(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Shares, no par value, outstanding at August ~~6, 2020—16,052,979~~4, 2021—15,138,706 shares

							June 30, 2021
	June 30, 2020			December 31, 2019			(Unaudited)			December 31, 2020
ASSETS
Cash and due from financial institutions	$	196,520		$	48,535		$	237,376		$	128,222
Restricted cash								7,930			11,300
Cash and cash equivalents								245,306			139,522
Securities available for sale		368,383			358,499			457,804			363,464
Equity securities		798			1,191			1,027			886
Loans held for sale		18,523			2,285			6,618			7,001
Loans, net of allowance of $20,420 and $14,767		2,002,545			1,694,203
Loans, net of allowance of $26,197 and $25,028								1,992,999			2,032,474
Other securities		20,537			20,280			20,537			20,537
Premises and equipment, net		23,137			22,871			22,817			22,580
Accrued interest receivable		11,047			7,093			8,123			9,421
Goodwill		76,851			76,851			76,851			76,851
Other intangible assets		8,001			8,305
Other intangible assets, net								8,129			8,075
Bank owned life insurance		45,489			44,999			46,467			45,976
Swap assets		25,719			8,918			14,521			21,700
Other assets		14,603			15,527			23,444			20,375
Total assets	$	2,812,153		$	2,309,557		$	2,924,643		$	2,768,862
LIABILITIES
Deposits
Noninterest-bearing	$	693,848		$	512,553		$	853,724		$	720,809
Interest-bearing		1,375,413			1,166,211			1,549,268			1,468,589
Total deposits		2,069,261			1,678,764			2,402,992			2,189,398
Short-term Federal Home Loan Bank advances		—			101,500
Long-term Federal Home Loan Bank advances		125,000			125,000			75,000			125,000
Securities sold under agreements to repurchase		23,608			18,674			24,916			28,914
Other borrowings		183,695			—
Subordinated debentures		29,427			29,427			29,427			29,427
Swap liabilities		25,719			8,918			14,563			21,764
Accrued expenses and other liabilities		18,830			17,148			25,332			24,251
Total liabilities		2,475,540			1,979,431			2,572,230			2,418,754
SHAREHOLDERS’ EQUITY
Common shares, no par value, 20,000,000 shares authorized, 17,664,951 shares issued at June 30, 2020 and 17,623,706 shares issued at December 31, 2019		276,841			276,422
Common shares, no par value, 20,000,000 shares authorized, 17,711,815 shares issued at June 30, 2021 and 17,664,951 shares issued at December 31, 2020, including Treasury Shares								277,495			277,039
Retained earnings		78,712			67,974			109,178			93,048
Treasury shares, 1,611,972 common shares at June 30, 2020 and 936,164 common shares at December 31, 2019, at cost		(32,594	)		(21,144	)
Treasury shares, 2,277,223 common shares at June 30, 2021 and 1,766,919 common shares at December 31, 2020, at cost								(45,953	)		(34,598	)
Accumulated other comprehensive income		13,654			6,874			11,693			14,619
Total shareholders’ equity		336,613			330,126			352,413			350,108
Total liabilities and shareholders’ equity	$	2,812,153		$	2,309,557		$	2,924,643		$	2,768,862

	Three months ended						Six Months Ended						Three months ended					Six Months Ended
	June 30,						June 30,						June 30,					June 30,
	2020			2019			2020			2019			2021		2020			2021		2020
Interest and dividend income
Loans, including fees	$	21,613		$	21,657		$	43,286		$	42,619		$	22,653	$	21,613		$	45,436	$	43,286
Taxable securities		1,359			1,694			2,775			3,442			1,230		1,359			2,505		2,775
Tax-exempt securities		1,541			1,408			3,053			2,760			1,525		1,541			3,044		3,053
Federal funds sold and other		71			167			472			689			90		71			239		472
Total interest and dividend income		24,584			24,926			49,586			49,510			25,498		24,584			51,224		49,586
Interest expense
Deposits		1,802			1,976			3,787			3,867			1,136		1,802			2,396		3,787
Federal Home Loan Bank advances		447			831			1,028			1,429			330		447			774		1,028
Subordinated debentures		250			372			563			744			185		250			371		563
Securities sold under agreements to repurchase and other		10			5			18			10			6		10			14		18
Total interest expense		2,509			3,184			5,396			6,050			1,657		2,509			3,555		5,396
Net interest income		22,075			21,742			44,190			43,460			23,841		22,075			47,669		44,190
Provision for loan losses		3,486			—			5,612			—			—		3,486			830		5,612
Net interest income after provision for loan losses		18,589			21,742			38,578			43,460			23,841		18,589			46,839		38,578
Noninterest income
Service charges		930			1,552			2,398			3,008			1,317		930			2,573		2,398
Net gain on sale of securities		—			10			—			14			1,784		—			1,783		—
Net loss on equity securities		(5	)		(33	)		(146	)		(31	)
Net gain (loss) on equity securities														53		(5	)		141		(146	)
Net gain on sale of loans		2,261			555			3,088			886			2,218		2,261			4,963		3,088
ATM/Interchange fees		1,149			951			2,043			1,857			1,373		1,149			2,620		2,043
Wealth management fees		904			911			1,910			1,758			1,188		904			2,334		1,910
Bank owned life insurance		240			252			490			499			248		240			491		490
Tax refund processing fees		475			550			2,375			2,750			475		475			2,375		2,375
Swap fees		764			15			1,102			88			17		764			94		1,102
Other		136			341			470			559			352		136			841		470
Total noninterest income		6,854			5,104			13,730			11,388			9,025		6,854			18,215		13,730
Noninterest expense
Compensation expense		10,597			9,548			21,468			19,353			11,406		10,597			23,188		21,468
Net occupancy expense		1,064			964			2,040			2,004			1,007		1,064			2,231		2,040
Equipment expense		507			480			1,013			943			482		507			896		1,013
Contracted data processing		475			447			925			866			490		475			933		925
FDIC assessment		156			106			243			298			322		156			582		243
State franchise tax		475			499			967			899			471		475			1,096		967
Professional services		883			700			1,620			1,395			741		883			1,479		1,620
Amortization of intangible assets		228			235			459			475			223		228			445		459
ATM/Interchange expense		331			546			778			924			656		331			1,249		778
Marketing		339			367			695			707			343		339			641		695
Software maintenance expense		407			356			844			705			545		407			1,053		844
Other operating expenses		2,652			2,391			4,918			4,519			5,781		2,652			8,064		4,918
Total noninterest expense		18,114			16,639			35,970			33,088			22,467		18,114			41,857		35,970
Income before taxes		7,329			10,207			16,338			21,760			10,399		7,329			23,197		16,338
Income tax expense		825			1,546			2,001			3,430			1,235		825			3,275		2,001
Net Income		6,504			8,661			14,337			18,330		$	9,164	$	6,504		$	19,922	$	14,337
Preferred stock dividends		—			164			—			328
Net income available to common shareholders	$	6,504		$	8,497		$	14,337		$	18,002
Earnings per common share, basic	$	0.41		$	0.54		$	0.88		$	1.15		$	0.59	$	0.41		$	1.27	$	0.88
Earnings per common share, diluted	$	0.41		$	0.51		$	0.88		$	1.08		$	0.59	$	0.41		$	1.27	$	0.88
Weighted average common shares, basic														15,529,766		15,989,851			15,674,231		16,237,242
Weighted average common shares, diluted														15,529,766		15,989,851			15,674,231		16,237,242

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Net income	$	6,504		$	8,661		$	14,337		$	18,330		$	9,164		$	6,504		$	19,922		$	14,337
Other comprehensive income, net of reclassification adjustment:
Unrealized holding gains on available for sale securities		4,695			6,299			8,438			12,441
Other comprehensive income (loss):
Unrealized holding gains (losses) on available for sale securities														2,606			4,695			(3,870	)		8,438
Tax effect														(547	)		(986	)		813			(1,772	)
Reclassification of losses recognized in net income														1			—			2			—
Tax effect		(986	)		(1,323	)		(1,772	)		(2,612	)		—			—			—			—
Pension liability adjustment		72			147			145			294			81			72			163			145
Tax effect		(15	)		(31	)		(31	)		(62	)		(17	)		(15	)		(34	)		(31	)
Total other comprehensive income		3,766			5,092			6,780			10,061
Total other comprehensive income (loss)														2,124			3,766			(2,926	)		6,780
Comprehensive income	$	10,270		$	13,753		$	21,117		$	28,391		$	11,288		$	10,270		$	16,996		$	21,117

																					Common Shares											Accumulated Other		Total
																					Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income		Shareholders’ Equity
Balance, March 31, 2021																						15,750,479		$	277,164	$	101,899		$	(38,574	)	$	9,569	$	350,058
Net Income																						—			—		9,164			—			—		9,164
Other comprehensive income																						—			—		—			—			2,124		2,124
Stock-based compensation																						7,725			331		—			—			—		331
Common stock dividends ($0.12 per share)																						—			—		(1,885	)		—			—		(1,885	)
Purchase of common stock																						(323,612	)		—		—			(7,379	)		—		(7,379	)
Balance, June 30, 2021																						15,434,592		$	277,495	$	109,178		$	(45,953	)	$	11,693	$	352,413

					Common Shares											Accumulated Other		Total			Common Shares											Accumulated Other		Total
					Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income		Shareholders’ Equity			Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income		Shareholders’ Equity
Balance, March 31, 2020						16,064,010		$	276,546	$	73,972		$	(32,239	)	$	9,888	$	328,167			16,064,010		$	276,546	$	73,972		$	(32,239	)	$	9,888	$	328,167
Net Income						—			—		6,504			—			—		6,504			—			—		6,504			—			—		6,504
Other comprehensive income						—			—		—			—			3,766		3,766			—			—		—			—			3,766		3,766
Stock-based compensation						14,266			295		—			—			—		295			14,266			295		—			—			—		295
Common stock dividends ($0.11 per share)						—			—		(1,764	)		—			—		(1,764	)		—			—		(1,764	)		—			—		(1,764	)
Purchase of treasury stock						(25,297	)		—		—			(355	)		—		(355	)
Purchase of common stock																						(25,297	)		—		—			(355	)		—		(355	)
Balance, June 30, 2020						16,052,979		$	276,841	$	78,712		$	(32,594	)	$	13,654	$	336,613			16,052,979		$	276,841	$	78,712		$	(32,594	)	$	13,654	$	336,613

	Preferred Shares				Common Shares											Accumulated Other		Total
	Outstanding Shares		Amount		Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income		Shareholders’ Equity
Balance, March 31, 2019		10,120	$	9,364		15,624,113		$	266,990	$	49,421		$	(17,235	)	$	3,517	$	312,057
Net Income		—		—		—			—		8,661			—			—		8,661
Other comprehensive income		—		—		—			—		—			—			5,092		5,092
Stock-based compensation		—		—		8,946			285		—			—			—		285
Common stock dividends ($0.11 per share)		—		—		—			—		(1,719	)		—			—		(1,719	)
Preferred stock dividends ($16.25 per share)		—		—		—			—		(164	)		—			—		(164	)
Balance, June 30, 2019		10,120	$	9,364		15,633,059		$	267,275	$	56,199		$	(17,235	)	$	8,609	$	324,212

																						Common Shares											Accumulated Other			Total
																						Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income			Shareholders’ Equity
Balance, December 31, 2020																							15,898,032		$	277,039	$	93,048		$	(34,598	)	$	14,619		$	350,108
Net Income																							—			—		19,922			—			—			19,922
Other comprehensive loss																							—			—		—			—			(2,926	)		(2,926	)
Stock-based compensation																							46,864			456		—			—			—			456
Common stock dividends ($0.24 per share)																							—			—		(3,792	)		—			—			(3,792	)
Purchase of common stock																							(510,304	)		—		—			(11,355	)		—			(11,355	)
Balance, June 30, 2021																							15,434,592		$	277,495	$	109,178		$	(45,953	)	$	11,693		$	352,413

					Common Shares											Accumulated Other			Total			Common Shares											Accumulated Other			Total
					Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income			Shareholders’ Equity			Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income			Shareholders’ Equity
Balance, December 31, 2019						16,687,542		$	276,422	$	67,974		$	(21,144	)	$	6,874		$	330,126			16,687,542		$	276,422	$	67,974		$	(21,144	)	$	6,874		$	330,126
Net Income						—			—		14,337			—			—			14,337			—			—		14,337			—			—			14,337
Other comprehensive income						—			—		—			—			6,780			6,780			—			—		—			—			6,780			6,780
Stock-based compensation						41,245			419		—			—			—			419			41,245			419		—			—			—			419
Common stock dividends ($0.22 per share)						—			—		(3,599	)		—			—			(3,599	)		—			—		(3,599	)		—			—			(3,599	)
Purchase of treasury stock						(675,808	)		—		—			(11,450	)		—			(11,450	)
Purchase of common stock																							(675,808	)		—		—			(11,450	)		—			(11,450	)
Balance, June 30, 2020						16,052,979		$	276,841	$	78,712		$	(32,594	)	$	13,654		$	336,613			16,052,979		$	276,841	$	78,712		$	(32,594	)	$	13,654		$	336,613

	Preferred Shares				Common Shares											Accumulated Other			Total
	Outstanding Shares		Amount		Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income (loss)			Shareholders’ Equity
Balance, December 31, 2018		10,120	$	9,364		15,603,499		$	266,901	$	41,320		$	(17,235	)	$	(1,452	)	$	298,898
Net Income		—		—		—			—		18,330			—			—			18,330
Other comprehensive income		—		—		—			—		—			—			10,061			10,061
Stock-based compensation		—		—		29,560			374		—			—			—			374
Common stock dividends ($0.20 per share)		—		—		—			—		(3,123	)		—			—			(3,123	)
Preferred stock dividends ($32.50 per share)		—		—		—			—		(328	)		—			—			(328	)
Balance, June 30, 2019		10,120	$	9,364		15,633,059		$	267,275	$	56,199		$	(17,235	)	$	8,609		$	324,212

	Six Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2021			2020
Net cash from operating activities	$	11,590		$	20,369		$	19,996		$	11,590
Cash flows used for investing activities:
Maturities and calls of securities, available-for-sale		27,439			25,887
Maturities, paydowns and calls of securities, available-for-sale								28,080			27,439
Purchases of securities, available-for-sale		(29,446	)		(43,998	)		(126,876	)		(29,446	)
Sale of securities available for sale		—			16,829
Purchase of other securities		(257	)		—			—			(257	)
Redemption of other securities		—			741
Sale of equity securities		247			—			1,785			247
Purchase of bank owned life insurance		—			(955	)
Net loan originations		(322,770	)		(36,593	)		39,449			(322,770	)
Proceeds from sale of other real estate owned properties								118			—
Premises and equipment purchases		(1,395	)		(651	)		(1,217	)		(1,395	)
Net cash used for investing activities		(326,182	)		(38,740	)		(58,661	)		(326,182	)
Cash flows from financing activities:
Proceeds from long-term FHLB advances		—			50,000
Repayment of long-term FHLB advances								(50,000	)		—
Net change in short-term FHLB advances		(101,500	)		(67,300	)		—			(101,500	)
Proceeds from other borrowings		183,695			—			—			183,695
Increase in deposits		390,497			52,827			213,594			390,497
Increase (decrease) in securities sold under repurchase agreements		4,934			(6,645	)		(3,998	)		4,934
Purchase of treasury shares		(11,450	)		—			(11,355	)		(11,450	)
Common dividends paid		(3,599	)		(3,123	)		(3,792	)		(3,599	)
Preferred dividends paid		—			(328	)
Net cash provided by financing activities		462,577			25,431			144,449			462,577
Increase in cash and due from financial institutions		147,985			7,060
Cash and due from financial institutions at beginning of period		48,535			42,779
Cash and due from financial institutions at end of period	$	196,520		$	49,839
Increase in cash and cash equivalents								105,784			147,985
Cash and cash equivalents at beginning of period								139,522			48,535
Cash and cash equivalents at end of period							$	245,306		$	196,520
Cash paid during the period for:
Interest	$	5,434		$	6,018		$	3,607		$	5,434
Income taxes		—			2,350			4,250			—
Supplemental cash flow information:
Transfer of loans from portfolio to other real estate owned								46			—
Change in fair value of swap asset		(16,801	)		—			7,201			(16,801	)
Change in fair value of swap asset liability		16,801			—
Change in fair value of swap liability								(7,201	)		16,801
Securities purchased not settled		—			2,102			1,469			—
Increase in right-of-use asset on leases		—			(251	)
Increase in lease liability		—			251

Nature of Operations and Principles of Consolidation: Civista Bancshares, Inc. (CBI) is an Ohio corporation and a registered financial holding company. The Consolidated Financial Statements include the accounts of CBI and its wholly-owned subsidiaries: Civista Bank (Civista), First Citizens Insurance Agency, Inc. (FCIA), Water Street Properties, Inc. (Water St.) and CIVB Risk Management, Inc. (CRMI). CRMI is a wholly-owned captive insurance company which allows ~~the Company~~CBI and its subsidiaries to insure against certain risks unique to ~~the operations of CBI and its subsidiaries.~~their operations. The operations of CRMI are located in Wilmington, Delaware. First Citizens Capital LLC (FCC) is wholly-owned by Civista and holds inter-company debt. The operations of FCC are located in Wilmington, Delaware. First Citizens Investments, Inc. (FCI) is wholly-owned by Civista and holds and manages its securities portfolio. The operations of FCI are located in Wilmington, Delaware. FCIA was formed to allow the Company to participate in commission revenue generated through its third party insurance agreement. ~~Insurance commission revenue was less than 1.0% of total revenue through June 30, 2020.~~ Water ~~Street Properties~~St. was formed to hold properties repossessed by CBI subsidiaries. ~~Revenue from Water St. was less than 1.0% of total revenue through June 30, 2020.~~ The above companies together are referred to as the “Company.” Intercompany balances and transactions are eliminated in consolidation. Management considers the Company to operate primarily in one reportable segment, banking.

The Consolidated Financial Statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Company’s financial position as of June 30, ~~2020~~2021 and its results of operations and changes in cash flows for the periods ended June 30, ~~2020~~2021 and ~~2019~~2020 have been made. The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with instructions of Form 10-Q, and therefore certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted. The results of operations for the ~~periods~~period ended June 30, ~~2020~~2021 are not necessarily indicative of the operating results for the full year. Reference is made to the accounting policies of the Company described in the notes to the audited financial statements contained in the Company’s ~~2019~~2020 annual report. The Company has consistently followed these policies in preparing this Form 10-Q.

~~The Company~~Civista provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Franklin, Logan, Madison, Summit, Huron, Ottawa, Richland, Montgomery and Cuyahoga, in the Indiana counties of Dearborn and Ripley and in the Kentucky county of Kenton. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Civista has 2 loan concentrations, 1 is to Lessors of Non-Residential Buildings and Dwellings totaling ~~$491,544,~~$561,320, or ~~24.1%~~27.7% of total loans, as of June 30, ~~2020,~~2021, and the other is to Lessors of Residential Buildings and Dwellings totaling ~~$222,089,~~$276,050, or ~~10.9%~~13.6% of total loans, as of June 30, ~~2020.~~2021. These segments of the loan portfolio 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. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions that are in excess of federally insured limits.

Allowance for Loan Losses: The allowance for loan losses is regularly reviewed by management to determine that the amount is considered adequate to absorb probable losses in the loan portfolio. If not, an additional provision is made to increase the allowance. This evaluation includes specific loss estimates on certain individually reviewed impaired loans, the pooling of commercial credits risk graded as special mention and substandard that are not individually analyzed, and general loss estimates that are based upon the size, quality, and concentration characteristics of the various loan portfolios, adverse situations that may affect a borrower’s ability to repay, and current economic and industry conditions, among other items.

Those judgments and assumptions that are most critical to the application of this accounting policy are assessing the initial and on-going credit-worthiness of the borrower, the amount and timing of future cash flows of the borrower that are available for repayment of the loan, the sufficiency of underlying collateral, the enforceability of third-party guarantees, the frequency and subjectivity of loan reviews and risk ratings, emerging or changing trends that might not be fully captured in the historical loss experience, and charges against the allowance for actual losses that are greater than previously estimated. These judgments and assumptions are dependent upon or can be influenced by a variety of factors, including the breadth and depth of experience of lending officers, credit administration and the corporate loan review staff that periodically review the status of the loan,

changing economic and industry conditions, changes in the financial condition of the borrower and changes in the value and availability of the underlying collateral and guarantees.

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, consideration of impairment of goodwill, fair values of financial instruments, deferred taxes, swap assets/liabilities and pension obligations are particularly subject to change.

~~Reclassifications:~~ ~~Some items in the prior year financial statements were reclassified to conform to the current presentation. Such reclassifications had no effect on net income or shareholders’ equity.~~

In ~~August 2018,~~October 2020, the Financial Accounting Standards Board ~~(“FASB”)~~(FASB) issued Accounting Standards Update ~~(“ASU”) 2018-13,~~(ASU) 2020-08, ~~Fair Value Measurement (Topic 820): Disclosure Framework~~Codification Improvements to Subtopic 310-20, Receivables – ~~Changes to the Disclosure Requirements~~Nonrefundable Fees and Other Costs, which clarifies that, for ~~Fair Value Measurement~~. The amendments in this Update remove the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level III fair value measurements. The amendments in this Update require disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of theeach reporting period, ~~and~~an entity should reevaluate whether a callable debt security is within the ~~range and weighted average~~scope of ~~significant unobservable inputs used to develop Level III fair value measurements.~~ASC 310-20-35-33. We adopted ASU ~~2018-13~~2020-08 effective January 1, ~~2020,~~2021, which did not have a material impact on the Company’s Consolidated Financial Statements.

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40).~~ The amendment in this ASU addressed customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also added certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment in this ASU aligned the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). We adopted ASU 2018-15 effective January 1, 2020, which did not have a material impact on the Company’s Consolidated Financial Statements.

~~In October, 2018, the FASB issued ASU 2018-17,~~ ~~Consolidation (Topic 810)~~, which made improvements in (1) applying the variable interest entity (VIE) guidance to private companies under common control and (2) considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. Under the amendments in this Update, a private company may elect not to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities. In addition, indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. We adopted ASU 2018-17 effective January 1, 2020, which did not have a material impact on the Company’s Consolidated Financial Statements.

