Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) October 27, 2023

Civista Bancshares, Inc.

(Exact name of Registrant as specified in its charter)

Ohio

001-36192

34-1558688

(State or other jurisdiction of

incorporation or organization)

(Commission

File Number)

(IRS Employer

Identification No.)

100 East Water Street, P.O. Box 5016, Sandusky, Ohio 44870

(Address of principle executive offices)

Registrant’s telephone number, including area code: (419) 625-4121

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Act of 1934 (§240.12b-2 of this chapter)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common

CIVB

NASDAQ Capital Market

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02

Results of Operations and Financial Condition

On October 27, 2023, Civista Bancshares, Inc. announced preliminary unaudited earnings for the three and nine-month periods ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated here by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01

Financial Statements and Exhibits

(d) Exhibit 99.1 Press release of Civista Bancshares, Inc. reporting financial results and earnings for the three and nine-month periods ended September 30, 2023.

Exhibit 104 Cover Page Interactive File-the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						Civista Bancshares, Inc.
						(Registrant)

Date: October 27, 2023						/s/ Todd A. Michel
						Todd A. Michel,
						Senior Vice President & Controller

Exhibit 99.1

LOGO

Civista Bancshares, Inc. Announces Third Quarter 2023 Financial Results

Sandusky, Ohio, October 27, 2023 /PRNewswire/– Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) announced its unaudited financial results for the three and nine month periods ending September 30, 2023.

Third quarter and year-to-date 2023 highlights:

•

Net income of $10.4 million, or $0.66 per diluted share, for the third quarter of 2023, compared to $11.1 million, or $0.72 per diluted share, for the third quarter of 2022.

•

Net income of $33.3 million, or $2.12 per diluted share, compared to $27.3 million, or $1.82 per diluted share, for the nine months ended September 30, 2023 and 2022, respectively.

•

Cost of deposits of 129 basis points and total funding costs of 172 basis points for the quarter.

•

Based on the September 29, 2023 market close share price of $15.50, the $0.16 third quarter dividend is equivalent to an annualized yield of 4.13% and a dividend payout ratio of 24.24%.

“Overall, I am extremely pleased with our third quarter results. Despite continued funding pressure, we were able to increase net interest income quarter-over-quarter, as loans grew by $118.6 million, or 18 percent on an annualized basis. We continue to post record earnings, with our year-to-date net income up 22 percent over the same period last year”, said Dennis G. Shaffer, CEO and President of Civista.

•

During the quarter Civista made the decision to step away from its income tax refund business for 2024. In the first quarter of 2021, the U.S Treasury mistakenly sent $5.6 billion in stimulus payments to the Company, causing an increase in the volume of consumer complaints. The volume of complaints has diminished, however, the amount of information required by our regulators to “close out” each complaint has increased extensively. While our business partner has been responsible for gathering most of the information related to these requests, it has become apparent that our regulators’ view of this program is changing. Management has made the decision to step away rather than risk that our participation in this program might inhibit future M&A activity. Civista earned $2.4 million in each of the previous 3 years from this program with very few direct costs associated with it.

Mr. Shaffer added, “We have had a long and very beneficial relationship with the Santa Barbara Tax Processing Group and our income tax refund processing program. This was not an easy decision, but one that we felt made sense for Civista.

Results of Operations:

For the three-month periods ended September 30, 2023 and 2022

Net interest income increased $1.1 million, or 3.5%, for the third quarter of 2023 compared to the same period of 2022. Interest income increased $13.3 million while interest expense increased $12.2 million. The increase in interest income was driven by both increases in rates and increases in volume. The increased interest expense was driven by rate and volume as well, but also by a shift in the mix of funding sources.

Net interest margin decreased 44 basis points to 3.69% for the third quarter of 2023, compared to 4.03% for the same period a year ago.

The increase in interest income was primarily due to a 104 basis point increase in asset yield, which led to $8.1 million of the increase in interest income. Additionally, a $377.9 million increase in average earning assets led to $5.2 million of the increase in interest income. The increase in volume can be attributed to both organic growth and to the acquisitions during 2022 of Comunibanc Corp (“Comunibanc”) and Civista Leasing and Financing (“CLF”), formerly known as Vision Financial group (“VFG”).

Interest expense increased $12.2 million, or 582.0%, for the third quarter of 2023, compared to the same period last year. The average rate paid on interest-bearing liabilities increased 201 basis points, while average interest-bearing liabilities increased $422.0 million. The increase in interest-bearing liabilities was primarily in brokered time deposits and short-term FHLB borrowings to fund growth. This shift in the funding mix, as well as rising rates, is driving the increase in the funding rate. Interest-bearing deposit costs have increased 172 basis points compared to a year ago.

