly flat, declining just $42.7 million or 1.3% for the quarter. This was primarily attributable to one municipal customer that deposited approximately $47 million during the first quarter and transferred those funds out during the second quarter. We continue to focus on growing core funding.
In July, we launched our new digital deposit account opening platform using Mantle that we expect to ramp up during the third and fourth quarters, focusing our marketing on new customers outside our current branch locations. Our overall cost of funding only increased one basis point to 2.32%. We continue to see migration from lower-rate interest-bearing accounts into higher-rate deposit accounts during the quarter. As a result, our cost of deposits, excluding broker deposits, increased by six basis points from the linked quarter to 1.48%. Our deposit base continues to be fairly granular, with our average deposit account, excluding CDs, approximately $27,000. Noninterest-bearing deposits and business operating accounts continue to be a focus.
In addition to our new digital platform, we have several initiatives underway to gather these types of deposits, including monthly marketing blitzes and marketing to low and no deposit balance loan customers. At quarter end, our loan-to-deposit ratio was 98.6%, which is up from our linked quarter, and it's higher than we would like it to be. We anticipate reducing this ratio to our targeted range of 90 to 95% as our deposit initiatives take hold and the Farmers acquisition closes. With respect to FDIC-insured deposits, 12.5% or $398.6 million of our deposits were in excess of the FDIC limits at quarter end.
Our cash and unpledged securities at June 30 were $507.9 million, which more than covered our uninsured deposits. Other than the $518.4 million of public funds with various municipalities across our footprint, we had no deposit concentrations at June 30. 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, and we look forward to adding Farmers' deposit base. The interest rate environment continues to put pressure on our bond portfolios. At June 30, our securities were all classified as available for sale and had $63.1 million of unrealized losses associated with that. This represented an increase in unrealized losses of $5.6 million since 12/31/2024.
At June 30, our security portfolio was $645 million, which represented 15.4% of our balance sheet. And when combined with cash balances, it represented 22.5% of our deposits. We ended the quarter with our tier one leverage ratio at 8.8%, which is deemed well-capitalized for regulatory purposes. Our tangible common equity ratio was 6.7% at June 30, up from 6.59% at March 31. Post capital raise and Farmers acquisition, our tier one leverage ratio increases to 10.6% and our tangible common equity ratio increases to 8.6%, which we feel gives us capital to support organic growth, future strategic transactions, and general corporate purposes.
The business' earnings continue to create capital, and our overall goal remains to maintain adequate capital to support organic growth and potential acquisitions. We will continue to focus on earnings and will balance the payment of dividends and any repurchases with building capital to support our growth. Although we did not repurchase any shares during the quarter, we do continue to believe that our stock is a value. Despite the uncertainties associated with the economy and the expense pressures our borrowers face, our credit quality remains strong, and our credit metrics remain stable. For the quarter, criticized credits declined by $2 million, with the biggest movement coming from a substandard and nonperforming $7.2 million loan payoff.
We did make a $1.2 million provision during the quarter, which was primarily attributable to funding loan growth and a $549,000 charge-off, which was associated with a nonoperating hotel loan that had been in workout. Our ratio of allowance for credit losses to total loans is 1.28% at June 30, which is consistent with the 1.29% at 12/31/2024. In addition, our allowance for credit losses to nonperforming loans is 175% at 06/30/2025, an improvement when compared to 122% at 12/31/2024. In summary, it's been a very busy and productive quarter. I could not be more bullish for Civista and our shareholders given the success of our follow-on offering and our new partnership with Farmers Savings.
I look forward to watching our teams work together over the next few quarters to prepare Farmers for a successful integration into the Civista family. Our margins remain strong, and we will continue our focus on generating more lower-cost funding. We anticipate loan growth will remain in the mid-single-digit range for the balance of 2025 and accelerate into the high single digits in 2026 as we leverage the excess Farmers deposits in our loan pipeline to build.
