(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”~~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 November ~~4, 2021—15,025,972~~3, 2022—15,727,360 shares

	September 30, 2021						September 30, 2022
	(Unaudited)			December 31, 2020			(Unaudited)			December 31, 2021
ASSETS
Cash and due from financial institutions	$	246,165		$	128,222		$	40,914		$	253,459
Restricted cash		7,000			11,300			-			10,780
Cash and cash equivalents		253,165			139,522			40,914			264,239
Securities available for sale		498,149			363,464
Investments in time deposits								1,479			1,730
Securities available-for-sale								602,046			559,874
Equity securities		1,077			886			2,028			1,072
Loans held for sale		5,810			7,001			3,491			1,972
Loans, net of allowance of $26,568 and $25,028		1,978,246			2,032,474
Loans, net of allowance of $27,773 and $26,641								2,300,841			1,971,238
Other securities		17,011			20,537			18,578			17,011
Premises and equipment, net		22,716			22,580			30,168			22,445
Accrued interest receivable		7,728			9,421			9,175			7,385
Goodwill		76,851			76,851			101,652			76,851
Other intangible assets, net		7,738			8,075			11,554			7,581
Bank owned life insurance		46,728			45,976			53,291			46,641
Swap assets		12,858			21,700			18,448			11,072
Deferred taxes								25,118			980
Other assets		24,159			20,375			22,936			22,814
Total assets	$	2,952,236		$	2,768,862		$	3,241,719		$	3,012,905
LIABILITIES
Deposits
Noninterest-bearing	$	832,492		$	720,809		$	944,241		$	788,906
Interest-bearing		1,602,274			1,468,589			1,764,012			1,627,795
Total deposits		2,434,766			2,189,398			2,708,253			2,416,701
Short-term Federal Home Loan Bank advances								55,000			—
Securities sold under agreements to repurchase								20,155			25,495
Long-term Federal Home Loan Bank advances		75,000			125,000			6,723			75,000
Securities sold under agreements to repurchase		23,331			28,914
Subordinated debentures		29,427			29,427			103,778			103,735
Swap liabilities		12,858			21,764			18,448			11,072
Securities purchased payable								2,611			3,524
Tax refunds in process								2,709			549
Accrued expenses and other liabilities		28,404			24,251			21,440			21,617
Total liabilities		2,603,786			2,418,754			2,939,117			2,657,693
SHAREHOLDERS’ EQUITY
Common shares, no par value, 40,000,000 shares authorized, 17,711,815 shares issued at September 30, 2021 and 17,664,951 shares issued at December 31, 2020, including Treasury Shares		277,627			277,039
Common shares, no par value, 40,000,000 shares authorized, 18,731,167 shares issued at September 30, 2022 and 17,709,584 shares issued at December 31, 2021, including Treasury shares								299,515			277,741
Retained earnings		116,680			93,048			146,546			125,558
Treasury shares, 2,681,843 common shares at September 30, 2021 and 1,766,919 common shares at December 31, 2020, at cost		(55,155	)		(34,598	)
Accumulated other comprehensive income		9,298			14,619
Treasury shares, 3,495,622 common shares at September 30, 2022 and 2,755,384 common shares at December 31, 2021, at cost								(73,641	)		(56,907	)
Accumulated other comprehensive income (loss)								(69,818	)		8,820
Total shareholders’ equity		348,450			350,108			302,602			355,212
Total liabilities and shareholders’ equity	$	2,952,236		$	2,768,862		$	3,241,719		$	3,012,905

	Three months ended				Nine Months Ended					Three months ended					Nine Months Ended
	September 30,				September 30,					September 30,					September 30,
	2021		2020		2021		2020			2022			2021		2022			2021
Interest and dividend income
Loans, including fees	$	22,704	$	21,638	$	68,140	$	64,924		$	27,176		$	22,704	$	70,065		$	68,140
Taxable securities		1,423		1,325		3,928		4,100			2,936			1,423		6,431			3,928
Tax-exempt securities		1,555		1,536		4,599		4,589			1,998			1,555		5,669			4,599
Deposits in other banks		102		59		341		531			423			102		1,098			341
Total interest and dividend income		25,784		24,558		77,008		74,144			32,533			25,784		83,263			77,008
Interest expense
Deposits		970		1,631		3,366		5,418			936			970		2,351			3,366
Federal Home Loan Bank advances		194		452		968		1,480			181			194		564			968
Subordinated debentures		182		194		553		757			975			182		2,701			553
Securities sold under agreements to repurchase and other		5		275		19		293			2			5		8			19
Total interest expense		1,351		2,552		4,906		7,948			2,094			1,351		5,624			4,906
Net interest income		24,433		22,006		72,102		66,196			30,439			24,433		77,639			72,102
Provision for loan losses		—		2,250		830		7,862			300			—		1,000			830
Net interest income after provision for loan losses		24,433		19,756		71,272		58,334			30,139			24,433		76,639			71,272
Noninterest income
Service charges		1,519		1,414		4,092		3,812			1,885			1,519		5,004			4,092
Net gain on sale of securities		4		92		1,787		92			4			4		10			1,787
Net gain (loss) on equity securities		50		20		191		(126	)		(133	)		50		(44	)		191
Net gain on sale of loans		1,612		2,413		6,575		5,501			637			1,612		2,146			6,575
ATM/Interchange fees		1,330		1,183		3,950		3,226			1,394			1,330		3,990			3,950
Wealth management fees		1,236		1,006		3,570		2,916			1,208			1,236		3,713			3,570
Bank owned life insurance		261		243		752		733			255			261		732			752
Tax refund processing fees		—		—		2,375		2,375			—			—		2,375			2,375
Swap fees		41		158		135		1,260			—			41		—			135
Other		373		257		1,214		727			484			373		1,086			1,214
Total noninterest income		6,426		6,786		24,641		20,516			5,734			6,426		19,012			24,641
Noninterest expense
Compensation expense		11,390		10,595		34,578		32,063			12,484			11,390		36,654			34,578
Net occupancy expense		985		1,010		3,216		3,050			1,252			985		3,428			3,216
Equipment expense		444		494		1,340		1,507			637			444		1,694			1,340
Contracted data processing		429		415		1,362		1,340			846			429		1,899			1,362
FDIC assessment		247		288		829		531			170			247		568			829
State franchise tax		511		427		1,607		1,394			629			511		1,848			1,607
Professional services		776		669		2,255		2,289			1,335			776		3,593			2,255
Amortization of intangible assets		223		227		668		686			456			223		890			668
ATM/Interchange expense		594		538		1,843		1,316			604			594		1,659			1,843
Marketing		359		361		1,000		1,056			372			359		1,069			1,000
Software maintenance expense		819		506		1,872		1,350			942			819		2,440			1,872
Other operating expenses		2,677		2,197		10,741		7,115			2,828			2,474		7,450			10,132
Total noninterest expense		19,454		17,727		61,311		53,697			22,555			19,251		63,192			60,702
Income before taxes		11,405		8,815		34,602		25,153			13,318			11,608		32,459			35,211
Income tax expense		1,763		1,133		5,038		3,134			2,206			1,966		5,180			5,647
Net Income	$	9,642	$	7,682	$	29,564	$	22,019		$	11,112		$	9,642	$	27,279		$	29,564
Earnings per common share, basic	$	0.64	$	0.48	$	1.90	$	1.36		$	0.72		$	0.64	$	1.82		$	1.90
Earnings per common share, diluted	$	0.64	$	0.48	$	1.90	$	1.36		$	0.72		$	0.64	$	1.82		$	1.90
Weighted average common shares, basic		15,096,162		15,991,270		15,479,424		16,154,652			15,323,294			15,096,162		14,907,539			15,479,424
Weighted average common shares, diluted		15,096,162		15,991,270		15,479,424		16,154,652			15,323,294			15,096,162		14,907,539			15,479,424

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Net income	$	9,642		$	7,682		$	29,564		$	22,019		$	11,112		$	9,642		$	27,279		$	29,564
Other comprehensive income (loss):
Unrealized holding gains (losses) on available for sale securities		(3,107	)		948			(6,977	)		9,386
Unrealized holding losses on available-for-sale securities														(29,926	)		(3,107	)		(99,837	)		(6,977	)
Tax effect		652			(199	)		1,465			(1,971	)		6,300			652			21,043			1,465
Reclassification of gains recognized in net income		(4	)		(92	)		(2	)		(92	)		(4	)		(4	)		(10	)		(2	)
Tax effect		—			19			—			19			—			—			2			—
Pension liability adjustment		81			72			244			217			69			81			208			244
Tax effect		(17	)		(15	)		(51	)		(46	)		(15	)		(17	)		(44	)		(51	)
Total other comprehensive income (loss)		(2,395	)		733			(5,321	)		7,513
Comprehensive income	$	7,247		$	8,415		$	24,243		$	29,532
Total other comprehensive loss														(23,576	)		(2,395	)		(78,638	)		(5,321	)
Comprehensive income (loss)													$	(12,464	)	$	7,247		$	(51,359	)	$	24,243

																		Common Shares											Accumulated Other			Total
																		Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income (Loss)			Shareholders’ Equity
Balance, June 30, 2022																			14,537,433		$	278,240	$	137,592		$	(67,528	)	$	(46,242	)	$	302,062
Net Income																			—			—		11,112			—			—			11,112
Other comprehensive loss																			—			—		—			—			(23,576	)		(23,576	)
Stock-based compensation																			—			153		—			—			—			153
Stock issued for acquisition of Comunibanc Corp.																			984,723			21,122											21,122
Common stock dividends ($0.14 per share)																			—			—		(2,158	)		—			—			(2,158	)
Purchase of common stock																			(286,611	)		—		—			(6,113	)		—			(6,113	)
Balance, September 30, 2022																			15,235,545		$	299,515	$	146,546		$	(73,641	)	$	(69,818	)	$	302,602

	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, June 30, 2021		15,434,592		$	277,495	$	109,178		$	(45,953	)	$	11,693		$	352,413			15,434,592		$	277,495	$	109,178		$	(45,953	)	$	11,693		$	352,413
Net Income		—			—		9,642			—			—			9,642			—			—		9,642			—			—			9,642
Other comprehensive income		—			—		—			—			(2,395	)		(2,395	)
Other comprehensive loss																			—			—		—			—			(2,395	)		(2,395	)
Stock-based compensation		—			132		—			—			—			132			—			132		—			—			—			132
Common stock dividends ($0.14 per share)		—			—		(2,140	)		—			—			(2,140	)		—			—		(2,140	)		—			—			(2,140	)
Purchase of common stock		(404,620	)		—		—			(9,202	)		—			(9,202	)		(404,620	)		—		—			(9,202	)		—			(9,202	)
Balance, September 30, 2021		15,029,972		$	277,627	$	116,680		$	(55,155	)	$	9,298		$	348,450			15,029,972		$	277,627	$	116,680		$	(55,155	)	$	9,298		$	348,450

	Common Shares											Accumulated Other			Total
	Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income			Shareholders’ Equity
Balance, June 30, 2020		16,052,979		$	276,841	$	78,712		$	(32,594	)	$	13,654		$	336,613
Net Income		—			—		7,682			—			—			7,682
Other comprehensive income		—			—		—			—			733			733
Stock-based compensation		—			99		—			—			—			99
Common stock dividends ($0.11 per share)		—			—		(1,766	)		—			—			(1,766	)
Purchase of common stock		(107,500	)		—		—			(1,306	)		—			(1,306	)
Balance, September 30, 2020		15,945,479		$	276,940	$	84,628		$	(33,900	)	$	14,387		$	342,055

																		Common Shares											Accumulated Other			Total
																		Outstanding Shares			Amount		Retained Earnings			Treasury Shares			Comprehensive Income (Loss)			Shareholders’ Equity
Balance, December 31, 2021																			14,954,200		$	277,741	$	125,558		$	(56,907	)	$	8,820		$	355,212
Net Income																			—			—		27,279			—			—			27,279
Other comprehensive loss																			—			—		—			—			(78,638	)		(78,638	)
Stock-based compensation																			36,860			652		—			—			—			652
Stock issued for acquisition of Comunibanc Corp.																			984,723			21,122											21,122
Common stock dividends ($0.42 per share)																			—			—		(6,291	)		—			—			(6,291	)
Purchase of common stock																			(740,238	)		—		—			(16,734	)		—			(16,734	)
Balance, September 30, 2022																			15,235,545		$	299,515	$	146,546		$	(73,641	)	$	(69,818	)	$	302,602

	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, 2020		15,898,032		$	277,039	$	93,048		$	(34,598	)	$	14,619		$	350,108			15,898,032		$	277,039	$	93,048		$	(34,598	)	$	14,619		$	350,108
Net Income		—			—		29,564			—			—			29,564			—			—		29,564			—			—			29,564
Other comprehensive loss		—			—		—			—			(5,321	)		(5,321	)		—			—		—			—			(5,321	)		(5,321	)
Stock-based compensation		46,864			588		—			—			—			588			46,864			588		—			—			—			588
Common stock dividends ($0.38 per share)		—			—		(5,932	)		—			—			(5,932	)		—			—		(5,932	)		—			—			(5,932	)
Purchase of common stock		(914,924	)		—		—			(20,557	)		—			(20,557	)		(914,924	)		—		—			(20,557	)		—			(20,557	)
Balance, September 30, 2021		15,029,972		$	277,627	$	116,680		$	(55,155	)	$	9,298		$	348,450			15,029,972		$	277,627	$	116,680		$	(55,155	)	$	9,298		$	348,450

