Civista Bancshares in Sandusky, Ohio, has received an upgraded Community Reinvestment Act rating.
The $1.5 billion-asset company said in a press release Thursday that its CRA rating was increased to “satisfactory” from “needs to improve,” which opens up the possibility of pursuing acquisitions. Civista’s latest exam was completed in May.
Civista had been “disappointed” with its prior rating, Dennis Shaffer, the company’s president, said in the filing, adding that the issue stemmed from an “inadvertent programming error.”
The lower rating came after the company incorrectly charged a total of $25,000 to 300 customers over four years, Matthew Forgotson, an analyst at Sandler O’Neill, wrote in a note to clients.
“Serving our community needs has been a priority for Civista for the past 133 years,” Shaffer said in the filing. “We are pleased that our efforts have been recognized and that we once again have a CRA rating that reflects that commitment. With the upgrade in our CRA rating we can get back to looking for acquisitions.”
Civista has been active acquirer in recent years, buying three banks between October 2007 and March 2015, according to the Federal Deposit Insurance Corp.
The CRA upgrade “enables the company to circle back with potential partners and engage in earnest about the strategic benefits, structure, and timing of a partnership,” Forgotson wrote.
Civista will likely take a “two-pronged M&A strategy” by considering small urban deals in or around the Ohio communities of Akron, Cleveland, Columbus, Dayton and Toledo, along with larger deposit-rich banks in rural markets, Forgotson added.
The company could focus on Ohio banks with $100 million to $500 million in assets, though southeastern Michigan and eastern Indiana are also possibilities. There are almost 90 institutions in Ohio within that range, Forgotson said.
“We sense a slight tilt towards a rural play of late, though we are certainly leaving both options on the table,” Forgotson wrote, adding that loan growth has increased the company’s loan-to-deposit ratio to 94%.