While our newly issued shares will put some pressure on our earnings per share for the next several quarters, I am confident in Civista's ability to leverage our new capital, generate solid earnings, and create long-term shareholder value while meeting the needs of our customers and communities. We also look forward to welcoming Farmers' customers, employees, and their communities into the Civista family. Thank you for your attention this afternoon and your investment. And now we'd be happy to address any questions you may have.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Brendan Nosal with Hovde Group. Your line is now open.
Brendan Nosal: Hey, Dennis. Maybe just starting off here on the core margin.
Dennis Shaffer: Actually, the one-time noise that you guys called out, it more or less came in as expected, it was up minus 6% in the first quarter. Any thoughts on how that core margin trends over the balance of the second half as you weigh deposit competition with a pickup in asset yields on remixing?
Dennis Shaffer: Yeah. I read this to you. So as we kind of think of Q2 going into Q3, now early in Q2, we shifted our focus on our CDs into a shorter term as we expected some rate cuts occurring in the third and fourth quarters. So now our highest rates on those three-month CDs as opposed to seven and twelve months that we're doing earlier in the year. Also, we have a good amount of the loans that are coming up for repricing. As they come forward into the year, that's going to be helping us also. We have about $50 million in the third quarter, another $50 million in the fourth quarter.
Brendan Nosal: They're gonna reprice up about 150 basis points.
Dennis Shaffer: So as we factor in those as well as the immediate benefit that we get out of that $75 million of capital. That's paying down borrowings immediately. That's gonna pay off near four and a half percent of the borrowings. All in all, we expect our margin for the third quarter to come in maybe low to mid three fifties so somewhere around three fifty two, three fifty three. And then expanding a little bit more in the fourth quarter.
Brendan Nosal: Fantastic. And I appreciate the color there. That's helpful. One more for you before I step back. Can you just update us on the competitive environment and how it's evolved for both lending and funding? We're hearing that several larger regionals are starting to step back into certain asset classes and trying to grow loans again. So just kind of curious what your experience is.
Dennis Shaffer: Yeah. We're seeing some of the same, you know, the same thing you're just alluding to. I think the regions are getting a little more aggressive. I think the West Bank of Premier thing, as it kind of settles through, I think West Bank of is going get a little bit more aggressive as well. We are seeing some opportunities in the because of that because of that acquisition, both with talent and with new clients. So we look forward to that, but it is a very competitive market across both deposits and lending.
Operator: Okay. Wonderful. Thank you for the color. Your next question comes from Terry McEvoy with Stephens. Your line is now open.
Terry McEvoy: Thanks. Good afternoon, everybody. Hi, Dennis. You said in your prepared remarks you're seeing solid loan growth across the footprint.
Dennis Shaffer: Could you just talk about maybe specific markets or sectors that are behind the demand? And were you maybe a bit more selective on loan growth in the second quarter given the loan-to-deposit ratio? And think that kind of feeds into your optimism for accelerated loan growth next year.
Dennis Shaffer: Yeah. I think I think we've been muting loan growth for a while now. But a lot of that loan growth in the second quarter was residential. Loan growth. We've been muting kind of the CRE just because of our, you know, the higher concentration. So I think the additional capital is gonna help us accelerate that organic growth. And we felt, you know, we were kind of at a point where needed to do something to be able to accelerate that. You know, we know that, you know, the next quarter or two, we'll probably take a step back as far as, you know, EPS growth and things like that.
But then we really look long term, we think we can accelerate it and keep growing that and improving our ROA, improving our earnings and stuff. So we do see loan growth accelerating because there's a lot of opportunities over the last year to eighteen months that we passed on. That the opportunities are really throughout our footprint. Ohio has really become a business-friendly state. So we are adding jobs, you know, all throughout the state. There's been some significant companies announcing investments into Ohio. So we feel really bullish that and we see that with our loan demand. I mean, we see our lenders bringing in stuff from all, you know, all across our footprint.