	Common Shares											Accumulated Other			Total
	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
Net Income		—			—		22,019			—			—			22,019
Other comprehensive income		—			—		—			—			7,513			7,513
Stock-based compensation		41,245			518		—			—			—			518
Common stock dividends ($0.33 per share)		—			—		(5,365	)		—			—			(5,365	)
Purchase of common stock		(783,308	)		—		—			(12,756	)		—			(12,756	)
Balance, September 30, 2020		15,945,479		$	276,940	$	84,628		$	(33,900	)	$	14,387		$	342,055

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2022			2021
Net cash from operating activities	$	34,295		$	25,301
Net cash provided by operating activities							$	27,421		$	34,295
Cash flows used for investing activities:
Maturities, paydowns and calls of investments in time deposits								245			—
Proceeds from sale of time certificates								742			—
Maturities, paydowns and calls of securities, available-for-sale		43,277			38,869			36,910			41,492
Purchases of securities, available-for-sale		(184,119	)		(39,144	)		(117,974	)		(184,119	)
Proceeds from sale of securities available for sale		—			1,455
Proceeds from sale of securities available-for-sale								57,322			—
Purchase of other securities		—			(257	)		(1,606	)		—
Redemption of other securities		3,526			—			1,592			3,526
Purchase of equity securities								(1,000	)		—
Sale of equity securities		—			247			—			1,785
Net loan repayments (originations)		54,926			(339,683	)
Net change in loans								(158,909	)		54,926
Proceeds from sale of other real estate owned properties		118			—			—			118
Proceeds from sale of premises and equipment		13			12			—			13
Acquisition, net of cash acquired								(21,870	)		—
Premises and equipment purchases		(1,689	)		(1,780	)		(3,208	)		(1,689	)
Net cash used for investing activities		(83,948	)		(340,281	)		(207,756	)		(83,948	)
Cash flows from financing activities:
Repayment of long-term FHLB advances		(50,000	)		—			(89,983	)		(50,000	)
Net change in short-term FHLB advances		—			(101,500	)		55,000			—
Proceeds from other borrowings		—			183,695
Increase in deposits		245,368			390,005			20,358			245,368
Increase (decrease) in securities sold under repurchase agreements		(5,583	)		7,139
Decrease in securities sold under repurchase agreements								(5,340	)		(5,583	)
Purchase of treasury shares		(20,557	)		(12,756	)		(16,734	)		(20,557	)
Common dividends paid		(5,932	)		(5,365	)		(6,291	)		(5,932	)
Net cash provided by financing activities		163,296			461,218
Increase in cash and cash equivalents		113,643			146,238
Net cash provided (used) by financing activities								(42,990	)		163,296
Increase (decrease) in cash and cash equivalents								(223,325	)		113,643
Cash and cash equivalents at beginning of period		139,522			48,535			264,239			139,522
Cash and cash equivalents at end of period	$	253,165		$	194,773		$	40,914		$	253,165
Cash paid during the period for:
Interest	$	4,995		$	7,733		$	4,969		$	4,995
Income taxes		4,690			4,595			3,737			4,690
Supplemental cash flow information:
Transfer of loans from portfolio to other real estate owned		26			—			—			26
Transfer of premises to held-for-sale		73			—			—			73
Change in fair value of swap asset		8,906			(15,809	)		(7,376	)		8,906
Change in fair value of swap liability		(8,906	)		15,809			7,376			(8,906	)
Securities purchased not settled		3,857			—			2,611			3,857
The Company purchased all of the capital stock of Comunibanc Corp. for $46,090 on July 1, 2022. In conjunction with the acquisition, liabilities were assumed as follows:
Fair value of assets acquired							$	340,649
Less: common stock issued								21,122
Cash paid for the capital stock								24,968
Liabilities assumed							$	294,559

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 CBI and its subsidiaries to insure against certain risks unique to 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~~third-party insurance agreement. Water St. was formed to hold properties repossessed by CBI subsidiaries. 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 September 30, ~~2021~~2022 and its results of operations and changes in cash flows for the periods ended September 30, ~~2021~~2022 and ~~2020~~2021 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 period ended September 30, ~~2021~~2022 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 ~~2020~~2021 annual report. The Company has consistently followed these policies in preparing this Form 10-Q.

Civista provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Franklin, Logan, Madison, Summit, Huron, Ottawa, Richland, Montgomery, Henry, Wood 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 $572,533, or 28.4% of total loans, as of September 30, 2021, and the other is to Lessors of Residential Buildings and Dwellings totaling $290,758, or 14.4% of total loans, as of September 30, 2021. These segments of the loan portfolio have been 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 financialFinancial 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.

~~In October 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-08,~~ ~~Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs,~~ which clarifies that, for each reporting period, an entity should reevaluate whether a callable debt security is within the scope of ASC 310-20-35-33. We adopted ASU 2020-08 effective January 1, 2021, which did not have a material impact on the Company’s Consolidated Financial Statements.

In June 2016, the ~~FASB~~Financial Accounting Standards Board (the “FASB”) issued ~~ASU~~Accounting Standards Update (“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~~were eligible to be smaller reporting companies as of November 15, 2019, 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~~has run parallel calculations and is finalizing ~~a method or methods of~~the methodology for adoption in time for the effective date.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): 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 SEC filers that were eligible to be smaller reporting companies as of November 15, 2019, 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 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~~were eligible to be smaller reporting companies as of November 15, 2019, 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~~were eligible to be smaller reporting companies as of November 15, 2019, 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, such as the Company, 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. The Company is working through this transition via a multi-disciplinary project team. We are still evaluating the impact the change from LIBOR 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~~available-for-sale securities and the related gross unrealized gains and losses recognized were as follows:

September 30, 2021	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2022										Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	53,247	$	186	$	(156	)	$	53,277	$	66,199	$	22	$	(5,677	)	$	60,544
Obligations of states and political subdivisions		240,179		17,086		(550	)		256,715		344,225		163		(46,581	)		297,807
Mortgage-backed securities in government sponsored entities		184,553		3,974		(370	)		188,157		272,950		17		(29,272	)		243,695
Total debt securities	$	477,979	$	21,246	$	(1,076	)	$	498,149	$	683,374	$	202	$	(81,530	)	$	602,046

December 31, 2020	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2021										Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	21,479	$	220	$	(6	)	$	21,693	$	48,390	$	30	$	(530	)	$	47,890
Obligations of states and political subdivisions		208,013		21,000		(1	)		229,012		281,247		17,696		(107	)		298,836
Mortgage-backed securities in government sponsored entities		106,824		5,963		(28	)		112,759		211,660		2,938		(1,450	)		213,148
Total debt securities	$	336,316	$	27,183	$	(35	)	$	363,464	$	541,297	$	20,664	$	(2,087	)	$	559,874

The amortized cost and fair value of securities at September 30, ~~2021,~~2022, 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	$	9,132	$	9,172	$	1,500	$	1,490
Due after one year through five years		31,533		31,732		47,323		43,934
Due after five years through ten years		45,283		47,236		72,996		66,744
Due after ten years		207,478		221,852		288,605		246,184
Mortgage-backed securities		184,553		188,157		272,950		243,694
Total securities available for sale	$	477,979	$	498,149
Total securities available-for-sale					$	683,374	$	602,046

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

Securities were pledged to secure public deposits, other deposits and liabilities as required by law. The carrying value of pledged securities was approximately $176,667 and $168,345 as of September 30, 2022 and December 31, 2021, respectively.

~~Proceeds from sales~~The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities ~~available for sale, gross realized gains and gross realized losses were as follows:~~

~~During the second quarter of 2021, the Company recorded~~have been in 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 $174,794 and $159,527 as of~~continuous unrealized loss position at September 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~

Securities with unrealized losses at September 30, 2021 and December 31, 2020 not recognized in income are 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:2021:

September 30, 2021	12 Months or less					More than 12 months					Total
September 30, 2022																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	$	23,327	$	(119	)	$	2,048	$	(37	)	$	25,375	$	(156	)	$	20,930	$	(880	)	$	39,122	$	(4,797	)	$	60,052	$	(5,677	)
Obligations of states and political subdivisions		36,646		(550	)		—		—			36,646		(550	)		266,106		(43,065	)		8,192		(3,516	)		274,298		(46,581	)
Mortgage-backed securities in gov’t sponsored entities		72,464		(282	)		3,521		(88	)		75,985		(370	)		159,647		(12,221	)		79,790		(17,051	)		239,437		(29,272	)
Total temporarily impaired	$	132,437	$	(951	)	$	5,569	$	(125	)	$	138,006	$	(1,076	)	$	446,683	$	(56,166	)	$	127,104	$	(25,364	)	$	573,787	$	(81,530	)

December 31, 2020	12 Months or less					More than 12 months					Total
December 31, 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	$	6,501	$	(5	)	$	126	$	(1	)	$	6,627	$	(6	)	$	41,432	$	(473	)	$	2,014	$	(57	)	$	43,446	$	(530	)
Obligations of states and political subdivisions		1,874		(1	)		—		—			1,874		(1	)		25,797		(107	)		—		—			25,797		(107	)
Mortgage-backed securities in gov’t sponsored entities		5,755		(28	)		—		—			5,755		(28	)		141,327		(1,343	)		3,123		(107	)		144,450		(1,450	)
Total temporarily impaired	$	14,130	$	(34	)	$	126	$	(1	)	$	14,256	$	(35	)	$	208,556	$	(1,923	)	$	5,137	$	(164	)	$	213,693	$	(2,087	)

At September 30, ~~2021,~~2022, there were a total of 60532 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 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- and nine-months ended September 30, 2022 and 2021, and the portion of unrealized gains and losses for the period that relates to equity investments held at September 30, 2022 and 2021:

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

	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
Commercial & Agriculture	$	276,741		$	409,876		$	227,387		$	246,502
Commercial Real Estate- Owner Occupied		292,725			278,413			364,468			295,452
Commercial Real Estate- Non-Owner Occupied		788,898			705,072			956,169			829,310
Residential Real Estate		424,553			442,588			531,164			430,060
Real Estate Construction		179,491			175,609			202,793			157,127
Farm Real Estate		30,147			33,102			25,636			28,419
Consumer and Other		12,259			12,842			20,997			11,009
Total loans		2,004,814			2,057,502			2,328,614			1,997,879
Allowance for loan losses		(26,568	)		(25,028	)		(27,773	)		(26,641	)
Net loans	$	1,978,246		$	2,032,474		$	2,300,841		$	1,971,238

Included in Commercial & Agriculture loans above are ~~$83,287~~$819 and ~~$217,295~~$43,209 of Paycheck Protection Program (“PPP”) loans as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

Included in total loans above are net deferred loan fees of ~~$4,444~~$1,741 and ~~$5,998~~$2,924 at September 30, ~~2021~~2022 and December 31, ~~2020, respectively. Included in~~2021, respectively, which included net deferred loan fees from PPP loans of $38 and $1,762 as of September 30, ~~2021~~2022 and December 31, ~~2020 are $3,340 and $5,194, respectively, of net deferred loans fees from PPP loans.~~2021, respectively.

In response to the 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 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, Civistatotal, we processed over ~~2,300~~3,600 PPP loans totaling ~~$268.3 million.~~

~~The Consolidated Appropriations Act 2021, was signed into law on December 27,~~$399.4 million during 2020 ~~to provide an additional funding~~and 2021. Of the total PPP loans we originated, $398.4 million had been forgiven or paid off as of ~~$284.5 billion under the PPP and the establishment~~September 30, 2022. We recognized $1.7 million of PPP ~~Second Draw Loans under~~fees in income during 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 existing PPP structure and the new PPP Second Draw Loans, and the PPP Second Draw Loan applications were released on January 11, 2021. The deadline (as extended) for submitting applications for PPP Second Draw Loans was May 31, 2021.

~~Funds provided under the Relief Act were 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 were as follows: (1) entities must have no more than 300 employees, (2) entities must have suffered a 25% of more reduction in gross revenues between comparable quarters in 2019 and 2020, (3) some entities previously excluded are eligible for 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 $2 million.

~~During the~~ nine months ~~ended~~of 2022, and $38 thousand of unearned PPP fees remained at September 30, ~~2021, Civista received SBA approval on, and funded, 1,340 PPP loans totaling $131,109 under the Relief Act.~~

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 ~~$26,568~~$27,773 adequate to cover loan losses inherent in the loan portfolio, at September 30, 2022. The following tables present, by portfolio segment, the changes in the allowance for loan losses for the three- and nine-months ended September 30, 2022 and 2021.

For the three months ended September 30, 2022, the Company provided $300 to the allowance for loan losses, as compared to a provision of $0 for the three months ended September 30, 2021. The increase in the provision in the third quarter of 2022, as compared to the third quarter of 2021, reflects the Company’s strong loan growth during the quarter. Our credit quality metrics remain stable despite the ongoing headwinds of the challenging international, national, regional and local economic conditions. While the direct impact of COVID-19 wains, we remain cautious due to increasing inflationary pressures. Criticized loans were reduced in the third quarter, primarily loans to borrowers in the hotel industry, due to improved occupancy. Economic impacts related to the COVID-19 pandemic have improved somewhat, but continued concerns linger due to the disruption of supply chains, workforce shortages, rising inflationary pressures and the prospects of recession.

During the three months ended September 30, 2022, 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 Commercial & Agriculture loan balances during the quarter. The result was represented as a decrease 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 increased loan balances. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans decreased due to a decrease in risk rated loans and lower loss rates, offset by an increase in general reserves required as a result of an increase in loan balances. This was represented as a decrease 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 increased loan balances. The result was represented by an increase in the provision. The allowance for Real Estate Construction loans increased due to an increase in loan balances. This 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 September 30, 2022.