~~In November, 2018, the FASB issued ASU 2018-18,~~ ~~Collaborative Arrangements (Topic 808)~~, which made the following targeted improvements to generally accepted accounting principles (GAAP) for collaborative arrangements: (1) clarified that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account, (2) added unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606, and (3) required that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. We adopted ASU 2018-18 effective January 1, 2020, which did not have a material impact on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of ASU 2016-13 is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. ASU 2016-13 was to be effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted for annual and interim periods beginning after December 15, 2018. In November 2019, however, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update deferred the effective date of ASU 2016-13 for U.S. Securities and Exchange Commission (“SEC”) filers that are eligible to be smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Management is in the process of evaluating the impact adoption of ASU 2016-13 will have on the Company’s Consolidated Financial Statements. This process has engaged multiple areas of the Company in evaluating loss estimation methods and application of these methods to specific segments of the loan portfolio. Management has been actively monitoring FASB developments and evaluating the use of different methods allowed. Due to continuing development of our methodology, additional time is required to quantify the effect this ASU will have on the Company’s Consolidated Financial Statements. Management plans on running parallel calculations and finalizing a method or methods of adoption in time for the effective date.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. A public business entity that is an SEC filer, such as the Company, was to adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. In November 2019, however, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), which deferred the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. Topic 326, Financial Instruments – Credit Losses amendments are effective for SEC registrants for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. ~~The Company is currently evaluating the potential impact of the Topic 326 amendments on the Company’s Consolidated Financial Statements.~~ The amendments to Topic 825 were to be effective for interim and annual reporting periods beginning after December 15, 2019. In November 2019, however, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This Update is not expected to have a material impact on the Company’s financial statements.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses, Topic 326, which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted ASU 2016-13, the effective dates and transition requirements are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU 2016-13 has been adopted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). The Update defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial statements.

In November 2019, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). The Update defers the effective dates of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This Update also amends the mandatory effective date for the elimination of Step 2 from the goodwill impairment test under ASU No. 2017-04, Intangibles ‒ Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (Goodwill),to align with those used for credit losses. Furthermore, the ASU provides a one-year deferral of the effective dates of the ASUs on derivatives and hedging and leases for companies that are not public business entities. The Company qualified as a smaller reporting company and does not expect to early adopt these ASUs.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. The effective dates in this Update are the same as those applicable for ASU 2019-10.The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim

periods within those years. Other amendments are effective upon issuance of this ASU. This Update is not expected to have a significant impact on the Company’s financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The Update is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements necessitated by reference rate reform. The Update also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. The amendments in this Update are effective for all entities as of March 12, 2020 through December 31, 2022. ~~Management~~The Company is ~~currently~~working through this transition via a multi-disciplinary project team. We are still evaluating ~~reference rate options and is reviewing loan agreements, debt securities, derivatives and borrowings impacted by reference rate reform.~~the impact the change to a benchmark like SOFR or Prime Rate will have on our financial condition, results of operations or cash flows.

Other recent ASU’s issued by the FASB did not, or are not believed by management to have, a material effect on the Company’s present or future Consolidated Financial Statements.

The amortized cost and fair market value of available for sale securities and the related gross unrealized gains and losses recognized were as follows:

June 30, 2020	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2021										Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	19,124	$	377	$	(1	)	$	19,500	$	56,359	$	195	$	(151	)	$	56,403
Obligations of states and political subdivisions		206,192		18,139		(12	)		224,319		218,812		19,222		(65	)		237,969
Mortgage-backed securities in government sponsored entities		118,322		6,247		(5	)		124,564		159,353		4,375		(296	)		163,432
Total debt securities	$	343,638	$	24,763	$	(18	)	$	368,383	$	434,524	$	23,792	$	(512	)	$	457,804

December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2020										Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	19,401	$	204	$	(4	)	$	19,601	$	21,479	$	220	$	(6	)	$	21,693
Obligations of states and political subdivisions		193,646		12,409		(21	)		206,034		208,013		21,000		(1	)		229,012
Mortgage-backed securities in government sponsored entities		129,145		3,863		(144	)		132,864		106,824		5,963		(28	)		112,759
Total debt securities	$	342,192	$	16,476	$	(169	)	$	358,499	$	336,316	$	27,183	$	(35	)	$	363,464

The amortized cost and fair value of securities at June 30, ~~2020,~~2021, by contractual maturity, is shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Securities not due at a single maturity date, primarily mortgage-backed securities are shown separately.

Available for sale	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	8,185	$	8,252	$	12,161	$	12,246
Due after one year through five years		17,501		17,966		31,649		31,878
Due after five years through ten years		26,404		28,233		45,020		46,966
Due after ten years		173,226		189,368		186,341		203,282
Mortgage-backed securities		118,322		124,564		159,353		163,432
Total securities available for sale	$	343,638	$	368,383	$	434,524	$	457,804

Proceeds from sales of securities available for sale, gross realized gains and gross realized losses were as follows:

	Three Months Ended				Six Months Ended				Three Months Ended					Six Months Ended
	June 30,				June 30,				June 30,					June 30,
	2020		2019		2020		2019		2021			2020		2021			2020
Sale proceeds	$	—	$	—	$	—	$	16,829	$	1,785		$	0	$	1,785		$	0
Gross realized gains		—		—		—		47		1,785			0		1,785			0
Gross realized losses		—		—		—		43		0			0		0			0
Gains from securities called or settled by the issuer		—		10		—		10
Losses from securities called or settled by the issuer										(1	)		—		(2	)		—

During the second quarter of 2021, the Company recorded a $1.785 million gain on the sale of its 7,361 shares of Visa Class B shares. As a result of this sale, the Company no longer owns any Visa Class B shares. The carrying value of the Visa Class B shares on the Company’s balance sheet was nominal as the Bank had no other historical cost basis in the shares.

Securities were pledged to secure public deposits, other deposits and liabilities as required by law. The carrying value of pledged securities was approximately ~~$158,871~~$171,879 and ~~$139,004~~$159,527 as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Securities with unrealized losses at June 30, ~~2020~~2021 and December 31, ~~2019~~2020 not recognized in income are ~~as follows:~~set forth in the tables below, segregated by securities with maturities of 12 months or less and securities with maturities of more than 12 months:

June 30, 2020	12 Months or less					More than 12 months					Total
June 30, 2021																12 Months or less					More than 12 months					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury securities and obligations of U.S. government agencies	$	—	$	—		$	142	$	(1	)	$	142	$	(1	)	$	25,292	$	(151	)	$	—	$	—		$	25,292	$	(151	)
Obligations of states and political subdivisions		1,333		(12	)		—		—			1,333		(12	)		6,428		(65	)		—		—			6,428		(65	)
Mortgage-backed securities in gov’t sponsored entities		1,085		(5	)		—		—			1,085		(5	)		77,314		(239	)		2,633		(57	)		79,947		(296	)
Total temporarily impaired	$	2,418	$	(17	)	$	142	$	(1	)	$	2,560	$	(18	)	$	109,034	$	(455	)	$	2,633	$	(57	)	$	111,667	$	(512	)

December 31, 2019	12 Months or less					More than 12 months					Total
December 31, 2020																12 Months or less					More than 12 months					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury securities and obligations of U.S. government agencies	$	—	$	—		$	3,408	$	(4	)	$	3,408	$	(4	)	$	6,501	$	(5	)	$	126	$	(1	)	$	6,627	$	(6	)
Obligations of states and political subdivisions		1,947		(21	)		—		—			1,947		(21	)		1,874		(1	)		—		—			1,874		(1	)
Mortgage-backed securities in gov’t sponsored entities		10,653		(91	)		7,732		(53	)		18,385		(144	)		5,755		(28	)		—		—			5,755		(28	)
Total temporarily impaired	$	12,600	$	(112	)	$	11,140	$	(57	)	$	23,740	$	(169	)	$	14,130	$	(34	)	$	126	$	(1	)	$	14,256	$	(35	)

At June 30, ~~2020,~~2021, there were a total of 625 securities in the portfolio with unrealized losses mainly due to higher current market rates when compared to the time of purchase. Unrealized losses on securities have not been recognized into income because the issuers’ securities are of high credit quality, management has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to currently higher market ~~yields increasing.~~rates when compared to the time of purchase. The fair value is expected to recover as the securities approach their maturity date or reset date. The Company does not intend to sell until recovery and does not believe selling will be required before recovery.

The following table presents the net gains and losses on equity investments recognized in earnings for the ~~three~~three- and ~~six months~~six-months ended June 30, ~~2020~~2021 and ~~2019,~~2020, and the portion of unrealized gains and losses for the period that relates to equity investments held at June 30, ~~2020~~2021 and ~~2019:~~2020:

	June 30, 2020			December 31, 2019			June 30, 2021			December 31, 2020
Commercial & Agriculture	$	442,444		$	203,110		$	328,871		$	409,876
Commercial Real Estate- Owner Occupied		252,914			245,606			271,667			278,413
Commercial Real Estate- Non-Owner Occupied		646,792			592,222			762,983			705,072
Residential Real Estate		453,067			463,032			426,731			442,588
Real Estate Construction		178,318			155,825			188,368			175,609
Farm Real Estate		35,441			34,114			28,616			33,102
Consumer and Other		13,989			15,061			11,960			12,842
Total loans		2,022,965			1,708,970			2,019,196			2,057,502
Allowance for loan losses		(20,420	)		(14,767	)		(26,197	)		(25,028	)
Net loans	$	2,002,545		$	1,694,203		$	1,992,999		$	2,032,474

Included in Commercial & Agriculture ~~is $257,568~~loans above are $153,007 and $217,295 of Paycheck Protection Program (“PPP”) ~~loans.~~loans as of June 30, 2021 and December 31, 2020, respectively.

Included in total loans above are net deferred loan fees of ~~$9,303~~$6,848 and ~~$488~~$5,998 at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Included in net deferred loan fees ~~is $8,678~~as of June 30, 2021 and December 31, 2020 are $5,855 and $5,194, respectively, of net deferred loans fees from PPP loans.

~~During~~In response to the ~~first six months~~novel COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended (the “CARES Act”), was signed into law on March 27, 2020, to provide national emergency economic relief measures. The CARES Act amended the loan program of the Small Business Administration (the “SBA”), in which Civista ~~modified 813~~participates, to create a guaranteed, unsecured loan program, the Paycheck Protection Program (the “PPP”), to fund operational costs of eligible businesses, organizations and self-employed persons during COVID-19. During 2020, Civista processed over 2,300 PPP loans totaling ~~$431,283, primarily consisting~~$268.3 million.

The Consolidated Appropriations Act 2021, was signed into law on December 27, 2020 to provide an additional funding of $284.5 billion under the ~~deferral~~PPP and the establishment of ~~principal and/or interest payments in accordance with customer deferral requests related~~PPP Second Draw Loans under the Economic Aid to Hard-Hit Small Businesses, Nonprofit, and Venues Act (the “Relief Act”). This additional funding was made available from original PPP lenders on January 19, 2021. As required by the Relief Act, on January 7, 2021, the SBA issued additional guidance (the “SBA Guidance”) providing additional details on certain changes to the ~~COVID-19 pandemic. All~~existing PPP structure and the new PPP Second Draw Loan, and the PPP Second Draw Loan applications were released on January 11, 2021.

Funds provided under the Relief Act are earmarked both for first time PPP borrowers (subject to original PPP eligibility and limits) as well as ‘Second Draw’ loans for borrowers that already received an original PPP loan. Additional Second Draw eligibility requirements are: (1) entities must have no more than 300 employees, (2) entities must have suffered a 25% of ~~the loans~~more reduction in gross revenues between comparable quarters in 2019 and 2020, (3) some entities previously excluded are eligible for

~~were performing at the time~~this round, such as local TV, newspaper, and radio, and (4) loan size limited to 2.5 times average monthly payroll with a maximum allowable amount of the modification and comply with the provisions of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to not be considered a troubled debt restructuring. Details with respect to actual loan modifications are as follows:$2 million.

~~For additional information regarding~~During the six months ended June 30, 2021, Civista received SBA approval on, and funded, 1,340 PPP loans ~~modified~~totaling $131,109 under the ~~CARES Act, please see the subsequent events note.~~

Certain loans within our commercial and commercial real estate portfolios are expected to be disproportionately adversely affected by the COVID-19 pandemic. Due to mandatory lockdowns and travel restrictions, certain industries, such as hospitality, travel, food service and restaurants and bars, may suffer greater losses as a result of the COVID-19 pandemic. The following table provides information regarding our potential COVID-19 risk concentrations for commercial and commercial real estate loans by industry type at June 30, 2020.

Management has an established methodology for determining the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Company has segmented certain loans in the portfolio by product type. Loss migration rates for each risk category are calculated and used as the basis for calculating loan loss allowance allocations. Loss migration rates are calculated over a three-year period for all portfolio segments. Management also considers certain economic factors for trends that management uses to account for the qualitative and environmental changes in risk, which affects the level of the reserve.

The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of ~~$20,420~~$26,197 adequate to cover loan losses inherent in the loan portfolio, at June 30, ~~2020.~~2021. The following tables present, by portfolio segment, the changes in the allowance for loan losses for the ~~three~~three- and ~~six~~six-months ended June 30, 2021 and 2020.

For the three months ended June 30, 2021, the Company provided $0 to the allowance for loan losses. The decrease in the provision in the first quarter of 2021, as compared to the first quarter of 2020, was due to the stability of our metrics coupled with the stabilization and, ~~2019.~~in some cases, improvement of international, national, regional and local economic conditions that were adversely impacted by the 2020 economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations during the first six months of 2021 have created some level of optimism in the business community, we remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry.

Economic impacts related to the COVID-19 pandemic since March 2020 have included the loss of revenue experienced by our business clients, disruption of supply chains, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large number of customers requesting payment relief. While some of these pressures have eased, ongoing supply chain and staffing challenges, as well as the threat of inflation remain.

During the three months ended June 30, 2021, the allowance for Commercial & Agriculture loans decreased due to a decrease in general reserves required for this type as a result of a decrease in loss rates. Loan balances decreased mainly from Civista’s participation in the PPP loan program. The result was represented as a decrease in the provision. The allowance for Commercial Real Estate – Owner Occupied loans decreased due to a decrease in general reserves required for this type as a result of decreased loan balances, classified loans and loss rates. The result was represented as a decrease in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans increased due to an increase in general reserves required as a result of an increase in loan balances, offset by decreases in classified loan balances and loss rates. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in recoveries for this type of loan. The result was represented by a decrease in the provision. The allowance for Real Estate Construction loans decreased due to a decrease in balances of substandard classified loan balances, offset by higher loan balances. This was represented as a decrease in the provision. Management feels that the unallocated amount is appropriate and within the relevant range for the allowance that is reflective of the risk in the portfolio at June 30, 2021.

For the three months ended June 30, 2020, the Company provided $3,486 to the allowance for loan losses. The provision was primarily the result of an increase in Civista’s qualitative factors, primarily changes in international, national, regional and local conditions, related to the economic shutdown driven by the ongoing COVID-19 pandemic. Economic impacts from the COVID-19 pandemic ~~include~~during the first quarter of 2020 included the loss of revenue ~~being experience~~experienced by our business clients, disruption of supply chains, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large number of customers requesting payment relief. ~~In addition,~~

For the three months ended June 30, 2020, the allowance for Commercial & Agriculture loans increased due to an increase in general reserves required for this type as a result of an increase in loan balances mainly from Civista’s ~~participated~~participation in the PPP loan program. In the event of a loss resulting from a default on a PPP loan, and a determination by the ~~U.S. Small Business Administration (“SBA”)~~SBA that there was a deficiency in the manner on which the PPP loan was originated or funded, the SBA may deny its liability under the guaranty. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Owner Occupied loans increased due to an increase in general reserves required for this type as a result of factors related to the COVID-19 pandemic, offset by a decrease in loan balances and loss rates. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans increased due to an increase in general

reserves required as a result of an increase in loan balances. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in general reserves required for this type as a result of factors related to the COVID-19 pandemic, offset by a decrease in loan balances and loss rates. The result was represented by an increase in the provision. The allowance for Real Estate Construction loans increased due to an increase in general reserves required as a result of an increase in loan balances, represented by an increase in the provision. The allowance for Farm Real Estate loans increased due to an increase in general reserves required as a result of an increase in loan balances. The result was represented as an increase in the provision. Management feels that the unallocated amount is appropriate and within the relevant range for the allowance that is reflective of the risk in the portfolio at June 30, 2020.

For the three months ended June 30, 2019	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
For the six months ended June 30, 2021													Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,834	$	(27	)	$	3	$	18		$	1,828	$	2,810	$	(15	)	$	163	$	(638	)	$	2,320
Commercial Real Estate:
Owner Occupied		1,979		—			17		13			2,009		4,057		—			6		(36	)		4,027
Non-Owner Occupied		5,989		—			30		(152	)		5,867		12,451		—			11		1,084			13,546
Residential Real Estate		1,434		(105	)		37		332			1,698		2,484		(37	)		179		(95	)		2,531
Real Estate Construction		971		—			—		164			1,135		2,439		—			1		(263	)		2,177
Farm Real Estate		366		—			1		(2	)		365		338		—			6		(54	)		290
Consumer and Other		251		(24	)		32		(58	)		201		209		(19	)		44		(32	)		202
Unallocated		998		—			—		(315	)		683		240		—			—		864			1,104
Total	$	13,822	$	(156	)	$	120	$	—		$	13,786	$	25,028	$	(71	)	$	410	$	830		$	26,197

For the ~~three~~six months ended June 30, ~~2019,~~2021, the Company provided $830 to the allowance for loan losses. The decrease in the provision in the first six months of 2021 as compared to the same period of 2020, was due to the stability of our metrics coupled with the stabilization and, in some cases, improvement of international, national, regional and local economic conditions that were adversely impacted by the 2020 economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations during the six months of 2021 have created some level of optimism in the business community, we remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry. Economic impacts related to the COVID-19 pandemic since March 2020 have included the loss of revenue experienced by our business clients, disruption of supply chains, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large number of customers requesting payment relief. While some of these pressures have eased, ongoing supply chain and staffing challenges, as well as the threat of inflation remain.

For the six months ended June 30, 2021, the allowance for Commercial & Agriculture loans decreased due to a decrease in general reserves required for this type as a result of a decrease in loss rates. Loan balances decreased mainly from Civista’s participated in the PPP loan program. The result was represented as a decrease in the provision. The allowance for Commercial Real Estate – ~~Non-Owner~~Owner Occupied loans decreased due to a decrease in general reserves required for this type as a result of ~~a decrease in~~decreased loan balances and ~~loss rates. This~~classified loan balances. The result was represented as a decrease in the provision. The allowance for ~~Residential~~Commercial Real Estate loans increased due to an increase in general reserves required for this type as a result of an increase in loan balances and loss rates, represented by an increase in the provision. The allowance for Real Estate Construction– Non-Owner Occupied loans increased due to an increase in general reserves required as a result of an increase in loan ~~balances. The allowance for Consumer~~balances, offset by a decrease in classified loan balances and ~~Other loans was reduced~~ by a decrease in loss rates. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in recoveries for this type of loan. The result was represented by a decrease in the provision. The allowance for Real Estate Construction loans decreased due to a decrease in loss rates ~~and recoveries~~ on ~~previously charged off amounts.~~substandard classified loan balances, represented by a decrease in the provision. The allowance for Farm Real Estate loans decreased due to a decrease in general reserves required for this type as a result of decreased loan balances. The result was represented as a decrease in the provision. Management ~~determined~~feels that the unallocated amount ~~was~~is appropriate and within the relevant range for the allowance that ~~was~~is reflective of the risk in the portfolio at June 30, ~~2019.~~2021.

For the six months ended June 30, 2020, the Company provided $5,612 to the allowance for loan losses. The provision was primarily the result of an increase in Civista’s qualitative factors, primarily changes in international, national, regional and local conditions, related to the economic shutdown driven by the ongoing COVID-19 pandemic. Economic impacts related to the COVID-19 pandemic ~~include~~during the first six months of 2020 included the loss of revenue ~~being experience~~experienced by our business clients, disruption of supply chains, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large number of customers requesting payment relief. ~~In addition,~~

For the six months ended June 30, 2020, the allowance for Commercial & Agriculture loans increased due to an increase in general reserves required for this type as a result of an increase in loan balances mainly from Civista’s participated in the PPP loan program, offset by a decrease in loss rates. . In the event of a loss resulting from a default on a PPP loan, and a determination by the SBA that there was a deficiency in the manner on which the PPP loan was originated or funded, the SBA may deny its liability under ~~the.~~the guaranty. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Owner Occupied loans increased due to an increase in general reserves required for this type as a result of higher loan balances and a decrease in loss rates. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans increased due to an increase in general reserves required as a result of an increase in loan balances and a decrease in loss rates. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in general reserves required for this type as a result of factors related to the COVID-19 pandemic, offset by a decrease in loan balances and loss rates, represented by an increase in the provision. The allowance for Real Estate Construction loans increased due to an increase in general reserves required as a result of an increase in loan balances, represented by an increase in the provision. The allowance for Farm Real Estate loans increased due to an increase in general reserves required as a result of an increase in loan balances. The result was represented as an increase in the provision. Management feels that the unallocated amount is appropriate and within the relevant range for the allowance that is reflective of the risk in the portfolio at June 30, 2020.

For the six months ended June 30, 2019, the allowance for Commercial & Agriculture loans increased due to an increase in general reserves required for this type as a result of higher loan balances, offset by a decrease in the loss rates. The result was represented as an increase in the provision. The allowance for Commercial Real Estate –Owner Occupied loans increased due to an increase in general reserves required as a result of higher loan balances, offset by net recoveries on previously charged off amounts, resulting in a decrease in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans increased due to an increase in general reserves required as a result of higher loan balances, offset by a decrease in the loss rates. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in general reserves required for this type as a result of an increase in loan balances and loss rates, represented by an increase in the provision. The allowance for Real Estate Construction loans increased due to an increase in general reserves required as a result of higher loan balances. The allowance for Farm Real Estate loans was reduced by a decrease in general reserves required for this type as a result of lower outstanding loan balances. The result was represented as a decrease in the provision. The allowance for Consumer and Other loans decreased due to a decrease in the general reserves required for the type as a result of a decrease in loan balances and loss rates. The result was represented as a decrease in the provision. Management determined that the unallocated amount was appropriate and within the relevant range for the allowance that was reflective of the risk in the portfolio at June 30, 2019.