Average Balance Analysis

(Unaudited - Dollars in thousands)


	Three Months Ended September 30,
	2023								2022
	Average					Yield/			Average					Yield/
	balance			Interest		rate*			balance			Interest		rate*
Assets:
Interest-earning assets:
Loans and leases**	$	2,679,679		$	39,732		5.88	%	$	2,289,588		$	27,176		4.71	%
Taxable securities ***		359,154			2,999		2.95	%		354,597			2,936		3.06	%
Non-taxable securities ***		286,048			2,336		3.77	%		268,327			1,998		3.47	%
Interest-bearing deposits in other banks		55,288			719		5.16	%		89,744			423		1.87	%

Total interest-earning assets ***	$	3,380,169		$	45,786		5.34	%	$	3,002,256			32,533		4.30	%

Noninterest-earning assets:
Cash and due from financial institutions		22,542								58,581
Premises and equipment, net		50,999								28,633
Accrued interest receivable		11,673								8,907
Intangible assets		128,215								84,265
Bank owned life insurance		53,879								53,131
Other assets		64,008								48,013
Less allowance for loan losses		(34,283	)							(27,546	)

Total Assets	$	3,677,202							$	3,256,240

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand and savings	$	1,333,903		$	2,189		0.65	%	$	1,457,112		$	379		0.10	%
Time		632,111			7,395		4.64	%		280,903			557		0.79	%
Short-term FHLB borrowings		233,547			3,246		5.51	%		6,713			48		2.84	%
Long-term FHLB borrowings		2,644			15		2.25	%		25,336			133		2.08	%
Other borrowings		8,026			198		9.91	%		—			—		0.00	%
Subordinated debentures		103,894			1,239		4.73	%		103,751			975		3.73	%
Repurchase agreements		993			—		0.00	%		19,277			2		0.04	%

Total interest-bearing liabilities	$	2,315,118		$	14,282		2.45	%	$	1,893,092		$	2,094		0.44	%

Noninterest-bearing deposits		980,835								980,999
Other liabilities		33,040								77,015
Shareholders’ equity		348,209								305,134

Total Liabilities and Shareholders’ Equity	$	3,677,202							$	3,256,240

Net interest income and interest rate spread				$	31,504		2.89	%				$	30,439		3.86	%
Net interest margin ***							3.69	%							4.03	%

* -	Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $621 thousand and $532 thousand for the periods ended September 30, 2023 and 2022, respectively.

** -	Average balance includes nonaccrual loans

*** -

Average yield on investments were calculated by adjusting the average balances of taxable and nontaxable securities by unrealized losses of $69.2 million and $46.9 million, respectively. These adjustments were also made when calculating the yield on earning assets and the margin.

For the nine-month periods ended September 30, 2023 and 2022

Net interest income increased $17.8 million, or 22.9%, compared to the same period in 2022.

Interest income increased $47.4 million, or 56.9%, for the nine months of 2023. Average earning assets increased $389.1 million, resulting in an increase in interest income of $19.3 million. Average yields increased 141 basis points, resulting in an increase in interest income of $28.1 million. The increase in volume can be attributed to both organic growth and to the acquisitions during 2022 of Comunibanc and CLF.

Interest expense increased $29.6 million, or 526.2%, for the nine months of 2023 compared to the same period of 2022. Average rates increased 166 basis points compared to 2022, resulting in $16.6 million of the increase in interest expense. Average interest-bearing liabilities increased $420.1 million, resulting in $13.0 million of the increase in interest expense.

Net interest margin increased 26 basis points to 3.88% for the nine months of 2023, compared to 3.62% for the same period a year ago.

Average Balance Analysis

(Unaudited - Dollars in thousands)


	Nine Months Ended September 30,
	2023								2022
	Average					Yield/			Average					Yield/
	balance			Interest		rate*			balance			Interest		rate*
Assets:
Interest-earning assets:
Loans **	$	2,607,632		$	114,108		5.85	%	$	2,111,019		$	70,065		4.44	%
Taxable securities ***		367,946			8,817		2.89	%		322,262			6,431		2.53	%
Non-taxable securities ***		285,250			6,917		3.79	%		262,790			5,669		3.55	%
Interest-bearing deposits in other banks		23,382			818		4.67	%		199,019			1,098		0.74	%

Total interest-earning assets ***	$	3,284,210		$	130,660		5.29	%	$	2,895,090			83,263		3.88	%

Noninterest-earning assets:
Cash and due from financial institutions		33,918								108,220
Premises and equipment, net		58,338								24,429
Accrued interest receivable		11,176								8,025
Intangible assets		133,154								84,268
Bank owned life insurance		53,796								48,965
Other assets		61,669								44,077
Less allowance for loan losses		(33,138	)							(27,168	)

Total Assets	$	3,603,123							$	3,185,906

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand and savings	$	1,360,692		$	4,818		0.47	%	$	1,414,215		$	860		0.08	%
Time		497,458			15,532		4.17	%		250,230			1,491		0.80	%
Short-term FHLB borrowings		282,214			10,617		5.03	%		2,380			49		2.75	%
Long-term FHLB borrowings		3,062			51		2.23	%		58,263			515		1.18	%
Other borrowings		11,953			587		6.57	%		—			—		0.00	%
Subordinated debentures		103,854			3,607		4.67	%		103,726			2,701		3.48	%
Repurchase agreements		11,611			4		0.05	%		21,910			8		0.05	%