~~September 30, 2021. The following tables present, by portfolio segment, the changes in the allowance for loan losses for the three- and nine-months ended September 30, 2021 and 2020.~~

For the three months ended September 30, 2021, the Company provided $0 to the allowance for loan ~~losses, as compared to~~losses. The lack of a provision ~~of $2,250~~ for ~~the three months ended September 30, 2020. The decrease in the provision in~~ the third quarter of 2021 ~~as compared to the third quarter of 2020,~~ was due to the stability of our credit quality 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 in 2021 have created some level of optimism in the business community, there remains uncertainty due to the continued concern over increased infections from the Delta variant of COVID. We remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry as well as the challenges businesses face in today’s environment. 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 September 30, 2021, 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 non-PPP loan balances. Commercial ~~and~~& Agriculture loan balances decreased during the quarter mainly ~~from Civista’s participation in~~as a result of the forgiveness and payoff of PPP ~~loan program.~~loans. 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 increased loan balances, offset by a decrease in classified loans balances. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans decreased due to decreases in classified loan balances and loss rates, offset by an increase in general reserves required as a result of an increase in loan balances. This was represented as a decrease in the provision. The allowance for Residential Real Estate loans increased due to an increase in loss rates for this type of loan. The result was represented by an increase in the provision. The allowance for Real Estate Construction loans increased due to an increase in loss rates on substandard classified loan balances, offset by lower loan balances. This 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 September 30, 2021.

For the three months ended September 30, 2020	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
For the nine months ended September 30, 2022													Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	2,799	$	—		$	1	$	(139	)	$	2,661	$	2,600	$	(22	)	$	16	$	135		$	2,729
Commercial Real Estate:
Owner Occupied		3,411		(147	)		6		685			3,955		4,464		—			42		420			4,926
Non-Owner Occupied		9,169		—			3		1,406			10,578		13,860		—			68		499			14,427
Residential Real Estate		2,434		(11	)		117		(83	)		2,457		2,597		(97	)		140		396			3,036
Real Estate Construction		1,844		—			1		500			2,345		1,810		—			—		203			2,013
Farm Real Estate		361		—			3		(4	)		360		287		—			5		(41	)		251
Consumer and Other		247		(27	)		21		(21	)		220		176		(45	)		25		(14	)		142
Unallocated		155		—			—		(94	)		61		847		—			—		(598	)		249
Total	$	20,420	$	(185	)	$	152	$	2,250		$	22,637	$	26,641	$	(164	)	$	296	$	1,000		$	27,773

For the ~~three~~nine months ended September 30, ~~2020,~~2022, the Company provided ~~$2,250~~$1,000 to the allowance for loan ~~losses.~~ losses, as compared to a provision of $830 for the nine months ended September 30, 2021. The increase in provision was ~~primarily~~due to the ~~result~~strong loan growth during the first nine months of ~~an increase in Civista’s qualitative factors, primarily changes in~~2022, as compared to the first nine months of 2021. In addition, the challenges of the international, national, regional and local economic conditions, ~~related~~particularly inflation, have taken greater focus from the prior economic shutdown and restrictions in response to the ~~economic shutdown driven~~COVID-19 pandemic. Despite these concerns our portfolio quality has remained stable overall with decreases in criticized loans. We continue to be optimistic that asset quality will continue to remain strong despite ongoing headwinds. While we remain cautious given the impact of inflation on all of our borrowers, we are encouraged by strong loan growth.

During the ongoing COVID-19 pandemic, as well as the significant increase in classified assets during the quarter, particularly in the special mention category. Economic impacts from the COVID-19 pandemic during the threenine months ended September 30, 2020 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.

~~For the three months ended September 30, 2020,~~2022, the allowance for Commercial & Agriculture loans ~~decreased~~increased due to ~~a decrease~~an increase in general reserves required for this type as a result of an increase in loss rates, partially offset by a decrease in Commercial & Agriculture loan ~~balances.~~balances during the first nine months of the year mainly due to the forgiveness or payoff of PPP loans. The result was represented as ~~a decrease~~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,~~ increased loan ~~balances and loss rates and by increased classified and non-accrual loans.~~balances. 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 by an increase in classified loans.~~balances. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in ~~recoveries~~general reserves required for this type as a result of ~~loan.~~increased loan balances. The result was represented by ~~a decrease~~an increase in the provision. The allowance for Real Estate Construction loans increased due to an increase in ~~loss rates on classified loans,~~loan balances. This was represented byas an increase in the provision. The allowance for Consumer and Other loans decreased due to a decrease in loan balances. This 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 September 30, ~~2020.~~2022.

For the nine months ended September 30, 2021, the Company provided $830 to the allowance for loan ~~losses, as compared to a provision of $7,862 for the nine months ended September 30, 2020.~~losses. The decrease in the provision in the first nine months of 2021 as compared to the same period of 2020, was due to the stability of our ~~credit quality~~ 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 in 2021 have created some level of optimism in the business community, there remains uncertainty due to the continued concern over increased infections from the Delta variant of COVID. We remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry as well as the challenges business face in today’s environment. 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 nine months ended September 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. Commercial & Agriculture loan balances decreased during the period 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 increased due to an increase in general reserves required for this type as a result of increased loan balances, offset by decreases in classified loan balances. 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, offset by a decrease in classified loan balances and 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 increased due to an increase in loan balances, represented by an increase 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 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 September 30, 2021.

For the nine months ended September 30, 2020, the Company provided $7,862 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 during the nine months ended September 30, 2020 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.

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 participation in the PPP loan program, offset by a decrease in loss rates, resulting in an increase in the provision. PPP loans are eligible for a 100% guaranty by the SBA. However, 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 guaranty. The reserve percentage for PPP loans is substantially less than the other loans in this segment resulting in an overall decrease in the reserve percentage. 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, an increase in classified and non-accrual loans and an increase 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, an increase in classified loans, offset 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 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 and an increase in loss rates on classified loans, 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 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 September 30, 2020.

The following tables present, by portfolio segment, the allocation of the allowance for loan losses and related loan balances as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

September 30, 2021	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
September 30, 2022									Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	—	$	2,512	$	2,512	$	—	$	—	$	2,729	$	2,729
Commercial Real Estate:
Owner Occupied		—		55		4,361		4,416		—		6		4,920		4,926
Non-Owner Occupied		—		—		13,170		13,170		—		—		14,427		14,427
Residential Real Estate		—		18		2,578		2,596		—		1		3,035		3,036
Real Estate Construction		—		—		2,459		2,459		—		—		2,013		2,013
Farm Real Estate		—		—		308		308		—		—		251		251
Consumer and Other		—		—		212		212		—		—		142		142
Unallocated		—		—		895		895		—		—		249		249
Total	$	—	$	73	$	26,495	$	26,568	$	—	$	7	$	27,766	$	27,773
Outstanding loan balances:
Commercial & Agriculture	$	—	$	—	$	276,741	$	276,741	$	809	$	343	$	226,235	$	227,387
Commercial Real Estate:
Owner Occupied		—		205		292,520		292,725		1,770		833		361,865		364,468
Non-Owner Occupied		—		—		788,898		788,898		120		140		955,909		956,169
Residential Real Estate		296		545		423,712		424,553		1,410		586		529,168		531,164
Real Estate Construction		—		—		179,491		179,491		—		—		202,793		202,793
Farm Real Estate		—		522		29,625		30,147		—		—		25,636		25,636
Consumer and Other		—		—		12,259		12,259		1		—		20,996		20,997
Total	$	296	$	1,272	$	2,003,246	$	2,004,814	$	4,110	$	1,902	$	2,322,602	$	2,328,614

December 31, 2020	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
December 31, 2021									Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	73	$	2,737	$	2,810	$	—	$	—	$	2,600	$	2,600
Commercial Real Estate:
Owner Occupied		—		5		4,052		4,057		—		7		4,457		4,464
Non-Owner Occupied		—		—		12,451		12,451		—		—		13,860		13,860
Residential Real Estate		—		29		2,455		2,484		—		11		2,586		2,597
Real Estate Construction		—		—		2,439		2,439		—		—		1,810		1,810
Farm Real Estate		—		—		338		338		—		—		287		287
Consumer and Other		—		—		209		209		—		—		176		176
Unallocated		—		—		240		240		—		—		847		847
Total	$	—	$	107	$	24,921	$	25,028	$	—	$	18	$	26,623	$	26,641
Outstanding loan balances:
Commercial & Agriculture	$	—	$	74	$	409,802	$	409,876	$	—	$	—	$	246,502	$	246,502
Commercial Real Estate:
Owner Occupied		—		980		277,433		278,413		—		187		295,265		295,452
Non-Owner Occupied		—		48		705,024		705,072		—		0		829,310		829,310
Residential Real Estate		388		946		441,254		442,588		290		526		429,244		430,060
Real Estate Construction		—		—		175,609		175,609		—		—		157,127		157,127
Farm Real Estate		—		618		32,484		33,102		—		509		27,910		28,419
Consumer and Other		—		—		12,842		12,842		—		—		11,009		11,009
Total	$	388	$	2,666	$	2,054,448	$	2,057,502	$	290	$	1,222	$	1,996,367	$	1,997,879

The following tables present credit exposures by internally assigned risk grades as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. 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.

September 30, 2021	Pass		Special Mention		Substandard		Doubtful		Ending Balance
September 30, 2022											Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	273,617	$	1,700	$	1,424	$	—	$	276,741	$	212,692	$	12,155	$	2,540	$	—	$	227,387
Commercial Real Estate:
Owner Occupied		279,409		5,120		8,196		—		292,725		351,464		9,751		3,253		—		364,468
Non-Owner Occupied		706,117		45,334		37,447		—		788,898		932,606		19,526		4,037		—		956,169
Residential Real Estate		75,337		266		4,387		—		79,990		141,827		116		5,506		—		147,449
Real Estate Construction		162,772		268		457		—		163,497		172,120		—		3		—		172,123
Farm Real Estate		28,711		206		1,230		—		30,147		25,197		392		47		—		25,636
Consumer and Other		913		—		21		—		934		11,993		—		27		—		12,020
Total	$	1,526,876	$	52,894	$	53,162	$	—	$	1,632,932	$	1,847,899	$	41,940	$	15,413	$	—	$	1,905,252

December 31, 2020	Pass		Special Mention		Substandard		Doubtful		Ending Balance
December 31, 2021											Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	401,636	$	4,472	$	3,768	$	—	$	409,876	$	244,787	$	526	$	1,189	$	—	$	246,502
Commercial Real Estate:
Owner Occupied		248,316		19,429		10,668		—		278,413		290,617		3,119		1,716		—		295,452
Non-Owner Occupied		604,909		58,270		41,893		—		705,072		764,181		28,042		37,087		—		829,310
Residential Real Estate		81,409		668		5,524		—		87,601		77,594		164		4,455		—		82,213
Real Estate Construction		158,207		962		492		—		159,661		136,149		260		5		—		136,414
Farm Real Estate		30,486		216		2,400		—		33,102		27,023		205		1,191		—		28,419
Consumer and Other		833		—		33		—		866		764		—		20		—		784
Total	$	1,525,796	$	84,017	$	64,778	$	—	$	1,674,591	$	1,541,115	$	32,316	$	45,663	$	—	$	1,619,094

The following tables present performing and nonperforming loans based solely on payment activity for the periods ended September 30, ~~2021~~2022 and December 31, ~~2020~~2021 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.

September 30, 2021	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
September 30, 2022									Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	344,563	$	15,994	$	11,325	$	371,882	$	383,389	$	30,670	$	8,977	$	423,036
Nonperforming		—		—		—		—		326		—		—		326
Total	$	344,563	$	15,994	$	11,325	$	371,882	$	383,715	$	30,670	$	8,977	$	423,362

December 31, 2020	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
December 31, 2021									Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	354,987	$	15,948	$	11,976	$	382,911	$	347,847	$	20,713	$	10,225	$	378,785
Nonperforming		—		—		—		—		—		—		—		—
Total	$	354,987	$	15,948	$	11,976	$	382,911	$	347,847	$	20,713	$	10,225	$	378,785

The following tables include an aging analysis of the recorded investment of past due loans outstanding as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

September 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
September 30, 2022																	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing
Commercial & Agriculture	$	400	$	—	$	—	$	400	$	276,341	$	—	$	276,741	$	—	$	423	$	2	$	694	$	1,119	$	225,459	$	809	$	227,387	$	—
Commercial Real Estate:
Owner Occupied		—		10		575		585		292,140		—		292,725		430		24		—		79		103		362,595		1,770		364,468		—
Non-Owner Occupied		—		—		4		4		788,894		—		788,898		—		—		—		2		2		956,047		120		956,169		—
Residential Real Estate		147		248		766		1,161		423,096		296		424,553		—		416		827		1,222		2,465		527,289		1,410		531,164		326
Real Estate Construction		—		—		—		—		179,491		—		179,491		—		—		—		—		—		202,793		—		202,793		—
Farm Real Estate		—		—		—		—		30,147		—		30,147		—		—		—		—		—		25,636		—		25,636		—
Consumer and Other		87		4		9		100		12,159		—		12,259		—		58		63		52		173		20,823		1		20,997		—
Total	$	634	$	262	$	1,354	$	2,250	$	2,002,268	$	296	$	2,004,814	$	430	$	921	$	892	$	2,049	$	3,862	$	2,320,642	$	4,110	$	2,328,614	$	326

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
December 31, 2021																	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing
Commercial & Agriculture	$	117	$	25	$	50	$	192	$	409,684	$	—	$	409,876	$	—	$	249	$	13	$	78	$	340	$	246,162	$	—	$	246,502	$	—
Commercial Real Estate:
Owner Occupied		—		4		102		106		278,307		—		278,413		—		—		—		106		106		295,346		—		295,452		—
Non-Owner Occupied		—		—		6		6		705,066		—		705,072		—		—		—		4		4		829,306		—		829,310		—
Residential Real Estate		1,059		867		1,314		3,240		438,960		388		442,588		—		1,848		879		842		3,569		426,201		290		430,060		—
Real Estate Construction		—		—		—		—		175,609		—		175,609		—		—		—		—		—		157,127		—		157,127		—
Farm Real Estate		—		—		4		4		33,098		—		33,102		—		—		—		—		—		28,419		—		28,419		—
Consumer and Other		59		1		16		76		12,766		—		12,842		—		42		—		9		51		10,958		—		11,009		—
Total	$	1,235	$	897	$	1,492	$	3,624	$	2,053,490	$	388	$	2,057,502	$	—	$	2,139	$	892	$	1,039	$	4,070	$	1,993,519	$	290	$	1,997,879	$	—

The following table presents loans on nonaccrual status, excluding purchased credit-impaired (PCI) loans, as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Commercial & Agriculture	$	—	$	139	$	668	$	78
Commercial Real Estate:
Owner Occupied		359		964		206		334
Non-Owner Occupied		4		6		2		4
Residential Real Estate		3,129		3,893		3,514		3,232
Real Estate Construction		6		7		3		5
Farm Real Estate		—		85		—		—
Consumer and Other		21		31		60		20
Total	$	3,519	$	5,125	$	4,453	$	3,673

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 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~~Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended (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 September 30, ~~2021,~~2022, TDRs accounted for ~~$73~~$7 of the allowance for loan losses. As of December 31, ~~2020,~~2021, TDRs accounted for ~~$35~~$18 of the allowance for loan losses.