The following tables present, by portfolio segment, the allocation of the allowance for loan losses and related loan balances as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

June 30, 2020	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
June 30, 2021									Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	—	$	2,799	$	2,799	$	—	$	—	$	2,320	$	2,320
Commercial Real Estate:
Owner Occupied		—		8		3,403		3,411		—		8		4,019		4,027
Non-Owner Occupied		—		—		9,169		9,169		—		—		13,546		13,546
Residential Real Estate		—		84		2,350		2,434		—		18		2,513		2,531
Real Estate Construction		—		—		1,844		1,844		—		—		2,177		2,177
Farm Real Estate		—		—		361		361		—		—		290		290
Consumer and Other		—		—		247		247		—		—		202		202
Unallocated		—		—		155		155		—		—		1,104		1,104
Total	$	—	$	92	$	20,328	$	20,420	$	—	$	26	$	26,171	$	26,197
Outstanding loan balances:
Commercial & Agriculture	$	—	$	—	$	442,444	$	442,444	$	—	$	—	$	328,871	$	328,871
Commercial Real Estate:
Owner Occupied		—		403		252,511		252,914		—		299		271,368		271,667
Non-Owner Occupied		—		368		646,424		646,792		—		30		762,953		762,983
Residential Real Estate		463		1,183		451,421		453,067		379		557		425,795		426,731
Real Estate Construction		—		—		178,318		178,318		—		—		188,368		188,368
Farm Real Estate		—		653		34,788		35,441		—		592		28,024		28,616
Consumer and Other		—		—		13,989		13,989		—		—		11,960		11,960
Total	$	463	$	2,607	$	2,019,895	$	2,022,965	$	379	$	1,478	$	2,017,339	$	2,019,196

December 31, 2019	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
December 31, 2020									Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	—	$	2,219	$	2,219	$	—	$	73	$	2,737	$	2,810
Commercial Real Estate:
Owner Occupied		—		9		2,532		2,541		—		5		4,052		4,057
Non-Owner Occupied		—		—		6,584		6,584		—		—		12,451		12,451
Residential Real Estate		—		82		1,500		1,582		—		29		2,455		2,484
Real Estate Construction		—		—		1,250		1,250		—		—		2,439		2,439
Farm Real Estate		—		—		344		344		—		—		338		338
Consumer and Other		—		—		247		247		—		—		209		209
Unallocated		—		—		0		0		—		—		240		240
Total	$	—	$	91	$	14,676	$	14,767	$	—	$	107	$	24,921	$	25,028
Outstanding loan balances:
Commercial & Agriculture	$	—	$	367	$	202,743	$	203,110	$	—	$	74	$	409,802	$	409,876
Commercial Real Estate:
Owner Occupied		—		426		245,180		245,606		—		980		277,433		278,413
Non-Owner Occupied		—		374		591,848		592,222		—		48		705,024		705,072
Residential Real Estate		467		1,764		460,801		463,032		388		946		441,254		442,588
Real Estate Construction		—		—		155,825		155,825		—		—		175,609		175,609
Farm Real Estate		—		666		33,448		34,114		—		618		32,484		33,102
Consumer and Other		—		—		15,061		15,061		—		—		12,842		12,842
Total	$	467	$	3,597	$	1,704,906	$	1,708,970	$	388	$	2,666	$	2,054,448	$	2,057,502

The following tables present credit exposures by internally assigned risk grades as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. The risk rating analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans.

Generally, Residential Real Estate, Real Estate Construction and Consumer and Other loans are not risk-graded, except when collateral is used for a business purpose. Only those loans that have been risk rated are included below.

June 30, 2020	Pass		Special Mention		Substandard		Doubtful		Ending Balance
June 30, 2021											Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	437,923	$	2,526	$	1,995	$	—	$	442,444	$	321,890	$	2,466	$	4,515	$	—	$	328,871
Commercial Real Estate:
Owner Occupied		241,144		8,867		2,903		—		252,914		255,219		6,744		9,704		—		271,667
Non-Owner Occupied		643,612		1,773		1,407		—		646,792		676,152		50,669		36,162		—		762,983
Residential Real Estate		78,028		486		5,731		—		84,245		77,427		739		4,595		—		82,761
Real Estate Construction		165,678		485		8		—		166,171		172,910		279		491		—		173,680
Farm Real Estate		32,302		550		2,589		—		35,441		26,882		211		1,523		—		28,616
Consumer and Other		1,024		—		21		—		1,045		824		—		24		—		848
Total	$	1,599,711	$	14,687	$	14,654	$	—	$	1,629,052	$	1,531,304	$	61,108	$	57,014	$	—	$	1,649,426

December 31, 2019	Pass		Special Mention		Substandard		Doubtful		Ending Balance
December 31, 2020											Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	199,649	$	2,236	$	1,225	$	—	$	203,110	$	401,636	$	4,472	$	3,768	$	—	$	409,876
Commercial Real Estate:
Owner Occupied		237,171		5,617		2,818		—		245,606		248,316		19,429		10,668		—		278,413
Non-Owner Occupied		588,633		2,155		1,434		—		592,222		604,909		58,270		41,893		—		705,072
Residential Real Estate		73,289		528		6,495		—		80,312		81,409		668		5,524		—		87,601
Real Estate Construction		145,251		—		9		—		145,260		158,207		962		492		—		159,661
Farm Real Estate		30,808		567		2,739		—		34,114		30,486		216		2,400		—		33,102
Consumer and Other		1,289		—		6		—		1,295		833		—		33		—		866
Total	$	1,276,090	$	11,103	$	14,726	$	—	$	1,301,919	$	1,525,796	$	84,017	$	64,778	$	—	$	1,674,591

The following tables present performing and nonperforming loans based solely on payment activity for the periods ended June 30, ~~2020~~2021 and December 31, ~~2019~~2020 that have not been assigned an internal risk grade. The types of loans presented here are not assigned a risk grade unless there is evidence of a problem. Payment activity is reviewed by management on a monthly basis to evaluate performance. Loans are considered to be nonperforming when they become 90 days past due and if management determines that we may not collect all of our principal and interest. Nonperforming loans also include certain loans that have been modified in Troubled Debt Restructurings (TDRs) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions due to economic status. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

June 30, 2020	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
June 30, 2021									Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	368,822	$	12,147	$	12,942	$	393,911	$	343,970	$	14,688	$	11,112	$	369,770
Nonperforming		—		—		2		2		—		—		—		—
Total	$	368,822	$	12,147	$	12,944	$	393,913	$	343,970	$	14,688	$	11,112	$	369,770

December 31, 2019	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
December 31, 2020									Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	382,720	$	10,565	$	13,766	$	407,051	$	354,987	$	15,948	$	11,976	$	382,911
Nonperforming		—		—		—		—		—		—		—		—
Total	$	382,720	$	10,565	$	13,766	$	407,051	$	354,987	$	15,948	$	11,976	$	382,911

The following tables include an aging analysis of the recorded investment of past due loans outstanding as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

June 30, 2020	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing
June 30, 2021																	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing
Commercial & Agriculture	$	—	$	—	$	55	$	55	$	442,389	$	—	$	442,444	$	—	$	11	$	20	$	—	$	31	$	328,840	$	—	$	328,871	$	—
Commercial Real Estate:
Owner Occupied		323		—		585		908		252,006		—		252,914		—		233		—		60		293		271,374		—		271,667		—
Non-Owner Occupied		—		—		7		7		646,785		—		646,792		—		—		—		5		5		762,978		—		762,983		—
Residential Real Estate		177		418		1,049		1,644		450,960		463		453,067		—		361		378		721		1,460		424,892		379		426,731		—
Real Estate Construction		—		—		—		—		178,318		—		178,318		—		—		—		—		—		188,368		—		188,368		—
Farm Real Estate		—		—		4		4		35,437		—		35,441		—		—		—		—		—		28,616		—		28,616		—
Consumer and Other		70		23		12		105		13,884		—		13,989		2		50		—		10		60		11,900		—		11,960		—
Total	$	570	$	441	$	1,712	$	2,723	$	2,019,779	$	463	$	2,022,965	$	2	$	655	$	398	$	796	$	1,849	$	2,016,968	$	379	$	2,019,196	$	—

December 31, 2019	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing
December 31, 2020																	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing
Commercial & Agriculture	$	27	$	35	$	106	$	168	$	202,942	$	—	$	203,110	$	—	$	117	$	25	$	50	$	192	$	409,684	$	—	$	409,876	$	—
Commercial Real Estate:
Owner Occupied		453		63		663		1,179		244,427		—		245,606		—		—		4		102		106		278,307		—		278,413		—
Non-Owner Occupied		—		—		8		8		592,214		—		592,222		—		—		—		6		6		705,066		—		705,072		—
Residential Real Estate		2,399		198		1,775		4,372		458,193		467		463,032		—		1,059		867		1,314		3,240		438,960		388		442,588		—
Real Estate Construction		—		—		—		—		155,825		—		155,825		—		—		—		—		—		175,609		—		175,609		—
Farm Real Estate		—		—		7		7		34,107		—		34,114		—		—		—		4		4		33,098		—		33,102		—
Consumer and Other		129		46		—		175		14,886		—		15,061		—		59		1		16		76		12,766		—		12,842		—
Total	$	3,008	$	342	$	2,559	$	5,909	$	1,702,594	$	467	$	1,708,970	$	—	$	1,235	$	897	$	1,492	$	3,624	$	2,053,490	$	388	$	2,057,502	$	—

The following table presents loans on nonaccrual status, excluding purchased credit-impaired (PCI) loans, as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

	June 30, 2020		December 31, 2019		June 30, 2021		December 31, 2020
Commercial & Agriculture	$	83	$	173	$	548	$	139
Commercial Real Estate:
Owner Occupied		832		938		292		964
Non-Owner Occupied		7		8		5		6
Residential Real Estate		3,753		4,183		3,126		3,893
Real Estate Construction		8		9		6		7
Farm Real Estate		259		284		70		85
Consumer and Other		19		4		22		31
Total	$	4,961	$	5,599	$	4,069	$	5,125

Nonaccrual Loans: Loans are considered for nonaccrual status upon reaching 90 days delinquency, unless the loan is well secured and in the process of collection, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is deducted from interest income. Payments received on nonaccrual loans are applied to the unpaid principal balance. A loan may be returned to accruing status only if one of three conditions are met: the loan is well-secured and none of the principal and interest has been past due for a minimum of 90 days; the loan is a TDR and has made a minimum of six months payments; or the principal and interest payments are reasonably assured and a sustained period of performance has occurred, generally six months.

Modifications: A modification of a loan constitutes a TDR when the Company for economic or legal reasons related to a borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Exceptions to this policy exist for loan modifications ~~done~~granted as part of the Company’s COVID-19 deferral program, which allows the Company to not classify a modification so long as certain criteria as established in the CARES Act are met at the time of the modification. The Company offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Commercial Real Estate loans modified in a TDR often involve reducing the interest rate lower than the current market rate for new debt with similar risk. Residential Real Estate loans modified in a TDR primarily involve interest rate reductions where monthly payments are lowered to accommodate the borrowers’ financial needs.

Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan. An allowance for impaired loans that have been modified in a TDR are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates. As of June 30, ~~2020,~~2021, TDRs accounted for ~~$92~~$26 of the allowance for loan losses. As of December 31, ~~2019,~~2020, TDRs accounted for ~~$91~~$35 of the allowance for loan losses.

There were 0 loans modified as TDRs during the ~~three-month~~three-and six-month periods ended June 30, ~~2020 and 2019 and for the six-month period ended June 30,~~2021 or 2020.~~Loan modifications that are considered TDRs completed during the six-month period ended June 30, 2019 were as follows:~~

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans.

During ~~both~~ the three- and six-month periods ended June 30, ~~2020~~2021 and June 30, ~~2019,~~2020, there were 0 defaults on loans that were modified and considered TDRs during the respective previous twelve months.

Impaired Loans: Larger (greater than $350) Commercial & Agricultural and Commercial Real Estate loan relationships, all TDRs and Residential Real Estate and Consumer loans that are part of a larger relationship are tested for impairment on a quarterly basis. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

In the second quarter of 2020, in the initial days of the pandemic, Civista booked 90-day payment modifications on 813 loans totaling $431.3 million. Additional 90-day modifications were extended on 100 loans totaling $124.4 million. Both deferral programs primarily consisted of the deferral of principal and/or interest payments. All such modified loans were performing at December 31, 2019 and comply with the provisions of the CARES Act to not be considered a troubled debt restructuring.

As of June 30, 2021, Civista has 34 loans totaling $50,436 that remain on a CARES Act modification. Details with respect to loan modifications that remain on deferred status are as follows:

The following table includes the recorded investment and unpaid principal balances for impaired loans, excluding purchased-credit impaired (“PCI”) loans, with the associated allowance amount, if applicable, as of June 30, 2021 and December 31, 2020.

	June 30, 2021						December 31, 2020
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied	$	86	$	86			$	757	$	757
Non-Owner Occupied		30		30				48		48
Residential Real Estate		526		551				915		940
Farm Real Estate		592		592				618		618
Total		1,234		1,259				2,338		2,363
With an allowance recorded:
Commercial & Agriculture		—		—	$	—		74		74	$	73
Commercial Real Estate:
Owner Occupied		213		213		8		223		223		5
Residential Real Estate		31		35		18		31		35		29
Total		244		248		26		328		332		107
Total:
Commercial & Agriculture		—		—		—		74		74		73
Commercial Real Estate:
Owner Occupied		299		299		8		980		980		5
Non-Owner Occupied		30		30		—		48		48		—
Residential Real Estate		557		586		18		946		975		29
Farm Real Estate		592		592		—		618		618		—
Total	$	1,478	$	1,507	$	26	$	2,666	$	2,695	$	107

The following table includes the recorded investment and unpaid principal balances for impaired loans, excluding PCI loans, with the associated allowance amount, if applicable, as of June 30, 2020 and December 31, 2019.

June 30, 2020

December 31, 2019

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

With no related allowance recorded:

Commercial & Agriculture

$
—

$
—

$
367

$
367

Commercial Real Estate:

Owner Occupied

156

156

168

168

Non-Owner Occupied

368

368

374

374

Residential Real Estate

1,002

1,074

1,571

1,643

Farm Real Estate

653

653

666

666

Total

2,179

2,251

3,146

3,218

With an allowance recorded:

Commercial Real Estate:

Owner Occupied

247

247

$
8

258

258

$
9

Residential Real Estate

181

186

84

193

197

82

Total

428

433

92

451

455

91

Total:

Commercial & Agriculture

—

—

—

367

367

—

Commercial Real Estate:

Owner Occupied

403

403

8

426

426

9

Non-Owner Occupied

368

368

—

374

374

—

Residential Real Estate

1,183

1,260

84

1,764

1,840

82

Farm Real Estate

653

653

—

666

666

—

Total

$
2,607

$
2,684

$
92

$
3,597

$
3,673

$
91

The following table includes the average recorded investment and interest income recognized for impaired financing receivables for the ~~three-month~~three- and six-month periods ended June 30, ~~2020~~2021 and ~~2019.~~2020.

	June 30, 2020				June 30, 2019				June 30, 2021				June 30, 2020
For the three months ended	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	—	$	—	$	367	$	6
Commercial Real Estate—Owner Occupied		409		7		465		9	$	304	$	5	$	409	$	7
Commercial Real Estate—Non-Owner Occupied		369		5		381		5		34		—		369		5
Residential Real Estate		1,462		11		1,137		15		563		8		1,462		11
Farm Real Estate		659		6		687		8		599		6		659		6
Total	$	2,899	$	29	$	3,037	$	43	$	1,500	$	19	$	2,899	$	29

	June 30, 2020				June 30, 2019				June 30, 2021				June 30, 2020
For the six months ended	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	122	$	4	$	367	$	12	$	25	$	—	$	122	$	4
Commercial Real Estate—Owner Occupied		415		14		472		17		529		11		415		14
Commercial Real Estate—Non-Owner Occupied		371		10		264		9		39		1		371		10
Residential Real Estate		1,563		24		1,184		31		690		16		1,563		24
Farm Real Estate		662		13		690		15		605		12		662		13
Total	$	3,133	$	65	$	2,977	$	84	$	1,888	$	40	$	3,133	$	65

Changes in the accretable yield for PCI loans were as follows, since acquisition:

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30:

	At June 30, 2020		At December 31, 2019		At June 30, 2021		At December 31, 2020
	Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)
	(In Thousands)				(In Thousands)
Outstanding balance	$	976	$	1,149	$	622	$	687
Carrying amount		463		467		379		388

There was 0 allowance for loan losses recorded for acquired loans with or without specific evidence of deterioration in credit quality as of June 30, ~~2020~~2021 or December 31, ~~2019, respectively.~~2020.

Foreclosed assets acquired in settlement of loans are carried at fair value less estimated costs to sell and are included in other assets on the Consolidated Balance Sheet. As of June 30, ~~2020 and December 31, 2019, respectively,~~2021, there were 0 foreclosed assets included in ~~other~~Other assets. As of December 31, 2020, there were $31 of foreclosed assets included in Other assets. As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had initiated formal foreclosure procedures on ~~$867~~$495 and ~~$1,022,~~$741, respectively, of consumer residential mortgages.

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax for the three month periods ended June 30, 2021 and June 30, 2020.

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three month periods ended June 30, 2021 and June 30, 2020.

~~The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax.~~

~~The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss).~~

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of ~~tax.~~tax for the six month periods ended June 30, 2021 and June 30, 2020.

	For the Six-Month Period Ended							For the Six-Month Period Ended
	June 30, 2020(a)							June 30, 2019(a)
	Unrealized Gains and Losses on Available-for- Sale Securities		Defined Benefit Pension Items			Total		Unrealized Gains and Losses on Available-for- Sale Securities			Defined Benefit Pension Items			Total			Unrealized Gains and (Losses) on Available-for- Sale Securities (a)			Defined Benefit Pension Items (a)			Total (a)			Unrealized Gains and (Losses) on Available-for- Sale Securities (a)		Defined Benefit Pension Items (a)			Total (a)
Beginning balance	$	12,883	$	(6,009	)	$	6,874	$	2,347		$	(3,799	)	$	(1,452	)	$	21,447		$	(6,828	)	$	14,619		$	12,883	$	(6,009	)	$	6,874
Other comprehensive income before reclassifications		6,666		—			6,666		9,840			—			9,840			(3,057	)		—			(3,057	)		6,666		—			6,666
Amounts reclassified from accumulated other comprehensive income (loss)		—		114			114		(11	)		232			221
Amounts reclassified from accumulated other comprehensive income																		2			129			131			—		114			114
Net current-period other comprehensive income		6,666		114			6,780		9,829			232			10,061			(3,055	)		129			(2,926	)		6,666		114			6,780
Ending balance	$	19,549	$	(5,895	)	$	13,654	$	12,176		$	(3,567	)	$	8,609		$	18,392		$	(6,699	)	$	11,693		$	19,549	$	(5,895	)	$	13,654

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss). for the six month periods ended June 30, 2021 and June 30, 2020.

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a)
Details about Accumulated Other Comprehensive Income (Loss) Components	For the Six months ended June 30, 2020			For the Six months ended June 30, 2019			Affected Line Item in the Statement Where Net Income is Presented	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a)						Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains on available-for-sale securities	$	—		$	14		Net gain (loss) on sale of securities
Unrealized losses on available-for-sale securities								$	(2	)	$	—		Net gain (loss) on sale of securities
Tax effect		—			(3	)	Income tax expense		—			—		Income tax expense
		—			11				(2	)		—
Amortization of defined benefit pension items
Actuarial gains/(losses) (b)		(145	)		(294	)	Other operating expenses		(163	)		(145	)	Other operating expenses
Tax effect		31			62		Income tax expense		34			31		Income tax expense
		(114	)		(232	)			(129	)		(114	)
Total reclassifications for the period	$	(114	)	$	(221	)		$	(131	)	$	(114	)

There was no change in the carrying amount of goodwill of $76,851 for the periods ended June 30, 2021 and December 31, 2020.

Acquired intangible assets, other than goodwill, as of June 30, 2021 and December 31, 2020 were as follows:

Aggregate core deposit intangible amortization expense was $223, $228, $445 and $459 for the three- and six-months ended June 30, 2021 and 2020, respectively.

Activity for mortgage servicing rights (MSRs) and the related valuation allowance as of June 30, 2021 and March 31, 2020 were as follows:

Estimated amortization expense for each of the next five years and thereafter is as follows:

Short-term and other borrowings, which consist of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings, are summarized as follows:

~~There was no change in the carrying amount of goodwill of $76,851 for the periods ended June 30, 2020 and December 31, 2019.~~

~~Acquired intangible assets, other than goodwill, as of June 30, 2020 and December 31, 2019 were as follows:~~

~~Aggregate core deposit intangible amortization expense was $228, $235, $459 and $475 for the three and six months ended June 30, 2020 and 2019, respectively.~~

~~Activity for mortgage servicing rights (MSRs) and the related valuation allowance as of June 30, 2020 and December 31, 2019 were as follows:~~

~~Estimated amortization expense for each of the next five years and thereafter is as follows:~~

Short-term borrowings, which consist of federal funds purchased and other short-term borrowings, are included in Short-term Federal Home Loan Bank advances on the Consolidated Balance Sheets and are summarized as follows:

Average balance during the period represents daily averages. Average rate paid represents interest expense divided by the related average balances.

These borrowing transactions can range from overnight to six months in maturity. The average maturity was one day at ~~December 31, 2019.~~

Other borrowings consist of the Paycheck Protection Program Lending Facility (“PPPLF”). The PPPLF is intended to facilitate lending, by eligible borrowers, to small businesses under the PPP of the CARES Act. Under the PPPLF, the Federal Reserve Banks will lend to eligible borrowers on a non-recourse basis, taking PPP loans as collateral. During the second quarter of 2020, the Company borrowed $183,695 under the PPPLF. The maturity date of the PPPLF borrowing will equal the maturity date of the PPP loans pledged to secure the borrowing. The rate paid on the borrowing is at 0.35%.June 30, 2021.

Securities sold under agreements to repurchase are used to facilitate the needs of our customers as well as to facilitate our short-term funding needs. Securities sold under repurchase agreements are carried at the amount of cash received in association with the agreement. We continuously monitor the collateral levels and may be required, from time to time, to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents.

The following table presents detail regarding the securities pledged as collateral under repurchase agreements as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. All of the repurchase agreements are overnight agreements.