Total interest-bearing liabilities	$	2,270,844		$	35,216		2.07	%	$	1,850,724			5,624		0.41	%

Noninterest-bearing deposits		941,842								936,686
Other liabilities		44,739								76,748
Shareholders’ equity		345,698								321,748

Total Liabilities and Shareholders’ Equity	$	3,603,123							$	3,185,906

Net interest income and interest rate spread				$	95,444		3.22	%				$	77,639		3.48	%

Net interest margin ***							3.88	%							3.62	%

* -	Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1.8 million and $1.5 million for the periods ended September 30, 2023 and 2022, respectively.

** -	Average balance includes nonaccrual loans

*** -

2023 and 2022 average yield on investments were calculated by adjusting the average balances of taxable and nontaxable securities by unrealized losses of $64.3 million and $24.7 million, respectively. These adjustments were also made when calculating the yield on earning assets and the margin.

Provision for credit losses for the third quarter of 2023 was $630 thousand compared to $300 thousand for the third quarter of 2022, primarily related to loan and lease growth.

On January 1, 2023, Civista adopted CECL, which resulted in an adjustment to the reserve of approximately $4.3 million. For the nine months ended September 30, 2023, provision for credit losses was $2.1 million, compared to $1.0 million for the same period of 2022. The reserve ratio increased to 1.28% as of September 30, 2023 from 1.12% at December 31, 2022.

The adoption of CECL also resulted in an additional $3.4 million reserve for unfunded commitments, which is reflected as a liability in the consolidated financial statements. Provision for unfunded commitments for the third quarter of 2023 was $130 thousand and $595 thousand for the nine months ended September 30, 2023. There was no provision for unfunded commitments during the first nine months of 2022.

For the third quarter of 2023, noninterest income totaled $8.0 million, an increase of $2.3 million, or 39.3%, compared to the prior year’s third quarter.

Noninterest income

(unaudited - dollars in thousands)


	Three months ended September 30,
	2023		2022			$ change			% change
Service charges	$	1,853	$	1,885		$	(32)			-1.7	%
Net gain on sale of securities		—		4			(4	)		-100.0	%
Net gain/(loss) on equity securities		69		(133	)		202			151.9	%
Net gain on sale of loans and leases		787		637			150			23.5	%
ATM/Interchange fees		1,424		1,394			30			2.2	%
Wealth management fees		1,197		1,208			(11	)		-0.9	%
Lease revenue and residual income		1,913		—			1,913			0.0	%
Bank owned life insurance		266		255			11			4.3	%
Tax refund processing fees		—		—			—			0.0	%
Other		616		484			132			27.3	%

Total noninterest income	$	8,125	$	5,734		$	2,391			41.7	%

Net gain/loss on equity securities increase of $202 thousand was the result of a market valuation adjustment.

The net gain on sale of loans and leases increased by $150 thousand compared to the same period last year. CLF generated a $466 thousand gain on the sale of $10.9 million in commercial loans and leases. The sale of mortgage loans generated a $321 thousand gain on the sale of $16.2 million, a decrease in the gain of $316 thousand and a $17.7 million decrease in volume in 2023, compared to 2022.

Lease revenue and residual income contributed $1.9 million to noninterest income due to the acquisition of CLF during 2022.

For the nine months ended September 30, 2023, noninterest income totaled $28.2 million, an increase of $9.2 million, or 48.3%, compared to the same period in the prior year.

Noninterest income

(unaudited - dollars in thousands)


	Nine months ended September 30,
	2023			2022			$ change			% change
Service charges	$	5,457		$	5,004		$	453			9.1	%
Net gain on sale of securities		—			10			(10	)		-100.0	%
Net (loss) on equity securities		(169	)		(44	)		(125	)		-284.1	%
Net gain on sale of loans and leases		2,033			2,146			(113	)		-5.3	%
ATM/Interchange fees		4,227			3,990			237			5.9	%
Wealth management fees		3,570			3,713			(143	)		-3.9	%
Lease revenue and residual income		6,160			—			6,160			0.0	%
Bank owned life insurance		830			732			98			13.4	%
Tax refund processing fees		2,375			2,375			—			0.0	%
Other		3,859			1,086			2,773			255.3	%

Total noninterest income	$	28,342		$	19,012		$	9,330			49.1	%

The increase in service charge income is split between $115 thousand in personal service charges and $149 thousand in business service charges. Overdraft fees also increased by $188 thousand.

The change in net loss on equity securities was the result of a market valuation adjustment.