There were 0no loans modified as TDRs during the ~~three-and~~three- and nine-month periods ended September 30, ~~2021~~2022 or ~~2020.~~2021.

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 the three- and nine-month periods ended September 30, ~~2021~~2022 and September 30, ~~2020,~~2021, there were 0no 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 with an aggregate principal balance outstanding of $431.3 million. Additional 90-day modifications were extended on 100 loans with an aggregate principal balance outstanding of $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 complied with the provisions of the CARES Act to not be considered a TDR.

As of September 30, 2021, Civista had 18 loans with an aggregate principal balance outstanding of $18,787 that remained on CARES Act modifications. 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 PCI loans, with the associated allowance amount, if applicable, as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

	September 30, 2021						December 31, 2020						September 30, 2022						December 31, 2021
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance			Related Allowance
With no related allowance recorded:
Commercial & Agriculture													$	343	$	343			$	—	$	—
Commercial Real Estate:
Owner Occupied	$	12	$	12			$	757	$	757				676		676				—		—	��
Non-Owner Occupied		—		—				48		48				140		140				—		—
Residential Real Estate		514		539				915		940				579		604				503		528
Farm Real Estate		522		522				618		618				—		—				509		509
Total		1,048		1,073				2,338		2,363				1,738		1,763				1,012		1,037
With an allowance recorded:
Commercial & Agriculture		—		—	$	—		74		74	$	73
Commercial Real Estate:
Owner Occupied		193		193		55		223		223		5		157		157	$	6		187		187		$	7
Residential Real Estate		31		34		18		31		35		29		7		11		1		23		27			11
Total		224		227		73		328		332		107		164		168		7		210		214			18
Total:
Commercial & Agriculture		—		—		—		74		74		73		343		343		—		—		—			—
Commercial Real Estate:
Owner Occupied		205		205		55		980		980		5		833		833		6		187		187			7
Non-Owner Occupied		—		—		—		48		48		—		140		140		—		—		—			—
Residential Real Estate		545		573		18		946		975		29		586		615		1		526		555			11
Farm Real Estate		522		522		—		618		618		—		—		—		—		509		509			—
Total	$	1,272	$	1,300	$	73	$	2,666	$	2,695	$	107	$	1,902	$	1,931	$	7	$	1,222	$	1,251		$	18

The following table includes the average recorded investment and interest income recognized for impaired financing receivables for the three- and nine-month periods ended September 30, ~~2021~~2022 and ~~2020.~~2021.

	September 30, 2021				September 30, 2020				September 30, 2022				September 30, 2021
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									$	172	$	—	$	—	$	—
Commercial Real Estate—Owner Occupied	$	252	$	4	$	391	$	7		504		3		252		4
Commercial Real Estate—Non-Owner Occupied		15		—		212		5		70		—		15		—
Residential Real Estate		551		8		1,175		10		503		9		551		8
Farm Real Estate		557		6		644		7		247		2		557		6
Total	$	1,375	$	18	$	2,422	$	29	$	1,496	$	14	$	1,375	$	18

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

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 September 30, 2021		At December 31, 2020		At September 30, 2022		At December 31, 2021
	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	$	525	$	687	$	4,952	$	512
Carrying amount		296		388		4,110		290

There was 0no allowance for loan losses recorded for acquired loans with or without specific evidence of deterioration in credit quality as of September 30, ~~2021~~2022 or December 31, ~~2020.~~2021.

Foreclosed assets acquired in settlement of loans are carried at fair value less estimated costs to sell and are included in ~~other~~Other assets on the Consolidated Balance Sheet. As of September 30, 2022 and December 31, 2021, there were ~~$26 of foreclosed assets included in Other assets. As of December 31, 2020, there were $31 of~~no foreclosed assets included in Other assets. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had initiated formal foreclosure procedures on ~~$296~~$488 and ~~$741,~~$293, 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~~three-month periods ended September 30, ~~2021~~2022 and September 30, ~~2020.~~2021.

	For the Three-Month Period Ended									For the Three-Month Period Ended									For the Three-Month Period Ended									For the Three-Month Period Ended
	September 30, 2021(a)									September 30, 2020(a)									September 30, 2022(a)									September 30, 2021(a)
	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)			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	$	18,392		$	(6,699	)	$	11,693		$	19,549		$	(5,895	)	$	13,654		$	(40,497	)	$	(5,745	)	$	(46,242	)	$	18,392		$	(6,699	)	$	11,693
Other comprehensive income (loss) before reclassifications		(2,455	)		—			(2,455	)		749			—			749			(23,626	)		—			(23,626	)		(2,455	)		—			(2,455	)
Amounts reclassified from accumulated other comprehensive income (loss)		(4	)		64			60			(73	)		57			(16	)		(4	)		54			50			(4	)		64			60
Net current-period other comprehensive income (loss)		(2,459	)		64			(2,395	)		676			57			733			(23,630	)		54			(23,576	)		(2,459	)		64			(2,395	)
Ending balance	$	15,933		$	(6,635	)	$	9,298		$	20,225		$	(5,838	)	$	14,387		$	(64,127	)	$	(5,691	)	$	(69,818	)	$	15,933		$	(6,635	)	$	9,298

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the ~~three month~~three-month periods ended September 30, ~~2021~~2022 and September 30, ~~2020.~~2021.

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a)							Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a)
Details about Accumulated Other Comprehensive Income (Loss) Components	For the Three months ended September 30, 2021			For the Three months ended September 30, 2020			Affected Line Item in the Statement Where Net Income is Presented	For the Three months ended September 30, 2022			For the Three months ended September 30, 2021			Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains on available-for-sale securities	$	4		$	92		Net gain on sale of securities
Unrealized gains (losses) on available-for-sale securities								$	4		$	4		Net gain on sale of securities
Tax effect		—			(19	)	Income tax expense		—			—		Income tax expense
		4			73				4			4
Amortization of defined benefit pension items
Actuarial gains/(losses) (b)		(81	)		(72	)	Other operating expenses		(69	)		(81	)	Other operating expenses
Tax effect		17			15		Income tax expense		15			17		Income tax expense
		(64	)		(57	)			(54	)		(64	)
Total reclassifications for the period	$	(60	)	$	16			$	(50	)	$	(60	)

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

~~(a)Amounts in parentheses indicate debits on the Consolidated Balance Sheets~~

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax for the nine-month periods ended September 30, 2022 and September 30, 2021.

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the ~~nine month~~nine-month periods ended September 30, ~~2021~~2022 and September 30, ~~2020.~~2021.

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a)							Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a)
Details about Accumulated Other Comprehensive Income (Loss) Components	For the Nine months ended September 30, 2021			For the Nine months ended September 30, 2020			Affected Line Item in the Statement Where Net Income is Presented	For the Nine months ended September 30, 2022			For the Nine months ended September 30, 2021			Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains on available-for-sale securities	$	2		$	92		Net gain on sale of securities
Unrealized gains (losses) on available-for-sale securities								$	10		$	2		Net gain on sale of securities
Tax effect		—			(19	)	Income tax expense		(2	)		—		Income tax expense
		2			73				8			2
Amortization of defined benefit pension items
Actuarial gains/(losses) (b)		(244	)		(217	)	Other operating expenses		(208	)		(244	)	Other operating expenses
Tax effect		51			46		Income tax expense		44			51		Income tax expense
		(193	)		(171	)			(164	)		(193	)
Total reclassifications for the period	$	(191	)	$	(98	)		$	(156	)	$	(191	)

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

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

Aggregate core deposit intangible amortization expense was $223 and $227 for the three months ended September 30, 2021 and 2020, respectively, and $668 and $686 for the nine-months ended September 30, 2021 and 2020, respectively.

The carrying amount of goodwill has increased $24,801 since December 31, 2021 as a result of the Comunibanc Corp. acquisition, discussed in Note 18. The balance of goodwill was $101,652 at September 30, 2022 and $76,851 at December 31, 2021.

Acquired intangible assets, other than goodwill, as of September 30, 2022 and December 31, 2021 were as follows:

Aggregate core deposit intangible amortization expense was $456, and $223, for the three-months ended September 30, 2022 and 2021, respectively, and $890 and $668 for the nine-months ended September 30, 2022 and 2021, respectively.

Activity for mortgage servicing rights (MSRs) and the related valuation allowance for the three- and nine-month periods ended September 30, ~~2021~~2022 and September 30, ~~2020~~2021 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Loan Servicing Rights:
Balance at Beginning of Period	$	2,745		$	1,717		$	2,246		$	1,562		$	2,664		$	2,745		$	2,642		$	2,246
Additions		164			381			562			924			91			164			317			562
Additions from acquisition														419			—			419			—
Disposals		—			—			—			—			—			—			—			—
Amortized to expense		(144	)		(135	)		(436	)		(361	)		(95	)		(144	)		(299	)		(436	)
Other charges		—			—			—			—			—			—			—			—
Change in valuation allowance		(189	)		25			204			(137	)		—			(189	)		—			204
Balance at End of Period	$	2,576		$	1,988		$	2,576		$	1,988		$	3,079		$	2,576		$	3,079		$	2,576


Valuation allowance:
Balance at Beginning of Period	$	(189	)	$	264		$	204		$	102		$	—		$	(189	)	$	—		$	204
Additions expensed		189			—			261			162			—			189			—			261
Reductions credited to operations		—			(25	)		(465	)		(25	)		—			—			—			(465	)
Direct write-offs		—			—			—			—			—			—			—			—
Balance at End of Period	$	—		$	239		$	—		$	239		$	—		$	—		$	—		$	—

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

	MSRs		Core deposit intangibles		Total		MSRs		Core deposit intangibles		Total
2021	$	33	$	223	$	256
2022		134		868		1,002	$	40	$	407	$	447
2023		133		841		974		161		1,579		1,740
2024		133		804		937		160		1,488		1,648
2025		132		708		840		160		1,312		1,472
2026								159		1,193		1,352
Thereafter		2,011		1,718		3,729		2,399		2,496		4,895
	$	2,576	$	5,162	$	7,738	$	3,079	$	8,475	$	11,554

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:

	Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended September 30,									Nine Months Ended September 30,
	2021		2021		2020			2020		2021		2021		2020			2020			2022		2022			2021		2021		2022		2022			2021		2021
	Federal Funds Purchased		Short-term Borrowings		Federal Funds Purchased			Short-term Borrowings		Federal Funds Purchased		Short-term Borrowings		Federal Funds Purchased			Short-term Borrowings			Federal Funds Purchased		Short-term Borrowings			Federal Funds Purchased		Short-term Borrowings		Federal Funds Purchased		Short-term Borrowings			Federal Funds Purchased		Short-term Borrowings
Maximum indebtedness	$	—	$	—	$	35,000		$	—	$	—	$	—	$	50,000		$	102,700		$	—	$	56,000		$	—	$	—	$	—	$	56,000		$	—	$	—
Average balance		—		—		543			—		—		—		385			10,888			—		6,713			—		—		—		2,380			—		—
Average rate paid		—		—		(1.47	)%		—		—		—		0.35	%		1.64	%		—		2.84	%		—		—		—		2.75	%		—		—

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 September 30, ~~2021.~~2022.

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 September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. All of the repurchase agreements are overnight agreements.