	June 30, 2020		December 31, 2019		June 30, 2021		December 31, 2020
Securities pledged for repurchase agreements:
U.S. Treasury securities	$	917	$	810	$	7,306	$	899
Obligations of U.S. government agencies		22,691		17,864		17,610		28,015
Total securities pledged	$	23,608	$	18,674	$	24,916	$	28,914
Gross amount of recognized liabilities for repurchase agreements	$	23,608	$	18,674	$	24,916	$	28,914
Amounts related to agreements not included in offsetting disclosures above	$	—	$	—	$	0	$	0

The Company has granted restricted stock awards with non-forfeitable rights, which are considered participating securities. Accordingly, earnings per share is computed using the two-class method as required by ASC 260-10-45. Basic earnings per common share are computed as net income available to common shareholders divided by the weighted average number of common shares outstanding during the ~~period.~~period, which excludes the participating securities. Diluted earnings per common share include the dilutive effect, if any, of additional potential common shares issuable under the Company’s equity incentive plan, computed using the treasury stock ~~method, and the impact of the Company’s convertible preferred shares using the “if converted”~~ method.

~~For~~ The Company had 0 dilutive securities for the three- and ~~six-month periods~~six-months ended June 30, 2019, there were 1,294,175 of average dilutive shares related to the Company’s convertible preferred shares. Under the “if converted” method, all convertible preferred shares are assumed to be converted into common shares at the corresponding conversion rate. These additional shares are then added to the common shares outstanding to calculate diluted2021 and 2020.

The presentation for earnings per ~~share. Effective December 20, 2019,~~common share for prior periods was revised to present under the ~~Company redeemed all convertible preferred shares and corresponding depositary shares that remained outstanding.~~

~~(Amounts in thousands, except~~two-class method. Earnings per common share ~~data)~~for prior periods was not impacted.

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customers’ financing needs. These are agreements to provide credit or to support the credit of others, as long as the conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk of credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of commitment. The contractual amounts of financial instruments with off-balance-sheet risk were as follows ~~for~~at June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

	Contract Amount								Contract Amount
	June 30, 2020				December 31, 2019				June 30, 2021				December 31, 2020
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate		Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitment to extend credit:
Lines of credit and construction loans	$	10,291	$	431,564	$	15,155	$	396,516	$	33,617	$	465,458	$	38,474	$	427,864
Overdraft protection		6		41,231		5		37,286		7		42,608		6		41,707
Letters of credit		600		886		624		776		615		885		615		986
	$	10,897	$	473,681	$	15,784	$	434,578	$	34,239	$	508,951	$	39,095	$	470,557

Commitments to make loans are generally made for a period of one year or less. Fixed rate loan commitments included in the table above had interest rates ranging from 3.50% to 8.00% at June 30, ~~2020~~2021 and from ~~4.50%~~3.50% to ~~8.50%~~8.00% at December 31, ~~2019.~~2020. Maturities extend up to 30 years.

Civista is required to maintain certain reserve balances on hand in accordance with the Federal Reserve Board requirements. The reserve balance maintained in accordance with such requirements was $0 on June 30, ~~2020~~2021 and ~~$7,127 on~~ December 31, ~~2019. Such amounts are included within cash and due from financial institutions on the~~2020.

Notes to Interim Consolidated ~~Balance Sheet.~~Financial Statements (Unaudited)

The Company sponsors a pension plan which is a noncontributory defined benefit retirement plan. Annual payments, subject to the maximum amount deductible for federal income tax purposes, are made to a pension trust fund. In 2006, the Company amended the pension plan to provide that no employee could be added as a participant to the pension plan after December 31, 2006. In 2014, the Company amended the pension plan again to provide that 0 additional benefits would accrue beyond April 30, 2014.

	Three months ended						Six Months Ended						Three months ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,					��
	2020			2019			2020			2019			2021			2020			2021			2020
Service cost	$	—		$	—		$	—		$	—		$	0		$	0		$	0		$	0
Interest cost		121			128			242			256			95			121			190			242
Expected return on plan assets		(187	)		(256	)		(374	)		(512	)		(160	)		(187	)		(320	)		(374	)
Other components		72			147			145			294			81			72			163			145
Net periodic pension cost	$	6		$	19		$	13		$	38		$	16		$	6		$	33		$	13

The Company does 0t expect to make any contribution to its pension plan in ~~2020.~~2021. The Company made 0 contribution to its pension plan in ~~2019.~~

At the Company’s 2014 annual meeting, the shareholders adopted the Company’s 2014 Incentive Plan (“2014 Incentive Plan”). The 2014 Incentive Plan authorizes the Company to grant options, stock awards, stock units and other awards for up to 375,000 common shares of the Company. There were ~~198,756~~151,892 shares available for future grants under this plan at June 30, ~~2020.~~2021.

NaN options were granted under the 2014 Incentive Plan during the periods ended June 30, ~~2020~~2021 and ~~2019.~~2020.

Each year, the Board of Directors has awarded restricted common shares to senior officers of the Company. The restricted shares vest ratably over a three-year period following the grant date. The product of the number of restricted shares granted and the grant date market price of the Company’s common shares determines the fair value of restricted shares awarded under the Company’s 2014 Incentive Plan. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period for the entire award.

On May ~~21, 2019,~~28, 2021, directors of the Company’s banking subsidiary, Civista, were paid a retainer in the form of non-restricted common shares of the Company. The aggregate of ~~8,946~~8,792 common shares were issued to Civista directors as payment of their retainer for their service on the Civista Board of Directors covering the period up to the ~~2020~~2022 Annual Meeting. This issuance was expensed in its entirety when the shares were issued in the amount of $196.

On May 21, 2020, directors of the Company’s banking subsidiary, Civista, were paid a retainer in the form of non-restricted common shares of the Company. The aggregate of 14,266 common shares were issued to Civista directors as payment of their retainer for their service on the Civista Board of Directors covering the period up to the 2021 Annual Meeting. This issuance was expensed in its entirety when the shares were issued in the amount of $196.

The Company classifies share-based compensation for employees with “Compensation expense” in the Consolidated Statements of Operations.

The following is a summary of the Company’s outstanding restricted shares and changes therein for the three- and six-month periods ended June 30, ~~2020:~~2021:

	Three months ended				Six Months Ended					Three months ended					Six Months Ended
	June 30, 2020				June 30, 2020					June 30, 2021					June 30, 2021
	Number of Restricted Shares		Weighted Average Grant Date Fair Value		Number of Restricted Shares			Weighted Average Grant Date Fair Value		Number of Restricted Shares			Weighted Average Grant Date Fair Value		Number of Restricted Shares			Weighted Average Grant Date Fair Value
Nonvested at beginning of period		54,274	$	20.90		44,027		$	20.48		73,138		$	20.13		54,274		$	20.90
Granted		—		—		26,979			21.26		0			0		39,139			19.17
Vested		—		—		(16,732	)		20.36		0			0		(20,275	)		20.35
Forfeited		—		—		—			—		(1,067	)		19.56		(1,067	)		19.56
Nonvested at end of period		54,274	$	20.90		54,274		$	20.90		72,071		$	20.13		72,071		$	20.13

~~The following is a summary of the status of the Company’s outstanding restricted shares as of June 30, 2020:~~

During the six months ended June 30, 2020, the Company recorded $223 of share-based compensation expense and $196 of director retainer fees for shares granted under the 2014 Incentive Plan. At June 30, 2020, the total compensation cost related to

The following is a summary of the status of the Company’s outstanding restricted shares as of June 30, 2021:

The Company recorded $135 and $99, of share-based compensation expense during the three months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021 and 2020, $260 and $223 of share-based compensation expense was recorded, respectively. The Company recorded $196 of director retainer fees for shares granted under the 2014 Incentive Plan during the three months ended June 30, 2021. At June 30, 2021, the total compensation cost related to unvested awards not yet recognized is ~~$849,~~$1,121, which is expected to be recognized over the weighted average remaining life of the grants of 2.80 years.

The Company uses a fair value hierarchy to measure fair value. This hierarchy describes three levels of inputs that may be used to measure fair ~~value.~~value: Level 1: Quoted prices for identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; and Level 3: Significant unobservable inputs that reflect the Company’s own view about the assumptions that market participants would use in pricing an asset.

Debt securities: The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Equity securities: The Company’s equity securities are not actively traded in an open market. The fair value of these equity security available for sale not actively traded in an open market is determined by using market data inputs for similar securities that are observable (Level 2 inputs).

The fair value of the swap asset/liability: The fair value of the swap asset and liability is based on an external derivative model using data inputs based on similar transactions as of the valuation date and classified Level 2. The changes in fair value of these assets/liabilities had no impact on net income or comprehensive income.

Mortgage servicing rights: Mortgage servicing rights do not trade in an active market with readily observable market data. As a result, the Company estimates the fair value of mortgage servicing rights by using a discounted cash flow model to calculate the present value of estimated future net servicing income. The Company stratifies its mortgage servicing portfolio on the basis of loan type. The assumptions used in the discounted cash flow model are those that the Company believes market participants would use in estimating future net servicing income. Significant assumptions in the valuation of mortgage servicing rights include estimated loan repayment rates, the discount rate, servicing costs, and the timing of cash flows, among other factors. Mortgage servicing rights are classified as Level 3 measurements due to the use of significant unobservable inputs, as well as significant management judgment and estimation.

Impaired loans: The Company has measured impairment on impaired loans based on the discounted cash flows of the loan or the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property which are also included in the net realizable value. If the fair value of the

collateral dependent loan is less than the carrying amount of the loan, a specific reserve for the loan is made in the allowance for loan losses or a charge-off is taken to reduce the loan to the fair value of the collateral (less estimated selling costs) and the loan is included as a Level 3 measurement. If the fair value of the collateral exceeds the carrying amount of the loan, then the loan is not included in the table below as it is not currently being carried at its fair value.

Assets and liabilities measured at fair value are summarized in the table below.

	Fair Value Measurements at June 30, 2020 Using:						Fair Value Measurements at June 30, 2021 Using:
Assets:	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:
Securities available for sale
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	19,500	$	—	$	—	$	56,403	$	—
Obligations of states and political subdivisions		—		224,319		—		—		237,969		—
Mortgage-backed securities in government sponsored entities		—		124,564		—		—		163,432		—
Total securities available for sale		—		368,383		—		—		457,804		—
Equity securities		—		798		—		—		1,027		—
Swap asset		—		25,719		—		—		14,521		—
Liabilities measured at fair value on a recurring basis:
Swap liability	$	—	$	25,719	$	—	$	—	$	14,563	$	—
Assets measured at fair value on a nonrecurring basis:
Mortgage Servicing Rights							$	—	$	—	$	2,745
Impaired loans								—		—		11

The following tables present quantitative information about the Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis as of June 30, 2021 and December 31, 2020.

The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at June 30, 2021 are as follows:

~~The following table presents quantitative information about the Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2019.~~

~~The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at June 30, 2020 are as follows:~~

June 30, 2020

Carrying
Amount

Total
Fair Value

Level 1

Level 2

Level 3

Financial Assets:

Cash and due from financial institutions

$
196,520

$
196,520

$
196,520

$
—

$
—

Other securities

20,537

20,537

20,537

—

—

Loans, held for sale

18,523

18,894

18,894

—

—

Loans, net of allowance

2,002,545

2,031,416

—

—

2,031,416

Bank owned life insurance

45,489

45,489

45,489

—

—

Accrued interest receivable

11,047

11,047

11,047

—

—

Financial Liabilities:

Nonmaturing deposits

1,776,351

1,776,351

1,776,351

—

—

Time deposits

292,910

294,736

—

—

294,736

Long-term FHLB advances

125,000

129,753

—

—

129,753

Other borrowings

183,695

183,682

—

—

183,682

Securities sold under agreement to repurchase

23,608

23,608

23,608

—

—

Subordinated debentures

29,427

32,048

—

—

32,048

Accrued interest payable

240

240

240

—

—

The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at December 31, ~~2019~~2020 are as follows:

December 31, 2019	Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
December 31, 2020											Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from financial institutions	$	48,535	$	48,535	$	48,535	$	—	$	—	$	139,522	$	139,522	$	139,522	$	—	$	—
Other securities		20,280		20,280		20,280		—		—		20,537		20,537		20,537		—		—
Loans, held for sale		2,285		2,331		2,331		—		—		7,001		7,141		7,141		—		—
Loans, net of allowance		1,694,203		1,713,863		—		—		1,713,863		2,032,474		2,063,249		—		—		2,063,249
Bank owned life insurance		44,999		44,999		44,999		—		—		45,976		45,976		45,976		—		—
Accrued interest receivable		7,093		7,093		7,093		—		—		9,421		9,421		9,421		—		—
Financial Liabilities:
Nonmaturing deposits		1,402,924		1,402,924		1,402,924		—		—		1,902,560		1,902,560		1,902,560		—		—
Time deposits		275,840		276,616		—		—		276,616		286,838		288,298		—		—		288,298
Short-term FHLB advances		101,500		101,500		101,500		—		—
Long-term FHLB advances		125,000		123,893		—		—		123,893		125,000		130,942		—		—		130,942
Securities sold under agreement to repurchase		18,674		18,674		18,674		—		—		28,914		28,914		28,914		—		—
Subordinated debentures		29,427		34,452		—		—		34,452		29,427		31,479		—		—		31,479
Accrued interest payable		277		277		277		—		—		204		204		204		—		—

To accommodate customer need and to support the Company’s asset/liability positioning, on occasion we enter into interest rate swaps with a customer and a bank counterparty. The interest rate swaps are free-standing derivatives and are recorded at fair value. The Company enters into a floating rate loan and a fixed rate swap with our customer. Simultaneously, the Company enters into an offsetting fixed rate swap with a bank counterparty. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay a bank counterparty the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. These transactions allow the Company’s customer to effectively convert variable rate loans to fixed rate loans. Since the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not significantly impact the Company’s results of operations. None of the Company’s derivatives are designated as hedging instruments.

The following table summarizes the Company’s interest rate swap positions as of June 30, ~~2020.~~2021.

	Classification on the Consolidated Balance Sheet	Notional Amount			Fair Value			Weighted Average Rate Received/(Paid)			Classification on the Consolidated Balance Sheet	Notional Amount			Fair Value
Derivative Assets	Other Assets	$	219,075		$	25,719			4.61	%	Swap assets	$	242,087		$	14,521
Derivative Liabilities	Accrued expenses and other liabilities		(219,075	)		(25,719	)		-4.61	%	Swap liabilities		(242,087	)		(14,563	)
Net Exposure		$	—		$	—						$	0		$	(42	)

The following table summarizes the Company’s interest rate swap positions as of December 31, ~~2019.~~2020.

	Classification on the Consolidated Balance Sheet	Notional Amount			Fair Value			Weighted Average Rate Received/(Paid)			Classification on the Consolidated Balance Sheet	Notional Amount			Fair Value
Derivative Assets	Other Assets	$	151,648		$	8,918			5.04	%	Swap assets	$	244,748		$	21,700
Derivative Liabilities	Accrued expenses and other liabilities		(151,648	)		(8,918	)		-5.04	%	Swap liabilities		(244,748	)		(21,764	)
Net Exposure		$	—		$	—						$	0		$	(64	)

The Company monitors and controls all derivative products with a comprehensive Board of Director approved commercial loan swap policy. All ~~hedge~~interest rate swap transactions must be approved in advance by the Lenders Loan Committee or the Directors Loan Committee of the Board of Directors. The Company classifies changes in fair value of derivatives with “Other” in the Consolidated Statements of Operation.

At June 30, 2021, the Company had cash and securities with a fair value of $7,930 and $7,089, respectively, pledged for collateral on its interest rate swaps with third party financial institutions. At December 31, 2020, the Company had cash and

securities with a fair value of $11,300 and $11,705, respectively, pledged as collateral. Cash pledged for collateral on interest rate swaps is classified as restricted cash on the Consolidated Balance Sheet.

The Company invests in certain qualified affordable housing projects. At June 30, 2021 and December 31, 2020, the balance of the investment for qualified affordable housing projects was $11,506 and $11,911, respectively. These balances are reflected in the Other assets line on the Consolidated Balance Sheet. The unfunded commitments related to the investments in qualified affordable housing projects totaled $4,649 and $5,944 at June 30, 2021 and December 31, 2020, respectively. These balances are reflected in the Accrued expenses and other liabilities line on the Consolidated Balance Sheet. Other assets and Accrued expenses and other liabilities were revised at December 31, 2020 to reflect the unfunded commitments of $5,944.

During the three months ended June 30, 2021 and 2020, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $202 and $164, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $338 and $301, respectively. During the six months ended June 30, 2021 and 2020, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $405 and $333, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $676 and $584, respectively. During the three- and six-months ended June 30, 2021 and 2020, the Company did 0t incur any impairment losses related to its investments in qualified affordable housing projects.

At June 30, 2020, the Company had cash and securities at fair value pledged for collateral on its interest rate swaps with third party financial institutions of $11,110 and $16,862, respectively. At December 31, 2019, securities with a fair value of $14,032 were pledged as collateral.

The Company invests in certain qualified affordable housing projects. At June 30, 2020 and December 31, 2019, the balance of the investment for qualified affordable housing projects was $5,353 and $5,154, respectively. These balances are reflected in the other assets line on the Consolidated Balance Sheet. The unfunded commitments related to the investments in qualified affordable housing projects totaled $4,885 and $5,417 at June 30, 2020 and December 31, 2019, respectively.

During the three months ended June 30, 2020 and 2019, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $164 and $133, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $301 and $276, respectively. During the six months ended June 30, 2020 and 2019, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $333 and $266, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $584 and $552, respectively. During the three and six months ended June 30, 2020 and 2019, the Company did 0t incur impairment losses related to its investment in qualified affordable housing projects.

The Company accounts for revenues from contracts with customers under ASC 606, Revenue from Contracts with ~~Customers.~~Customers. Revenue associated with financial instruments, including revenue from loans and securities are outside the scope of the new standard and accounted for under other existing GAAP. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also not in scope of the new guidance. Noninterest revenue streams in-scope of ASC 606 are discussed below.

Service charges consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Fees, exchange, and other service charges are primarily comprised of debit and credit card income, ATM fees and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Wealth management fees are primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received in the following month through a direct charge to customers’ accounts. The Company does not earn performance-based incentives. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

The Company facilitates the payment of federal and state income tax refunds in partnership with a third-party vendor. Refund Transfers (“RTs”) are fee-based products whereby a tax refund is issued to the taxpayer after the Company has received the

refund from the federal or state government. As part of this agreement the Company earns fee income, the majority of which is received in the first quarter of the year. The Company’s fee income revenue is recognized based on the estimated percent of business completed by each date.

Other noninterest income consists of other recurring revenue streams such as check order fees, wire transfer fees, safety deposit box rental fees, item processing fees and other miscellaneous revenue streams. Check order income mainly represents fees charged to customers for checks. Wire transfer fees represent revenue from processing wire transfers. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. Item processing fee income represents fees charged to other financial institutions for processing their transactions. Payment is typically received in the following month.

~~The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30, 2020 and 2019.~~

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three- and six-months ended June 30, 2021 and 2020.

Civista has received second customer deferral requests related to the COVID-19 pandemic for loans that had been previously modified. Through August 5, 2020, Civista granted a second modification on 75 loans totaling $95,153. Most of the second modifications consisted of the deferral of principal and/or interest payments as was granted under the first modification. Included in the second modifications were 17 loans totaling $33,160 that migrated from principal and interest deferrals to interest only payments. NaN loans have returned to making principal and interest payments and 651 loans are still within the original 90-day modification period. Details with respect to the second loan modifications are as follows:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion focuses on the consolidated financial condition of the Company at June 30, ~~2020~~2021 compared to December 31, ~~2019,~~2020, and the consolidated results of operations for the three- and six-month periods ended June 30, ~~2020,~~2021, compared to the same periods in ~~2019.~~2020. This discussion should be read in conjunction with the ~~consolidated financial statements~~Consolidated Financial Statements and footnotes included in this Form 10-Q.

This Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to such matters as the Company’s financial condition, anticipated operating results, cash flows, business line results, credit quality expectations, prospects for new lines of business, economic trends (including interest rates) and similar matters. Forward-looking statements reflect our expectations, estimates or projections concerning future results or events. These statements are generally identified by the use of forward-looking words or phrases such as “believe,” “belief,” “expect,” “anticipate,” “may,” “could,” “intend,” “intent,” “estimate,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results, performance or achievements to differ materially from those expressed in or implied by the forward-looking statements. Factors that could cause actual results, performance or achievements to differ from those discussed in the forward-looking statements include, but are not limited to, adverse affects from the ongoing COVID-19 pandemic, or an outbreak of another highly infectious or contagious disease; changes in financial markets or national or local economic conditions, including impacts from the COVID-19 pandemic on local, national and global economic conditions; higher default rates on loans made to our customers related to the impact of COVID-19 on our customers’ operations and financial conditions; the effects of various governmental responses to the COVID-19 pandemic, including stimulus packages and programs; potential litigation or other risks related to participating in the U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), sustained weakness or deterioration in the real estate market; volatility and direction of market interest rates; credit risks of lending activities; changes in the allowance for loan losses; the transition away from LIBOR as a reference rate for financial contracts; legislation or regulatory changes or actions; increases in Federal Deposit Insurance Corporation (“FDIC”) insurance premiums and assessments; changes in tax laws; operational risks; failure of or breach in our information and data processing systems; unforeseen litigation; and other risks identified from time-to-time in the Company’s other public documents on file with the SEC, including those risks identified in “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, as supplemented ~~by “Item 1A. Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 and~~ by “Item 1A. Risk Factors” of Part II of this Quarterly Report on ~~From~~Form 10-Q. The Company does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.

