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2021
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Ohio | 34-1558688 | ||
State or other jurisdiction of |
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incorporation or organization | (IRS Employer Identification No.) | ||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common shares, no par value
| CIVB | The NASDAQ Stock Market LLC
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ | Smaller reporting company |
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Emerging Growth Company | ☐ |
Item 1. | 3 | ||||||||
Item 1A. |
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Item 1B. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 7A. |
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Item 8. |
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Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Item 9A. |
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Item 9B. |
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Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 36 | |||||||
Item 10. |
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Item 11. |
| 37 | |||||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13. | Certain Relationships and Related Transactions, and Director Independence |
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Item 14. |
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Item 15. |
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Item 16 |
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2021.
2021.
2021.
2021.
inactivity due to FCRS no longer being necessary to facilitate the Company’s continuing participation in the tax refund processing program.
were discontinued December 31, 2021 as a result of inactivity.
Acquisition of United Community Bancorp
On September 14, 2018, CBI completed the acquisition by merger of United Community Bancorp (“UCB”) in a stock and cash transaction for aggregate consideration of approximately $117,344. Immediately following the merger, UCB’s banking subsidiary, United Community Bank, was merged into CBI’s banking subsidiary, Civista Bank. At the time of the merger, UCB had total assets of $537,875, including $298,319 in loans, and $475,944 in deposits. As a result of the merger, we acquired eight offices of UCB in the Indiana communities of Lawrenceburg (3), Aurora, West Harrison, Milan, Osgood and Versailles and a loan production office in Fort Mitchell, Kentucky.
3
| Narrative Description of Business |
CBI or its other subsidiaries.
ODFI.
In
Competition
The
Civista experiences intense competition within several As a result of its markets duetheir size, resources and ability to the presenceachieve economies of several national, regional and local financial institutions and other service providers. Civista primarily competes based on client service, convenience and responsiveness to customer needs, availability and selectionscale, certain of our competitors offer a broader range of products and rates of interest on loans and deposits. However, some of Civista’ competitors have greater resources and,services than we offer, as such,well as higher lending limits, which may adversely affect the ability of Civista to compete.
Employees
CBI has no
The statutes and regulations applicable to the Company are continually under review by the United States Congress and state legislatures and federal and state regulatory agencies, and a change in statutes, regulations or regulatory policies applicable to the Company could have a material effect on the Company’s business.
Banking subsidiaries of financial and bank holding companies are also subject to federal regulation regarding such matters as reserves, limitations on the nature and amount of loans and investments, issuance or retirement of its own securities, limitations on the payment of dividends and other aspects of banking operations.
Privacy Provisions: Under the GLBA, federal banking regulators adopted rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to non-affiliated third parties. These rules contain extensive provisions on a customer’s right to privacy of non-public personal information. Except in certain cases, an institution may not provide personal information to unaffiliated third parties unless the institution discloses that such information may be disclosed and the customer is given the opportunity to opt out of such disclosure. The privacy provisions of the GLBA affect how consumer information is conveyed to outside vendors. CBI and its subsidiaries are also subject to certain state laws that govern the use and distribution of non-public personal information.
6
In addition, all FDIC-insured institutions are required to pay assessments to fund interest payments on bonds issued by the Financing Corporation, which was established by the government to recapitalize a predecessor to the DIF. These assessments will continue until the Financing Corporation bonds mature in 2019.
USA Civista received a rating of “satisfactory” in its most recent CRA examination.
Civista has established policies and procedures that Civista believes comply with the requirements of the Patriot Act.
The risk-based capital guidelines adopted by the federal banking agencies are based on the “International Convergence of Capital Measurement and Capital Standard” (Basel I), published by the Basel Committee on Banking Supervision (the “Basel Committee”).
8
In November 2018, the Federal Reserve Board, along with other bank regulatory agencies, proposed a rule2020, that would givegave community banks, including Civista,the Company, the option to calculate a simple leverage ratio rather than multiple measures ofto measure capital adequacy if they meetthe community banks met certain requirements. Under the proposal,rule, a community bank would beis eligible to elect the Community Bank Leverage Ratio ("CBLR"(“CBLR”) framework if it hashad less than $10 billion in total consolidated assets, limited amounts of certain assets and
Thegenerally applicable risk-based capital rule. Pursuant to the CARES Act, on August 26, 2020, the federal banking agencies also adopted a final rule providingthat temporarily lowered the CBLR threshold and provided a gradual transition back to the prior level. Specifically, the CBLR threshold was reduced to 8.0% for the remainder of 2020, increased to 8.5% for 2021, and returned to 9.0% on January 1, 2022. This final rule became effective on October 1, 2020. The Company did not utilize the CBLR in assessing capital adequacy and, instead, continued to follow existing capital rules.
the CECL model. The Company currently anticipates recording a
9
notwithstanding its capital level, if, after notice and opportunity for hearings, the bank is deemed to be engaged in an unsafe or unsound practice, because it has not corrected deficiencies that resulted in it receiving a less than satisfactory examination rating on matters other than capital or it is deemed to be in an unsafe or unsound condition. Civista’s capital at December 31, 2018,2021, met the standards for the highest capital category, a “well-capitalized” bank.
subject to regulation by the Ohio Department of Insurance and the state insurance regulatory agencies of those states where it conducts business. CRMI, as a Delaware-chartered captive insurance company, is subject to the laws and regulations of the State of Delaware and undergoes periodic examinations by the Delaware Division of Insurance.
In 2011, federal banking regulatory agencies jointly issued These three principles are incorporated into the proposed rules on incentive-basedjoint compensation arrangements under applicable provisions of the Dodd-Frank Act (“First Proposed Rules”). The First Proposed Rules generally would have applied to financial institutions with $1.0 billion or more in assets that maintain incentive-based compensation arrangements for certain covered employees.
10
In May 2016, the federal bank regulatory agencies approved a second joint notice of proposed rules (the “Second Proposed Joint Rules”) designed to prohibit incentive-based compensation arrangements that encourage inappropriate risks at financial institutions. The Second Proposed Joint Rules would apply to covered financial institutions with total assets of $1 billion or more. The requirements of the Second Proposed Joint Rules would differ for each of three categories of financial institutions:
Level 1 consists of institutions with assets of $250 billion or more;
Level 2 consists of institutions with assets of at least $50 billion and less than $250 billion; and
Level 3 consists of institutions with assets of at least $1 billion and less than $50 billion.
Some of the requirements would apply only to Level 1 and Level 2 institutions. For all covered institutions, including Level 3 institutions like us, the Second Proposed Joint Rules would:
prohibit incentive-based compensation arrangements that are “excessive” or “could lead to material financial loss;”
require incentive-based compensation that is consistent with a balance of risk and reward, effective management and control of risk, and effective governance; and
require board oversight, recordkeeping and disclosure to the appropriate regulatory agency.
Level 1 and Level 2 institutions would have additional requirements, including deferrals of awards to certain covered persons; potential downward adjustments, forfeitures or clawbacks; and additional risk-management and control standards, policies and procedures. In addition, certain practices and types of incentive compensation would be prohibited.