The net gain on sale of loans and leases decreased by $113 thousand compared to the same period last year. CLF generated a $1.1 million gain on the sale of $32.9 million in commercial loans and leases. The sale of mortgage loans generated a $911 thousand gain on the sale of $42.2 million, a decrease in the gain of $1.2 million and a $65.4 million decrease in volume in 2023, compared to 2022.

Lease revenue and residual income contributed $6.2 million due to the acquisition of CLF during 2022.

Other income increased as result of a $1.5 million fee collected associated with the renewal of the company’s contract with MasterCard. Other income also increased as result of $707 thousand in interim rent at Civista Leasing and Finance, and $198 thousand increase in swap fee income.

For the third quarter of 2023, noninterest expense totaled $26.6 million, an increase of $4.1 million, or 18.0%, compared to the prior year’s third quarter.

Noninterest expense

(unaudited - dollars in thousands)


	Three months ended September 30,
	2023		2022		$ change			% change
Compensation expense	$	14,054	$	12,484	$	1,570			12.6	%
Net occupancy and equipment		4,055		1,889		2,166			114.7	%
Contracted data processing		651		846		(195	)		-23.0	%
Taxes and assessments		1,028		799		229			28.7	%
Professional services		1,010		1,335		(325	)		-24.3	%
Amortization of intangible assets		398		456		(58	)		-12.7	%
ATM/Interchange expense		619		604		15			2.5	%
Marketing		497		372		125			33.6	%
Software maintenance expense		1,052		942		110			11.7	%
Other		3,388		2,828		560			19.8	%

Total noninterest expense	$	26,752	$	22,555	$	4,197			18.6	%

Compensation expense increased primarily due to the acquisition of CLF resulting in an additional $1.3 million. The quarter-to-date average full time equivalent (FTE) employees were 528 at September 30, 2023, an increase of 85 FTEs over the same period in 2022.

The increase in occupancy and equipment expense is primarily due to a $2.0 million increase in equipment depreciation and expense related to the acquisition of CLF.

Taxes and assessments increased due to an increase in the FDIC assessment rate charged.

The decrease in professional services is attributable to higher consulting expense in 2022 related to the acquisition of Comunibanc.

The increase in other operating expense is primarily due to a $130 thousand provision for credit losses on unfunded commitments as well as an increase in bad check loss of $255 thousand compared to the same period in 2022. Additional increases related to the acquisition of CLF are also attributable to the increase in 2023.

The efficiency ratio was 66.5% for the quarter ended September 30, 2023, compared to 61.4% for the quarter ended September 30, 2022. The change in the efficiency ratio is primarily due to an increase in noninterest expense, partially offset by an increases in noninterest income and in net interest income.

Civista’s effective income tax rate for the third quarter 2023 was 15.2% compared to 16.6% in 2022.

For the nine months ended September 30, 2023, noninterest expense totaled $82.2 million, an increase of $19.0 million, or 30.0%, compared to the same period in the prior year.

Noninterest expense

(unaudited - dollars in thousands)


	Nine months ended September 30,
	2023		2022		$ change			% change
Compensation expense	$	44,137	$	36,654	$	7,483			20.4	%
Net occupancy and equipment		12,310		5,122		7,188			140.3	%
Contracted data processing		1,730		1,899		(169	)		-8.9	%
Taxes and assessments		2,985		2,416		569			23.6	%
Professional services		3,804		3,593		211			5.9	%
Amortization of intangible assets		1,195		890		305			34.3	%
ATM/Interchange expense		1,814		1,659		155			9.3	%
Marketing		1,542		1,069		473			44.2	%
Software maintenance expense		2,989		2,440		549			22.5	%
Other		9,792		7,450		2,342			31.4	%

Total noninterest expense	$	82,298	$	63,192	$	19,106			30.2	%

Compensation expense increased primarily due to $4.6 million of salaries related to the acquisition of CLF. Other increases related to salaries were a result of annual merit increases and add-to-staff positions as well as increases in employee insurance. The year-to-date average full time equivalent (FTE) employees were 531 at September 30, 2023, an increase of 67 FTEs over the same period in 2022.

The increase in occupancy and equipment expense is primarily due to a $6.1 million increase in equipment depreciation related to the acquisition of CLF.

The increase in amortization expense is due to $377 thousand related to the core deposit intangible associated with the acquisition of Comunibanc.

Marketing expense increased due to an increase in marketing efforts in newly acquired markets related to the Comunibanc and CLF acquisitions.

The increase in software maintenance expense is due to increases in software maintenance contracts related to the digital banking platform.

The increase in other operating expense is primarily due to a $595 thousand provision for credit losses on unfunded commitments, a $353 thousand increase in bad check loss expense and additional expenses related to CLF of $608 thousand. Business promotion, travel & lodging, donations, and education & training all increased as well.

The efficiency ratio was 65.5% for the nine months ended September 30, 2023 compared to 64.4% for the nine months ended September 30, 2022. The change in the efficiency ratio is primarily due to an increase in noninterest expense, partially offset by an increases in net interest income and noninterest income.