Total assets of the Company at June 30, ~~2020~~2021 were ~~$2,812,153~~$2,924,643 compared to ~~$2,309,557~~$2,768,862 at December 31, ~~2019,~~2020, an increase of ~~$502,596,~~$155,781, or ~~21.8%~~5.6%. The increase in total assets was due to increases in cash and ~~due from financial institutions~~cash equivalents of ~~$147,985,~~$105,784, accompanied by other increases in securities available for sale ~~loans held for sale, loans, accrued interest receivable~~ and other assets of ~~$9,884, $16,238, $308,342, $3,954~~$94,340 and ~~$15,877,~~$3,069, respectively, partially offset by decreases in loans and swap assets of $39,475 and $7,179, respectively. Total liabilities at June 30, ~~2020~~2021 were ~~$2,475,540~~$2,572,230 compared to ~~$1,979,431~~$2,418,754 at December 31, ~~2019,~~2020, an increase of ~~$496,109,~~$153,476, or ~~25.1%~~6.3%. The increase in total liabilities was primarily attributable to increases in noninterest-bearing demand accounts and interest-bearing demand accounts ~~other borrowings~~of $132,915 and ~~accrued expenses and other liabilities of $181,295, $209,202, $183,695 and $18,483,~~$80,679, respectively, partially offset by ~~a decrease~~decreases in ~~short-term FHLB~~long-term Federal Home Loan advances and swap liabilities of ~~$101,500.~~$50,000 and $7,201, respectively.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Loans outstanding as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were as follows:

	June 30, 2020			December 31, 2019			$ Change			% Change			June 30, 2021			December 31, 2020			$ Change			% Change
Commercial & Agriculture	$	442,444		$	203,110		$	239,334			117.8	%	$	328,871		$	409,876		$	(81,005	)		-19.8	%
Commercial Real Estate—Owner Occupied		252,914			245,606			7,308			3.0	%		271,667			278,413			(6,746	)		-2.4	%
Commercial Real Estate—Non-Owner Occupied		646,792			592,222			54,570			9.2	%		762,983			705,072			57,911			8.2	%
Residential Real Estate		453,067			463,032			(9,965	)		-2.2	%		426,731			442,588			(15,857	)		-3.6	%
Real Estate Construction		178,318			155,825			22,493			14.4	%		188,368			175,609			12,759			7.3	%
Farm Real Estate		35,441			34,114			1,327			3.9	%		28,616			33,102			(4,486	)		-13.6	%
Consumer and Other		13,989			15,061			(1,072	)		-7.1	%		11,960			12,842			(882	)		-6.9	%
Total loans		2,022,965			1,708,970			313,995			18.4	%		2,019,196			2,057,502			(38,306	)		-1.9	%
Allowance for loan losses		(20,420	)		(14,767	)		(5,653	)		38.3	%		(26,197	)		(25,028	)		(1,169	)		4.7	%
Net loans	$	2,002,545		$	1,694,203		$	308,342			18.2	%	$	1,992,999		$	2,032,474		$	(39,475	)		-1.9	%

Included in Commercial & Agriculture loans above as of June 30, 2021 is ~~$257,568~~$153,007 of PPP loans.

~~Loans held for sale increased $16,238~~Net loans have decreased $39,475 or ~~710.6%~~1.9% since December 31, ~~2019.~~2020. The increase is due to an increase in volume due to refinances as rates have declined. At June 30, 2020, 82 loans totaling $18,523 were held for sale as compared to 15 loans totaling $2,285 at December 31, 2019.

~~Net loans have~~Commercial Real Estate – Non-Owner Occupied and Real Estate Construction loan portfolios increased ~~$308,342 or 18.2%~~$57,911 and $12,759, respectively, since December 31, ~~2019. The~~2020, while the Commercial & Agriculture, Commercial Real Estate – Owner Occupied, ~~Commercial~~Residential Real Estate, ~~– Non-Owner Occupied, Real Estate Construction and~~ Farm ~~Real Estate loan portfolios increased $239,334, $7,308, $54,570, $22,493 and $1,327, respectively, since December 31, 2019, while the Residential~~ Real Estate and Consumer and Other loan portfolios decreased ~~$9,965~~$81,005, $6,746, $15,857, $4,486 and ~~$1,072,~~$882, respectively, since December 31, ~~2019. The increase in Commercial & Agriculture loans is the result of PPP loans totaling $257,568 at June 30,~~ 2020. At June 30, ~~2020,~~2021, the net loan to deposit ratio was ~~96.8%~~82.9% compared to ~~100.9%~~92.8% at December 31, ~~2019.~~2020. The decrease in the net loan to deposit ratio is primarily the result of an increase in deposits.

During the first six months of ~~2020,~~2021, provisions made to the allowance for loan losses ~~from earnings~~ totaled ~~$5,612,~~$830, compared to a provision of $0$5,612 during the same period in ~~2019.~~2020. The ~~increase~~decrease in provision was due to ~~an increase~~the stability of our metrics coupled with the stabilization and, in ~~the bank’s qualitative factors, primarily changes in~~some cases, improvement of international, national, regional and local economic conditions ~~related to~~that were adversely impacted by the 2020 economic shutdown ~~driven by~~and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations in the first six months of 2021 have created some level of optimism in the business community, we remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry. Economic impacts related to the COVID-19 pandemic since March 2020 include the loss of revenue ~~being~~ experienced by our business clients, disruption of supply chains, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large number of customers requesting payment relief. While some of these pressures have eased, ongoing supply chain and staffing challenges, as well as the threat of inflation remain. Net recoveries for the first six months of ~~2020~~2021 totaled ~~$41,~~$339, compared to net recoveries of ~~$107~~$41 in the first six months of ~~2019.~~2020. For the first six months of ~~2020,~~2021, the Company charged off a total of 15eleven loans. ~~One~~Four Residential Real Estate loans totaling $37, one Commercial and Agriculture loan totaling $15 ~~one Commercial Real Estate – Owner Occupied totaling $1, seven Residential Real Estate loans totaling $97~~ and six Consumer and Other loans totaling ~~$27~~$19 were charged off in the first six months of the year. In addition, during the first six months of ~~2020,~~2021, the Company had recoveries on previously charged-off Commercial and Agriculture loans of ~~$4,~~$163, Commercial Real Estate – Owner Occupied loans of ~~$14,~~$6, Commercial Real Estate – Non-Owner Occupied loans of ~~$41,~~$11, Residential Real Estate loans of ~~$79,~~$179, Real Estate Construction loans of ~~$2,~~$1, Farm Real Estate loans of $7$6 and Consumer and Other loans of ~~$34.~~$44. For each loan category, as well as in total, the percentage of net charge-offs to loans was less than one percent. Nonperforming loans decreased by ~~$636~~$1,056 since December 31, ~~2019,~~2020, which was due to a decrease in loans on nonaccrual status of ~~$638 and an increase in loans past due 90 days and accruing of $2.~~$1,056. Each of these factors was considered by management as part of the examination of both the level and mix of the allowance by loan type as well as the overall level of the allowance.

Management specifically evaluates loans that are impaired for estimates of loss. To evaluate the adequacy of the allowance for loan losses to cover probable losses in the portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for delinquencies and historical reserve allocations. Loss migration rates are calculated over a three-year period for all portfolio segments. Management also considers certain economic factors for trends that management uses to account for the qualitative and environmental changes in risk, which affects the level of the reserve.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management analyzes each impaired Commercial and Commercial Real Estate loan relationship with a balance of $350 or larger, on an individual basis and designates a loan as impaired when it is in nonaccrual status or when an analysis of the borrower’s operating results and financial condition indicates that underlying cash flows are not adequate to meet its debt service requirements. Loans held for sale are excluded from consideration as impaired. Loans are generally moved to nonaccrual status when 90 days or more past due. Impaired loans, or portions thereof, are charged-off when deemed uncollectible. The allowance for loan losses as a percent of total loans was ~~1.01%~~1.30% at June 30, ~~2020~~2021 and ~~0.86%~~1.22% at December 31, ~~2019.~~2020.

The available for sale security portfolio increased by ~~$9,884,~~$94,340, from ~~$358,499~~$363,464 at December 31, ~~2019~~2020 to ~~$368,383~~$457,804 at June 30, ~~2020.~~2021. Management continually evaluates our securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability and the level of interest rate risk to which the Company is exposed. These evaluations may cause the Company to change the level of funds it deploys into investment securities and change the composition of its investment securities portfolio. As of June 30, ~~2020,~~2021, the Company was in compliance with all pledging requirements.

Accrued interest receivable increased $3,954, from $7,093 at December 31, 2019 to $11,047 at June 30, 2020. The increase is the result of loan modifications consisting of the deferral of principal and/or interest payments, which are the result of the COVID-19 pandemic.

Premises and equipment, net, increased ~~$266~~$237 from December 31, ~~2019~~2020 to June 30, ~~2020.~~2021. The increase is the result of new purchases of ~~$1,395,~~$1,217, offset by depreciation of ~~$1,119 and proceeds from the sale of premises and equipment of $10.~~$980.

Bank owned life insurance (BOLI) increased ~~$490~~$491 from December 31, ~~2019~~2020 to June 30, ~~2020.~~2021. The increase is the result of increases in the cash surrender value of the underlying insurance policies.

Swap assets ~~increased $16,801~~decreased $7,179 from December 31, ~~2019~~2020 to June 30, ~~2020.~~2021. The ~~increase~~decrease of ~~$16,801~~$7,179 is primarily the result of a decrease in market value.

Other assets increased $3,069 from December 31, 2020 to June 30, 2021. The increase is the result of a $1,000 refund receivable related to an alternative minimum tax (AMT) credit refundable under the CARES Act and an increase in ~~volume~~prepaid expenses of ~~swap activity related to our Commercial Real Estate loan growth.~~$1,695.

Total deposits as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were as follows:

	June 30, 2020		December 31, 2019		$ Change		% Change			June 30, 2021		December 31, 2020		$ Change			% Change
Noninterest-bearing demand	$	693,848	$	512,553	$	181,295		35.4	%	$	853,724	$	720,809	$	132,915			18.4	%
Interest-bearing demand		408,980		301,674		107,306		35.6	%		480,281		410,139		70,142			17.1	%
Savings and money market		673,524		588,697		84,827		14.4	%		809,530		771,612		37,918			4.9	%
Time deposits		292,909		275,840		17,069		6.2	%		259,457		286,838		(27,381	)		-9.5	%
Total Deposits	$	2,069,261	$	1,678,764	$	390,497		23.3	%	$	2,402,992	$	2,189,398	$	213,594			9.8	%

Total deposits at June 30, ~~2020~~2021 increased ~~$390,497~~$213,594 from year-end ~~2019.~~2020. Noninterest-bearing deposits increased ~~$181,295~~$132,915 from year-end ~~2019,~~2020, while interest-bearing deposits, including savings and time deposits, increased ~~$209,202~~$80,679 from December 31, ~~2019.~~2020. The increase in noninterest-bearing deposits was partially due to increases in cash balances related to the Company’s participation in a tax refund processing program, which added noninterest-bearing deposits of ~~$30,799.~~$50,828. This increase is temporary as transactions are processed and is expected to return to levels more consistent with December 31, ~~2019~~2020 over the next two quarters. In addition, ~~personal~~business demand deposit and ~~business~~public fund demand deposit accounts increased ~~$21,364~~$61,065 and ~~$134,055,~~$12,163, respectively. Much of the increase in business demand deposit accounts ~~is due to the~~resulted from customer deposits of PPP loan proceeds. The increase in interest-bearing deposits was primarily due to an increase in non-public interest-bearing demand and public fund interest-bearing demand accounts of $26,726 and $47,649, respectively, accompanied by a decrease in Jumbo Now accounts of $3,201. Statement savings, money market savings and public fund money ~~markets~~market savings increased by $40,889, $26,652 and $14,776, respectively, accompanied by decreases in business money market savings and brokered money market savings accounts of ~~$37,731, $61,399~~$7,074 and ~~$29,745,~~$40,141, respectively. ~~Public fund interest-bearing demand~~Time certificates over $250, time certificates, Jumbo time certificates and public fund time deposit ~~accounts increased $69,575~~decreased $7,128, $6,973, $4,999 and ~~$17,411,~~$9,753, respectively. The year-to-date average balance of total deposits increased ~~$303,335~~$501,329 compared to the average balance for the same period in ~~2019~~2020 mainly due to increases in noninterest-bearing business demand ~~and tax refund processing program~~ accounts of ~~$96,754 and $133,376, respectively,~~$106,743, accompanied by increases in non-public interest-bearing demand, savings and money markets and public funds interest-bearing demand of ~~$21,564, $33,665~~$56,713, $146,068 and ~~$27,893, respectively. In addition, the average balance of time deposits increased $14,332 as compared to the same period in 2019.~~

Short-term FHLB advances decreased $101,500 from December 31, 2019 to June 30, 2020. The decrease is due to a decrease in overnight borrowings. Securities sold under agreements to repurchase, which tend to fluctuate, have increased $4,934 from December 31, 2019 to June 30, 2020.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Other borrowings increased $183,695~~$47,356, respectively. In addition, the average balance of time deposits decreased $8,386 as compared to the same period in 2020.

Securities sold under agreements to repurchase, which tend to fluctuate based on the liquidity needs of customers and short-term nature of the instrument, decreased $3,998 from December 31, ~~2019~~2020 to June 30, ~~2020.~~2021.

Long-term Federal Home Loan advances decreased $50,000 from December 31, 2020 to June 30, 2021. During the second quarter of 2021, the Company prepaid a $50,000 advance with a rate of 2.05% and a remaining maturity of approximately 8 years at a pre-tax loss of approximately $3,717. The ~~increase is~~prepayment penalty of $3,717 was recorded in other operating expenses on the ~~result~~Consolidated Statements of ~~borrowings by Civista under the Paycheck Protection Program Lending Facility (“PPPLF”) to provide funding for PPP loans.~~Operations.

Swap liabilities ~~increased $16,801~~decreased $7,201 from December 31, ~~2019~~2020 to June 30, ~~2020.~~2021. The ~~increase~~decrease of ~~$16,801~~$7,201 is primarily the result of ~~an increase~~a decrease in ~~volume of swap activity related to our Commercial Real Estate loan growth.~~

Accrued expenses and other liabilities increased $1,682 from December 31, 2019 to June 30, 2020. The increase is the result of an increase in a clearing account related to the tax refund processing program of $1,072.market value.

Shareholders’ equity at June 30, ~~2020~~2021 was ~~$336,613,~~$352,413, or 12.0% of total assets, compared to ~~$330,126,~~$350,108, or ~~14.3%~~12.7% of total assets, at December 31, ~~2019.~~2020. The increase was the result of net income of ~~$14,337,~~$19,922, a decrease in the Company’s pension liability, net of tax, of ~~$114, and an increase~~$129, offset by a decrease in the fair value of securities available for sale, net of tax, of ~~$6,666, offset by~~$3,055, dividends on common shares of ~~$3,599~~$3,792 and the purchase of treasury shares of ~~$11,450.~~$11,355.

Total outstanding common shares at June 30, ~~2020~~2021 were ~~16,052,979,~~15,434,592, which decreased from ~~16,687,542~~15,898,032 common shares outstanding at December 31, ~~2019.~~2020. Common shares outstanding decreased as a result of ~~675,808~~510,304 common shares being repurchased by the Company at an average repurchase price of ~~$16.94.~~$22.25. The Company repurchased ~~672,000~~239,536 common shares pursuant to a stock repurchase program announced on ~~December 17, 2019~~May 4, 2020 and ~~3,808~~265,703 common shares pursuant to a stock repurchase program announced on April 20, 2021. An additional 5,065 common shares were surrendered to pay taxes upon vesting of restricted shares and the forfeiture of 1,067 restricted common shares. The ~~publicly-announced~~ repurchase plan publicly-announced on May 4, 2020 authorized the Company to repurchase ~~up to 672,000 shares~~a maximum aggregate value of $13,500 of the Company’s common shares until ~~December 17, 2020.~~April 20, 2021. The ~~decrease in~~repurchase plan publicly-announced on April 20, 2020 authorized the Company to repurchase a maximum aggregate value of $13,500 of the Company’s common shares ~~outstanding~~until April 19 2022. The repurchase of common shares was offset by the grant of ~~26,979~~39,139 restricted common shares to certain officers under the Company’s 2014 Incentive Plan. In addition, ~~14,266~~8,792 common shares were issued to Civista directors as a retainer payment for service on the Civista Board of Directors.

The Company had net income of ~~$6,504~~$9,164 for the three months ended June 30, ~~2020, a decrease~~2021, an increase of ~~$2,157~~$2,660 from net income of ~~$8,661~~$6,504 for the same three months of ~~2019.~~2020. Basic earnings per common share were ~~$0.41~~$0.59 for the quarter ended June 30, ~~2020,~~2021, compared to ~~$0.54~~$0.41 for the same period in ~~2019.~~2020. Diluted earnings per common share were ~~$0.41~~$0.59 for the quarter ended June 30, ~~2020,~~2021, compared to ~~$0.51~~$0.41 for the same period in ~~2019.~~2020. The primary reasons for the changes in net income are explained below.

Net interest income for the three months ended June 30, ~~2020~~2021 was ~~$22,075,~~$23,841, an increase of ~~$333~~$1,766 from ~~$21,742 in~~$22,075 for the same three months of ~~2019.~~2020. This increase is the result of ~~a decrease~~an increase of ~~$342~~$914 in total interest income with a decrease of ~~$675~~$852 in interest expense. Interest-earning assets averaged $2,776,131 during the three months ended June 30, 2021, an increase of $248,125 from $2,528,006 for the same period of 2020. The Company’s average interest-bearing liabilities increased from $1,619,603 during the three months ended June 30, 2020 ~~an increase of $541,165 from $1,986,841 for the same period of 2019. The Company’s average interest-bearing liabilities increased from $1,316,104~~to $1,737,886 during the three months ended June 30, ~~2019 to $1,619,603 during the three months ended June 30, 2020.~~2021. The Company’s fully tax equivalent net interest margin for the three months ended June 30, 2021 and 2020 was 3.53% and ~~2019 was~~ 3.61% ~~and 4.49%~~, respectively.

Total interest income was ~~$24,584~~$25,498 for the three months ended June 30, ~~2020, a decrease~~2021, an increase of ~~$342~~$914 from ~~$24,926~~$24,584 of total interest income for the same period in ~~2019.~~2020. The ~~decrease~~increase in interest income is attributable to ~~a decrease~~an increase of ~~$44~~$1,040 in interest and fees on loans, which resulted from ~~a lower yield on the portfolio, partially offset by~~ an increase in the average balance of loans. The average balance of loans increased by ~~$389,436~~$81,815 or ~~24.6%~~4.1% to ~~$1,972,969~~$2,054,784 for the three months ended June 30, ~~2020~~2021 as compared to ~~$1,583,533~~$1,972,969 for the same period in ~~2019.~~2020. The loan yield ~~decreased~~increased to ~~4.41%~~4.42% for ~~2020, from 5.49% in 2019 mainly due to~~ the ~~impact of lower interest rates during the first~~ three months ~~of 2020 as compared to~~ended June 30, 2021, from 4.41% for the same period ~~of 2019.~~in 2020. During the quarter, the average balance of PPP loans was ~~$189,405.~~$207,511. These loans had an average yield of ~~3.46% including~~6.34%, which includes the amortization of PPP fees.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Interest on taxable securities decreased ~~$335~~$129 to ~~$1,359~~$1,230 for the three months ended June 30, ~~2020,~~2021, compared to ~~$1,694~~$1,359 for the same period in ~~2019.~~2020. The average balance of taxable securities ~~decreased $17,039~~increased $18,598 to $204,554 for the three months ended June 30, 2021 as compared to $185,956 for the same period in 2020. The yield on taxable securities decreased 59 basis points to 2.47% for 2021, compared to 3.06% for 2020. Interest on tax-exempt securities decreased $16 to $1,525 for the three months ended June 30, 2021, compared to $1,541 for the same period in 2020. The average balance of tax-exempt securities increased $8,058 to $208,940 for the three months ended June 30, 2020 as compared to ~~$202,995~~$200,882 for the same period in 2019. The yield on taxable securities decreased 33 basis points to 3.06% for 2020, compared to 3.39% for 2019. Interest on tax-exempt securities increased $133 to $1,541 for the three months ended June 30, 2020, compared to $1,408 for the same period in 2019. The average balance of tax-exempt securities increased $29,878 to $200,882 for the three months ended June 30, 2020 as compared to $171,004 for the same period in 2019.2020. The yield on tax-exempt securities decreased 2015 basis points to 4.04% for 2021, compared to 4.19% for 2020 ~~compared to 4.39% for 2019~~ due to the impact of lower interest rates ~~during the first three months of 2020~~in 2021 as compared to the same period of ~~2019.~~2020.

Interest expense decreased ~~$675~~$852, or ~~21.2%~~34.0%, to ~~$2,509~~$1,657 for the three months ended June 30, ~~2020,~~2021, compared with ~~$3,184~~$2,509 for the same period in ~~2019.~~2020. The change in interest expense can be attributed to an increase in the average balance of interest-bearing liabilities, offset by a decrease in rates on demand and savings accounts, FHLB borrowings and subordinated debentures. For the three months ended June 30, ~~2020,~~2021, the average balance of interest-bearing liabilities increased ~~$303,499~~$118,283 to ~~$1,619,603,~~$1,737,886, as compared to ~~$1,316,104~~$1,619,603 for the same period in ~~2019.~~2020. Interest incurred on deposits decreased by ~~$174~~$666 to ~~$1,802~~$1,136 for the three months ended June 30, ~~2020,~~2021, compared to ~~$1,976~~$1,802 for the same period in ~~2019.~~2020. Although the average balance of interest-bearing deposits increased to ~~$187,372~~$263,286 for the three months ended June 30, ~~2020~~2021 as compared to the same period in ~~2019,~~2020, deposit expense decreased due to a decrease in the rate paid on demand and savings accounts from ~~0.34% in 2019 to~~ 0.17% in ~~2020.~~2020 to 0.10% in 2021. The rate paid on time deposits ~~increased~~decreased from ~~1.86%~~1.89% to ~~1.89%~~1.19% in ~~2020 mainly due to special rates offered on time deposits during 2019 and through 2020.~~2021. Interest expense incurred on FHLB advances and subordinated debentures decreased ~~42.1%~~26.1% from ~~2019.~~2020. The average balance on FHLB balances decreased ~~$13,237~~$23,111 for the three months ended June 30, ~~2020~~2021 as compared to the same period in ~~2019, while~~2020 as a result of the ~~rate paid decreased 97 basis points.~~prepayment of a long-term advance. In addition, the rate paid on subordinated debentures decreased ~~165~~90 basis points for the three months ended June 30, ~~2020~~2021 as compared to the same period in 2019. The average balance of other borrowings increased $124,819 for the three months ended June 30, 2020 as compared to the same period in 2019 as a result of the Company’s borrowings under the Paycheck Protection Program Liquidity Facility to fund PPP loans.2020.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table presents the condensed average balance sheets for the three months ended June 30, ~~2020~~2021 and ~~2019.~~2020. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a 21% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.