Pursuant to rules adopted by the stock exchanges and approved by the SEC in January 2013regulations under the Dodd-Frank Act, publicdescribed above.
11
|
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|
| 2018 |
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| 2017 |
|
| 2016 |
| |||
|
| (Dollars in thousands) |
| |||||||||
Available for sale (1) |
|
|
|
|
|
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|
|
|
|
|
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U.S. Treasury securities and obligations of U.S. Government agencies |
| $ | 30,685 |
|
| $ | 30,358 |
|
| $ | 37,446 |
|
Obligations of states and political subdivisions |
|
| 172,071 |
|
|
| 118,056 |
|
|
| 94,998 |
|
Mortgage-backed securities in government sponsored entities |
|
| 143,538 |
|
|
| 81,816 |
|
|
| 62,642 |
|
Total debt securities |
| $ | 346,294 |
|
| $ | 230,230 |
|
| $ | 195,086 |
|
|
|
The following tables set forth the maturities of securities at December 31, 20182021 and the weighted average yields of such debt securities. Maturities are reported based on stated maturities and do not reflect principal prepayment assumptions.
|
| Within one year |
|
| After one but within five years |
|
| After five but within ten years |
|
| After ten years |
| ||||||||||||||||||||
|
| Amount |
|
| Yield |
|
| Amount |
|
| Yield |
|
| Amount |
|
| Yield |
|
| Amount |
|
| Yield |
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| (Dollars in thousands) |
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Available for Sale (2) |
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|
|
|
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|
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|
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|
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|
|
|
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|
|
|
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|
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|
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|
|
|
|
|
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U.S. Treasury securities and obligations of U.S. government agencies |
| $ | 8,985 |
|
|
| 1.42 | % |
| $ | 13,378 |
|
|
| 2.26 | % |
| $ | 1,870 |
|
|
| 1.51 | % |
| $ | 6,452 |
|
|
| 3.07 | % |
Obligations of states and political subdivisions (1) |
|
| 1,927 |
|
|
| 1.74 |
|
|
| 5,769 |
|
|
| 3.43 |
|
|
| 28,653 |
|
|
| 4.55 |
|
|
| 135,722 |
|
|
| 3.47 |
|
Mortgage-backed securities in government sponsored entities |
|
| 2,545 |
|
| 1.74 |
|
|
| 16,205 |
|
|
| 2.98 |
|
|
| 28,874 |
|
|
| 3.18 |
|
|
| 95,914 |
|
|
| 3.23 |
| |
Total |
| $ | 13,457 |
|
|
| 1.53 | % |
| $ | 35,352 |
|
|
| 2.78 | % |
| $ | 59,397 |
|
|
| 3.79 | % |
| $ | 238,088 |
|
|
| 3.36 | % |
Within one year | After one but within five years | After five but within ten years | After ten years | |||||||||||||||||||||||||||||
Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | |||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Available for Sale (2) | ||||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 3,252 | 1.32 | % | $ | 25,714 | 0.63 | % | $ | 18,691 | 1.29 | % | $ | 233 | 1.56 | % | ||||||||||||||||
Obligations of states and political subdivisions (1) | 537 | 3.56 | 8,904 | 4.03 | 42,211 | 2.72 | 247,184 | 2.90 | ||||||||||||||||||||||||
Mortgage-backed securities in government sponsored entities | 1,573 | 3.11 | 16,560 | 3.23 | 11,872 | 0.82 | 183,143 | 1.90 | ||||||||||||||||||||||||
Total | $ | 5,362 | 2.07 | % | $ | 51,178 | 2.07 | % | $ | 72,774 | 2.04 | % | $ | 430,560 | 2.51 | % | ||||||||||||||||
(1) | Weighted average yields on nontaxable obligations have been computed based on actual yields stated on the security. |
(2) | The weighted average yield has been computed using the historical amortized cost for available-for-sale |
12
TypesTable of Loans
The amounts of gross loans outstanding at December 31 are shown in the following table according to types of loans.
|
| 2018 |
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| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
| |||||
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| (Dollars in thousands) |
| |||||||||||||||||
Commercial and Agriculture |
| $ | 177,101 |
|
| $ | 152,473 |
|
| $ | 135,462 |
|
| $ | 124,402 |
|
| $ | 113,265 |
|
Commercial Real Estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
|
| 210,121 |
|
|
| 164,099 |
|
|
| 161,364 |
|
|
| 167,897 |
|
|
| 143,014 |
|
Non-owner occupied |
|
| 523,598 |
|
|
| 425,623 |
|
|
| 395,931 |
|
|
| 348,439 |
|
|
| 308,666 |
|
Residential Real Estate |
|
| 457,850 |
|
|
| 268,735 |
|
|
| 247,308 |
|
|
| 236,338 |
|
|
| 214,537 |
|
Real Estate Construction |
|
| 135,195 |
|
|
| 97,531 |
|
|
| 56,293 |
|
|
| 58,898 |
|
|
| 65,452 |
|
Farm Real Estate |
|
| 38,513 |
|
|
| 39,461 |
|
|
| 41,170 |
|
|
| 46,993 |
|
|
| 53,973 |
|
Consumer and other |
|
| 19,563 |
|
|
| 16,739 |
|
|
| 17,978 |
|
|
| 18,560 |
|
|
| 15,950 |
|
Total |
| $ | 1,561,941 |
|
| $ | 1,164,661 |
|
| $ | 1,055,506 |
|
| $ | 1,001,527 |
|
| $ | 914,857 |
|
Commercial loans are those made for commercial, industrial and professional purposes to individuals, sole proprietorships, partnerships, corporations and other business enterprises. Agriculture loans are for financing agricultural production, including all costs associated with growing crops or raising livestock. Commercial and Agriculture loans may be secured, other than by real estate, or unsecured, requiring one single repayment or on an installment repayment schedule. Commercial and Agriculture loans involve certain risks relating to changes in local and national economic conditions and the resulting effect on the borrowing entities. Secured loans not collateralized by real estate mortgages maintain a loan-to-value ratio ranging from 50% in the case of certain stocks, to 100% in the case of savings or time deposit accounts. Unsecured credits rely on the financial strength and previous credit experience of the borrower and in many cases the financial strength of the principals when such credit is extended to a corporation.
Commercial Real Estate mortgage loans are made predicated on having a security interest in real property and are secured wholly or substantially by that lien on real property. Commercial Real Estate mortgage loans are generally underwritten with a maximum loan-to-value ratio of 80%.
Residential Real Estate mortgage loans and home equity lines of credit are made predicated on security interests in real property and secured wholly or substantially by those liens on real property. Such real estate mortgage loans are primarily loans secured by one-to-four family real estate. Residential Real Estate mortgage loans generally pose less risk to the Company due to the nature of the collateral being less susceptible to sudden changes in value.
Real Estate Construction loans are for the construction of residential homes, new buildings or additions to existing buildings. Generally, these loans are secured by one-to-four family real estate or commercial real estate. The Company controls disbursements in connection with construction loans.