Civista’s effective income tax rate was 15.4% for the nine months of 2023 and 16.0% for the nine months 2022.

Balance Sheet

Total assets increased $195.1 million, or 5.5%, from December 31, 2022 to September 30, 2023, primarily due to growth in the loan portfolio.

End of period loan and lease balances

(unaudited - dollars in thousands)


	September 30,		December 31,
	2023		2022		$ Change			% Change
Commercial and Agriculture	$	301,877	$	278,595	$	23,282			8.4	%
Commercial Real Estate:
Owner Occupied		375,851		371,147		4,704			1.3	%
Non-owner Occupied		1,102,932		1,018,736		84,196			8.3	%
Residential Real Estate		614,304		552,781		61,523			11.1	%
Real Estate Construction		269,292		243,127		26,165			10.8	%
Farm Real Estate		24,109		24,708		(599	)		-2.4	%
Lease financing receivable		48,259		36,797		11,462			31.1	%
Consumer and Other		18,267		20,775		(2,508	)		-12.1	%

Total Loans	$	2,754,891	$	2,546,666	$	208,225			8.2	%

Loan and lease balances increased $208.2 million, or 8.2% since December 31, 2022. Commercial growth is predominately due to loan production from the leasing division and an increase in new commercial customers with commercial lines of credit outstanding. Even with the increase, the revolving line of credit balances continue to be less than forty percent advanced. Commercial Real Estate continued to grow due to consistent demand in the Non-owner Occupied category, especially in the multi-family area in the major Ohio metropolitan areas. Real Estate Construction has increased as many construction projects near completion. The undrawn construction availability continues to be near all-time highs. Residential Real Estate has grown with continued new production in our Community Reinvestment Act (“CRA”) product, more home construction loans, and more on balance sheet ARM products in this higher rate environment.

Deposits

Total deposits increased $175.8 million, or 6.7%, from December 31, 2022 to September 30, 2023.

End of period deposit balances

(unaudited - dollars in thousands)


	September 30,		December 31,
	2023		2022		$ Change			% Change
Noninterest-bearing demand	$	802,614	$	896,333	$	(93,719	)		-10.5	%
Interest-bearing demand		464,338		527,879		(63,541	)		-12.0	%
Savings and money market		872,805		876,427		(3,622	)		-0.4	%
Time deposits		655,986		319,345		336,641			105.4	%

Total Deposits	$	2,795,743	$	2,619,984	$	175,759			6.7	%

The decrease in noninterest-bearing demand of $93.7 million was primarily due to a $71.5 million decrease in noninterest-bearing business accounts and $32.3 million noninterest-bearing personal accounts. The $63.5 million decrease in interest-bearing demand deposits was spread across personal, business, and public fund accounts. The decrease in savings and money market was primarily due to a $62.5 million decrease in statement savings, an $11.0 million decrease in corporate savings, a $33.7 million decrease in personal money markets, partially offset by a $46.5 million increase in brokered money market accounts, a $42.1 million increase in business money market accounts and a $14.2 million increase in public money market accounts. The increase in time certificates was primarily due to a $202.5 million increase in brokered time deposits. In addition, Jumbo time certificates increased $62.4 million and retail time certificates increased $28.8 million.

FHLB overnight advances totaled $431.5 million on September 30, 2023, up from $393.7 million on December 31, 2022. FHLB term advances totaled $2.6 million on September 30, 2023, down from $3.6 million on December 31, 2022.

Stock Repurchase Program

During the nine months of 2023, Civista has repurchased 84,230 shares for $1.5 million at a weighted average price of $17.77 per share. We have approximately $12.0 million remaining of the current $13.5 million repurchase authorization. The current repurchase plan will expire in May 2024. In January, Civista liquidated 5,620 shares held by employees, at $21.52 per share, to satisfy tax obligations stemming from vesting of restricted shares.

Shareholders’ Equity

Total shareholders’ equity decreased $2.1 million from December 31, 2022 to September 30, 2023, primarily due to a decrease in accumulated other comprehensive loss of $21.4 million, partially offset by a $20.2 million increase in retained earnings.

Asset Quality

Civista recorded net losses of $535 thousand for the nine months of 2023 compared to net recoveries of $132 thousand for the same period of 2022. The allowance for credit losses to loans ratio was 1.28% at September 30, 2023 and 1.12% at December 31, 2022.

Allowance for Credit Losses

(dollars in thousands)


	Nine months ended September 30,
	2023			2022
Beginning of period	$	28,511		$	26,641
CECL adoption adjustments		5,193			—
Charge-offs		(855	)		(164	)
Recoveries		320			296
Provision		2,111			1,000

End of period	$	35,280		$	27,773

Allowance for Unfunded Commitments

(dollars in thousands)


	Nine months ended September 30,
	2023		2022
Beginning of period	$	—	$	—
CECL adoption adjustments		3,386
Charge-offs		—		—
Recoveries		—		—
Provision		595		—

End of period	$	3,981	$	—

Non-performing assets at September 30, 2023 were $11.4 million, a 4.9% increase from December 31, 2022. The non-performing assets to assets ratio was 0.31% at September 30, 2023 and 0.31% at December 31, 2022. The allowance for credit losses to non-performing loans increased from 261.45% at December 31, 2022 to 308.52% at September 30, 2023.