	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Securities pledged for repurchase agreements:
U.S. Treasury securities	$	7,656	$	899	$	20,155	$	16,478
Obligations of U.S. government agencies		15,675		28,015		—		9,017
Total securities pledged	$	23,331	$	28,914	$	20,155	$	25,495
Gross amount of recognized liabilities for repurchase agreements	$	23,331	$	28,914	$	20,155	$	25,495
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, 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. The Company had 0no dilutive securities for the three- and nine-months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Basic
Net income	$	9,642	$	7,682	$	29,564	$	22,019	$	11,112	$	9,642	$	27,279	$	29,564
Less allocation of earnings and dividends to participating securities		46		26		122		64		52		46		123		122
Net income available to common shareholders—basic	$	9,596	$	7,656	$	29,442	$	21,955	$	11,060	$	9,596	$	27,156	$	29,442
Weighted average common shares outstanding		15,168,233		16,045,544		15,543,488		16,201,898		15,394,898		15,168,233		14,974,862		15,543,488
Less average participating securities		72,071		54,274		64,064		47,246		71,604		72,071		67,323		64,064
Weighted average number of shares outstanding used in the calculation of basic earnings per common share		15,096,162		15,991,270		15,479,424		16,154,652		15,323,294		15,096,162		14,907,539		15,479,424
Earnings per common share:
Basic	$	0.64	$	0.48	$	1.90	$	1.36	$	0.72	$	0.64	$	1.82	$	1.90
Diluted		0.64		0.48		1.90		1.36		0.72		0.64		1.82		1.90

~~The presentation for earnings per common share for prior periods was revised to present under the two-class method. Earnings per common share 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 at September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

	Contract Amount								Contract Amount
	September 30, 2021				December 31, 2020				September 30, 2022				December 31, 2021
	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	$	31,205	$	465,902	$	38,474	$	427,864	$	45,738	$	544,286	$	33,542	$	455,777
Overdraft protection		7		42,925		6		41,707		10		62,637		7		54,034
Letters of credit		615		885		615		986		615		876		615		731
	$	31,827	$	509,712	$	39,095	$	470,557	$	46,363	$	607,799	$	34,164	$	510,542

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%~~2.60% to ~~8.00%~~7.25% at September 30, ~~2021~~2022 and from ~~3.50%~~3.25% to 8.00% at December 31, ~~2020.~~2021. 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 September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

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 0no additional benefits would accrue beyond April 30, 2014.

	Three months ended						Nine Months Ended						Three months ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Service cost	$	0		$	0		$	0		$	0		$	—		$	—		$	—		$	—
Interest cost		95			121			285			363			103			95			310			285
Expected return on plan assets		(160	)		(187	)		(480	)		(561	)		(144	)		(160	)		(432	)		(480	)
Other components		81			72			244			217			69			81			208			244
Net periodic pension cost	$	16		$	6		$	49		$	19		$	28		$	16		$	86		$	49

The Company does 0tnot expect to make any contribution to its pension plan in ~~2021.~~2022. The Company made 0no contribution to its pension plan in ~~2020.~~2021.

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 ~~151,892~~118,536 shares available for future grants under this plan at September 30, ~~2021.~~2022.

~~NaN~~No options were granted under the 2014 Incentive Plan during the periods ended September 30, ~~2021~~2022 and ~~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 or five-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 ~~28, 2021,~~25, 2022, 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 ~~8,792~~7,224 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 ~~2022~~2023 Annual Meeting. This issuance was expensed in its entirety when the shares were issued in the amount of ~~$196.~~$168.

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 nine-month periods ended September 30, ~~2021:~~2022:

	Three months ended				Nine Months Ended					Three months ended				Nine Months Ended
	September 30, 2021				September 30, 2021					September 30, 2022				September 30, 2022
	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		72,071	$	20.13		54,274		$	20.90		71,748	$	21.88		69,840		$	20.14
Granted		0		0		39,139			19.17		—		—		31,774			24.51
Vested		0		0		(20,275	)		20.35		—		—		(27,728	)		24.28
Forfeited		0		0		(1,067	)		19.56		—		—		(2,138	)		21.99
Nonvested at end of period		72,071	$	20.13		72,071		$	20.13		71,748	$	21.88		71,748		$	21.88

The following is a summary of the status of the Company’s outstanding restricted shares as of September 30, ~~2021:~~2022:

At September 30, 2021
At September 30, 2022							At September 30, 2022
Date of Award	Shares		Remaining Expense		Remaining Vesting Period (Years)			Shares		Remaining Expense		Remaining Vesting Period (Years)
March 20, 2017		1,198	$	6		0.25
April 10, 2018		3,114		41		1.25			1,470	$	8		0.25
March 14, 2019		3,401		16		0.25
March 14, 2019		6,560		89		2.25			4,034		49		1.25
March 14, 2020		9,139		114		1.25			4,304		21		0.25
March 14, 2020		10,390		160		3.25			6,951		106		2.25
March 3, 2021		16,277		243		4.25			11,359		170		3.25
March 3, 2021		21,992		323		2.25			13,692		164		1.25
March 3, 2022									12,914		264		4.25
March 3, 2022									17,024		296		2.25
		72,071	$	992		2.55			71,748	$	1,078		2.36

The Company recorded ~~$132~~$153 and ~~$99,~~$132 of share-based compensation expense during the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. During the nine months ended September 30, 2022 and 2021, the Company recorded $484 and ~~2020,~~ $392, ~~and $322~~respectively, of share-based compensation ~~expense was recorded, respectively.~~expense. The Company recorded ~~$196~~$168 of director retainer fees for shares granted under the 2014 Incentive Plan during the nine months ended September 30, ~~2021.~~2022. At September 30, ~~2021,~~2022, the total compensation cost related to unvested awards not yet recognized ~~is $922,~~was $1,078, which iswas expected to be recognized over the weighted average remaining life of the grants of ~~2.55~~2.36 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: 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~~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~~securities 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 tables below.

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

	Fair Value Measurements at December 31, 2020 Using:						Fair Value Measurements at December 31, 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
Securities available-for-sale
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	21,693	$	—	$	—	$	47,890	$	—
Obligations of states and political subdivisions		—		229,012		—		—		298,836		—
Mortgage-backed securities in government sponsored entities		—		112,759		—		—		213,148		—
Total securities available for sale		—		363,464		—
Total securities available-for-sale								—		559,874		—
Equity securities		—		886		—		—		1,072		—
Swap asset		—		21,700		—		—		11,072		—
Liabilities measured at fair value on a recurring basis:
Swap liability		—		21,764		—		—		11,072		—
Assets measured at fair value on a nonrecurring basis:
Mortgage Servicing Rights	$	—	$	—	$	2,246
Mortgage servicing rights							$	—	$	—	$	2,642
Impaired loans		—		—		1		—		—		11
Other real estate owned		—		—		31

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 September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at September 30, ~~2021~~2022 were as follows:

September 30, 2021	Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
September 30, 2022											Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from financial institutions	$	253,165	$	253,165	$	253,165	$	—	$	—	$	40,914	$	40,914	$	40,914	$	—	$	—
Other securities		17,011		17,011		17,011		—		—		18,578		18,578		18,578		—		—
Loans, held for sale		5,810		5,926		5,926		—		—		3,491		3,561		3,561		—		—
Loans, net of allowance		1,978,246		1,996,174		—		—		1,996,174		2,300,841		2,200,018		—		—		2,200,018
Bank owned life insurance		46,728		46,728		46,728		—		—		53,291		53,291		53,291		—		—
Accrued interest receivable		7,728		7,728		7,728		—		—		9,175		9,175		9,175		—		—
Financial Liabilities:
Nonmaturing deposits		2,181,931		2,181,931		2,181,931		—		—		2,436,219		2,436,219		2,436,219		—		—
Time deposits		252,835		253,643		—		—		253,643		272,034		270,928		—		—		270,928
Short-term FHLB advances												55,000		55,000		55,000		—		—
Long-term FHLB advances		75,000		76,617		—		—		76,617		6,723		6,716		—		—		6,716
Securities sold under agreement to repurchase		23,331		23,331		23,331		—		—		20,155		20,155		20,155		—		—
Subordinated debentures		29,427		29,534		—		—		29,534		103,778		97,890		—		—		97,890
Accrued interest payable		115		115		115		—		—		970		970		970		—		—

The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at December 31, ~~2020~~2021 were as follows:

December 31, 2020	Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
December 31, 2021											Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from financial institutions	$	139,522	$	139,522	$	139,522	$	—	$	—	$	264,239	$	264,239	$	264,239	$	—	$	—
Other securities		20,537		20,537		20,537		—		—		17,011		17,011		17,011		—		—
Loans, held for sale		7,001		7,141		7,141		—		—		1,972		2,011		2,011		—		—
Loans, net of allowance		2,032,474		2,063,249		—		—		2,063,249		1,971,238		1,945,638		—		—		1,945,638
Bank owned life insurance		45,976		45,976		45,976		—		—		46,641		46,641		46,641		—		—
Accrued interest receivable		9,421		9,421		9,421		—		—		7,385		7,385		7,385		—		—
Financial Liabilities:
Nonmaturing deposits		1,902,560		1,902,560		1,902,560		—		—		2,170,253		2,170,253		2,170,253		—		—
Time deposits		286,838		288,298		—		—		288,298		246,448		247,053		—		—		247,053
Long-term FHLB advances		125,000		130,942		—		—		130,942		75,000		75,930		—		—		75,930
Securities sold under agreement to repurchase		28,914		28,914		28,914		—		—		25,495		25,495		25,495		—		—
Subordinated debentures		29,427		31,479		—		—		31,479		103,735		111,118		—		—		111,118
Accrued interest payable		204		204		204		—		—		315		315		315		—		—

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 Company presents derivative positions net on the balance sheet for customers and financial institution counterparty positions subject to master netting arrangements. The following table ~~summarizes~~reflects the ~~Company’s interest rate swap positions as of September 30, 2021.~~derivatives recorded on the balance sheet:

The ~~following table summarizes~~presentation for derivatives for the ~~Company’s interest rate~~current and prior periods was revised to present derivative positions net for customer positions. Fair value of swap ~~positions~~assets and liabilities for the prior period was not impacted.

The effect of swap fair value changes on the Consolidated Statement of Operations are as ~~of December 31, 2020.~~follows:

The Company monitors and controls all derivative products with a comprehensive Board of Director approved commercial loan swap policy. All 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 September 30, ~~2021,~~2022, the Company ~~had~~did not have any cash ~~and~~or securities ~~with a fair value of $7,000 and $7,035, respectively,~~ pledged for collateral on its interest rate swaps with third party financial institutions. At December 31, ~~2020,~~2021, the Company had cash and securities with a fair value of ~~$11,300~~$10,780 and ~~$11,705,~~$509, 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 September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the balance of the investment for qualified affordable housing projects was ~~$13,303~~$12,377 and ~~$11,911,~~$13,093, 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 ~~$6,629~~$4,093 and ~~$5,944~~$5,706 at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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 September 30, 2021 and 2020, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $203 and $156, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $339 and $304, respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $608 and $489, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $1,015 and $888, respectively. During the three- and nine-months ended September 30, 2021 and 2020, the Company did 0t incur any impairment losses related to its investments in qualified affordable housing projects.

During the three months ended September 30, 2022 and 2021, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $239 and $203, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $396 and $339, respectively. During the nine months ended September 30, 2022 and 2021, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $716 and $608, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $1,181 and $1,015, respectively. During the three- and nine-month periods ended September 30, 2022 and 2021, the Company did not incur any impairment losses related to its investments in qualified affordable housing projects. Other operating expenses and Income tax expense were reclassified for the three- and nine-month periods of September 30, 2021 to reflect the change to proportional amortization method of accounting of $203 and $608, respectively.

The Company accounts for revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers. Revenue associated with financial instruments, including revenue from loans and securities, are outside the scope of ~~the new standard~~ASC 606 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 nine-months ended September 30, 2022 and 2021.

On July 1, 2022, CBI completed the acquisition by merger of Comunibanc Corp. in a stock and cash transaction for aggregate consideration of approximately $46,090. As a result of the acquisition, the Company issued 984,723 common shares and paid approximately $24,968 in cash to the former shareholders of Comunibanc Corp. The Company and Comunibanc Corp. had first announced that they had entered into an agreement to merge in January of 2022. Immediately following the merger, Comunibanc Corp.’s banking subsidiary, The Henry County Bank (HCB), was merged into CBI’s banking subsidiary, Civista Bank.

The assets and liabilities of Comunibanc Corp. were recorded on the Company’s Balance Sheet at their preliminary estimated fair values as of July 1, 2022, the acquisition date, and Comunibanc Corp.’s results of operations have been included in the Company’s Consolidated Statements of Operations since that date. Due to the timing of the acquisition relative to the end of the reporting period, the fair values for certain assets and liabilities acquired from Comunibanc Corp on July 1, 2022 represent preliminary estimates. Based on a preliminary purchase price allocation, the Company recorded $24,801 in goodwill and $4,426 in core deposit intangibles, representing the principal change in goodwill and intangibles from December 31, 2021. None of the purchase price is deductible for tax purposes.

At the time of the merger, Comunibanc Corp had total consolidated assets of $315,083, including $175,500 in loans, and $271,081 in deposits. The transaction was recorded as a purchase and, accordingly, the operating results of Comunibanc Corp. and HCB have been included in the Company’s Consolidated Financial Statements since the close of business on July 1, 2022.

Identifiable intangibles are amortized to their estimated residual values over the expected useful lives. Such lives are also periodically reassessed to determine if any amortization period adjustments are required. The identifiable intangible assets consist of core deposit intangible which is being amortized over the estimated useful life. The gross carrying amount of the core deposit intangible at September 30, 2022 was $4,426.

In 2022, the Company has incurred additional third-party acquisition-related costs of $1.9 million. These expenses are comprised of employee benefits of $16.6 thousand, occupancy and equipment expenses of $51.6 thousand, software expense of $14.0 thousand, consulting and other professional fees of $839.4 thousand, data processing costs of $558.3 thousand and other operating expenses of $373.0 thousand in the Company’s consolidated statement of operations for the nine-month period ended September 30, 2022.

As of September 30, 2022, the current year and estimated future amortization expense for the core deposit intangible is as follows:

The following table presents financial information for the former Comunibanc Corp. included in the Consolidated Statements of Operations from the date of acquisition through September 30, 2022.