Consumer loans are made to individuals for household, family and other personal expenditures. These expenditures include the purchase of vehicles or furniture, educational expenses, medical expenses, taxes or vacation expenses. Consumer loans may be secured, other than by real estate, or unsecured, generally requiring repayment on an installment repayment schedule. Consumer loans pose a relatively higher credit risk. This higher risk is moderated by the use of certain loan to value limits on secured credits and aggressive collection efforts. The collectability of consumer loans is influenced by local and national economic conditions.
Letters of credit represent extensions of credit granted in the normal course of business, which are not reflected in the Company’s consolidated financial statements. As of December 31, 2018 and 2017, the Company was contingently liable for $1,474 and $3,261, respectively, with respect to outstanding letters of credit. In addition, Civista had issued lines of credit to customers. Borrowings under such lines of credit are usually for the working capital needs of the borrower. At December 31, 2018 and 2017, Civista had commitments to extend credit, excluding letters of credit, in the aggregate amounts of approximately $411,408 and $325,267, respectively. Of these amounts, $374,204 and $291,907 represented lines of credit and construction loans, and $37,204 and $33,360 represented overdraft protection commitments at December 31, 2018 and 2017, respectively. Such amounts represent the portion of total commitments that had not been used by customers as of December 31, 2018 and 2017.
13
|
| Maturing |
| |||||||||||||
|
| Within one year |
|
| After one but within five years |
|
| After five years |
|
| Total |
| ||||
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| (Dollars in thousands) |
| |||||||||||||
Commercial and Agriculture |
| $ | 63,054 |
|
| $ | 71,078 |
|
| $ | 42,969 |
|
| $ | 177,101 |
|
Commercial Real Estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner Occupied |
|
| 1,622 |
|
|
| 21,659 |
|
|
| 186,840 |
|
|
| 210,121 |
|
Non-Owner Occupied |
|
| 38,293 |
|
|
| 94,521 |
|
|
| 390,784 |
|
|
| 523,598 |
|
Residential Real Estate |
|
| 1,385 |
|
|
| 27,753 |
|
|
| 428,712 |
|
|
| 457,850 |
|
Real Estate Construction |
|
| 23,299 |
|
|
| 50,521 |
|
|
| 61,375 |
|
|
| 135,195 |
|
Farm Real Estate |
|
| 712 |
|
|
| 4,641 |
|
|
| 33,160 |
|
|
| 38,513 |
|
Consumer and Other |
|
| 3,338 |
|
|
| 14,260 |
|
|
| 1,965 |
|
|
| 19,563 |
|
Total |
| $ | 131,703 |
|
| $ | 284,433 |
|
| $ | 1,145,805 |
|
| $ | 1,561,941 |
|
Maturing | ||||||||||||||||||||
Within one year | After one but within five years | After five but within fifteen years | After fifteen years | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Commercial & Agriculture | $ | 70,434 | $ | 115,810 | $ | 59,678 | $ | 580 | $ | 246,502 | ||||||||||
Commercial Real Estate: | ||||||||||||||||||||
Owner Occupied | 8,311 | 48,099 | 216,523 | 22,519 | 295,452 | |||||||||||||||
Non-Owner Occupied | 36,837 | 241,402 | 535,859 | 15,212 | 829,310 | |||||||||||||||
Residential Real Estate | 6,393 | 18,744 | 201,719 | 203,204 | 430,060 | |||||||||||||||
Real Estate Construction | 24,703 | 78,299 | 39,660 | 14,465 | 157,127 | |||||||||||||||
Farm Real Estate | 2,380 | 3,578 | 18,667 | 3,794 | 28,419 | |||||||||||||||
Consumer and Other | 2,512 | 6,139 | 2,017 | 341 | 11,009 | |||||||||||||||
Total | $ | 151,570 | $ | 512,071 | $ | 1,074,123 | $ | 260,115 | $ | 1,997,879 | ||||||||||
|
| Interest Sensitivity |
| |||||
|
| Fixed rate |
|
| Variable rate |
| ||
|
| (Dollars in thousands) |
| |||||
Due after one but within five years |
| $ | 120,618 |
|
| $ | 163,816 |
|
Due after five years |
|
| 182,935 |
|
|
| 962,869 |
|
|
| $ | 303,553 |
|
| $ | 1,126,685 |
|
Due After One Year | ||||||||
Fixed Rate | Variable Rate | |||||||
(Dollars in thousands) | ||||||||
Commercial & Agriculture | $ | 78,080 | $ | 97,988 | ||||
Commercial Real Estate: | ||||||||
Owner Occupied | 54,777 | 232,364 | ||||||
Non-Owner Occupied | 197,951 | 594,522 | ||||||
Residential Real Estate | 121,192 | 302,475 | ||||||
Real Estate Construction | 24,962 | 107,462 | ||||||
Farm Real Estate | 7,283 | 18,756 | ||||||
Consumer and Other | 7,465 | 1,032 | ||||||
Total | $ | 491,710 | $ | 1,354,599 | ||||
Risk Elements
The following table presents information concerning the amount
|
| 2018 |
|
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
| |||||
|
| (Dollars in thousands) |
| |||||||||||||||||
Loans accounted for on a nonaccrual basis (1) |
| $ | 5,869 |
|
| $ | 6,132 |
|
| $ | 6,943 |
|
| $ | 9,259 |
|
| $ | 13,558 |
|
Loans contractually past due 90 days or more as to principal or interest payments (2) |
|
| — |
|
|
| 16 |
|
|
| 9 |
|
|
| — |
|
|
| 18 |
|
Loans whose terms have been renegotiated to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower (3) |
|
| 3,024 |
|
|
| 2,888 |
|
|
| 4,180 |
|
|
| 5,085 |
|
|
| 4,928 |
|
Total |
| $ | 8,893 |
|
| $ | 9,036 |
|
| $ | 11,132 |
|
| $ | 14,344 |
|
| $ | 18,504 |
|
Impaired loans included in above totals |
| $ | 2,857 |
|
| $ | 3,460 |
|
| $ | 6,539 |
|
| $ | 7,386 |
|
| $ | 7,101 |
|
Impaired loans not included in above totals |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 99 |
|
|
| 4,048 |
|
Total impaired loans |
| $ | 2,857 |
|
| $ | 3,460 |
|
| $ | 6,539 |
|
| $ | 7,485 |
|
| $ | 11,149 |
|
|
|
14
| Contents |
|
|
There were no loans as of December 31, 2018, other than those disclosed above, where known information about probable credit problems of borrowers caused management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms. There were no other interest-bearing assets that would be required to be disclosed in the table above, if such assets were loans as of December 31, 2018. The gross interest income that would have been recorded on nonaccrual loans and restructured loans in 2018 if the loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination, if held
Interest income recognition associated with impaired loans was as follows.
|
| 2018 |
|
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
| |||||
|
| (Dollars in thousands) |
| |||||||||||||||||
Interest income on impaired loans, all of which was recognized on a cash basis |
| $ | 167 |
|
| $ | 216 |
|
| $ | 1,256 |
|
| $ | 384 |
|
| $ | 570 |
|
At December 31, 2018, Civista had two concentrations of loans exceeding 10% of total loans: one to Lessors of Non-Residential Buildings and Dwellings totaling $403,581, or 26.4 percent of total loans, as of December 31, 2018, and the other to Lessors of Residential Buildings and Dwellings totaling $160,839, or 10.5 percent of total loans, as of December 31, 2018.