Non-performing Assets

(dollars in thousands)


	September 30,		December 31,
	2023		2022
Non-accrual loans	$	8,713	$	7,890
Restructured loans		2,722		3,015

Total non-performing loans		11,435		10,905
Other Real Estate Owned		—		—

Total non-performing assets	$	11,435	$	10,905

Conference Call and Webcast

Civista Bancshares, Inc. will also host a conference call to discuss the Company’s financial results for the third quarter of 2023 at 1:00 p.m. ET on Friday, October 27, 2023. Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company’s website, www.civb.com. Participants can also listen to the conference call by dialing 855-238-2712 and ask to join the Civista Bancshares, Inc. third quarter 2023 earnings call. Please log in or dial in at least 10 minutes prior to the start time to ensure a connection.

An archive of the webcast will be available for one year on the Investor Relations section of the Company’s website (www.civb.com).

Forward Looking Statements

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Civista. For these statements, Civista claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Civista, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Civista’ reports filed with the Securities and Exchange Commission, including those described in “Item 1A Risk Factors” of Part I of Civista’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and any additional risks identified in the Company’s subsequent Form 10-Q’s. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date

hereof. Civista does not undertake, and specifically disclaims any obligation, to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Civista Bancshares, Inc., is a $3.7 billion financial holding company headquartered in Sandusky, Ohio. Its primary subsidiary, Civista Bank, was founded in 1884 and provides full-service banking, commercial lending, mortgage, and wealth management services. Today, Civista Bank operates 43 locations across Ohio, Southeastern Indiana and Northern Kentucky. Civista Leasing & Finance, a division of Civista Bank, offers commercial equipment leasing services for businesses nationwide. Civista Bancshares’ common shares are traded on the NASDAQ Capital Market under the symbol “CIVB”. Learn more at www.civb.com.

For additional information, contact:

Dennis G. Shaffer

CEO and President

Civista Bancshares, Inc.

888-645-4121

Civista Bancshares, Inc.

Financial Highlights

(Unaudited, dollars in thousands, except share and per share amounts)

Consolidated Condensed Statement of Income


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Interest income	$	45,786		$	32,533		$	130,660		$	83,263
Interest expense		14,282			2,094			35,216			5,624

Net interest income		31,504			30,439			95,444			77,639
Provision for credit losses		630			300			2,111			1,000

Net interest income after provision		30,874			30,139			93,333			76,639
Noninterest income		8,125			5,734			28,342			19,012
Noninterest expense		26,752			22,555			82,298			63,192

Income before taxes		12,247			13,318			39,377			32,459
Income tax expense		1,860			2,206			6,068			5,180

Net income		10,387			11,112			33,309			27,279

Dividends paid per common share	$	0.16		$	0.14		$	0.45		$	0.42

Earnings per common share
Basic
Net income	$	10,387		$	11,112		$	33,309		$	27,279

Less allocation of earnings and dividends to participating securities		389			52			1,220			122

Net income available to common shareholders - basic	$	9,998		$	11,060		$	32,089		$	27,157

Weighted average common shares outstanding		15,735,007			15,394,898			15,747,648			14,974,862
Less average participating securities		588,715			71,604			576,902			67,323

Weighted average number of shares outstanding used to calculate basic earnings per share		15,146,292			15,323,294			15,170,746			14,907,539

Earnings per common share
Basic	$	0.66		$	0.72		$	2.12		$	1.82
Diluted		0.66			0.72			2.12			1.82

Selected financial ratios:
Return on average assets		1.12	%		1.35	%		1.24	%		1.14	%
Return on average equity		11.83	%		14.45	%		12.88	%		11.34	%
Dividend payout ratio		24.24	%		19.40	%		21.27	%		23.06	%
Net interest margin (tax equivalent)		3.69	%		4.03	%		3.88	%		3.62	%

Selected Balance Sheet Items

(Dollars in thousands, except share and per share amounts)


	September 30,			December 31,
	2023			2022
	(unaudited)			(unaudited)
Cash and due from financial institutions	$	50,316		$	43,361
Investment in time deposits		1,472			1,477
Investment securities		595,508			617,592
Loans held for sale		1,589			683
Loans		2,754,890			2,546,666
Less: allowance for credit losses		(35,280	)		(28,511	)

Net loans		2,719,610			2,518,155
Other securities		34,224			33,585
Premises and equipment, net		58,989			64,018
Goodwill and other intangibles		134,998			133,528
Bank owned life insurance		54,053			53,543
Other assets		82,157			71,888

