Exhibit 99.1
August 22, 2023
Dear
Shareholder,
We are pleased to enclose (unless you have direct deposit) your August 22, 2023, dividend of $0.16 per common share. This is a $0.01
per share, or 6.7%, increase in your dividend and it is the second consecutive quarter that we have raised the dividend. Our earnings remain strong, so an increase is warranted. Our stock closed at $17.40 on June 30, 2023.
For the second quarter 2023, we reported net income of $10.0 million or $0.64 per diluted share which represents a 30.3% increase over the second quarter
2022. Our net income of $22.9 million or $1.45 per diluted share for the six months ended June 30, 2023, represents a 41.8% increase over the first half 2022 performance. The increase over the prior year is a direct result of our good
organic loan growth, our two acquisitions last year, and the rising interest rate environment.
Our net interest margin continues to drive our earnings
and was a healthy 3.86% for the quarter and 3.99% year-to-date. However, like the rest of the industry, our margin is under pressure and did contract 25 basis points for
the quarter.
The second quarter margin contraction was primarily a result of adding approximately $300 million in higher costing, brokered
certificate of deposits to our balance sheet. This was done to enhance our liquidity position and to preserve our overnight borrowing capacity at the Federal Home Loan Bank. We felt this was extremely important, given the uncertainty at the time due
to the three bank failures that occurred in early March. Rising deposit costs also contributed to the contraction. Our liquidity position remains strong, and we do not anticipate adding any additional brokered certificate of deposits for the
remainder of the year.
I continue to believe that our low-cost deposit franchise is one of Civista’s most
valuable characteristics and contributes significantly to our peer leading net interest margin and profitability. Approximately 34% of our deposits are in non-interest checking accounts, which helps us control
our funding costs.
During the quarter, net loans and leases grew by $55.7 million or at an annualized rate of 8.8%. We had good loan demand across
our entire footprint. At quarter-end, we had $211.3 million in undrawn construction lines, so we are optimistic that we will continue to grow our loan portfolio at or above a mid-single digit rate for the remainder of the year.
Despite the rising interest rate environment, the bank’s
credit quality is good, and we continue to see no indication of any systemic deterioration in our customers’ financial conditions. We are, however, well positioned for any potential downturn and our ratio of allowance for loan losses to loans
is 1.33% on June 30, 2023.