The following table presents pro forma information for the three- and nine-month periods ended September 30, 2022 and 2021 as if the acquisition of Comunibanc Corp. had occurred on January 1, 2021. This table has been prepared for comparative purposes only and is not indicative of the actual results that would have been attained had the acquisition occurred as of the beginning of the periods presented, nor is it indicative of future results. Furthermore, the unaudited pro forma information does not reflect management’s estimate of any revenue-enhancing opportunities nor anticipated cost savings as a result of the integration and consolidation of the acquisition.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for Comunibanc Corp. Core deposit intangibles will be amortized over periods of between ten years using an accelerated method. Goodwill will not be amortized, but instead will be evaluated for impairment.

Loans purchased with evidence of credit deterioration since origination and for which it was probable that all contractually required payments would not be collected were considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date included information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Purchased credit-impaired loans were accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which included estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans was not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporated the estimate of the current assumptions, such as default rates, severity and prepayment speeds.

The following table presents ~~noninterest income, segregated by revenue streams in-scope~~additional information regarding loans acquired and ~~out-of-scope of Topic 606,~~accounted for in accordance with ASC 310-30:

The gross principal due under the contract for acquired receivables not subject to ASC 310-30 is $171.1 million. The fair value adjustment is $2.1 million and the contractual cash flows not expected to be collected is $5.7 million.

The acquired assets and liabilities were measured at estimated fair values. Management made certain estimates and exercised judgment in accounting for the ~~three- and nine-months ended September 30, 2021 and 2020.~~acquisition.

The amount of goodwill recorded reflects a strategic opportunity to expand into new markets that, while similar to existing markets, are projected to be more vibrant in population growth and business opportunity growth. The goodwill represents the excess purchase price over the estimated fair value of the net assets acquired. Additionally, the acquisition will provide exposure to suburbs of larger urban areas without the commitment of operating inside large metropolitan areas dominated by regional and national financial organizations. The acquisition is also expected to create synergies on the operational side of the Company by allowing noninterest expenses to be spread over a larger operating base.

On September 29, 2022, CBI and Civista, entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Vision Financial Group, Inc., a Pennsylvania corporation (“VFG”), and Frederick S. Summers, a resident of the State of Florida (“Seller”), pursuant to which Civista agreed to acquire all of the issued and outstanding shares of capital stock of VFG. VFG is a privately held, independent, full-service equipment leasing and financing company headquartered in Pittsburgh, Pennsylvania. The acquisition of VFG subsequently closed on October 3, 2022.

Under the terms and conditions of the Purchase Agreement, upon closing, Civista acquired all of the issued and outstanding shares of capital stock of VFG from Seller in exchange for: (i) payment to Seller of cash consideration equal to approximately $28,600 (subject to adjustment based on the Shareholder Equity of VFG at the time of closing); and (ii) issuance to Seller and certain members of VFG management of an aggregate of 150,145 shares of CBI common stock (“CBI Shares”), equal to $5,250 divided by the volume weighted average closing price of a CBI Share on The NASDAQ—Capital Market® for the ten consecutive trading days immediately preceding the closing date. Approximately $7,900 of outstanding subordinated debt of VFG was also assumed and paid off by Civista in connection with the transaction. Pursuant to the Purchase Agreement, Seller and certain members of VFG management received an additional amount of contingent consideration in the form of 250,148 restricted CBI Shares with an aggregate value of $5,250. The restricted shares will be subject to vesting or forfeiture based on agreed upon targets of actual originations of equipment leases and similar financing products offered by VFG in 2023 and 2024.

The Purchase Agreement contains customary representations, warranties and covenants by each of the parties and contains indemnification provisions under which the parties agreed, subject to certain limitations, to indemnify each other against certain liabilities. At closing, Civista deposited certain portions of the cash consideration with an escrow agent to be held in escrow and made available to satisfy post-closing indemnification claims under the Purchase Agreement. To supplement the indemnification provided by Seller, Civista obtained representation and warranty insurance.

The purchase price allocation and certain fair value measurements remain preliminary due to the timing of the acquisition. Due to the recent closing, management remains in the early stages of reviewing the estimated fair values and evaluating the assumed tax positions of this acquisition. The Company expects to finalize its analysis of the acquired assets and assumed liabilities in this transaction within one year of the acquisition.

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 September 30, ~~2021~~2022 compared to December 31, ~~2020,~~2021, and the consolidated results of operations for the ~~three- and~~three-and nine-month periods ended September 30, ~~2021,~~2022, compared to the same periods in ~~2020.~~2021. This discussion should be read in conjunction with the 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~~to:

Management’s Discussion and Analysis of ~~another highly infectious or contagious disease; changes~~Financial Condition and Results of Operations

(Amounts 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, 2020, as supplemented by “Item 1A. Risk Factors” of Part II of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021. thousands, except share data)

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 September 30, ~~2021~~2022 were ~~$2,952,236~~$3,241,719 compared to ~~$2,768,862~~$3,012,905 at December 31, ~~2020,~~2021, an increase of ~~$183,374,~~$228,814, or ~~6.6%~~7.6%. The increase in total assets was due to the Company’s acquisition by merger of Comunibanc Corp. effective July 1, 2022 and increases in loans of $329,603, accompanied by increases in securities available-for-sale, and other assets of $42,172 and $24,260, respectively, partially offset by a decrease in cash and cash equivalents of $113,643, accompanied by other increases in securities available for sale and other assets of $134,685 and $3,784, respectively, partially offset by decreases in other securities, loans held for sale, loans and swap assets of $3,526, $1,191, $54,228 and $8,842, respectively.$223,325. Total liabilities at September 30, ~~2021~~2022 were ~~$2,603,786~~$2,939,117 compared to ~~$2,418,754~~$2,657,693 at December 31, ~~2020,~~2021, an increase of ~~$185,032,~~$281,424, or ~~7.6%~~10.6%. The increase in total liabilities was primarily attributable to ~~increases~~an increase in ~~noninterest-bearing demand accounts and interest-bearing demand~~total deposit accounts of ~~$111,683 and $133,685, respectively,~~$291,552, accompanied by an increase in ~~accrued expenses and other liabilities~~short term FHLB borrowings of ~~$4,153,~~$55,000, partially offset by decreases in ~~long-term Federal Home Loan advances and swap liabilities~~long term FHLB borrowings of ~~$50,000 and $8,906, respectively.~~$68,277.

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

Loans outstanding as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:

	September 30, 2021			December 31, 2020			$ Change			% Change			September 30, 2022			December 31, 2021			$ Change			% Change
Commercial & Agriculture	$	276,741		$	409,876		$	(133,135	)		-32.5	%	$	227,387		$	246,502		$	(19,115	)		-7.8	%
Commercial Real Estate—Owner Occupied		292,725			278,413			14,312			5.1	%		364,468			295,452			69,016			23.4	%
Commercial Real Estate—Non-Owner Occupied		788,898			705,072			83,826			11.9	%		956,169			829,310			126,859			15.3	%
Residential Real Estate		424,553			442,588			(18,035	)		-4.1	%		531,164			430,060			101,104			23.5	%
Real Estate Construction		179,491			175,609			3,882			2.2	%		202,793			157,127			45,666			29.1	%
Farm Real Estate		30,147			33,102			(2,955	)		-8.9	%		25,636			28,419			(2,783	)		-9.8	%
Consumer and Other		12,259			12,842			(583	)		-4.5	%		20,997			11,009			9,988			90.7	%
Total loans		2,004,814			2,057,502			(52,688	)		-2.6	%		2,328,614			1,997,879			330,735			16.6	%
Allowance for loan losses		(26,568	)		(25,028	)		(1,540	)		6.2	%		(27,773	)		(26,641	)		(1,132	)		4.2	%
Net loans	$	1,978,246		$	2,032,474		$	(54,228	)		-2.7	%	$	2,300,841		$	1,971,238		$	329,603			16.7	%

Included in Commercial & Agriculture loans above were ~~$83,287~~$819 of PPP loans as of September 30, ~~2021~~2022 and ~~$217,295~~$43,209 of PPP loans as of December 31, ~~2020.~~2021.

Loans held for sale ~~decreased $1,191~~increased $1,519, or ~~17.0%~~77.0%, since December 31, ~~2020.~~2021. The ~~decrease~~increase was due to ~~a decrease~~an increase in the average loan balance held for sale. At September 30, ~~2021, 34~~2022, 19 loans totaling ~~$5,810~~$3,491 were held for sale as compared to 2914 loans totaling ~~$7,001~~$1,972 at December 31, ~~2020.~~2021.

Net loans have ~~decreased $54,228~~increased $329,603, or ~~2.7%~~16.7%, since December 31, ~~2020.~~2021. The Commercial Real Estate – Owner Occupied, Commercial Real Estate – Non-Owner Occupied, ~~and~~Residential Real Estate, Real Estate Construction and Consumer and Other loan portfolios increased ~~$14,312, $83,826~~$69,016, $126,859, $101,104, $45,666 and ~~$3,882,~~$9,988, respectively, since December 31, ~~2020,~~2021, while the Commercial & Agriculture and Farm Real Estate loan portfolios decreased $19,115 and $2,783, respectively, since December 31, 2021. Loans acquired as part of the Comunibanc Corp. acquisition for Commercial & Agriculture, Commercial Real Estate – Owner Occupied, Commercial Real Estate – Non-Owner Occupied, Residential Real Estate, Real Estate Construction, Farm Real Estate and Consumer and Other loan portfolios ~~decreased $133,135, $18,035, $2,955~~totaled $9,731, $30,680, $45,731, $61,752, $12,394 $2,872 and ~~$583, respectively, since December 31, 2020.~~$11,757, respectively. At September 30, ~~2021,~~2022, the net loan to deposit ratio was ~~81.2%~~85.0% compared to ~~92.8%~~81.6% at December 31, ~~2020.~~2021. The ~~decrease~~increase in the net loan to deposit ratio is primarily the result of an increase in loans, partially offset by an increase in deposits.

During the first nine months of ~~2021,~~2022, provisions made to the allowance for loan losses totaled ~~$830,~~$1,000, compared to a provision of ~~$7,862~~$830 during the same period in ~~2020.~~ 2021. The ~~decrease~~increase in provision was due to the ~~stability~~strong loan growth during the first nine months of ~~our credit quality metrics coupled with~~2022. The challenges of the ~~stabilization and, in some cases, improvement of~~ international, national, regional and local economic conditions, ~~that were adversely impacted by~~particularly inflation, has taken greater focus from the ~~2020~~prior economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. Despite these concerns, our portfolio quality has remained stable overall with decreases in criticized loans. We continue to be optimistic that asset quality will continue to remain strong despite ongoing headwinds. While vaccinations in the first nine months of 2021 have created some level of optimism in the business community, there remains uncertainty due to the continued concern over increased infections from the Delta variant of COVID. Wewe remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry as well as challenges businesses face in today’s environment. Economic impacts related to the COVID-19 pandemic since March 2020 include 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 threatimpact of inflation ~~remain.~~on all of our borrowers, we are encouraged by strong loan growth.

Net recoveries for the first nine months of ~~2021~~2022 totaled ~~$710,~~$132, compared to net recoveries of $8$710 in the first nine months of ~~2020.~~2021. For the first nine months of ~~2021,~~2022, the Company charged off a total of ~~sixteen~~14 loans. ~~Nine Residential Real Estate loans totaling $114, one~~One Commercial and Agriculture loan totaling ~~$15~~$22, five Residential Real Estate loan totaling $97 and ~~six~~eight Consumer and Other loans totaling ~~$19~~$45 were charged off in the first nine months of the year. In addition, during the first nine months of ~~2021,~~2022, the Company had recoveries on previously charged-off Commercial and Agriculture loans of ~~$164,~~$16, Commercial Real Estate – Owner Occupied loans of ~~$6,~~$42, Commercial Real Estate – Non-Owner Occupied loans of ~~$392,~~$68, Residential Real Estate loans of ~~$232, Real Estate Construction loans of $1,~~$140, Farm Real Estate loans of $9$5 and Consumer and Other loans of ~~$54.~~$25. 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~~increased by ~~$1,176~~$1,106 since December 31, ~~2020,~~2021, which was due to a ~~decrease~~$780 increase in loans on nonaccrual status ~~of $1,606~~ and an increase in loans past due 90 days and accruing of ~~$430.~~$326. 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

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

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 ~~1.33%~~1.19% at September 30, ~~2021~~2022 and ~~1.22%~~1.33% at December 31, ~~2020.~~2021.

The ~~available for sale~~available-for-sale security portfolio increased by ~~$134,685,~~$42,172, from ~~$363,464~~$559,874 at December 31, ~~2020~~2021 to ~~$498,149~~$602,046 at September 30, ~~2021.~~2022. Securities acquired as part of the acquisition of Comunibanc Corp. totaled $120,399 and $57,322 were sold immediately after the merger. 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 September 30, ~~2021,~~2022, the Company was in compliance with all pledging requirements.

Other securities decreased $3,526 from December 31, 2020 to September 30, 2021. The decrease is the result of the FHLB of Indianapolis calling FHLB securities held by the Company during the third quarter of 2021.

Premises and equipment, net, increased ~~$136~~$7,723 from December 31, ~~2020~~2021 to September 30, ~~2021.~~2022. The increase is the result of new purchases of ~~$1,467,~~$3,208, offset by depreciation of ~~$1,689~~$1,558. Premises and ~~disposals~~equipment, net, acquired from the acquisition of ~~$13.~~Comunibanc Corp. totaled $6,073.