	Three Months Ended June 30,																Three Months Ended June 30,
	2020								2019								2021								2020
Assets:	Average balance			Interest		Yield/ rate*			Average balance			Interest		Yield/ rate*			Average balance			Interest		Yield/ rate*			Average balance			Interest		Yield/ rate*
Interest-earning assets:
Loans, including fees	$	1,972,969		$	21,613		4.41	%	$	1,583,533		$	21,657		5.49	%
Loans, including fees**																	$	2,054,784		$	22,653		4.42	%	$	1,972,969		$	21,613		4.41	%
Taxable securities		185,956			1,359		3.06	%		202,995			1,694		3.39	%		204,554			1,230		2.47	%		185,956			1,359		3.06	%
Tax-exempt securities		200,882			1,541		4.19	%		171,004			1,408		4.39	%		208,940			1,525		4.04	%		200,882			1,541		4.19	%
Interest-bearing deposits in other banks		168,199			71		0.17	%		29,309			167		2.29	%		307,853			90		0.12	%		168,199			71		0.17	%
Total interest-earning assets	$	2,528,006		$	24,584		4.01	%	$	1,986,841		$	24,926		5.14	%	$	2,776,131		$	25,498		3.77	%	$	2,528,006		$	24,584		4.01	%
Noninterest-earning assets:
Cash and due from financial institutions		84,961								38,558								45,626								84,961
Premises and equipment, net		22,535								21,819								22,375								22,535
Accrued interest receivable		9,312								7,324								8,463								9,312
Intangible assets		84,906								85,865								84,638								84,906
Other assets		43,297								22,193								37,173								43,297
Bank owned life insurance		45,334								44,328								46,305								45,334
Less allowance for loan losses		(17,098	)							(13,884	)							(26,580	)							(17,098	)
Total Assets	$	2,801,253							$	2,193,044							$	2,994,131							$	2,801,253
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	1,027,678		$	439		0.17	%	$	858,781		$	721		0.34	%	$	1,310,998		$	334		0.10	%	$	1,027,678		$	439		0.17	%
Time		289,658			1,363		1.89	%		271,183			1,255		1.86	%		269,624			802		1.19	%		289,658			1,363		1.89	%
Short-term FHLB advances		34			—		0.00	%		111,842			698		2.50	%		—			—		0.00	%		34			—		0.00	%
Long-term FHLB advances		125,000			447		1.44	%		26,429			133		2.02	%		101,923			330		1.30	%		125,000			447		1.44	%
Other borrowings		124,819			4		0.01	%		—			—		0.00	%		—			—		0.00	%		124,819			4		0.01	%
Subordinated debentures		29,427			250		3.42	%		29,427			372		5.07	%		29,427			185		2.52	%		29,427			250		3.42	%
Repurchase Agreements		22,987			6		0.10	%		18,442			5		0.11	%		25,914			6		0.09	%		22,987			6		0.10	%
Total interest-bearing liabilities	$	1,619,603		$	2,509		0.62	%	$	1,316,104		$	3,184		0.97	%	$	1,737,886		$	1,657		0.38	%	$	1,619,603		$	2,509		0.62	%
Noninterest-bearing deposits		790,891								540,283								867,561								790,891
Other liabilities		60,235								21,219								39,428								60,235
Shareholders’ Equity		330,524								315,438								349,256								330,524
Total Liabilities and Shareholders’ Equity	$	2,801,253							$	2,193,044							$	2,994,131							$	2,801,253
Net interest income and interest rate spread				$	22,075		3.39	%				$	21,742		4.17	%				$	23,841		3.39	%				$	22,075		3.39	%
Net interest margin							3.61	%							4.49	%							3.53	%							3.61	%

*—Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was ~~$413~~$406 and ~~$378~~$413 for the periods ended June 30, ~~202~~2021 and ~~2019,~~2020, respectively.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the three months ended June 30, ~~2020~~2021 and ~~2019.~~2020.

	Increase (decrease) due to:									Increase (decrease) due to:
	Volume (1)			Rate (1)			Net			Volume (1)			Rate (1)			Net
	(Dollars in thousands)									(Dollars in thousands)
Interest income:
Loans, including fees	$	4,740		$	(4,784	)	$	(44	)	$	901		$	139		$	1,040
Taxable securities		(172	)		(163	)		(335	)		146			(275	)		(129	)
Tax-exempt securities		201			(68	)		133			38			(54	)		(16	)
Interest-bearing deposits in other banks		178			(274	)		(96	)		46			(27	)		19
Total interest income	$	4,947		$	(5,289	)	$	(342	)	$	1,131		$	(217	)	$	914
Interest expense:
Demand and savings	$	122		$	(404	)	$	(282	)	$	101		$	(206	)	$	(105	)
Time		87			21			108			(89	)		(472	)		(561	)
Short-term FHLB advances		(698	)		—			(698	)		—			—			—
Long-term FHLB advances		363			(49	)		314			(77	)		(40	)		(117	)
Other borrowings		4			—			4			(4	)		—			(4	)
Subordinated debentures		—			(122	)		(122	)		—			(65	)		(65	)
Repurchase agreements		1			—			1			1			(1	)		—
Total interest expense	$	(121	)	$	(554	)	$	(675	)	$	(68	)	$	(784	)	$	(852	)
Net interest income	$	5,068		$	(4,735	)	$	333		$	1,199		$	567		$	1,766

The Company provides for loan losses through regular provisions to the allowance for loan losses. Provisions for loan losses totaled ~~$3,486~~$0 and $0$3,486 during the quarters ended June 30, ~~2020~~2021 and ~~2019.~~2020. The ~~increase~~decrease in the provision in the second quarter of 2021 was due to ~~an increase~~the stability of our metrics coupled with the stabilization and, in ~~the bank’s qualitative factors, primarily changes in~~some cases, improvement of international, national, regional and local economic conditions ~~related to~~that were adversely impacted by the 2020 economic shutdown ~~driven by~~and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations in the first six months of 2021 have created some level of optimism in the business community, we remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry. Economic impacts ~~relating~~related to the COVID-19 pandemic ~~include~~since March 2020 have included the loss of revenue ~~being experience~~experienced by our business clients, disruption of supply chains, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large number of customers requesting payment relief. While some of the pressures have eased, ongoing supply chain and staffing challenges, as well as the threat of inflation remain. Our Commercial and Commercial Real Estate ~~and Consumer~~ portfolios have been, and are expected to continue to be impacted the most.

Noninterest income for the three-month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 are as follows:

	Three months ended June 30,												Three months ended June 30,
	2020			2019			$ Change			% Change			2021		2020			$ Change			% Change
Service charges	$	930		$	1,552		$	(622	)		-40.1	%	$	1,317	$	930		$	387			41.6	%
Net gain on sale of securities		—			10			(10	)		-100.0	%		1,784		—			1,784			0.0	%
Net loss on equity securities		(5	)		(33	)		28			-84.8	%
Net gain (loss) on equity securities														53		(5	)		58			1160.0	%
Net gain on sale of loans		2,261			555			1,706			307.4	%		2,218		2,261			(43	)		-1.9	%
ATM/Interchange fees		1,149			951			198			20.8	%		1,373		1,149			224			19.5	%
Wealth management fees		904			911			(7	)		-0.8	%		1,188		904			284			31.4	%
Bank owned life insurance		240			252			(12	)		-4.8	%		248		240			8			3.3	%
Tax refund processing fees		475			550			(75	)		-13.6	%		475		475			—			0.0	%
Swap fees		764			15			749			4993.3	%		17		764			(747	)		-97.8	%
Other		136			341			(205	)		-60.1	%		352		136			216			158.8	%
Total noninterest income	$	6,854		$	5,104		$	1,750			34.3	%	$	9,025	$	6,854		$	2,171			31.7	%

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Noninterest income for the three months ended June 30, ~~2020~~2021 was ~~$6,854,~~$9,025, an increase of ~~$1,750~~$2,171, or ~~34.3%~~31.7%, from ~~$5,104~~$6,854 for the same period of ~~2019.~~2020. The increase was primarily due to increases in service charges, net gain on sale of ~~loans,~~securities, net gain on equity securities, ATM/Interchange fees, wealth management fees and ~~swap fees,~~other, offset by ~~decreases~~a decrease in ~~service~~swap fees. Service charges ~~tax refund processing~~increased as a result of higher overdraft fees and ~~other.~~service charges. During the second quarter of 2020, Civista waived service fees on deposit accounts of $93. In addition, overdraft fees are rebounding to pre-pandemic levels. Net ~~loss~~gain on sale of securities increased as a result of the sale of Visa Class B shares. Net gain on equity securities ~~decreased~~increased as a result of market value decreases. Net gain on sale of loans increased primarily as a result of an increase in volume of loans sold. During the three-months ended June 30, 2020, 444 loans were sold, totaling $91,460. During the three-months ended June 30, 2019, 149 loans were sold, totaling $27,941.increases. ATM/Interchange fees increased as a result of increased transaction volume and incentives. Wealth management fees increased primarily as a result of an increase in trust and ~~the receipt~~brokerage fees of ~~member support~~$230 and $54, respectively. Trust income increased as a result of new accounts and market conditions while brokerage income has increased due to volume of business. Other income increased due to increases in wire transfer fees, amortization of mortgage servicing rights and merchant credit card fees. Swap fees ~~increased~~decreased due to the volume of swaps performed during the quarter ended June 30, ~~2020~~2021 as compared to the same period of 2019. Service charges decreased as a result of Civista waiving $93 of service fees on deposits accounts related to the COVID-19 pandemic. In addition, overdraft fees have decreased by $477. Other income decreased due to the amortization of mortgage servicing rights as a result of higher loan payoffs.2020.

Additionally, the Company processes state and federal income tax refund payments for customers of third-party income tax preparation vendors for which we receive a fee for processing the refund payments. Tax refund processing fees were $475 for each of the three months ended June 30, ~~2019, a decrease of $75 from $550 for the same period of 2019. The decrease is the result of a decrease in volume of transactions processed during the period.~~2021 and 2020. This fee income is seasonal in nature, the majority of which is earned in the first quarter of the year.

Noninterest expense for the three-month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 are as follows:

	Three months ended June 30,										Three months ended June 30,
	2020		2019		$ Change			% Change			2021		2020		$ Change			% Change
Compensation expense	$	10,597	$	9,548	$	1,049			11.0	%	$	11,406	$	10,597	$	809			7.6	%
Net occupancy expense		1,064		964		100			10.4	%		1,007		1,064		(57	)		-5.4	%
Equipment expense		507		480		27			5.6	%		482		507		(25	)		-4.9	%
Contracted data processing		475		447		28			6.3	%		490		475		15			3.2	%
FDIC assessment		156		106		50			47.2	%		322		156		166			106.4	%
State franchise tax		475		499		(24	)		-4.8	%		471		475		(4	)		-0.8	%
Professional services		883		700		183			26.1	%		741		883		(142	)		-16.1	%
Amortization of intangible assets		228		235		(7	)		-3.0	%		223		228		(5	)		-2.2	%
ATM/Interchange expense		331		546		(215	)		-39.4	%		656		331		325			98.2	%
Marketing		339		367		(28	)		-7.6	%		343		339		4			1.2	%
Software maintenance expense		407		356		51			14.3	%		545		407		138			33.9	%
Other		2,652		2,391		261			10.9	%		5,781		2,652		3,129			118.0	%
Total noninterest expense	$	18,114	$	16,639	$	1,475			8.9	%	$	22,467	$	18,114	$	4,353			24.0	%

Noninterest expense for the three months ended June 30, ~~2020~~2021 was ~~$18,114,~~$22,467, an increase of ~~$1,475,~~$4,353, or ~~8.9%~~24.0%, from ~~$16,639~~$18,114 reported for the same period of ~~2019.~~2020. The primary reasons for the increase were increases in compensation expense, ~~net occupancy expense,~~ FDIC assessment, ~~professional services,~~ATM/Interchange expense, software maintenance expense and other expenses, offset by a decrease in ~~ATM/Interchange expense.~~expense for professional services. The increase in compensation expense was due to increased ~~payroll, payroll taxes~~salary and salary based expenses, commission and incentive based ~~costs. The quarter-to-date average full time equivalent (FTE) employees were 456.0 at June 30, 2020, an increase of 19.9 FTEs over 2019, which increased payroll~~costs and payroll related expenses. Payroll and payroll related expenses also increased due to annual pay increases and increases in commission based costs as the result of increased loan activity. The increase in net occupancy is the result of increased COVID-19 pandemic related expenses to janitorial services and supplies of $123.employee insurance costs. The quarter-over-quarter increase in FDIC assessments was attributable to ansmall bank assessment credits applied to the 2020 assessments not repeated in 2021. The quarter-over-quarter increase in ~~the assessment base. The increase in professional services costs~~ATM/Interchange expense is the result of ~~increased consulting services to implement cost savings~~an increase in volume of transactions and ~~customer services. The decrease in ATM/Interchange expense is primarily due to~~ a settlement received in the second quarter of ~~2020 and savings realized by a vendor change.~~2020. The increase in software maintenance expense is due to a general increase in legacy software maintenance contracts and new maintenance contracts. The quarter-over-quarter increase in other ~~operating~~ expense is ~~primarily~~ due to ~~increases~~the prepayment expense of $3,717 related to the early payoff of an FHLB long-term advance, offset by a credit to the valuation adjustment for mortgage servicing rights. Professional services decreased due to a decrease in ~~communications expense, education~~consulting fees related to cost savings initiatives and ~~training, amortization on low income housing investment, other loan expense and MSR valuation expense.~~customer service programs the Company was undertaking during 2020.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Income tax expense for the three months ended June 30, ~~2020~~2021 totaled ~~$825, down $721~~$1,235, up $410 compared to the same period in ~~2019.~~2020. The effective tax rates for the three-month periods ended June 30, 2021 and 2020 were 11.9% and ~~2019 were~~ 11.3% ~~and 15.2%~~, respectively. The difference between the statutory federal income tax rate and the Company’s effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low income housing tax credits and bank owned life insurance income. ~~The decrease in the effective tax rate is due to higher non-taxable income and lower taxable income for the three months ended June 30, 2020, as compared to the same period in 2019.~~

The Company had net income of ~~$14,337~~$19,922 for the six months ended June 30, ~~2020, a decrease~~2021, an increase of ~~$3,993~~$5,585 from net income of ~~$18,330~~$14,337 for the same six months of ~~2019.~~2020. Basic earnings per common share were ~~$0.88~~$1.27 for the period ended June 30, ~~2020,~~2021, compared to ~~$1.15~~$0.88 for the same period in ~~2019.~~2020. Diluted earnings per common share were ~~$0.88~~$1.27 for the period ended June 30, ~~2020,~~2021, compared to ~~$1.08~~$0.88 for the same period in ~~2019.~~2020. The primary reasons for the changes in net income are explained below.

Net interest income for the six months ended June 30, ~~2020~~2021 was ~~$44,190,~~$47,669, an increase of ~~$730~~$3,479 from ~~$43,460~~$44,190 in the same six months of ~~2019.~~2020. This increase is the result of an increase of ~~$76~~$1,638 in total interest income with a decrease of ~~$654~~$1,841 in interest expense. Interest-earning assets averaged ~~$2,380,088~~$2,890,755 during the six months ended June 30, ~~2020,~~2021, an increase of ~~$377,989~~$510,667 from ~~$2,002,099~~$2,380,088 for the same period of ~~2019.~~2020. The Company’s average interest-bearing liabilities increased from ~~$1,295,697~~$1,502,552 for the first six months of 2020 to $1,728,179 for the same period in ~~2019 to $1,502,552 in 2020.~~2021. The Company’s fully tax equivalent net interest margin for the six months ended June 30, 2021 and 2020 was 3.41% and ~~2019 was~~ 3.84% ~~and 4.47%~~, respectively.

Total interest income increased ~~$76~~$1,638 to ~~$49,586~~$51,224 for the period ended June 30, ~~2020,~~2021, which is attributable to an increase of ~~$667~~$2,150 in interest and fees on loans. This change was the result of an increase in the average balance of loans, accompanied by a lower yield on the portfolio. The average balance of loans increased by ~~$275,403~~$212,734, or ~~17.5%~~11.5%, to $2,062,061 for the period ended June 30, 2021, as compared to $1,849,327 for the period ended June 30, ~~2020, as compared~~2020. The loan yield decreased to ~~$1,573,924~~4.44% for 2021, from 4.71% in 2020. During the six months ended June 30, 2021, the average balance of PPP loans was $228,102. These loans had an average yield of 6.22%, which includes the amortization of PPP fees.

Interest on taxable securities decreased $270 to $2,505 for the period ended June 30, ~~2019.~~2021, compared to $2,775 for the same period in 2020. The ~~loan yield decreased to 4.71% for 2020, from 5.46% in 2019.~~

~~Interest on~~average balance of taxable securities ~~decreased $667~~increased $2,949 to ~~$2,775~~$189,729 for the period ended June 30, ~~2020,~~2021 as compared ~~to $3,442 for the same period in 2019. The average balance of taxable securities decreased $18,505~~ to $186,780 for the period ended June 30, ~~2020 as~~2020. The yield on taxable securities decreased 35 basis points to 2.75% for 2021, compared to ~~$205,285~~3.10% for 2020. Interest on tax-exempt securities decreased $9 to $3,044 for the period ended June 30, ~~2019. The yield on taxable securities decreased 31 basis points to 3.10% for 2020,~~2021, compared to ~~3.41% for 2019. Interest on tax-exempt securities increased $293 to~~ $3,053 ~~for the period ended June 30, 2020, compared to $2,760~~ for the same period in ~~2019.~~2020. The average balance of tax-exempt securities increased ~~$34,884~~$9,027 to $208,260 for the period ended June 30, 2021 as compared to $199,233 for the period ended June 30, ~~2020 as compared to $164,349 for the period ended June 30, 2019.~~2020. The yield on tax-exempt securities decreased 2313 basis points to 4.08% for 2021, compared to 4.21% for ~~2020, compared to 4.44% for 2019.~~2020.

Interest on interest-bearing deposits in other banks decreased ~~$217~~$233 to ~~$472~~$239 for the period ended June 30, ~~2020,~~2021, compared to ~~$689~~$472 for the same period in ~~2019.~~2020. The average balance of interest-bearing deposits in other banks increased ~~$86,207~~$285,957 to $430,705 for the period ended June 30, 2021 as compared to $144,748 for the period ended June 30, ~~2020 as compared to $58,541 for the period ended June 30, 2019.~~2020. The yield on interest-bearing deposits in other banks decreased ~~171~~55 basis points to 0.11% for 2021, compared to 0.66% for ~~2020, compared to 2.37% for 2019.~~2020.

Interest expense decreased ~~$654~~$1,841, or ~~10.8%~~34.1%, to ~~$5,396~~$3,555 for the period ended June 30, ~~2020,~~2021, compared with ~~$6,050~~$5,396 for the same period in ~~2019.~~2020. The change in interest expense can be attributed to an increase in the average balance of interest-bearing liabilities accompanied by a decrease in rate. For the period ended June 30, ~~2020,~~2021, the average balance of interest-bearing liabilities increased ~~$206,855~~$225,627 to ~~$1,502,552,~~$1,728,179, as compared to ~~$1,295,697~~$1,502,552 for the period ended June 30, ~~2019.~~2020. Interest incurred on deposits decreased by ~~$80~~$1,391 to ~~$3,787~~$2,396 for the period ended June 30, ~~2020,~~2021, compared to ~~$3,867~~$3,787 for the same period in ~~2019.~~2020. Although the average balance of interest-bearing deposits increased by ~~$118,385~~$310,359 for the period ended June 30, ~~2020~~2021 as compared to the same period in ~~2019,~~2020, deposit expense decreased due to a decrease in the rate paid on demand and savings accounts from ~~0.34% in 2019 to~~ 0.22% in ~~2020.~~2020 to 0.11% in 2021. The rate paid on time deposits ~~increased~~decreased from ~~1.82%~~1.93% to ~~1.93%~~1.25% in ~~2020.~~2021. Interest expense incurred on FHLB advances and subordinated debentures decreased ~~26.8%~~28.0% from ~~2019.~~2020. The average balance on FHLB balances ~~increased $23,509~~decreased $27,993 as a result of the prepayment of a long-term advance for the period ended June 30, ~~2020~~2021 as compared to the same period in ~~2019,~~2020, while the rate paid decreased 988 basis points. In addition, the rate paid on subordinated debentures decreased ~~125~~131 basis points for the period ended June 30, ~~2020~~2021 as compared to the same period in ~~2019.~~2020. The average balance of other borrowings ~~increased~~decreased $62,410 for the period ended June 30, ~~2020~~2021 as compared to the same period in ~~2019~~2020 as a result of the Company’s ~~borrowings under~~repayment of the Paycheck Protection Program Liquidity ~~Facility to fund loans.~~Facility.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table presents the condensed average balance sheets for the six months ended June 30, ~~2020~~2021 and ~~2019.~~2020. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a 21% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.