Total assets	$	3,732,916		$	3,537,830

Total deposits	$	2,795,743		$	2,619,984
Federal Home Loan Bank advances - short term		431,500			393,700
Federal Home Loan Bank advances - long term		2,573			3,578
Securities sold under agreements to repurchase		—			25,143
Subordinated debentures		103,921			103,799
Other borrowings		10,964			15,516
Securities purchased payable		1,755			1,338
Tax refunds in process		493			278
Accrued expenses and other liabilities		53,222			39,658
Total shareholders’ equity		332,745			334,836

Total liabilities and shareholders’ equity	$	3,732,916		$	3,537,830

Shares outstanding at period end		15,695,997			15,728,234

Book value per share	$	21.20		$	21.29
Equity to asset ratio		8.91	%		9.46	%

Selected asset quality ratios:
Allowance for loan losses to total loans		1.28	%		1.12	%
Non-performing assets to total assets		0.31	%		0.31	%
Allowance for loan losses to non-performing loans		308.52	%		261.45	%

Non-performing asset analysis
Nonaccrual loans	$	8,713		$	7,890
Restructured loans		2,722			3,015
Other real estate owned		—			—

Total	$	11,435		$	10,905

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)


End of Period Balances	September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022
Assets
Cash and due from banks	$	50,316		$	41,354		$	52,723		$	43,361		$	40,914
Investment in time deposits		1,472			1,719			1,721			1,477			1,479
Investment securities		595,508			619,250			629,829			617,592			604,074
Loans held for sale		1,589			3,014			1,465			683			3,491
Loans and leases		2,754,890			2,636,280			2,580,066			2,546,666			2,328,614
Allowance for credit losses		(35,280	)		(35,149	)		(34,196	)		(28,511	)		(27,773	)

Net Loans		2,719,610			2,601,131			2,545,870			2,518,155			2,300,841
Other securities		34,224			28,449			35,383			33,585			18,578
Premises and equipment, net		58,989			60,899			61,895			64,018			30,168
Goodwill and other intangibles		134,998			135,406			135,808			136,454			113,206
Bank owned life insurance		54,053			53,787			53,796			53,543			53,291
Other assets		82,157			70,971			66,068			68,962			75,677

Total Assets	$	3,732,916		$	3,615,980		$	3,584,558		$	3,537,830		$	3,241,719


Liabilities
Total deposits	$	2,795,743		$	2,942,774		$	2,843,516		$	2,619,984		$	2,708,253
Federal Home Loan Bank advances - short term		431,500			142,000			212,000			393,700			55,000
Federal Home Loan Bank advances - long term		2,573			2,859			3,361			3,578			6,723
Securities sold under agreement to repurchase		—			6,788			15,631			25,143			20,155
Subordinated debentures		103,921			103,880			103,841			103,799			103,778
Other borrowings		10,964			12,568			13,938			15,516			—
Securities purchased payable		1,755			—			—			1,338			2,611
Tax refunds in process		493			7,208			5,752			278			2,709
Accrued expenses and other liabilities		53,222			48,027			38,822			39,658			39,888

Total liabilities		3,400,171			3,266,104			3,236,861			3,202,994			2,939,117

Shareholders’ Equity
Common shares		310,975			310,784			310,412			310,182			299,515
Retained earnings		176,644			168,777			161,110			156,493			146,546
Treasury shares		(75,412	)		(73,915	)		(73,915	)		(73,794	)		(73,641	)
Accumulated other comprehensive loss		(79,462	)		(55,770	)		(49,910	)		(58,045	)		(69,818	)

Total shareholders’ equity		332,745			349,876			347,697			334,836			302,602

Total Liabilities and Shareholders’ Equity	$	3,732,916		$	3,615,980		$	3,584,558		$	3,537,830		$	3,241,719


Quarterly Average Balances
Assets:
Earning assets	$	3,380,169		$	3,258,738		$	3,211,902		$	3,099,501		$	3,002,256
Securities		645,202			658,515			655,987			630,127			622,924
Loans		2,679,679			2,593,286			2,548,518			2,458,980			2,289,588
Liabilities and Shareholders’ Equity
Total deposits	$	2,946,849		$	2,817,712		$	2,654,356		$	2,649,755		$	2,719,014
Interest-bearing deposits		1,966,014			1,912,955			1,692,470			1,710,019			1,738,015
Other interest-bearing liabilities		115,557			375,608			515,122			407,710			155,077
Total shareholders’ equity		348,209			347,647			341,159			299,509			305,134

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)


	Three Months Ended
Income statement	September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022
Total interest and dividend income	$	45,786	$	43,335	$	41,539	$	37,990	$	32,533
Total interest expense		14,282		11,996		8,938		5,425		2,094

Net interest income		31,504		31,339		32,601		32,565		30,439
Provision for loan losses		630		861		620		752		300
Noninterest income		8,125		9,149		11,068		10,064		5,734
Noninterest expense		26,752		27,913		27,633		27,301		22,555