These segments of the portfolio are stable and have been conservatively underwritten, monitored and managed by experienced commercial bankers. However, the customers’ ability to repay their loans is dependent on the real estate market and general economic conditions in the area. There were no foreign loans outstanding at December 31, 2018.
15
Analysis of the Allowance for Loan Losses
|
| 2018 |
|
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
| |||||
|
| (Dollars in thousands) |
| |||||||||||||||||
Daily average amount of loans net of unearned income |
| $ | 1,274,779 |
|
| $ | 1,109,069 |
|
| $ | 1,025,908 |
|
| $ | 981,475 |
|
| $ | 874,432 |
|
Allowance for loan losses at beginning of year |
| $ | 13,134 |
|
| $ | 13,305 |
|
| $ | 14,361 |
|
| $ | 14,268 |
|
| $ | 16,528 |
|
Loan charge-offs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Agriculture |
|
| 249 |
|
|
| 11 |
|
|
| 880 |
|
|
| 190 |
|
|
| 338 |
|
Commercial Real Estate—Owner Occupied |
|
| 193 |
|
|
| 328 |
|
|
| 228 |
|
|
| 523 |
|
|
| 1,661 |
|
Commercial Real Estate—Non-Owner Occupied |
|
| 153 |
|
|
| 38 |
|
|
| 23 |
|
|
| 81 |
|
|
| 198 |
|
Real Estate Mortgage |
|
| 105 |
|
|
| 400 |
|
|
| 455 |
|
|
| 1,135 |
|
|
| 2,449 |
|
Real Estate Construction |
|
| — |
|
|
| — |
|
|
| 115 |
|
|
| — |
|
|
| 0 |
|
Farm Real Estate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0 |
|
Consumer and Other |
|
| 203 |
|
|
| 165 |
|
|
| 125 |
|
|
| 120 |
|
|
| 135 |
|
Total charge-offs |
|
| 903 |
|
|
| 942 |
|
|
| 1,826 |
|
|
| 2,049 |
|
|
| 4,781 |
|
Recoveries of loans previously charged-off: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Agriculture |
|
| 169 |
|
|
| 372 |
|
|
| 105 |
|
|
| 182 |
|
|
| 251 |
|
Commercial Real Estate—Owner Occupied |
|
| 158 |
|
|
| 69 |
|
|
| 56 |
|
|
| 187 |
|
|
| 360 |
|
Commercial Real Estate—Non-Owner Occupied |
|
| 28 |
|
|
| 46 |
|
|
| 1,372 |
|
|
| 115 |
|
|
| 50 |
|
Real Estate Mortgage |
|
| 208 |
|
|
| 194 |
|
|
| 479 |
|
|
| 331 |
|
|
| 293 |
|
Real Estate Construction |
|
| — |
|
|
| 44 |
|
|
| 12 |
|
|
| 5 |
|
|
| 6 |
|
Farm Real Estate |
|
| 5 |
|
|
| 3 |
|
|
| — |
|
|
| 76 |
|
|
| — |
|
Consumer and Other |
|
| 100 |
|
|
| 43 |
|
|
| 46 |
|
|
| 46 |
|
|
| 61 |
|
Total recoveries |
|
| 668 |
|
|
| 771 |
|
|
| 2,070 |
|
|
| 942 |
|
|
| 1,021 |
|
Net recoveries (charge-offs) (1) |
|
| (235 | ) |
|
| (171 | ) |
|
| 244 |
|
|
| (1,107 | ) |
|
| (3,760 | ) |
Provision (credit) for loan losses (2) |
|
| 780 |
|
|
| — |
|
|
| (1,300 | ) |
|
| 1,200 |
|
|
| 1,500 |
|
Allowance for loan losses at year end |
| $ | 13,679 |
|
| $ | 13,134 |
|
| $ | 13,305 |
|
| $ | 14,361 |
|
| $ | 14,268 |
|
Allowance for loan losses as a percent of loans at year-end |
|
| 0.88 | % |
|
| 1.13 | % |
|
| 1.26 | % |
|
| 1.43 | % |
|
| 1.56 | % |
Ratio of net charge-offs (recoveries) during the year to average loans outstanding |
|
| 0.02 | % |
|
| 0.02 | % |
|
| (0.02 | )% |
|
| 0.11 | % |
|
| 0.43 | % |
|
|
|
|
16
2021 | 2020 | 2019 | ||||||||||
(Dollars in thousands) | ||||||||||||
Total loans outstanding | $ | 1,997,879 | $ | 2,057,502 | $ | 1,708,970 | ||||||
Allowance for credit losses at year end | 26,641 | 25,028 | 14,767 | |||||||||
Loans accounted for on a nonaccrual basis | 3,673 | 5,125 | 5,599 | |||||||||
Allowance for credit losses to total loans outstanding | 1.33 | % | 1.22 | % | 0.86 | % | ||||||
Nonaccrual loans to total loans outstanding | 0.18 | % | 0.25 | % | 0.33 | % | ||||||
Allowance for credit losses to nonaccrual loans | 725.32 | % | 488.35 | % | 263.74 | % | ||||||
Average loans outstanding: | ||||||||||||
Commercial & Agriculture | 338,916 | 359,820 | 185,093 | |||||||||
Commercial Real Estate—Owner Occupied | 278,777 | 256,962 | 193,335 | |||||||||
Commercial Real Estate—Non-Owner Occupied | 755,578 | 643,622 | 576,383 | |||||||||
Real Estate Mortgage | 433,351 | 462,834 | 464,509 | |||||||||
Real Estate Construction | 176,775 | 175,573 | 140,184 | |||||||||
Farm Real Estate | 28,968 | 33,935 | 35,819 | |||||||||
Consumer and Other | 14,542 | 20,726 | 17,652 | |||||||||
Total average loans outstanding | 2,026,907 | 1,953,472 | 1,612,975 | |||||||||
Net charge-offs (recoveries): | ||||||||||||
Commercial & Agriculture | (150 | ) | 13 | 28 | ||||||||
Commercial Real Estate—Owner Occupied | (7 | ) | (111 | ) | (128 | ) | ||||||
Commercial Real Estate—Non-Owner Occupied | (395 | ) | (48 | ) | (102 | ) | ||||||
Real Estate Mortgage | (182 | ) | 18 | 35 | ||||||||
Real Estate Construction | (1 | ) | (4 | ) | 21 | |||||||
Farm Real Estate | (12 | ) | (13 | ) | (5 | ) | ||||||
Consumer and Other | (36 | ) | (4 | ) | 98 | |||||||
Total net charge-offs (recoveries) | (783 | ) | (149 | ) | (53 | ) | ||||||
Ratio of net charge-offs (recoveries) during the year to average loans outstanding: | ||||||||||||
Commercial & Agriculture | (0.04 | )% | 0.00 | % | 0.02 | % | ||||||
Commercial Real Estate—Owner Occupied | (0.00 | )% | (0.04 | )% | (0.07 | )% | ||||||
Commercial Real Estate—Non-Owner Occupied | (0.05 | )% | (0.01 | )% | (0.02 | )% | ||||||
Real Estate Mortgage | (0.04 | )% | 0.00 | % | 0.01 | % | ||||||
Real Estate Construction | (0.00 | )% | (0.00 | )% | 0.01 | % | ||||||
Farm Real Estate | (0.04 | )% | (0.04 | )% | (0.01 | )% | ||||||
Consumer and Other | (0.25 | )% | (0.02 | )% | 0.56 | % | ||||||
Total net recoveries (charge-offs) | (0.04 | )% | (0.01 | )% | (0.00 | )% | ||||||
|
| 2018 |
|
| 2017 |
| ||||||||||
|
| Allowance |
|
| Percentage of loans to total loans |
|
| Allowance |
|
| Percentage of loans to total loans |
| ||||
|
| (Dollars in thousands) |
| |||||||||||||
Commercial and Agriculture |
| $ | 1,747 |
|
|
| 11.3 | % |
| $ | 1,562 |
|
|
| 13.1 | % |
Commercial Real Estate—Owner Occupied |
|
| 1,962 |
|
|
| 13.5 |
|
|
| 2,043 |
|
|
| 14.1 |
|
Commercial Real Estate—Non-Owner Occupied |
|
| 5,803 |
|
|
| 33.5 |
|
|
| 5,307 |
|
|
| 36.5 |
|
Real Estate Mortgage |
|
| 1,531 |
|
|
| 29.3 |
|
|
| 1,910 |
|
|
| 23.1 |
|