	Six Months Ended June 30,																Six Months Ended June 30,
	2020								2019								2021								2020
Assets:	Average balance			Interest		Yield/ rate*			Average balance			Interest		Yield/ rate*			Average balance			Interest		Yield/ rate*			Average balance			Interest		Yield/ rate*
Interest-earning assets:
Loans, including fees	$	1,849,327		$	43,286		4.71	%	$	1,573,924		$	42,619		5.46	%
Loans, including fees**																	$	2,062,061		$	45,436		4.44	%	$	1,849,327		$	43,286		4.71	%
Taxable securities		186,780			2,775		3.10	%		205,285			3,442		3.41	%		189,729			2,505		2.75	%		186,780			2,775		3.10	%
Tax-exempt securities		199,233			3,053		4.21	%		164,349			2,760		4.44	%		208,260			3,044		4.08	%		199,233			3,053		4.21	%
Interest-bearing deposits in other banks		144,748			472		0.66	%		58,541			689		2.37	%		430,705			239		0.11	%		144,748			472		0.66	%
Total interest-earning assets	$	2,380,088		$	49,586		4.30	%	$	2,002,099		$	49,510		5.08	%	$	2,890,755		$	51,224		3.66	%	$	2,380,088		$	49,586		4.30	%
Noninterest-earning assets:
Cash and due from financial institutions		126,655								65,567								39,777								126,655
Premises and equipment, net		22,636								21,872								22,442								22,636
Accrued interest receivable		8,031								6,931								8,515								8,031
Intangible assets		84,994								85,990								84,749								84,994
Other assets		36,229								22,394								37,157								36,229
Bank owned life insurance		45,210								43,987								46,185								45,210
Less allowance for loan losses		(16,013	)							(13,885	)							(26,087	)							(16,013	)
Total Assets	$	2,687,830							$	2,234,955							$	3,103,493							$	2,687,830
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	961,285		$	1,044		0.22	%	$	857,232		$	1,429		0.34	%	$	1,280,030		$	677		0.11	%	$	961,285		$	1,044		0.22	%
Time		285,179			2,743		1.93	%		270,847			2,438		1.82	%		276,793			1,719		1.25	%		285,179			2,743		1.93	%
Short-term FHLB advance		16,391			134		1.64	%		102,108			1,270		2.51	%		—			—		—			16,391			134		1.64	%
Long-term FHLB advance		125,000			894		1.44	%		15,774			159		2.03	%		113,398			774		1.38	%		125,000			894		1.44	%
Other borrowings		62,410			4		0.01	%		—			—		—			—			—		—			62,410			4		0.01	%
Federal funds purchased		305			3		1.98	%		—			—		—			—			—		—			305			3		1.98	%
Subordinated debentures		29,427			563		3.85	%		29,427			744		5.10	%		29,427			371		2.54	%		29,427			563		3.85	%
Repurchase Agreements		22,555			11		0.10	%		20,309			10		0.10	%		28,531			14		0.10	%		22,555			11		0.10	%
Total interest-bearing liabilities	$	1,502,552		$	5,396		0.72	%	$	1,295,697		$	6,050		0.94	%	$	1,728,179		$	3,555		0.41	%	$	1,502,552		$	5,396		0.72	%
Noninterest-bearing deposits		795,215								610,265								986,185								795,215
Other liabilities		58,500								20,408								39,690								58,500
Shareholders’ Equity		331,563								308,585								349,439								331,563
Total Liabilities and Shareholders’ Equity	$	2,687,830							$	2,234,955							$	3,103,493							$	2,687,830
Net interest income and interest rate spread				$	44,190		3.58	%				$	43,460		4.14	%				$	47,669		3.25	%				$	44,190		3.58	%
Net interest margin							3.84	%							4.47	%							3.41	%							3.84	%

*—Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was ~~$819~~$814 and ~~$741~~$819 for the periods ended June 30, ~~202~~2021 and ~~2019,~~2020, respectively.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the six months ended June 30, ~~2020~~2021 and ~~2019.~~2020. The table is presented on a fully tax-equivalent basis.

(1)The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate.

The Company provides for loan losses through regular provisions to the allowance for loan losses. Provisions for loan losses totaled ~~$5,612~~$830 and $0$5,612 during the periods ended June ~~30, 2020~~31, 2021 and ~~2019.~~2020. The ~~increase~~decrease in the provision in the second quarter of 2021 was due to ~~an increase~~the stability of our metrics coupled with the stabilization and, in ~~the bank’s qualitative factors, primarily changes in~~some cases, improvement of international, national, regional and local economic conditions ~~related to~~that were adversely impacted by the 2020 economic shutdown ~~driven by~~and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations in the first six months of 2021 have created some level of optimism in the business community, we remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry. Economic impacts related to the COVID-19 pandemic ~~include~~since March 2020 have included the loss of revenue ~~being experience~~experienced by our business clients, disruption of supply chains, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large number of customers requesting payment relief. While some of the pressures have eased, ongoing supply chain and staffing challenges, as well as the threat of inflation remain. Our Commercial and Commercial Real Estate ~~and Consumer~~ portfolios have been, and are expected to continue to be impacted the most.

Noninterest income for the six-month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 are as follows:

	Six months ended June 30,												Six months ended June 30,
	2020			2019			$ Change			% Change			2021		2020			$ Change			% Change
Service charges	$	2,398		$	3,008		$	(610	)		-20.3	%	$	2,573	$	2,398		$	175			7.3	%
Net gain (loss) on sale of securities		—			14			(14	)		-100.0	%
Net gain on equity securities		(146	)		(31	)		(115	)		371.0	%
Net gain on sale of securities														1,783		—			1,783			0.0	%
Net gain (loss) on equity securities														141		(146	)		287			-196.6	%
Net gain on sale of loans		3,088			886			2,202			248.5	%		4,963		3,088			1,875			60.7	%
ATM/Interchange fees		2,043			1,857			186			10.0	%		2,620		2,043			577			28.2	%
Wealth management fees		1,910			1,758			152			8.6	%		2,334		1,910			424			22.2	%
Bank owned life insurance		490			499			(9	)		-1.8	%		491		490			1			0.2	%
Tax refund processing fees		2,375			2,750			(375	)		-13.6	%		2,375		2,375			—			0.0	%
Swap fees		1,102			88			1,014			1152.3	%		94		1,102			(1,008	)		-91.5	%
Other		470			559			(89	)		-15.9	%		841		470			371			78.9	%
Total noninterest income	$	13,730		$	11,388		$	2,342			20.6	%	$	18,215	$	13,730		$	4,485			32.7	%

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Noninterest income for the six months ended June ~~30, 2020~~31, 2021 was ~~$13,730,~~$18,215, an increase of ~~$2,342~~$4,485, or ~~20.6%~~32.7%, from ~~$11,388~~$13,730 for the same period of ~~2019.~~2020. The increase was primary due to increases in net gain (loss) on equity securities of $287, net gain on sale of securities of $1,783, net gain on sale of loans of ~~$2,202,~~$1,875, ATM/Interchange fees of ~~$186 and swap~~$577, wealth management fees of ~~$1,014~~$424 and other income of $371, which was offset by a decrease in ~~service charges of $610, tax refund processing~~swap fees of ~~$375, other income~~$1,008. Net gain on sale of ~~$89 and an increase in net loss on equity~~ securities increased as a result of ~~$115.~~the sale of Visa Class B shares. Net gain (loss) on equity securities ~~decreased~~increased as a result of market value ~~decreases.~~increases. Net gain on sale of loans increased primarily as a result of an increase in volume of loans sold. During the six-months ended June 30, 2020, ~~658~~752 loans were sold, totaling ~~$126,828.~~$147,841. During the six-months ended June 30, ~~2019, 251~~2020, 658 loans were sold, totaling ~~$44,441.~~$126,828. ATM/Interchange fees increased as a result of increased transaction fees and MasterCard fees. Wealth management fees increased primarily as a result of an increase in trust and brokerage fees of $343 and $81, respectively. Trust income increased as a result of new accounts and market conditions while brokerage income has increased due to volume of business. Swap fees ~~increased~~decreased due to the volume of swaps performed during the six-months ended June 30, ~~2020~~2021 as compared to the same period of ~~2019. Service charges decreased~~2020. Other income increased due to ~~Civista waiving $93 of service~~increases in wire transfer fees, ~~on deposits accounts related to the COVID-19 pandemic. In addition, overdraft fees have decreased during the period. Other income decreased due to~~ the amortization of mortgage servicing rights, ~~as a result~~merchant credit card fees and gains on the sale of ~~higher loan payoffs.~~OREO properties.

Additionally, the Company processes state and federal income tax refund payments for customers of third-party income tax preparation vendors for which we receive a fee for processing the refund payments. Tax refund processing fees were $2,375 for each of the ~~period~~six months ended June 30, ~~2019, a decrease of $375 from $2,750 for the same period of 2019. The decrease is the result of a decrease in volume of transactions processed during the period.~~2021 and 2020. This fee income is seasonal in nature, the majority of which is earned in the first quarter of the year.

Noninterest expense for the six-month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 are as follows:

	Six months ended June 30,										Six months ended June 30,
	2020		2019		$ Change			% Change			2021		2020		$ Change			% Change
Compensation expense	$	21,468	$	19,353	$	2,115			10.9	%	$	23,188	$	21,468	$	1,720			8.0	%
Net occupancy expense		2,040		2,004		36			1.8	%		2,231		2,040		191			9.4	%
Equipment expense		1,013		943		70			7.4	%		896		1,013		(117	)		-11.5	%
Contracted data processing		925		866		59			6.8	%		933		925		8			0.9	%
FDIC assessment		243		298		(55	)		-18.5	%		582		243		339			139.5	%
State franchise tax		967		899		68			7.6	%		1,096		967		129			13.3	%
Professional services		1,620		1,395		225			16.1	%		1,479		1,620		(141	)		-8.7	%
Amortization of intangible assets		459		475		(16	)		-3.4	%		445		459		(14	)		-3.1	%
ATM/Interchange expense		778		924		(146	)		-15.8	%		1,249		778		471			60.5	%
Marketing		695		707		(12	)		-1.7	%		641		695		(54	)		-7.8	%
Software maintenance expense		844		705		139			19.7	%		1,053		844		209			24.8	%
Other operating expenses		4,918		4,519		399			8.8	%		8,064		4,918		3,146			64.0	%
Total noninterest expense	$	35,970	$	33,088	$	2,882			8.7	%	$	41,857	$	35,970	$	5,887			16.4	%

Noninterest expense for the six months ended June 30, ~~2020~~2021 was ~~$35,970,~~$41,857, an increase of ~~$2,882,~~$5,887, or ~~8.7%~~16.4%, from ~~$33,088~~$35,970 reported for the same period of ~~2019.~~2020. The primary reasons for the increase were increases in compensation expenses of ~~$2,115, professional services costs~~$1,720, FDIC assessments of ~~$225,~~$339, state franchise tax of $129, ATM/Interchange expense of $471, software maintenance expense of ~~$139~~$209 and other operating expenses of ~~$399, offset by decreases in FDIC assessments of $55 and ATM/Interchange expense of $146.~~$3,146. The increase in compensation expense was due to increased payroll, overtime pay, 401k expenses, payroll taxes ~~employee insurance~~ and commission and incentive based costs. ~~The year-to-date average full time equivalent (FTE) employees were 454.2 at June 30, 2020, an increase of 20.9 FTEs over 2019, which increased payroll and payroll related expenses.~~ Payroll and payroll related expenses ~~also~~ increased due to annual pay increases and increases in commission based costs are ~~the~~a result of increased loan activity. The year-over-year ~~decrease~~increase in FDIC assessments was attributable to ~~the remaining~~ small bank assessment credits ~~the bank carried over into 2020 and~~ applied to ~~its first quarter assessment.~~the 2020 assessments. The state franchise tax increase ~~in professional services costs~~ is related to $172 of additional taxes paid on the Company’s 2019 franchise tax return as a result of ~~increased consulting services to implement cost savings and customer services and increased recruitment costs.~~findings from a State of Ohio audit. The ~~decrease~~increase in ATM/Interchange expense is primarily due to increased transaction fees and a settlement received in the second quarter of ~~2020 and savings realized by a vendor change.~~2020. The increase in software maintenance expense is due to a general increase in legacy software maintenance contracts and new maintenance contracts. The increase in other operating expense is primarily due to ~~increases in software depreciation, amortization~~the prepayment expense of ~~low income housing investments, other loan expense and MSR valuation expense, employee education and training, ATM/debit card losses and communication expense,~~$3,717 related to the early payoff of an FHLB long-term advance, offset by ~~decreases in travel and lodging and meals.~~

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Income tax expense for the six months ended June 30, ~~2020~~2021 totaled ~~$2,001, down $1,429~~$3,275, up $1,274 compared to the same period in ~~2019.~~2020. The effective tax rates for the six-month periods ended June 30, 2021 and 2020 were 14.1% and ~~2019 were 12.2% and 15.8%~~12.3%, respectively. The difference between the statutory federal income tax rate and the Company’s effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low income housing tax credits and bank owned life insurance income. The ~~decrease~~increase in the effective tax rate is due to ~~lower~~higher taxable income for the six-months ended June 30, ~~2020,~~2021, as compared to the same period in ~~2019.~~2020.

Shareholders’ equity totaled ~~$336,613~~$352,413 at June 30, ~~2020~~2021 compared to ~~$330,126~~$350,108 at December 31, ~~2019. The Company repurchased common shares during the period, which totaled $11,450. The increase in shareholders’~~2020. Shareholders’ equity was ~~also~~ impacted by net income of ~~$14,337,~~$19,922, a ~~$114~~$129 net decrease in the Company’s pension liability, which was offset by and ~~an increase~~a decrease in the fair value of securities available for sale, net of tax, of ~~$6,666, which was partially offset by~~$3,055, dividends on common stock of ~~$3,599.~~$3,792 and the Company’s repurchase of common shares during the period, which totaled $11,355.

All of the Company’s capital ratios exceeded the regulatory minimum guidelines as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 as identified in the following table:

	Total Risk Based Capital			Tier I Risk Based Capital			CET1 Risk Based Capital			Leverage Ratio			Total Risk Based Capital			Tier I Risk Based Capital			CET1 Risk Based Capital			Leverage Ratio
Company Ratios—June 30, 2020		14.0	%		13.0	%		11.6	%		10.4	%
Company Ratios—December 31, 2019		16.1	%		15.3	%		13.6	%		12.3	%
Company Ratios—June 30, 2021														15.9	%		14.6	%		13.2	%		9.9	%
Company Ratios—December 31, 2020														16.0	%		14.7	%		13.2	%		10.8	%
For Capital Adequacy Purposes		8.0	%		6.0	%		4.5	%		4.0	%		8.0	%		6.0	%		4.5	%		4.0	%
To Be Well Capitalized Under Prompt
Corrective Action Provisions		10.0	%		8.0	%		6.5	%		5.0	%		10.0	%		8.0	%		6.5	%		5.0	%

The Company maintains a conservative liquidity position. All securities, with the exception of equity securities, are classified as available for sale. Securities, with maturities of one year or less, totaled ~~$8,252,~~$12,246, or ~~2.2%~~2.7% of the total security portfolio at June 30, ~~2020.~~2021. The available for sale portfolio helps to provide the Company with the ability to meet its funding needs. The Condensed Consolidated Statements of Cash Flows (Unaudited) contained in the ~~consolidated financial statements~~Consolidated Financial Statements detail the Company’s cash flows from operating activities resulting from net earnings.

As reported in the Condensed Consolidated Statements of Cash Flows (Unaudited), our cash flows are classified for financial reporting purposes as operating, investing or financing cash flows. Net cash provided by operating activities was ~~$11,590~~$19,996 and ~~$20,369~~$11,590 for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The primary additions to cash from operating activities are from proceeds from the sale of loans. ~~In addition, in 2020, additions from the change in the provision of loan losses and net deferred loan fees of $5,612 and $8,816, respectively added to cash from operating activities.~~ The primary use of cash from operating activities is from loans originated for sale. ~~The increase in originations and sales of loans held for sale is due to an increase in volume due to refinances as rates have declined.~~ Net cash used ~~for~~by investing activities was ~~$326,182~~$58,661 and ~~$38,740~~$326,182 for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, principally reflecting our loan and investment security activities. Cash provided by and used for deposits, borrowings and purchase of treasury shares comprised most of our financing activities, which resulted in net cash provided by of ~~$462,577~~$144,449 and ~~$25,431~~$462,577 for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Future loan demand of Civista may be funded by increases in deposit accounts, proceeds from payments on existing loans, the maturity of securities, and the sale of securities classified as available for sale. Additional sources of funds may also come from borrowing in the Federal Funds market and/or borrowing from the FHLB. Through its correspondent banks, Civista maintains federal funds borrowing lines totaling $50,000. As of June 30, 2020, Civista had total credit availability with the FHLB of ~~$603,042~~$602,978 with standby letters of credit totaling ~~$20,000~~$23,300 and a remaining borrowing capacity of approximately ~~$458,042.~~$504,678. In addition, CBI maintains a credit line totaling $10,000.

The Company’s primary market risk exposure is interest-rate risk and, to a lesser extent, liquidity risk. All of the Company’s transactions are denominated in U.S. dollars with no specific foreign exchange exposure.

Interest-rate risk is the exposure of a banking organization’s financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value. However, excessive levels of interest-rate risk can pose a significant threat to the Company’s earnings and capital base. Accordingly, effective risk management that maintains interest-rate risk at prudent levels is essential to the Company’s safety and soundness.

Evaluating a financial institution’s exposure to changes in interest rates includes assessing both the adequacy of the management process used to control interest-rate risk and the organization’s quantitative level of exposure. When assessing the interest-rate risk management process, the Company seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest-rate risk at prudent levels with consistency and continuity. Evaluating the quantitative level of interest rate risk exposure requires the Company to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity and, where appropriate, asset quality.

The Federal Reserve Board, together with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, ~~adopted a Joint Agency Policy Statement on interest-rate risk, effective June 26, 1996. The~~issue policy ~~statement provides~~statements and guidance ~~to examiners and bankers~~ on sound practices for managing interest-rate risk, which ~~will~~ form the basis for ongoing evaluation of the adequacy of interest-rate risk management at supervised institutions. The ~~policy statement~~guidance also outlines fundamental elements of sound management ~~that have been identified in prior Federal Reserve guidance~~ and discusses the importance of these elements in the context of managing interest-rate risk. ~~Specifically, the~~The guidance emphasizes the need for active board of director and senior management oversight and a comprehensive risk-management process that effectively identifies, measures, and controls interest-rate risk.

Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institution’s assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institution’s interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution’s profits could decrease on existing assets because the institution will have either lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment.

Several techniques may be used by an institution to minimize interest-rate risk. One approach used by the Company is to periodically analyze its assets and liabilities and make future financing and investment decisions based on payment streams, interest rates, contractual maturities, and estimated sensitivity to actual or potential changes in market interest rates. Such activities fall under the broad definition of asset/liability management. The Company’s primary asset/liability management technique is the measurement of the Company’s asset/liability gap, that is, the difference between the cash flow amounts of interest sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year, or longer period, the institution is in an asset sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. If, alternatively, more liabilities than assets will reprice, the institution is in a liability sensitive position. Accordingly, net interest income would decline when rates rose and increase when rates fell. Also, these examples assume that interest rate changes for assets and liabilities are of the same magnitude, whereas actual interest rate changes generally differ in magnitude for assets and liabilities.

Several ways an institution can manage interest-rate risk include selling existing assets or repaying certain liabilities; matching repricing periods for new assets and liabilities, for example, by shortening terms of new loans or securities; and hedging existing assets, liabilities, or anticipated transactions. An institution might also invest in more complex financial instruments intended to hedge or otherwise change interest-rate risk. Interest rate swaps, futures contracts, options on futures, and other such derivative financial instruments often are used for this purpose. Because these instruments are sensitive to interest rate changes, they require management expertise to be effective. The Company has not purchased derivative financial instruments to hedge interest rate risk in the past and does not currently intend to purchase such instruments in the near future. Financial institutions are also subject to prepayment risk in falling rate environments. For example, mortgage loans and other financial assets may be prepaid by a debtor so that the debtor may refinance its obligations at new, lower rates. Prepayments of assets carrying higher rates reduce the Company’s interest income and overall asset yields. A large portion of an institution’s liabilities may be short-term or due on demand, while most of its assets may be invested in long-term loans or securities. Accordingly, the Company seeks to have in place sources of cash to meet short-term demands. These funds can be obtained by increasing deposits, borrowing, or selling assets. FHLB advances and wholesale borrowings may also be used as important sources of liquidity for the Company.

The following table provides information about the Company’s financial instruments that were sensitive to changes in interest rates as of December 31, ~~2019~~2020 and June 30, ~~2020,~~2021, based on certain prepayment and account decay assumptions that management believes are reasonable. The table shows the changes in the Company’s net portfolio value (in amount and percent) that would result from hypothetical interest rate increases of 200 basis points and 100 basis points and interest rate decreases of 100 basis points and 200 basis points at June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

The Company had derivative financial instruments as of December 31, ~~2019~~2020 and June 30, ~~2020.~~2021. The changes in fair value of the assets and liabilities of the underlying contracts offset each other. Expected maturity date values for interest-bearing core deposits were calculated based on estimates of the period over which the deposits would be outstanding. The Company’s borrowings were tabulated by contractual maturity dates and without regard to any conversion or repricing dates.

Net Portfolio Value	Net Portfolio Value																Net Portfolio Value
		June 30, 2020							December 31, 2019									June 30, 2021							December 31, 2020
Change in Rates		Dollar Amount		Dollar Change		Percent Change			Dollar Amount		Dollar Change			Percent Change				Dollar Amount		Dollar Change		Percent Change			Dollar Amount		Dollar Change		Percent Change
+200bp			483,152		71,705		17	%		449,843		31,596			8	%			509,917		32,307		7	%		515,754		44,930		10	%
+100bp			455,738		44,291		11	%		437,195		18,948			5	%			496,630		19,020		4	%		503,010		32,186		7	%
Base			411,447		—		—			418,247		—			—				477,610		—		—			470,824		—		—
-100bp			438,284		26,837		7	%		394,943		(23,304	)		-6	%			515,533		37,923		8	%		501,686		30,862		7	%
-200bp			472,406		60,959		15	%		416,878		(1,369	)		0	%			551,942		74,332		16	%		527,360		56,536		12	%

The change in net portfolio value from December 31, ~~2019~~2020 to June 30, ~~2020,~~2021, can be attributed to a couple of factors. ~~There was a nearly parallel drop in~~The yield curve has shifted up and steepened on the ~~yield curve~~short end from the end of the year, and both the volume and mix of assets and funding sources has changed. The volume of loans has increased, but the mix has shifted toward cash. Both the increase in loans and cash are primarily a result of PPP loans and the proceeds of those loans on deposit, respectively. ~~Similarly,~~Cash also increased as a result of the tax refund processing program, as it does each year in the first half of the year. The volume and mix of liabilities has shifted toward deposits and away from certificates of deposit and other borrowings. Deposits increased as a result of PPP loan proceeds on deposit and ~~other borrowings increased~~also as a result of ~~PPP funding acquired from~~ the ~~PPPLF.~~influx of cash due to the tax refund processing program. The mix shifts from the end of the year led to a ~~slight decrease~~small increase in the base net portfolio value. Generally, assets have shifted toward less volatile components while liabilities have shifted toward more volatile components. Combined, this led to ana small increase in volatility. Beyond the change in the base level of net portfolio value, projected movements in rates, up or down, would also lead to changes in market values. The change in the rates up scenarios for both the 100 and 200 basis point movements would lead to a larger decrease in the market value of liabilities than assets. Accordingly, we see an increase in the net portfolio value. For 100 and 200 basis point downward changes in rates, the market value of ~~liabilities~~assets would increase ~~more quickly~~faster than the market value of ~~assets,~~liabilities, leading to an increase in the net portfolio value.