So I'll let Chuck here comment to see if he has other comments. You know, he's he's probably even closer to it than I am. Well, I just think, you know, I think Dennis alluded to it, but you know, the nice part of Ohio right now is the three major cities, Cleveland, Columbus, and Cincinnati are all.
Chuck Parcher: All doing quite well. All expanding marketplaces from a jobs perspective. And from a population perspective, you know, slightly. So we feel good about we feel good about that. We really never saw any well, it's all major deterioration in our in our office. Even, you know, even though we don't have much central city office, but very little at all. You know, all of our office really held in there pretty good. The demand around, especially the suburbs of those three cities and, you know, then you throw in Dayton and Toledo are doing very well as well. So know, we feel good about where we're positioned, you know, inside of the inside of the Midwest right now.
Terry McEvoy: Thanks. And then as a follow-up, Dennis, thanks for running through some of the deposit initiatives. Believe last year when you announced a few other initiatives, one, I believe, with the state of Ohio. Can you just talk about the last year's deposit growth strategy and those initiatives? Are they capacity? And then what do you think some of these newer initiatives can add to the balance sheet over the next few years?
Dennis Shaffer: Yes. Some of the little things we did last year are probably at capacity. I mean, they were specifically like, the Ohio homebuyers was a specific program and stuff. So I think some of the new initiatives we are limitless for us. You know, we've we've made a big investment into this Mantle product. And, you know, that's that's a new deposit account origination system. That really can expand our footprint and stuff and provide people in just an easier way to open accounts.
You know, we'll initially lead with as Ian was alluding to when he addressed the margin question, you know, a kind of higher rate CD to attract people but that's still cheaper than what, you know, some of the broker deposits and then the borrowings that we have. So the goal is to raise enough deposits to kind of keep pace with our loan growth. So that was a significant investment. We already talked about, you know, targeting these low and no deposit balances. You know, I think in our strategic plan, we have a we call for maybe hiring some more treasury management officers.
We've had great success in growing adding deposits and growing fee income over the last several years. So that's one of our initiatives that we'd like to kick off and stuff. You know, maybe some branch adding some branches in areas where we've identified where we think we there's growth and opportunity for us. So there are just a number of initiatives that we outlined in our strategic plan that we are starting to execute. Some of those, you know, they take a little while to take hold, but, we're able to execute and increase our deposits to help, you know, keep pace with a lot of that. What we see is on the opportunity on the loan side.
Terry McEvoy: That's great color. Thanks for taking my questions.
Dennis Shaffer: Thanks, Terry.
Operator: The next question comes from Tim Switzer with KBW. Your line is now open.
Tim Switzer: Hey, good afternoon. Thanks for taking my questions. Hi, Dennis. I've been jumping around calls, so sorry if this is already covered. But you know, after adjusting for the one-timer and leasing fee income this quarter, still a little bit below what we had. And I know that line item can jump around quite a bit. Can you give us an update on maybe what we should be projecting going forward there?
Dennis Shaffer: Chuck, you got thoughts on that? Well, I think some of them. I mean, I think our gain on sale in mortgage will continue to stay relatively consistent. We're hoping the back half of the leasing year will be a little bit better. Think you know, Trump big, beautiful, whatever you wanna call it, bill brought back accelerated depreciation. We feel like the back half of the year the leasing side, we'll have a little bit more a little bit more volume there from that perspective. So They don't have are a little bit Pipeline. We're that they're reporting. So we don't have our probably a real good number for you yet, Tim.
But you know, it's it's been very lumpy. So us because we've been just tweaking, you know, like I said, we did the core conversion and there too. So that's been a little bit it just made things lumpy but we'll we'll if we can get a better number and provide some guidance here. One of the Tavern one a little bit later. Yeah. And this is Ian just added, but I think the first half, as Dennis just mentioned, was slow because of the CapEx spending on businesses on the leasing side. And then also, I think our sales team just had some distractions because of our courses conversion.