Real Estate Construction |
|
| 1,046 |
|
|
| 8.7 |
|
|
| 834 |
|
|
| 8.4 |
|
Farm Real Estate |
|
| 397 |
|
|
| 2.5 |
|
|
| 430 |
|
|
| 3.4 |
|
Consumer and Other |
|
| 284 |
|
|
| 1.2 |
|
|
| 290 |
|
|
| 1.4 |
|
Unallocated |
|
| 909 |
|
|
| — |
|
|
| 758 |
|
|
| — |
|
|
| $ | 13,679 |
|
|
| 100.0 | % |
| $ | 13,134 |
|
|
| 100.0 | % |
2021 | 2020 | |||||||||||||||
Allowance | Percentage of loans to total loans | Allowance | Percentage of loans to total loans | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Commercial and Agriculture | $ | 2,600 | 12.3 | % | $ | 2,810 | 19.9 | % | ||||||||
Commercial Real Estate—Owner Occupied | 4,464 | 14.9 | 4,057 | 13.6 | ||||||||||||
Commercial Real Estate—Non-Owner Occupied | 13,860 | 41.5 | 12,451 | 34.3 | ||||||||||||
Real Estate Mortgage | 2,597 | 21.5 | 2,484 | 21.5 | ||||||||||||
Real Estate Construction | 1,810 | 7.9 | 2,439 | 8.5 | ||||||||||||
Farm Real Estate | 287 | 1.4 | 338 | 1.6 | ||||||||||||
Consumer and Other | 176 | 0.5 | 209 | 0.6 | ||||||||||||
Unallocated | 847 | — | 240 | — | ||||||||||||
$ | 26,641 | 100.0 | % | $ | 25,028 | 100.0 | % | |||||||||
|
| 2016 |
|
| 2015 |
| ||||||||||
|
| Allowance |
|
| Percentage of loans to total loans |
|
| Allowance |
|
| Percentage of loans to total loans |
| ||||
|
| (Dollars in thousands) |
| |||||||||||||
Commercial and Agriculture |
| $ | 2,018 |
|
|
| 12.8 | % |
| $ | 1,478 |
|
|
| 12.4 | % |
Commercial Real Estate—Owner Occupied |
|
| 2,171 |
|
|
| 15.3 |
|
|
| 2,467 |
|
|
| 16.8 |
|
Commercial Real Estate—Non-Owner Occupied |
|
| 4,606 |
|
|
| 37.5 |
|
|
| 4,657 |
|
|
| 34.8 |
|
Real Estate Mortgage |
|
| 3,089 |
|
|
| 23.4 |
|
|
| 4,086 |
|
|
| 23.6 |
|
Real Estate Construction |
|
| 420 |
|
|
| 5.3 |
|
|
| 371 |
|
|
| 5.9 |
|
Farm Real Estate |
|
| 442 |
|
|
| 3.9 |
|
|
| 538 |
|
|
| 4.7 |
|
Consumer and Other |
|
| 314 |
|
|
| 1.7 |
|
|
| 382 |
|
|
| 1.9 |
|
Unallocated |
|
| 245 |
|
|
| — |
|
|
| 382 |
|
|
| — |
|
|
| $ | 13,305 |
|
|
| 100.0 | % |
| $ | 14,361 |
|
|
| 100.0 | % |
|
| 2014 |
| |||||
|
| Allowance |
|
| Percentage of loans to total loans |
| ||
|
| (Dollars in thousands) |
| |||||
Commercial and Agriculture |
| $ | 1,819 |
|
|
| 12.4 | % |
Commercial Real Estate—Owner Occupied |
|
| 2,221 |
|
|
| 15.6 |
|
Commercial Real Estate—Non-Owner Occupied |
|
| 4,334 |
|
|
| 33.7 |
|
Real Estate Mortgage |
|
| 3,747 |
|
|
| 23.5 |
|
Real Estate Construction |
|
| 428 |
|
|
| 7.2 |
|
Farm Real Estate |
|
| 822 |
|
|
| 5.9 |
|
Consumer and Other |
|
| 200 |
|
|
| 1.7 |
|
Unallocated |
|
| 697 |
|
|
| — |
|
|
| $ | 14,268 |
|
|
| 100.0 | % |
17
2019 | ||||||||
Allowance | Percentage of loans to total loans | |||||||
(Dollars in thousands) | ||||||||
Commercial and Agriculture | $ | 2,219 | 11.9 | % | ||||
Commercial Real Estate—Owner Occupied | 2,541 | 14.4 | ||||||
Commercial Real Estate—Non-Owner Occupied | 6,584 | 34.6 | ||||||
Real Estate Mortgage | 1,582 | 27.1 | ||||||
Real Estate Construction | 1,250 | 9.1 | ||||||
Farm Real Estate | 344 | 2.0 | ||||||
Consumer and Other | 247 | 0.9 | ||||||
Unallocated | — | — | ||||||
$ | 14,767 | 100.0 | % | |||||
|
| 2018 |
|
| 2017 |
|
| 2016 |
| |||||||||||||||
|
| Average balance |
|
| Average rate paid |
|
| Average balance |
|
| Average rate paid |
|
| Average balance |
|
| Average rate paid |
| ||||||
|
| (Dollars in thousands) |
| |||||||||||||||||||||
Noninterest-bearing demand deposits |
| $ | 466,763 |
|
| N/A |
|
| $ | 450,648 |
|
| N/A |
|
| $ | 434,601 |
|
| N/A |
| |||
Interest-bearing demand deposits |
|
| 213,904 |
|
|
| 0.06 | % |
|
| 189,419 |
|
|
| 0.06 | % |
|
| 190,965 |
|
|
| 0.05 | % |
Savings, including Money Market deposit accounts |
|
| 471,593 |
|
|
| 0.28 | % |
|
| 395,799 |
|
|
| 0.12 | % |
|
| 375,624 |
|
|
| 0.10 | % |
Certificates of deposit, including IRA’s |
|
| 189,600 |
|
|
| 1.22 | % |
|
| 200,797 |
|
|
| 0.87 | % |
|
| 209,093 |
|
|
| 0.73 | % |
|
| $ | 1,341,860 |
|
|
|
|
|
| $ | 1,236,663 |
|
|
|
|
|
| $ | 1,210,283 |
|
|
|
|
|
2021 | 2020 | |||||||||||||||
Average balance | Average rate paid | Average balance | Average rate paid | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Noninterest-bearing demand deposits | $ | 907,591 | N/A | $ | 739,648 | N/A | ||||||||||
Interest-bearing demand deposits | 497,067 | 0.03 | % | 379,828 | 0.05 | % | ||||||||||
Savings, including Money Market deposit accounts | 818,153 | 0.13 | % | 670,716 | 0.24 | % | ||||||||||
Certificates of deposit, including IRA’s | 265,294 | 1.11 | % | 288,262 | 1.76 | % | ||||||||||
$ | 2,488,105 | $ | 2,078,454 | |||||||||||||
|
| Certificates of Deposits |
|
| Individual Retirement Accounts |
|
| Total |
| |||
|
| (Dollars in thousands) |
| |||||||||
3 months or less |
| $ | 15,413 |
|
| $ | 1,213 |
|
| $ | 16,626 |
|
Over 3 through 6 months |
|
| 17,778 |
|
|
| 2,276 |
|
|
| 20,054 |
|
Over 6 through 12 months |
|
| 25,191 |
|
|
| 2,943 |
|
|
| 28,134 |
|
Over 12 months |
|
| 34,348 |
|
|
| 10,613 |
|
|
| 44,961 |
|
|
| $ | 92,730 |
|
| $ | 17,045 |
|
| $ | 109,775 |
|
Return on Equity and Assets
Information required by this section is incorporated herein by reference from the information appearing under the caption “Five-Year Selected Consolidated Financial Data” located on pages 1 and 2
Certificates of Deposits | Individual Retirement Accounts | Total | ||||||||||
(Dollars in thousands) | ||||||||||||
3 months or less | $ | 12,532 | $ | 301 | $ | 12,833 | ||||||
Over 3 through 6 months | 6,784 | 611 | 7,395 | |||||||||
Over 6 through 12 months | 12,785 | 648 | 13,433 | |||||||||
Over 12 months | 23,410 | 1,296 | 24,706 | |||||||||
$ | 55,511 | $ | 2,856 | $ | 58,367 | |||||||
FORWARD-LOOKING
strategies the Company develops to address them are unsuccessful. The forward-looking statements included in this report are only made as of the date of this report, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for All subsequent written and oral forward-looking statements attributable to the Company or any person acting on the Company’s behalf are qualified in their entirety by the following cautionary statements
pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.
19
inflation;
recession;
unemployment;
money supply;
ADVERSE CHANGES IN
Although we primarily invest in securities issued by United States government agencies and sponsored entities and United States state and local governments with limited credit risk, certainVARIOUS FINANCIAL CONTRACTS.
20
ContentsA transition away from LIBOR as a reference rate for financial contracts could negatively our income and expenses and the value of various financial contracts.
cash flows.
Many of these risks are heightened in light of
action, and could have a material adverse effect on the price of our common shares or result in heightened volatility of our stock price.
21
disrupting the ability of the bank to process transactions. Other businesses have been victims of ransomware attacks in which the business becomes unable to access its own information and is presented with a demand to pay a ransom in order to once again have access to its information.
We are also at risk of the impact of natural disasters, terrorism and international hostilities on our systems or for the effects of outages or other failures involving power or communications systems operated by others.
can take many forms, some breaches may not be covered under our cyber insurance coverage.
To date, we have not experienced any material losses relating to cyber-attacks or other information security breaches, but there can be no assurance that we will not suffer such attacks or attempted breaches, or incur resulting losses in the future. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, and our plans to continue to implement internet and mobile banking capabilities to meet customer demand. As cyber and other data security threats continue to evolve, we may be required to expend significant additional resources to continue to modify and enhance its protective measures or to investigate and remediate any security vulnerabilities.
Our
business, financial condition, and results of operations. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for the Company.
22
WE MAY ELECT OR NEED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE, BUT CAPITAL MAY NOT BE AVAILABLE WHEN IT IS NEEDED.
We are required by federal and state regulatory authorities to maintain adequate levels
LEGISLATIVE OR REGULATORY CHANGES OR ACTIONS COULD ADVERSELY IMPACT OUR BUSINESS.
The financial services industry is extensively regulated. We are subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of our operations. These laws and regulations are primarily intended for the protection of consumers, depositors, borrowers and the deposit insurance fund, not to benefit our shareholders. Changes to laws and regulations or other actions by regulatory agencies may negatively impact us, possibly limiting the services we provide, increasing the ability of non-banks to compete with us or requiring us to change the way we operate. Regulations affecting banks and other financial services businesses are undergoing continuous changes. Recently, the current United States President and certain legislators have taken steps to make extensive changes to regulations affecting financial institutions. While such changes are generally intended to lessen the regulatory burden for financial institutions, we cannot predict the impact of any such changes to laws and regulations or other actions. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on the operation of an institution and the ability to determine the adequacy of an institution’s allowance for loan losses. Failure to comply with applicable laws, regulations and policies could result in sanctions being imposed by the regulatory agencies, including the imposition of civil money penalties, which could have a material adverse effect on our operations and financial condition. Even the reduction of regulatory restrictions could have an adverse effect on us if such lessening of restrictions increases competition within our industry or market areas.
23
In light of conditions in the global financial markets and the global economy that occurred in the last decade, regulators increased their focus on the regulation of the financial services industry. In the last several years, the United States Congress and the federal bank regulators have acted on an unprecedented scale in responding to the stresses experienced in the global financial markets. Some of the laws enacted by Congress and regulations promulgated by federal bank regulators subject us and other financial institutions to additional restrictions, oversight and costs that may have an adverse impact on our business and results of operations. In addition to laws, regulations and supervisory and enforcement actions directed at the operations of banks, proposals to reform the housing finance market contemplate winding down Fannie Mae and Freddie Mac, which could negatively affect our sales of loans.
In July 2013, our primary federal regulator, the Federal Reserve, published final rules (the “Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations. The Basel III Capital Rules substantially revise the risk-based capital requirements applicable to financial holding companies and other bank holding companies as well as depository institutions, including CBI and Civista, compared to the previous United States risk-based capital rules. The Basel III Capital Rules define the components of capital and address other issues affecting the numerator in banking institutions’ regulatory capital ratios and also address risk weights and other issues affecting the denominator in banking institutions’ regulatory capital ratios. Although CBI and Civista are in compliance with the Basel III Capital rules, any future changes to capital requirements could have a material impact on the Company.