Under the supervision and with the participation of our management, including our principal executive and our principal financial officers, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our principal executive and our principal financial officers concluded that our disclosure controls and procedures as of June 30, ~~2020,~~2021, were effective.

There have not been any changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~None~~In the ordinary course of their respective businesses, CBI or Civista or their respective properties may be named or otherwise subject as a plaintiff, defendant or other party to various pending and threatened legal proceedings and various actual and potential claims. In view of the inherent difficulty of predicting the outcome of such matters, CBI cannot state what the eventual outcome of any such matters will be. However, based on current knowledge and after consultation with legal counsel, management believes these proceedings will not have a material adverse effect on the consolidated financial position, results of operations or liquidity of CBI or Civista.

The following information updates our risk factors and should be read in conjunction with the risk factors disclosed in “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019, and in “Item 1A. Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020.~~2021.

As a participating lender in the SBA Paycheck Protection Program (“PPP”), Civista is subject to additional risks of litigation from its customers or other parties regarding Civista’s processing of loans for the PPP and risks that the SBA may not fund some or all PPP loan guaranties.CHANGES IN THE FEDERAL, STATE, OR LOCAL TAX LAWS MAY NEGATIVELY IMPACT OUR FINANCIAL PERFORMANCE.

On March ~~27, 2020,~~31, 2021, the President ~~Trump signed~~unveiled his infrastructure plan, which includes a proposal to increase the ~~CARES Act, which included~~federal corporate tax rate from 21% to 28% as part of a ~~loan program administered through~~package of tax reforms to help fund the ~~SBA referred to as the PPP. Under the PPP, small businesses and other entities and individuals can apply for loans from existing SBA lenders and other approved regulated lenders that enroll~~spending proposals in the ~~program, subject to numerous limitations and eligibility criteria. Civista has participated as a lender~~plan. The plan is in the ~~PPP. The PPP opened on April 3, 2020; however, because~~early stages of the ~~short timeframe between~~legislative process. If adopted as proposed, the ~~passing~~increase of the CARES Act and the opening of the PPP, there was some ambiguity in the laws, rules and guidance regarding the operation of the PPP, which exposes Civista to risks relating to noncompliance with the PPP.

Since the opening of the PPP, several other larger banks have been subject to litigation regarding the process and procedures that such banks used in processing applications for the PPP and claims related to agent fees. Civista may be exposed to the risk of similar litigation, from both customers and non-customers that approached Civista regarding PPP loans, regarding its process and procedures used in processing applications for the PPP, or litigation from agents with respect to agent fees. If any such litigation is filed against Civista and is not resolved in a favorable manner, it may result in significant financial liability orcorporate tax rate would adversely affect the Company’s reputation. In addition, litigation can be costly, regardless of outcome. Any financial liability, litigation costs or reputational damage caused by PPP-related litigation could have a material adverse impact on our ~~business, financial condition and results of operations.~~

Civista also has credit risk on PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which a PPP loan was originated, funded, or serviced by Civista, such as an issue with the eligibility of a borrower to receive a PPP loan, which may or may not be related to the ambiguity in the laws, rules and guidance regarding the operation of the PPP. In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which the PPP loan was originated, funded, or serviced by Civista, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from Civista.

~~THE OUTBREAK OF THE RECENT COVID-19, OR AN OUTBREAK OF ANOTHER HIGHLY INFECTIOUS OR CONTAGIOUS DISEASE, COULD ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~

Our business is dependent upon the willingness and ability of our customers to conduct banking and other financial transactions. The spread of a highly infectious or contagious disease, such as COVID-19. Could cause severe and prolonged disruptions to the economies in the U.S. and our market areas, which could in turn disrupt the business activities, and operations of our customers, as well as our business and operations. Since January 2020, the COVID-19 outbreak has caused significant disruption in the financial markets both globally and in the United States. The spread of COVID-19, or an outbreak of another highly infectious or contagious disease, including the time such outbreak takes to wane and the time it takes our markets to return to normal, may result in a significant decrease in business and/or cause our customers to be unable to meet existing payment or other obligations to us, particularly in the event of a significant spread of COVID-19 or an outbreak of an infectious disease in our market area. Although we maintain contingency plans for pandemic outbreaks, a spread of COVID-19, or an outbreak of another contagious disease could also negatively impact the availability of key personnel necessary to conduct our business activities. Such a spread or outbreak also negatively impacts the business and operations of third-party service providers who perform critical services for us. The spread of COVID-19, or another highly infectious or contagious disease, or the failure to contain such spread could have a material adverse effect to our business, financial condition, and results of operations.

On March 11. 2020, the World Health Organization announced that infections of COVID-19 had become pandemic, and on March 13, the U.S. President announced a national emergency relating to the disease. National, state and local authorities have recommended social distancing and imposed quarantine and isolation measures on large portions of the population, including mandatory stay-at-home orders and business closures. More recently, authorities have issued recommendations and mandates, including a state-wide mask mandate in Ohio, in connection with the reopening of businesses. These measures, while intended to protect human life, are expected to continue to have serious adverse impacts on the U.S. and our local economies of uncertain severity and duration. The effectiveness of economic stabilization efforts, including government payments to affected citizens and industries, is uncertain. Some economists are predicting the United States will soon enter a recession. Any of the foregoing factors, or other cascading effects of the pandemic that are not currently foreseeable, could materially affect our business, including our customers’ willingness to conduct banking transactions, their ability to pay on existing obligations and the availability of liquidity, which would negatively affect our financial condition and results of operations. The duration of any such impacts cannot be predicted.

~~OPERATIONAL IMPACTS FROM THE COVID-19 PANDEMIC COULD ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~.

In response to COVID-19, the Company has modified its business practices with a portion of employees working remotely from their homes to limit interruptions to operations as much as possible and to help reduce the risk of COVID-19 infecting entire departments. Reduced workforces which may be caused by, but not limited to, illness, quarantine, stay at home or other government mandates, or difficulties transitioning back to an in office environment, could result in an adverse impact to the Company’s operations and financial performance. Employees with health conditions putting them at higher risk of adverse effects from COVID-19 are working remotely. The Company is encouraging virtual meetings and conference calls in place of in-person meetings, including the annual shareholders meeting which was held via teleconference this year. Additionally, travel has been restricted. The Company is promoting social distancing, frequent hand washing and thorough disinfection of all surfaces. Civista’s financial service location lobbies have been closed except for advance appointments only. Branch drive-ups, call center, ATMs and online/mobile banking services continue to operate and are the preferred option of service. Even with the precautions undertaken, the continued spread or prolonged impact of COVID-19 could negatively impact the availability of key personnel or significant numbers of the Company's staff, who are necessary to conduct the Company' business.

Further, technology in employees’ homes may not be as robust as in the Company’s offices and could cause the networks, information systems, applications, and other tools available to employees to be more limited or less reliable than in our offices. The continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risk. These cybersecurity risks include greater phishing, malware, and other cybersecurity attacks, vulnerability to disruptions of the Company’s information technology infrastructure and telecommunications systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction or misuse of valuable information, and potential impairment of the Company’s ability to perform critical functions, including wiring funds, all of which could expose the Company to risks of data or financial loss, litigation and liability and could seriously disrupt operations and the operations of any impacted customers.

The Company also relies on many third parties in business operations, including appraisers of real property collateral, vendors that supply essential services such as loan servicers, providers of financial information, systems and analytical tools and providers of electronic payment and settlement systems, and local and federal government agencies, offices, and courthouses. In light of the developing measures responding to the pandemic, many of these entities may limit the availability and access of their services. For example, loan originations could be delayed due to the limited availability of real estate appraisers for the underlying collateral. Loan closings could be delayed due to reductions in available staff in recording offices or the closing of courthouses in certain counties, which slows the process for title work, and mortgage and UCC filings in those counties. If the third-party service providers continue to have limited capacities for a prolonged period or if additional limitations or potential disruptions in these services materialize, it may negatively affect the Company’s operations.

~~THE COMPANY MAY BE EXPOSED TO INCREASED INTEREST RATE RISK AS A RESULT OF THE COVID-19 PANDEMIC.~~

The Company’s net interest income, lending activities, deposits and profitability could be negatively affected by volatility in interest rates caused by uncertainties stemming from COVID-19. In March 2020, the Federal Reserve lowered the target range for the federal funds rate to a range from 0% to 0.25%, citing concerns about the impact of COVID-19 on markets and stress in the energy sector. A prolonged period of extremely volatile and unstable market conditions would likely increase the Company’s funding costs and negatively affect market risk mitigation strategies. Higher revenue volatility from changes in interest rates and spreads to benchmark indices could cause a loss of future net interest income and a decrease in the fair market values of the Company’s assets. Fluctuations in interest rates will impact both the level of income and expense recorded on most of the Company’s assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on the Company’s net income, results of operations ~~and financial condition. Low rates increase the risk~~ in the U.S. of a negative interest rate environment in which interest rates drop below zero, either broadly or for some types of instruments. Such an occurrence would likely further reduce the interest the Company earns on loans and other earning assets, while also likely requiring the Company to pay to maintain its deposits with the Federal Reserve. The Company’s systems may not be able to adequately handle a negative interest rate environment and not all variable rate instruments are designed for such a circumstance. The Company cannot predict the nature or timing of future ~~changes in monetary policies in response to the outbreak or the precise effects that they may have on the Company’s activities and financial results.~~periods.

During the second quarter of ~~2020,~~2021, the Company purchased common shares as follows:

On ~~December 17, 2019,~~April 21, 2021, the Company announced the implementation of a common share repurchase program which authorized the Company to ~~buy up to 672,000 shares~~repurchase a maximum aggregate value of $13,500,000 of its outstanding common shares. The expiration date of the common share repurchase program is ~~December 17, 2020. As~~April 19, 2022. A total of 265,703 common shares had been repurchased for an aggregate purchase price of $6,056,227 as of June 30, 2021 under the repurchase program. On May 4, 2020, the Company announced the implementation of a common share repurchase program which authorized the Company to repurchase a maximum aggregate value of $13,500,000 of its outstanding common shares. The plan expired on April 20, 2021. A total of 394,483 common shares had ~~purchased the full amount~~been repurchased for an aggregate purchase price of ~~672,000 shares authorized~~$7,212,622 under the repurchase program.

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.

Ohio		34-1558688
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

100 East Water Street, Sandusky, Ohio		44870
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common		CIVB		NASDAQ Capital Market

PART I.	Financial Information
Item 1.	Financial Statements:
	Consolidated Balance Sheets (Unaudited) June 30, ~~2020~~2021 and December 31, ~~2019~~2020	2
	Consolidated Statements of Operations (Unaudited) Three- and six-months ended June 30, ~~2020~~2021 and ~~2019~~2020	3
	Consolidated Statements of Comprehensive Income (Unaudited) Three- and six-months ended June 30, ~~2020~~2021 and ~~2019~~2020	4
	Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) Three- and six-months ended June 30, ~~2020~~2021 and ~~2019~~2020	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) Six months ended June 30, ~~2020~~2021 and ~~2019~~2020	7
	Notes to Interim Consolidated Financial Statements (Unaudited)	8-36
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~38-50~~37-50
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~51-52~~50-51
Item 4.	Controls and Procedures	5352

PART II.	Other Information	53
Item 1.	Legal Proceedings	5453
Item 1A.	Risk Factors	5453
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5653
Item 3.	Defaults Upon Senior Securities	5653
Item 4.	Mine Safety Disclosures	5653
Item 5.	Other Information	5653
Item 6.	Exhibits	5754
Signatures		5855

	Commercial & Agriculture		Commercial Real Estate- Owner Occupied		Commercial Real Estate- Non-Owner Occupied		Total
Administration and support	$	365	$	952	$	—	$	1,317
Agriculture		153		811		—		964
Construction		3,895		298		1,370		5,563
Education		74		2,363		—		2,437
Entertainment and recreation		3,102		26,638		5,151		34,891
Health care		3,226		11,523		—		14,749
Hotels		1,802		979		52,309		55,090
Information, finance and insurance		175		—		—		175
Manufacturing		6,192		2,068		—		8,260
Other services		4,490		9,319		3,421		17,230
Professional and management		250		394		—		644
Real estate		590		15,631		168,606		184,827
Restaurants		17,818		12,998		3,042		33,858
Retail		3,838		4,637		644		9,119
Transportation and warehousing		216		542		—		758
Wholesalers		1,500		2,678		—		4,178
Total	$	47,686	$	91,831	$	234,543	$	374,060

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

	Number of				Weighted Average
Type of Loan	Loans		Balance		Interest Rate
			(In thousands)
Commercial & Agriculture		229	$	47,686		4.56	%
Commercial Real Estate:
Owner Occupied		193		91,831		4.82	%
Non-Owner Occupied		179		234,543		4.47	%
Residential Real Estate		170		29,012		4.67	%
Real Estate Construction		18		26,296		4.39	%
Farm Real Estate		9		1,783		4.94	%
Consumer and Other		15		132		8.01	%
Total		813	$	431,283		4.57	%

For the six months ended June 30, 2020	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	2,219	$	(15	)	$	4	$	591		$	2,799
Commercial Real Estate:
Owner Occupied		2,541		(1	)		14		857			3,411
Non-Owner Occupied		6,584		—			41		2,544			9,169
Residential Real Estate		1,582		(97	)		79		870			2,434
Real Estate Construction		1,250		—			2		592			1,844
Farm Real Estate		344		—			7		10			361
Consumer and Other		247		(27	)		34		(7	)		247
Unallocated		—		—			—		155			155
Total	$	14,767	$	(140	)	$	181	$	5,612		$	20,420

For the six months ended June 30, 2019	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,747	$	(27	)	$	4	$	104		$	1,828
Commercial Real Estate:
Owner Occupied		1,962		(60	)		239		(132	)		2,009
Non-Owner Occupied		5,803		—			44		20			5,867
Residential Real Estate		1,531		(203	)		162		208			1,698
Real Estate Construction		1,046		(24	)		—		113			1,135
Farm Real Estate		397		—			2		(34	)		365
Consumer and Other		284		(81	)		51		(53	)		201
Unallocated		909		—			—		(226	)		683
Total	$	13,679	$	(395	)	$	502	$	—		$	13,786

	For the Six-Month Period Ended
	June 30, 2019
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial & Agriculture		—	$	—	$	—
Commercial Real Estate—Owner Occupied		—		—		—
Commercial Real Estate—Non-Owner Occupied		1		382		382
Residential Real Estate		—		—		—
Real Estate Construction		—		—		—
Farm Real Estate		—		—		—
Consumer and Other		—		—		—
Total Loan Modifications		1	$	382	$	382


Type of Loan	Number of Loans		Balance		Percent of Loans Outstanding
			(In thousands)
Commercial & Agriculture		13	$	4,222		0.21	%
Commercial Real Estate:
Owner Occupied		5		8,185		0.41	%
Non-Owner Occupied		15		37,544		1.86	%
Real Estate Construction		1		485		0.02	%
Total		34	$	50,436		2.50	%

	For the Three-Month Period Ended June 30, 2021			For the Three-Month Period Ended June 30, 2020
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	224		$	206
Acquisition of PCI loans		0			0
Accretion		(55	)		(7	)
Transfer from non-accretable to accretable		55			6
Balance at end of period	$	224		$	205

	For the Six-Month Period Ended June 30, 2021			For the Six-Month Period Ended June 30, 2020
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	225		$	255
Acquisition of PCI loans		0			0
Accretion		(56	)		(169	)
Transfer fron non-accretable to accretable		55			119
Balance at end of period	$	224		$	205

	For the Three-Month Period Ended							For the Three-Month Period Ended
	June 30, 2020(a)							June 30, 2019(a)
	Unrealized Gains and Losses on Available-for- Sale Securities		Defined Benefit Pension Items			Total		Unrealized Gains and Losses on Available-for- Sale Securities			Defined Benefit Pension Items			Total
Beginning balance	$	15,840	$	(5,952	)	$	9,888	$	7,200		$	(3,683	)	$	3,517
Other comprehensive income before reclassifications		3,709		—			3,709		4,984			—			4,984
Amounts reclassified from accumulated other comprehensive income (loss)		—		57			57		(8	)		116			108
Net current-period other comprehensive income		3,709		57			3,766		4,976			116			5,092
Ending balance	$	19,549	$	(5,895	)	$	13,654	$	12,176		$	(3,567	)	$	8,609

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a)
Details about Accumulated Other Comprehensive Income (Loss) Components	For the Three months ended June 30, 2020			For the Three months ended June 30, 2019			Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains on available-for-sale securities	$	—		$	10		Net gain (loss) on sale of securities
Tax effect		—			(2	)	Income tax expense
		—			8
Amortization of defined benefit pension items
Actuarial gains/(losses) (b)		(72	)		(147	)	Other operating expenses
Tax effect		15			31		Income tax expense
		(57	)		(116	)
Total reclassifications for the period	$	(57	)	$	(108	)

	2021						2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized intangible assets(1):
Core deposit intangibles	$	8,527	$	3,143	$	5,384	$	8,527	$	2,698	$	5,829
Total amortized intangible assets	$	8,527	$	3,143	$	5,384	$	8,527	$	2,698	$	5,829

	MSRs		Core deposit intangibles		Total
2021	$	67	$	445	$	512
2022		133		868		1,001
2023		132		841		973
2024		131		804		935
2025		131		708		839
Thereafter		2,151		1,718		3,869
	$	2,745	$	5,384	$	8,129

	2020			2019
Loan Servicing Rights:
Beginning of year	$	1,562		$	1,664
Additions		543			247
Disposals		—			—
Amortized to expense		(226	)		(247	)
Other charges		—			—
Change in valuation allowance		(162	)		(102	)
End of year	$	1,717		$	1,562


Valuation allowance:
Beginning of year	$	102		$	—
Additions expensed		162			102
Reductions credited to operations		—			—
Direct write-offs		—			—
End of year	$	264		$	102

	At June 30, 2020						At June 30, 2019
	Federal Funds Purchased			Short-term Borrowings			Federal Funds Purchased		Short-term Borrowings
Outstanding balance	$	—		$	—		$	—	$	121,300
Interest rate on balance		—			—			—		2.46	%
Maximum indebtedness		37,000			102,700			—		192,700
Average balance		305			16,391			—		102,108
Average rate paid		1.98	%		1.64	%		—		2.51	%

At June 30, 2020
Date of Award	Shares		Remaining Expense		Remaining Vesting Period (Years)
January 15, 2016		2,056	$	10		0.50
March 20, 2017		2,388		37		1.50
April 10, 2018		2,643		23		0.50
April 10, 2018		4,670		77		2.50
March 14, 2019		6,796		95		1.50
March 14, 2019		8,742		139		3.50
March 13, 2020		12,982		242		2.50
March 13, 2020		13,997		226		4.50
		54,274	$	849		2.80

	Fair Value Measurements at December 31, 2020 Using:
Assets:	(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:
Securities available for sale
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	21,693	$	—
Obligations of states and political subdivisions		—		229,012		—
Mortgage-backed securities in government sponsored entities		—		112,759		—
Total securities available for sale		—		363,464		—
Equity securities		—		886		—
Swap asset		—		21,700		—
Liabilities measured at fair value on a recurring basis:
Swap liability		—		21,764		—
Assets measured at fair value on a nonrecurring basis:
Mortgage Servicing Rights	$	—	$	—	$	2,246
Impaired loans		—		—		1
Other real estate owned		—		—		31

	Quantitative Information about Level 3 Fair Value Measurements
December 31, 2020	Fair Value		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1	Appraisal of collateral	Appraisal adjustments	0% - 30%	19%
				Holding period	23 months	23 months
Other real estate owned	$	31	Appraisal of collateral	Appraisal adjustments	10%	10%
Mortgage Servicing Rights	$	2,246	Discounted Cash Flow	Constant Prepayment Rate	12% - 50%	22%
				Discount Rate	12%	12%

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 (Units) that May Yet Be Purchased Under the Plans or Programs
April 1, 2020 - April 30, 2020		25,297	$	14.04		25,297		—
May 1, 2020 - May 31, 2020		—	$	—		—		—
June 1, 2020 - June 30, 2020		—	$	—		—		—
Total		25,297	$	14.04		25,297		—

Exhibit	Description	Location

3.1	Second Amended and Restated Articles of Incorporation of Civista Bancshares, Inc., as filed with the Ohio Secretary of State on November 15, 2018.	Filed as Exhibit 3.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K, filed on November 16, 2018 and incorporated herein by reference. (File No. 001-36192)

3.2	Amended and Restated Code of Regulations of Civista Bancshares, Inc. (adopted April 15, 2008)	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. (File No. 001-36192)

31.1	Rule 13a-14(a)/15-d-14(a) Certification of Chief Executive Officer.	Included herewith

31.2	Rule 13a-14(a)/15-d-14(a) Certification of Principal Accounting Officer.	Included herewith

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith

32.2	Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith

101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, ~~2020,~~2021, formatted in Inline Extensible Business Reporting Language: (i) Consolidated Balance Sheets (Unaudited) as of June 30, ~~2020~~2021 and December 31, ~~2019;~~2020; (ii) Consolidated Statements of Income (Unaudited) for the three- and ~~six- months~~six-months ended June 30, ~~2020~~2021 and ~~2019;~~2020; (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three- and ~~six- months~~six-months ended June 30, ~~2020~~2021 and ~~2019;~~2020; (iv) Consolidated Statement of Shareholders’ Equity (Unaudited) for the ~~three- and six- months~~three-and six-months ended June 30, ~~2020~~2021 and ~~2019;~~2020; (v) Condensed Consolidated Statement of Cash Flows (Unaudited) for the six months ended June 30, ~~2020~~2021 and ~~2019;~~2020; and (vi) Notes to Interim Consolidated Financial Statements (Unaudited).	Included herewith

104	Cover page formatted in Inline Extensible Business Reporting Language.	Included herewith


/s/ Dennis G. Shaffer		August ~~10, 2020~~9, 2021
Dennis G. Shaffer		Date
Chief Executive Officer and President


/s/ Todd A. Michel		August ~~10, 2020~~9, 2021
Todd A. Michel		Date
Senior Vice President, Controller