Income before taxes		12,247		11,714		15,416		14,576		13,318
Income tax expense		1,860		1,680		2,528		2,428		2,206

Net income	$	10,387	$	10,034	$	12,888	$	12,148	$	11,112


Per share data
Earnings per common share
Basic
Net income	$	10,387	$	10,034	$	12,888	$	12,148	$	11,112
Less allocation of earnings and dividends to participating securities		389		374		453		432		52

Net income available to common shareholders - basic	$	9,998	$	9,660	$	12,435	$	11,716	$	11,060

Weighted average common shares outstanding		15,735,007		15,775,812		15,732,092		15,717,439		15,394,898
Less average participating securities		588,715		588,715		552,882		559,596		71,604

Weighted average number of shares outstanding used to calculate basic earnings per share		15,146,292		15,187,097		15,179,210		15,157,843		15,323,294

Earnings per common share
Basic	$	0.66	$	0.64	$	0.82	$	0.77	$	0.72
Diluted		0.66		0.64		0.82		0.77		0.72

Common shares dividend paid	$	2,521	$	2,367	$	2,201	$	2,202	$	2,042

Dividends paid per common share		0.16		0.15		0.14		0.14		0.14

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)


	Three Months Ended
Asset quality	September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022
Allowance for credit losses:
Beginning of period	$	35,251		$	34,196		$	28,511		$	27,773		$	27,435
CECL adoption adjustments		—			—			5,193			—			—
Charge-offs		(666	)		(14	)		(175	)		(58	)		(74	)
Recoveries		65			208			47			44			112
Provision		630			861			620			752			300

End of period	$	35,280		$	35,251		$	34,196		$	28,511		$	27,773

Allowance for unfunded commitments:
Beginning of period	$	3,851		$	3,587		$	—		$	—		$	—
CECL adoption adjustments		—			—			3,386			—			—
Charge-offs		—			—			—			—			—
Recoveries		—			—			—			—			—
Provision		130			264			201			—			—

End of period	$	3,981		$	3,851		$	3,587		$	—		$	—

Ratios
Allowance to total loans		1.28	%		1.33	%		1.33	%		1.12	%		1.19	%
Allowance to nonperforming assets		308.52	%		327.05	%		345.91	%		261.45	%		476.24	%
Allowance to nonperforming loans		308.52	%		327.05	%		345.82	%		261.45	%		476.24	%

Nonperforming assets
Nonperforming loans	$	11,435		$	10,747		$	9,860		$	10,905		$	5,832
Other real estate owned		—			—			26			—			—

Total nonperforming assets	$	11,435		$	10,747		$	9,886		$	10,905		$	5,832

Capital and liquidity
Tier 1 leverage ratio		8.79	%		8.86	%		8.63	%		8.92	%		9.32	%
Tier 1 risk-based capital ratio		10.72	%		10.93	%		10.80	%		10.78	%		11.62	%
Total risk-based capital ratio		14.51	%		14.83	%		14.73	%		14.52	%		15.62	%
Tangible common equity ratio ⁽¹⁾		5.50	%		6.16	%		6.14	%		5.83	%		6.05	%

(1)	See reconciliation of non-GAAP measures at the end of this press release.

Reconciliation of Non-GAAP Financial Measures

(Unaudited - dollars in thousands except share data)


	Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2023			2023			2023			2022			2022
Tangible Common Equity
Total Shareholder’s Equity - GAAP	$	332,745		$	349,876		$	347,697		$	334,835		$	302,602
Less: Goodwill and intangible assets		134,998			135,406			135,808			136,454			113,206

Tangible common equity (Non-GAAP)	$	197,747		$	214,470		$	211,889		$	198,381		$	189,396

Total Shares Outstanding		15,695,997			15,780,227			15,732,092			15,728,234			15,235,545

Tangible book value per share	$	12.60		$	13.59		$	13.47		$	12.61		$	12.43

Tangible Assets
Total Assets - GAAP	$	3,732,916		$	3,615,980		$	3,587,118		$	3,537,830		$	3,241,719
Less: Goodwill and intangible assets		134,998			135,406			135,808			136,454			113,206

Tangible assets (Non-GAAP)	$	3,597,918		$	3,480,574		$	3,451,310		$	3,401,376		$	3,128,513

Tangible common equity to tangible assets		5.50	%		6.16	%		6.14	%		5.83	%		6.05	%

Document and Entity Information	Oct. 27, 2023
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0000944745
Document Type	8-K
Document Period End Date	Oct. 27, 2023
Entity Registrant Name	Civista Bancshares, Inc.
Entity Incorporation State Country Code	OH
Entity File Number	001-36192
Entity Tax Identification Number	34-1558688
Entity Address, Address Line One	100 East Water Street
Entity Address, Address Line Two	P.O. Box 5016
Entity Address, City or Town	Sandusky
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	44870
City Area Code	(419)
Local Phone Number	625-4121
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common
Trading Symbol	CIVB
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false