DEPOSIT INSURANCE PREMIUMS MAY INCREASE AND HAVE A NEGATIVE EFFECT ON THE COMPANY’S RESULTS OF OPERATIONS.
The DIF maintained by the FDIC to resolve bank failures is funded by fees assessed on insured depository institutions. The costs of resolving bank failures increased for a period of time and decreased the DIF. The FDIC collected a special assessment in 2009 to replenish the DIF and also required a prepayment of an estimated amount of future deposit insurance premiums. If the costs of future bank failures increase, the deposit insurance premiums required to be paid by Civista may also increase. The FDIC recently adopted rules revising its assessments in a manner benefitting banks with assets totaling less than $10 billion. There can be no assurance, however, that assessments will not be changed in the future.
24
accounting guidance isFASB voted to defer the effective date for this ASU for smaller reporting companies, such as the Company, to annual reporting periods and interim reporting periods within those annual periods, beginning after December 15, 2019.2022. Under the CECL model, financial institutions will be required to use historical information, current conditions and reasonable forecasts to estimate the expected loss over the life of the loan. The transition to the CECL model will bring with it significantly greater data requirements and changes to methodologies to accurately account for expected losses under the new parameters.
If the methodologies and assumptions that we use in the CECL model are proven to be incorrect, or inadequate, the allowance for credit losses may not be sufficient, resulting in the need for additional allowance for credit losses to be established, which could have a material adverse impact on our financial condition and results of operations.
CHANGES IN TAX LAWS COULD ADVERSELY AFFECT OUR PERFORMANCE
We are subject to extensive federal, state and local taxes, including income, excise, sales/use, payroll, franchise, withholding and ad valorem taxes. Changes to our taxes could have a material adverse effect on our results of operations. In addition, our customers are subject to a wide variety of federal, state and local taxes. Changes in taxes paid by our customers may adversely affect their ability to purchase homes or consumer products, which could adversely affect their demand for our loans and deposit products. In addition, such negative effects on our customers could result in defaults on the loans we have made and decrease the value of mortgage-backed securities in which we have invested.
On December 22, 2017, H.R.1, formally known as the "Tax Cuts and Jobs Act," was enacted into law. This new tax legislation, among other changes, limits the amount of state, federal and local taxes that taxpayers are permitted to deduct on their individual tax returns and eliminates other deductions in their entirety. Such limits and eliminations may result in customer defaults on loans we have made and decrease the value of mortgage-backed securities in which we have invested.
Accounting changes could impact our reported financial condition or results of operations.
The accounting standard setters, including the Financial Accounting Standards Board, the SEC and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our consolidated financial statements. The pace of change continues to accelerate and changes in accounting standards can be hard to predict and could materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively, resulting in the restatement of prior period financial statements.
25
The preparation of consolidated financial statements in conformity with GAAP requires management to make significant estimates that affect the financial statements. Due to the inherent nature of these estimates, actual results may vary materially from management’s estimates. In June 2016, FASB issued a new accounting standard for recognizing current expected credit losses, commonly referred to as CECL. CECL will result in earlier recognition of credit losses and requires consideration of not only past and current events but also reasonable and supportable forecasts that affect collectability. The Company will be required to comply with the new standard in the first quarter of 2020. Upon adoption of CECL, credit loss allowances may increase, which would decrease retained earnings and regulatory capital. The federal banking regulators have adopted a regulation that will allow banks to phase in the day-one impact of CECL on regulatory capital over three years. CECL implementation poses operational risk, including the failure to properly transition internal processes or systems, which could lead to call report errors, financial misstatements, or operational losses.
WE NEED TO CONSTANTLY UPDATE OUR TECHNOLOGY IN ORDER TO COMPETE AND MEET CUSTOMER DEMANDS.
The financial services market, including banking services, is undergoing rapid changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and may enable us to reduce costs. Our future success will depend, in part, on our ability to use technology to provide products and services that provide convenience to customers and to create additional efficiencies in our operations. Some of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.
WE MAY BE THE SUBJECT OF LITIGATION WHICH COULD RESULT IN LEGAL LIABILITY AND DAMAGE TO OUR BUSINESS AND REPUTATION.
From time to time, we may be subject to claims or legal action from customers, employees or others. Financial institutions like CBI and Civista are facing a growing number of significant class actions, including those based on the manner of calculation of interest on loans and the assessment of overdraft fees. Future litigation could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We are also involved from time to time in other reviews, investigations and proceedings (both formal and informal) by governmental and other agencies regarding our business. These matters also could result in adverse judgments, settlements, fines, penalties, injunctions or other relief. Like other large financial institutions, we are also subject to risk from potential employee misconduct, including non-compliance with policies and improper use or disclosure of confidential information. Substantial legal liability or significant regulatory action against us could materially adversely affect our business, financial condition or results of operations and/or cause significant reputational harm to our business.
Climate change, severe weather, natural disasters, acts of war or terrorism and other external events could significantly impact our business.
Natural disasters, including severe weather events of increasing strength and frequency due to climate change, acts of war or terrorism, and other adverse external events could have a significant impact on our ability to conduct business or upon third parties who perform operational services for us or our customers. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in lost revenue or cause us to incur additional expenses.
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materially misleading.
When Civista sells a mortgage loan, it agreesAVAILABLE WHEN IT IS NEEDED.
WE DO NOT HAVE ASSURANCE REGARDING THE FUTURE REVENUES OF OUR TAX REFUND PROGRAM.
The revenues from our tax refund program are based upon a contract with a third party. While the contract has a term of three years expiring October 31, 2019 and contains provisions for automatic renewal after that term, the amount to be paid to us is not fixed for any period after 2017. As a result, the amount paid to us may fluctuate after 2017, and there is no assurance that the parties will be able to negotiate compensation that is acceptable to us after that year.
We could experience difficulties managing our growth and effectively integrating the operations of UCB, which may negatively affect the market price of o common shares and have an impact on United Community’s employees and customers.
On September 14, 2018, CBI completed the acquisition by merger of UCB. Immediately following the merger, UCB’s banking subsidiary, United Community Bank, was merged with and into Civista. As a result of the merger, we acquired eight offices of UCB in the Indiana communities of Lawrenceburg (3), Aurora, West Harrison, Milan, Osgood and Versailles and a loan production office in Fort Mitchell, Kentucky.
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The earnings, financial condition and prospects of Civista after the UCB merger will depend in part on our ability to integrate successfully the operations of UCB and United Community and continue to implement our business plan. We may not be able to fully achieve our strategic objectives and projected operating efficiencies. The costs and/or challenges involved in integrating UCB and United Community with our organization may be greater than expected or the cost savings from anticipated economies of scale of the combined organization may be lower or take longer to realize than expected. I nherent uncertainties exist in integrating the operations of an acquired entity. The success of the UCB merger will depend on a number of factors, including, without limitation:
Our ability to integrate the business acquired from UCB and United Community in the merger into our operations;
Our ability to limit the outflow of deposits held by new customers and to successfully retain and manage interest-earning assets and relationships (including lending relationships) acquired in the merger;
Our ability to control the incremental non-interest expense from the acquired business in a manner that enables us to maintain a favorable overall efficiency ratio;
Our ability to retain and attract key employees and other appropriate personnel; and
Our ability to earn acceptable levels of interest and non-interest income, including fee income, from the acquired business.