So as we take those two items away, of getting bonus depreciation put in, maybe a little bit more comfort on what the future looks like with tariffs, we do expect to see that business rebound in the second half.
Tim Switzer: Okay. Alright. That makes sense. And you just touched on my next question. Related to the tariffs. You know? Have you guys done kind of, like, a good deep dive into your loan book? See where you have exposure, if any, and, you know, what were the results of that?
Dennis Shaffer: We did we did look at it, and we've had quite a few conversations with our especially our larger manufacturers. You know, most you know, believe it or not, most of them are optimistic. Feel like if we do bring more stuff into you know, back domestically from overseas that there's opportunity there. Almost all of them said the capacity isn't there right now Take on all that work. It would all come back tomorrow. Most are optimistic.
Now at the same time, Tim, as what Ian just alluded to, CapEx spend you know, everybody's still kind of waiting to see how it totally plays out and at least CapEx spending for our what I would call, major middle market borrowers has not accelerated yet to look at that. I think everybody's still waiting a little bit to see how it totally plays out.
Tim Switzer: That's great color. Thank you, guys.
Dennis Shaffer: Thanks, Tim.
Operator: Ladies and gentlemen, as a reminder, you have a should you have a question, please press 1. Your next question comes from Manuel Navas with D. A. Davidson. Your line is now open.
Manuel Navas: Hey. Good afternoon. What's well. What low growth was a little bit higher through May. Was there some payoffs in commercial? By the end of the quarter in June? Just trying to understand that shift.
Dennis Shaffer: Yeah. Not anything drastic, I think, from that perspective. Our run rate's been pretty consistent. Manuel. So I guess I don't know where you what are you picking that up from, I guess, the main I guess the update through May, I think, had a little bit more loan growth. And the Mantle initiative is there any numbers about around that so far in terms of amounts that is brought in here in July, or just you've just been pretty excited about how it's going? We don't really we're we just kicked it off July 7, So you know, we do see some positive we, you know, we do see some positive pickup in those CD balances.
But, you know, we're two weeks into it, so there's you know, it would not major. You know, like, we haven't raised a $100 million in deposits. We got lots of toys in our family so far. Appreciate the commentary on leasing recovery. Is that also impacting the loan balances as well? Or the lease balance? On the leasing side, yes. Yeah. So, yeah, on the leasing side, we sell about half of them. And so that would you know, increase our leases that go on to the balance sheet too, if that's what your question is.
Manuel Navas: Okay.
Dennis Shaffer: And then in the average balance sheet, was there anything interesting going on in deposit costs? It seems like CDs came down, but then your other line kinda saw a jump in deposit cost. Is that just some of the public funds? Your overall deposit costs were fine, but does it seem like some of the geographies shifted around? Yeah. We have seen a little bit of shift, and some larger deposits that are in some of the different pricing buckets for public funds. Okay. That gives you back to the competitive environment, meanwhile, some of those higher deposit balances. We've had to tweak up.
We've kind of we've kind of have the price that to our effective fund fed funds rate. But we did see a little bit of shift in some of them higher deposit balance. He discount to the effective funds rate. Right. We discount it. Yeah. A discount to them. Right?
Manuel Navas: Okay.
Dennis Shaffer: I appreciate that. That's that's all I've got right now.
Manuel Navas: Thank you.
Operator: There are no further questions at this time. I will now turn the call over to Dennis Shaffer for closing remarks.
Dennis Shaffer: Well, in closing, I just want to thank everyone for joining us for today's call. The quarter is strong. We had this quarter's strong financial results. Our announcement of the Farmers deal and the following offering, we're doing large part of just a lot of hard work and discipline from our team. I'm really confident as we move forward that we continue to improve on our strong core deposit franchise and then and we take this disciplined approach to managing the company I think it's just gonna lead to a lot of long-term future success for us. So I look forward to talking to everyone again in a few months. Share our third quarter results.
Thank you for your time today.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.