Goodwill increased by $24,801, from $76,851 at December 31, 2021 to $101,652 at September 30, 2022. The increase is due to the goodwill created from the acquisition of Comunibanc Corp. Other intangible assets increased $3,973 from year-end 2021. The increase includes $4,426 of core deposit intangibles and $419 of mortgage servicing rights from the acquisition of Comunibanc Corp.

Bank owned life insurance (BOLI) increased ~~$752~~$6,650 from December 31, ~~2020~~2021 to September 30, ~~2021.~~2022. BOLI acquired from the merger with Comunibanc Corp. totaled $5,918. The ~~increase~~remaining difference is the result of increases in the cash surrender value of the underlying insurance policies.

Swap assets ~~decreased $8,842~~increased $7,376 from December 31, ~~2020~~2021 to September 30, ~~2021.~~2022. The ~~decrease of $8,842~~increase is primarily the result of ~~a decrease~~an increase in market value.

~~Other assets~~Deferred taxes available-for-sale securities increased ~~$3,784~~$24,138 from December 31, ~~2020~~2021 to September 30, ~~2021.~~2022. The increase is the result of ~~a $1,000 refund receivable related to an alternative minimum tax (AMT) credit refundable under the CARES Act,~~ an increase in ~~prepaid franchise~~deferred taxes - securities of ~~$585, an increase in prepaid software of $641 and an increase in low income housing investments of $1,392.~~ $21,044.

Total deposits as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:

	September 30, 2021		December 31, 2020		$ Change			% Change			September 30, 2022		December 31, 2021		$ Change		% Change
Noninterest-bearing demand	$	832,492	$	720,809	$	111,683			15.5	%	$	944,241	$	788,906	$	155,335		19.7	%
Interest-bearing demand		502,865		410,139		92,726			22.6	%		560,594		537,510		23,084		4.3	%
Savings and money market		846,573		771,612		74,961			9.7	%		931,393		843,837		87,556		10.4	%
Time deposits		252,836		286,838		(34,002	)		-11.9	%		272,025		246,448		25,577		10.4	%
Total Deposits	$	2,434,766	$	2,189,398	$	245,368			11.2	%	$	2,708,253	$	2,416,701	$	291,552		12.1	%

Total deposits at September 30, ~~2021~~2022 increased ~~$245,368~~$291,552 from year-end ~~2020.~~2021. Noninterest-bearing deposits increased ~~$111,683~~$155,335 from year-end ~~2020,~~2021, while interest-bearing deposits, including savings and time deposits, increased ~~$133,685~~$136,217 from December 31, ~~2020.~~2021. Noninterest-bearing deposits acquired in the acquisition of Comunibanc Corp. totaled $65,491, while interest-bearing deposits, including savings and time deposits totaled $185,332. 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 ~~$31,500.~~$60,070. In addition, ~~business~~ demand deposit and public fund demand deposit accounts increased ~~$48,937~~$19,672 and ~~$28,515,~~$10,212, respectively. ~~Much of the increase in business demand deposit accounts resulted~~Noninterest-bearing deposits acquired from ~~customer deposits of PPP loan proceeds.~~Comunibanc Corp. totaled $65,491 at September 30, 2022. The increase in interest-bearing deposits was primarily due to ~~an increase~~increases in ~~non-public~~personal interest-bearing demand and public fund interest-bearing demand accounts of ~~$36,448~~$8,044 and ~~$52,121,~~$11,782, respectively, accompanied by ~~an increase~~decreases in ~~IOLTA~~business interest-bearing demand and JUMBO NOW accounts of ~~$3,832.~~$30,951 and $9,523, respectively. Interest-bearing demand deposits acquired from Comunibanc Corp. totaled $41,376 at September 30, 2022. Statement ~~savings, money market~~ savings, business money market savings and public fund money market savings accounts increased by ~~$45,336, $25,157, $23,723~~$25,012, $5,376 and ~~$18,182,~~$1,669, respectively, accompanied by a decrease in brokered money market savings accounts of ~~$40,137. Time certificates over $250, time certificates~~$16,997. Savings and ~~Jumbo time certificates decreased~~money market deposits

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

~~$16,836, $10,325~~acquired from Comunibanc Corp. totaled $87,641 at September 30, 2022. Time certificates over $250, time certificates and ~~$6,247,~~Jumbo time certificates decreased $7,767, $11,365 and $9,676, respectively. Time deposits acquired from Comunibanc Corp. totaled $56,315 at September 30, 2022. The year-to-date average balance of total deposits increased ~~$451,324~~$93,652, compared to the average balance for the same period in ~~2020~~2021, mainly due to increases in ~~noninterest-bearing business demand accounts~~the average balances of ~~$113,158, accompanied by increases in non-public~~ interest-bearing demand ~~non-public~~and savings and money markets ~~public funds interest-bearing demand and public funds money market~~ accounts of ~~$60,534, $150,178, $49,993~~$47,234 and ~~$8,949,~~$46,890, respectively. In addition, the average balance of time deposits decreased ~~$17,601~~$19,909 as compared to the same period in ~~2020.~~2021.

FHLB advances decreased $13,277 from December 31, 2021 to September 30, 2022. The decrease is due to the repayment of an FHLB advance in the amount of $75,000. This advance had terms of one hundred twenty months with a fixed rate of 1.03% and was puttable. The advance was not replaced. Long-term advances acquired in the acquisition of Comunibanc Corp. totaled $21,706, of which $14,983 has been paid down. The Company had $55,000 in overnight funds with FHLB as of September 30, 2022.

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 ~~$5,583~~$5,340 from December 31, ~~2020~~2021 to September 30, ~~2021.~~2022.

~~Long-term Federal Home Loan advances~~Securities purchased payable decreased ~~$50,000~~$913 from December 31, ~~2020~~2021 to September 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.~~2022. The ~~prepayment penalty of $3,717 was recorded in other operating expenses on the Consolidated Statements of Operations.~~

~~Swap liabilities decreased $8,906 from December 31, 2020 to September 30, 2021. The~~ decrease ~~of $8,906~~ is primarily the result of a decrease in ~~market value.~~accounts payable related to securities purchased but not yet funded of $913.

Tax refunds in process increased ~~$4,153~~$2,160 from December 31, ~~2020~~2021 to September 30, ~~2021.~~2022. The increase is primarily the result of ~~securities purchased, not yet funded~~an increase in a clearing account related to our tax refund processing program of ~~$3,857.~~$2,160.

Shareholders’ equity at September 30, ~~2021~~2022 was ~~$348,450,~~$302,602, or ~~11.8%~~9.3% of total assets, compared to ~~$350,108,~~$355,212, or ~~12.7%~~11.8% of total assets, at December 31, ~~2020.~~2021. The decrease was the result of a decrease in the fair value of securities available-for-sale, net of tax, of $78,802, dividends on common shares of $6,291 and the purchase of treasury shares of $16,734, offset by net income of ~~$29,564,~~$27,279 and a decrease in the Company’s pension liability, net of tax, of ~~$193, offset by a decrease in the fair value of securities available for sale, net of tax, of $5,514, dividends on common shares of $5,932 and the purchase of treasury shares of $20,557.~~$164.

Total outstanding common shares at September 30, ~~2021~~2022 were ~~15,029,972,~~15,235,545, which ~~decreased~~increased from ~~15,898,032~~14,954,200 common shares outstanding at December 31, ~~2020.~~2021. Common shares outstanding ~~decreased as a result~~increased due to the issuance of ~~914,924~~984,723 common shares to former shareholders of Comunibanc Corp. in connection with the acquisition of Comunibanc Corp. effective July 1, 2022. Additionally, common share outstanding was impacted by 740,238 common shares being repurchased by the Company at an average repurchase price of ~~$22.47.~~$22.61. The Company repurchased ~~239,536~~341,963 common shares pursuant to a stock repurchase program announced on May 4, ~~2020, 562,489~~2022 and 392,847 common shares pursuant to a stock repurchase program announced on ~~April 20, 2021 and 107,834 common shares pursuant to a stock repurchase program announced~~ August 12, 2021. ~~An additional 5,065 common shares were surrendered to pay taxes upon vesting of restricted shares, and 1,067 restricted common shares were forfeited during the period. A~~The repurchase program ~~publicly-announced~~publicly announced on May 4, ~~2020~~2022 authorized the Company to repurchase a maximum aggregate value of $13,500 of the Company’s common shares until ~~April 20, 2021. A~~May 9, 2023. The repurchase ~~program publicly-announced~~plan publicly announced on ~~April 20,~~August 12, 2021 authorized the Company to repurchase a maximum aggregate value of $13,500 of the Company’s common shares until ~~April 19~~August 10, 2022. ~~On August 12, 2021, the Company publicly announced a new repurchase program, which replaced the April 20, 2021 repurchase program and authorizes~~An additional 5,428 common shares were surrendered by officers to the Company to ~~repurchase up to a maximum~~pay taxes upon vesting of ~~$13,500 of the Company’s~~restricted shares and 2,138 restricted common shares ~~until August 10, 2022.~~were forfeited. The repurchase of common shares was offset by the grant of ~~39,139~~31,774 restricted common shares to certain officers under the Company’s 2014 Incentive Plan. In addition, ~~8,792~~7,224 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 ~~$9,642~~$11,112 for the three months ended September 30, ~~2021,~~2022, an increase of ~~$1,960~~$1,470 from net income of ~~$7,682~~$9,642 for the same three months of ~~2020.~~2021. Basic earnings per common share were ~~$0.64~~$0.72 for the quarter ended September 30, ~~2021,~~2022, compared to ~~$0.48~~$0.64 for the same period in ~~2020.~~2021. Diluted earnings per common share were ~~$0.64~~$0.72 for the quarter ended September 30, ~~2021,~~2022, compared to ~~$0.48~~$0.64 for the same period in ~~2020.~~2021. The primary reasons for the changes in net income are explained below.

Net interest income for the three months ended September 30, ~~2021~~2022 was ~~$24,433,~~$30,439, an increase of ~~$2,427~~$6,006 from ~~$22,006~~$24,433 for the same three months of ~~2020.~~2021. This increase is the result of an increase of ~~$1,226~~$6,749 in total interest income, ~~with a decrease~~offset by an increase of ~~$1,201~~$743 in interest expense. Interest-earning assets averaged $3,002,256 during the three months ended September 30, 2022, an increase of $254,806 from $2,747,450 for the same period of 2021. The Company’s average interest-bearing liabilities increased from $1,716,512 during the three months ended September 30, 2021 ~~an increase of $129,566 from $2,617,884 for the same period of 2020. The Company’s average interest-bearing liabilities decreased from $1,764,283~~to $1,893,092 during the three months ended September 30, ~~2020 to $1,715,590 during~~2022. The Company’s fully tax equivalent net interest margin for the three months ended September 30, 2022 and 2021 was 4.03% and 3.62%, respectively.

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

~~September 30, 2021. The Company’s fully tax equivalent net~~Total interest ~~margin~~income was $32,533 for the three months ended September 30, ~~2021 and 2020 was 3.62% and 3.44%, respectively.~~

~~Total interest income was $25,784 for the three months ended September 30, 2021,~~2022, an increase of ~~$1,226~~$6,749 from ~~$24,558~~$25,784 of total interest income for the same period in ~~2020.~~2021. The increase in interest income is attributable to ~~an increase of $1,066~~increases in interest and fees on loans ~~which resulted from an increase in loan yield, offset by a decrease in the average balance~~and interest income on taxable and tax-exempt securities of ~~loans. The average balance of~~$4,472, $1,513, and $443, respectively. Interest on loans ~~decreased by $29,827 or 1.5%~~increased $4,472 to ~~$2,010,665~~$27,176 for the three months ended September 30, ~~2021~~2022, as compared to ~~$2,040,492~~$22,704 for the same period in ~~2020.~~2021. The ~~loan yield~~average balance of loans increased by $278,923, or 13.9% to ~~4.48%~~$2,289,588 for the three months ended September 30, ~~2021, from 4.22%~~2022 as compared to $2,010,665 for the same period in ~~2020. During the quarter, the average balance of PPP loans was $105,886. These loans had an average~~2021. The loan yield ~~of 10.44%, which includes the amortization of PPP fees.~~

~~Interest on taxable securities~~ increased ~~$98~~ to ~~$1,423~~4.71% for the three months ended September 30, ~~2021, compared to $1,325~~2022, from 4.48% for the same period in ~~2020.~~2021.

Interest on taxable securities increased $1,513 to $2,936 for the three months ended September 30, 2022, compared to $1,423 for the same period in 2021. The average balance of taxable securities increased ~~$81,459~~$89,942 to ~~$264,655~~$354,597 for the three months ended September 30, ~~2021~~2022, as compared to ~~$183,196~~$264,655 for the same period in ~~2020.~~2021. The yield on taxable securities ~~decreased 83~~increased 88 basis points to 3.06% for 2022, compared to 2.18% for ~~2021, compared to 3.01% for 2020.~~2021. Interest on tax-exempt securities increased ~~$19~~$443 to ~~$1,555~~$1,998 for the three months ended September 30, ~~2021,~~2022, compared to ~~$1,536~~$1,555 for the same period in ~~2020.~~2021. The average balance of tax-exempt securities increased ~~$12,589~~$50,340 to ~~$217,987~~$268,327 for the three months ended September 30, ~~2020~~2022, as compared to ~~$205,398~~$217,987 for the same period in ~~2020.~~2021. The yield on tax-exempt securities decreased 2344 basis points to 3.47% for 2022, compared to 3.91% for 2021 ~~compared to 4.14% for 2020~~ due to the impact of lower interest rates in ~~2021~~2022 as compared to the same period of ~~2020.~~2021.