While we believe that the initial transaction and integration has been successful thus far, we may encounter future difficulties, including, but not limited to, loss of key employees and customers, disruption of our ongoing business, or possible inconsistencies in standards, controls, procedures, and policies. These factors could contribute to the Company not fully achieving the anticipated benefits of the UCB merger.
FUTURE ACQUISITIONS OR OTHER EXPANSION MAY ADVERSELY AFFECT OUR FINANCIAL CONDITION AND RESULT OF OPERATIONS.
In the future, we may acquire other financial institutions or branches or assets of other financial institutions. We may also open new branches, enter into new lines of business, or offer new products or services. Any such acquisition or expansion of our business will involve a number of expenses and risks, which may include some or all of the following:
the time and expense associated with identifying and evaluating potential acquisitions or expansions;
the potential inaccuracy of estimates and judgments used to evaluate credit, operations, management and market risk with respect to target institutions;
the time and costs of evaluating new markets, hiring local management and opening new offices, and the delay between commencing these activities and the generation of profits from the expansion;
any financing required in connection with an acquisition or expansion;
the diversion of management’s attention to the negotiation of a transaction and the integration of the operations and personnel of the combining businesses;
entry into unfamiliar markets and the introduction of new products and services into our existing business;
the possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations; and
the risk of loss of key employees and customers.
We may incur substantial costs to expand, and we can give no assurance that such expansion will result in the levels of profits we expect. Neither can we assure that integration efforts for any future acquisitions will be successful. We may issue equity securities in connection with acquisitions, which could dilute the economic and voting interests of our existing shareholders.
WE ARE A HOLDING COMPANY AND DEPEND ON OUR SUBSIDIARY BANK FOR DIVIDENDS.
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The Company did not repurchase any of its common shares during
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
October 1, 2021 -October 31, 2021 | 4,000 | $ | 23.99 | 4,000 | $ | 10,964,868 | ||||||||||
November 1, 2021 - November 30, 2021 | 10,752 | $ | 23.72 | 10,752 | $ | 10,709,821 | ||||||||||
December 1, 2021 - December 31, 2021 | 58,789 | $ | 23.83 | 58,789 | $ | 9,308,655 | ||||||||||
Total | 73,541 | $ | 23.83 | 73,541 | $ | 9,308,655 |
2020
2019
2019
2019
2019
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Equity Compensation Plan Information | ||||||||||||
Plan category | (a) Number of Common Shares to be issued upon exercise of outstanding options, warrants and rights (a) | (b) Weighted-average exercise price of outstanding options, warrants and rights (b) | (c) Number of Common Shares remaining available for future issuance under equity compensation plans (excluding common shares reflected in column (a) ) | |||||||||
Equity compensation plans approved by shareholders | — |
| — |
|
| 154,123 | ||||||
Equity compensation plans not approved by shareholders | — |
| — | — |
| |||||||
Total | — |
| — | 154,123 | ||||||||
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1. |
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(PCAOB ID: 686)
2020
2019
2019
2019
2019
2. |
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3. |
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Exhibit | Description | Location | ||
2.1 | Filed as Exhibit 2.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on No. 001-36192). | |||
3.1 | Filed as Exhibit 3.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on November 16, 2018 and incorporated herein by reference (FileNo. 001-36192). | |||
3.2 | Filed as Exhibit 3.2 to Civista Bancshares, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed on November 8, 2017 and incorporated herein by reference. (FileNo. 001-36192) | |||
4.1 | Filed as Exhibit 8-K dated and filed on November No. | |||
4.2 |
| Included as Exhibit A-1 and ExhibitA-2 to |
Exhibit |
Description | Location | ||
4.3 | Included herewith. | |||
4.4 | Filed as Exhibit 4.2 to Civista Bancshares, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 15, 2021 and incorporated herein by reference (FileNo. 001-36192). | |||
10.1* | Filed as Exhibit 10.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on No. 001-36192). | |||
10.2* | Filed as Exhibit 10.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on March 8, 2019 and incorporated herein by reference. (FileNo. 001-36192). | |||
10.3* | Filed as Exhibit 10.2 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on October 29, 2015 and incorporated herein by reference. (FileNo. 001-36192). | |||
10.4* | Filed as Exhibit 10.12 to Civista Bancshares, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011, filed on March 15, 2012 and incorporated herein by reference (FileNo. 0-25980). | |||
10.5* | Filed as Exhibit 10.13 to Civista Bancshares, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011, filed on March 15, 2012 and incorporated herein by reference (FileNo. 0-25980). | |||
10.6* | Filed as Exhibit 10.1 to Civista Bancshares, Inc.’s Quarterly Report on Form 10-Q for the period ended June 30, 2016, filed on August 9, 2016 and incorporated herein by reference (FileNo. 1-36192) | |||
10.7* | Filed as Exhibit 10.1 to Civista Bancshares, Inc.’s Quarterly Report on Form 10-Q for the period ended June 30, 2018, filed on August 8, 2018 and incorporated herein by reference (FileNo. 1-36192). |
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10.8* | Filed as Exhibit 10.1 to Civista Bancshares, Inc.’s Registration Statement on Form S-8 filed on February 26, 2015 and incorporated herein by reference (FileNo. 333-202316). | |||
10.9* |
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Filed as Exhibit 10-K for the year ended December 31, 2018, filed on March 15, 2019 and incorporated herein by reference. (FileNo. 1-36192) | |||
13.1 | Included herewith | |||
21.1 | Included herewith | |||
23.1 | Included herewith |
Exhibit | Description | Location | ||
23.2 | Included herewith | |||
31.1 | Included herewith | |||
31.2 | Included herewith | |||
32.1 | Included herewith | |||
32.2 | Included herewith | |||
101 | The following materials from Civista Bancshares, Inc.’s Annual Report on Form 10-K for the year ended December 31, S-T: (i) Consolidated Balance Sheets as of December 31, | |||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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(Registrant) Civista Bancshares, Inc. | ||
By | /s/ Dennis G. Shaffer | |
Dennis G. Shaffer, President & CEO (Principal Executive Officer) |
2022
/s/ Thomas A. Depler | /s/ Allen R. Nickles, CPA , CFE , | ||
Thomas A. Depler, Director | Allen R. Nickles, CPA, | ||
/s/ | /s/ Julie A. Mattlin | ||
Harry Singer, Director | Julie A. Mattlin, Director | ||
/s/ Todd A. Michel | /s/ M. Patricia Oliver | ||
Todd A. Michel, Senior Vice President, | M. Patricia Oliver, Director | ||
(Principal Accounting Officer) | |||
/s/ James O. Miller | /s/ Daniel J. White | ||
James O. Miller, Chairman of the Board | Daniel J. White, Director | ||
/s/ Dennis E. Murray, Jr. | /s/ Dennis G. Shaffer | ||
Dennis E. Murray, Jr., Director | Dennis G. Shaffer, President & CEO, (Principal Executive Officer) | ||
/s/ William F. Ritzmann | |||
William F. Ritzmann, Director |
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