Interest expense ~~decreased $1,201,~~increased $743, or ~~47.1%~~55.0%, to ~~$1,351~~$2,094 for the three months ended September 30, ~~2021,~~2022, compared with ~~$2,552~~$1,351 for the same period in ~~2020.~~2021. The change in interest expense can be attributed to ~~both a decrease~~an increase in ~~both~~ the average balance of interest-bearing liabilities, ~~and a decrease~~accompanied by increases in ~~rates on demand and savings accounts, FHLB borrowings and subordinated debentures.~~rates. For the three months ended September 30, ~~2021,~~2022, the average balance of interest-bearing liabilities ~~decreased $48,693~~increased $176,580 to ~~$1,715,590,~~$1,893,092, as compared to ~~$1,764,283~~$1,716,512 for the same period in ~~2020.~~2021. Interest incurred on deposits decreased by ~~$661~~$34 to ~~$970~~$936 for the three months ended September 30, ~~2021,~~2022, compared to ~~$1,631~~$970 for the same period in ~~2020.~~2021. Although the average balance of interest-bearing deposits increased by ~~$186,761~~$149,936 for the three months ended September 30, ~~2021~~2022, as compared to the same period in ~~2020,~~2021, deposit expense decreased due to a decrease in the rate paid on ~~demand and savings accounts from 0.14% in 2020 to 0.09% in 2021. The rate paid on~~ time deposits ~~decreased~~ from ~~1.69% to~~ 1.03% in ~~2021.~~2021 to 0.79% in 2022. Interest expense incurred on FHLB advances ~~and subordinated debentures~~ decreased ~~41.8%~~6.7% from ~~2020.~~2021. The average balance on FHLB balances decreased ~~$50,000~~$42,951 for the three months ended September 30, ~~2021~~2022, as compared to the same period in ~~2020~~2021, as a result of the ~~prepayment~~repayment of a long-term advance. ~~In addition, the rate paid~~Interest expense incurred on subordinated debentures ~~decreased 17 basis points~~increased $793, to $975 for the three months ended September 30, ~~2021 as~~2022, compared to $182 for the same period in ~~2020.~~2021. For the three months ended September 30, 2022, the average balance of subordinated debentures increased $73,402 to $103,751, as compared to $30,349 for the same period in 2021. During the fourth quarter of 2021, the Company entered into a Subordinated Note Purchase Agreement pursuant to which the Company sold and issued $75,000 aggregate principal amount of its 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031.

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 September 30, ~~2021~~2022 and ~~2020.~~2021. 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 September 30,																	Three Months Ended September 30,
		2021								2020									2022								2021
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**		$	2,010,665		$	22,704		4.48	%	$	2,040,492		$	21,638			4.22	%	$	2,289,588		$	27,176		4.71	%	$	2,010,665		$	22,704		4.48	%
Taxable securities			264,655			1,423		2.18	%		183,196			1,325			3.01	%		354,597			2,936		3.06	%		264,655			1,423		2.18	%
Tax-exempt securities			217,987			1,555		3.91	%		205,398			1,536			4.14	%		268,327			1,998		3.47	%		217,987			1,555		3.91	%
Interest-bearing deposits in other banks			254,143			102		0.16	%		188,798			59			0.12	%		89,744			423		1.87	%		254,143			102		0.16	%
Total interest-earning assets		$	2,747,450		$	25,784		3.82	%	$	2,617,884		$	24,558			3.83	%	$	3,002,256		$	32,533		4.30	%	$	2,747,450		$	25,784		3.82	%
Noninterest-earning assets:
Cash and due from financial institutions			33,803								29,647									58,581								33,803
Premises and equipment, net	��		22,845								23,214									28,633								22,845
Accrued interest receivable			7,417								10,109									8,907								7,417
Intangible assets			84,949								84,906									84,265								84,949
Other assets			38,189								42,916									48,013								39,111
Bank owned life insurance			46,557								45,574									53,131								46,557
Less allowance for loan losses			(26,683	)							(21,214	)								(27,546	)							(26,683	)
Total Assets		$	2,954,527							$	2,833,036								$	3,256,240							$	2,955,449
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings		$	1,331,032		$	302		0.09	%	$	1,108,512		$	389			0.14	%	$	1,457,112		$	379		0.10	%	$	1,331,032		$	302		0.09	%
Time			257,047			668		1.03	%		292,806			1,242			1.69	%		280,903			557		0.79	%		257,047			668		1.03	%
Short-term FHLB advances																				6,713			48		2.08	%		-			—		0.00	%
Long-term FHLB advances			75,000			194		1.03	%		125,000			452			1.44	%		25,336			133		2.84	%		75,000			194		1.03	%
Other borrowings			—			—		0.00	%		183,695			271			0.59	%
Federal funds purchased			—			—		0.00	%		543			(2	)		-1.47	%
Subordinated debentures			29,427			182		2.45	%		29,427			194			2.62	%		103,751			975		3.73	%		30,349			182		2.45	%
Repurchase Agreements			23,084			5		0.09	%		24,300			6			0.10	%		19,277			2		0.04	%		23,084			5		0.09	%
Total interest-bearing liabilities		$	1,715,590		$	1,351		0.31	%	$	1,764,283		$	2,552			0.58	%	$	1,893,092		$	2,094		0.44	%	$	1,716,512		$	1,351		0.31	%
Noninterest-bearing deposits			849,501								683,473									980,999								849,501
Other liabilities			40,466								46,002									77,015								40,466
Shareholders’ Equity			348,970								339,278									305,134								348,970
Total Liabilities and Shareholders’ Equity		$	2,954,527							$	2,833,036								$	3,256,240							$	2,955,449
Net interest income and interest rate spread					$	24,433		3.51	%				$	22,006			3.25	%				$	30,439		3.86	%				$	24,433		3.51	%
Net interest margin								3.62	%								3.44	%							4.03	%							3.62	%

*—Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was ~~$414~~$532 and ~~$411~~$414 for the periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, 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 September 30, ~~2021~~2022 and ~~2020.~~2021.

	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	$	(320	)	$	1,386		$	1,066		$	3,267		$	1,205		$	4,472
Taxable securities		520			(422	)		98			819			694			1,513
Tax-exempt securities		100			(81	)		19			633			(190	)		443
Interest-bearing deposits in other banks		24			19			43			(106	)		427			321
Total interest income	$	324		$	902		$	1,226		$	4,613		$	2,136		$	6,749
Interest expense:
Demand and savings	$	68		$	(155	)	$	(87	)	$	30		$	47		$	77
Time		(138	)		(436	)		(574	)		58			(169	)		(111	)
Short-term FHLB advances											48			—			48
Long-term FHLB advances		(151	)		(107	)		(258	)		(180	)		119			(61	)
Other borrowings		(271	)		—			(271	)
Federal funds purchased		2			—			2
Subordinated debentures		—			(12	)		(12	)		642			151			793
Repurchase agreements		—			(1	)		(1	)		(1	)		(2	)		(3	)
Total interest expense	$	(490	)	$	(711	)	$	(1,201	)	$	597		$	146		$	743
Net interest income	$	814		$	1,613		$	2,427		$	4,016		$	1,990		$	6,006

The Company provides for loan losses through regular provisions to the allowance for loan losses. Provisions for loan losses totaled $0$300 and ~~$2,250~~$0 during the quarters ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The ~~decrease~~increase in the provision in the third quarter of ~~2021 was due to~~2022 reflects the ~~stability of our~~Company’s strong loan growth during the quarter. Our credit quality metrics ~~coupled with~~remain stable despite the ~~stabilization and, in some cases, improvement~~ongoing headwinds of the challenging international, national, regional and local economic ~~conditions that~~conditions. While the direct impact of COVID-19 wains, we remain cautious due to increasing inflationary pressures. Criticized loans were ~~adversely impacted by the 2020 economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations in 2021 have created some level of optimism~~reduced in the business community, there remains uncertainty due to the continued concern over increased infections from the Delta variant of COVID. We remain cautious given the level of classified loans in the portfolio, particularlythird quarter, primarily loans to borrowers in the hotel industry ~~as well as the challenges businesses face in today’s environment.~~due to improved occupancy. Economic impacts related to the COVID-19 pandemic ~~since March 2020~~ have ~~included~~improved somewhat, but continued concerns linger due to the ~~loss of revenue experienced by our business clients,~~ disruption of supply chains, ~~additional employee costs for businesses due to~~workforce shortages, rising inflationary pressures and the ~~pandemic, higher unemployment rates throughout our footprint and a large number~~prospects 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 portfolios have been, and are expected to continue to be impacted the most.recession.

Noninterest income for the three-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021 are as follows:

	Three months ended September 30,										Three months ended September 30,
	2021		2020		$ Change			% Change			2022			2021		$ Change			% Change
Service charges	$	1,519	$	1,414	$	105			7.4	%	$	1,885		$	1,519	$	366			24.1	%
Net gain on sale of securities		4		92		(88	)		-95.7	%		4			4		—			0.0	%
Net gain on equity securities		50		20		30			150.0	%
Net gain (loss) on equity securities												(133	)		50		(183	)		-366.0	%
Net gain on sale of loans		1,612		2,413		(801	)		-33.2	%		637			1,612		(975	)		-60.5	%
ATM/Interchange fees		1,330		1,183		147			12.4	%		1,394			1,330		64			4.8	%
Wealth management fees		1,236		1,006		230			22.9	%		1,208			1,236		(28	)		-2.3	%
Bank owned life insurance		261		243		18			7.4	%		255			261		(6	)		-2.3	%
Swap fees		41		158		(117	)		-74.1	%		—			41		(41	)		-100.0	%
Other		373		257		116			45.1	%		484			373		111			29.8	%
Total noninterest income	$	6,426	$	6,786	$	(360	)		-5.3	%	$	5,734		$	6,426	$	(692	)		-10.8	%

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

Noninterest income for the three months ended September 30, ~~2021~~2022 was ~~$6,426,~~$5,734, a decrease of ~~$360,~~$692, or ~~5.3%~~10.8%, from ~~$6,786~~$6,426 for the same period of ~~2020.~~2021. The decrease was primarily due to decreases in net gain (loss) on ~~sale of~~equity securities, net gain on sale of loans and swap fees, offset by increases in ~~net gain on equity securities, ATM/Interchange fees, wealth management fees~~service charges and ~~other.~~other income. Net gain (loss) on ~~sale of~~equity securities decreased as a result of ~~fewer securities sales for the quarter.~~market value decreases. Net gain on sale of loans decreased primarily as a result of a decrease in volume of loans sold. During the three-months ended September 30, 2022, 117 loans were sold, totaling $33,929. During the three-months ended September 30, 2021, 303 loans were sold, totaling $56,887. ~~During the three-months ended September 30, 2020, 418 loans were sold, totaling $84,315.~~ Swap fees decreased due to the volume of swaps performed during the quarter ended September 30, ~~2021~~2022 as compared to the same period of ~~2020. Net gain on equity securities~~2021. Service charges increased ~~as a result~~due to higher service charges of ~~market value increases. ATM/Interchange~~$196 and overdraft fees of $130. Other income increased as ~~a result of increased transaction volume and incentives. Wealth management fees increased primarily as a~~ result of an increase in trust and brokerage fees of $158 and $71, respectively. Trust income increased as a result of new accounts and market conditions while brokerage income increased due to volume of business. Other income increased due to increases in amortization of mortgage servicing ~~rights and merchant credit card fees.~~fee income.

Noninterest expense for the three-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021 are as follows:

	Three months ended September 30,										Three months ended September 30,
	2021		2020		$ Change			% Change			2022		2021		$ Change			% Change
Compensation expense	$	11,390	$	10,595	$	795			7.5	%	$	12,484	$	11,390	$	1,094			9.6	%
Net occupancy expense		985		1,010		(25	)		-2.5	%		1,252		985		267			27.1	%
Equipment expense		444		494		(50	)		-10.1	%		637		444		193			43.5	%
Contracted data processing		429		415		14			3.4	%		846		429		417			97.2	%
FDIC assessment		247		288		(41	)		-14.2	%		170		247		(77	)		-31.2	%
State franchise tax		511		427		84			19.7	%		629		511		118			23.1	%
Professional services		776		669		107			16.0	%		1,335		776		559			72.0	%
Amortization of intangible assets		223		227		(4	)		-1.8	%		456		223		233			104.5	%
ATM/Interchange expense		594		538		56			10.4	%		604		594		10			1.7	%
Marketing		359		361		(2	)		-0.6	%		372		359		13			3.6	%
Software maintenance expense		819		506		313			61.9	%		942		819		123			15.0	%
Other		2,677		2,197		480			21.8	%		2,828		2,474		354			14.3	%
Total noninterest expense	$	19,454	$	17,727	$	1,727			9.7	%	$	22,555	$	19,251	$	3,304			17.2	%

Noninterest expense for the three months ended September 30, ~~2021~~2022 was ~~$19,454,~~$22,555, an increase of ~~$1,727,~~$3,304, or ~~9.7%~~17.2%, from ~~$17,727~~$19,251 reported for the same period of ~~2020.~~2021. The primary reasons for the increase were increases in compensation expense, net occupancy, equipment expense, contracted data processing expense, state franchise tax, professional services, ~~ATM/Interchange~~amortization expense, software maintenance expense and other ~~expenses,~~operating expense, offset by ~~decreases~~a decrease in ~~expense for equipment and~~ FDIC assessment. The increase in compensation expense was mainly due to the acquisition of Comunibanc Corp. The increase in occupancy expense is due to increases in utilities and ground maintenance. Equipment expense increased ~~salary, payroll taxes, employer savings contributions~~due to increases in computer, security and ~~employee insurance costs, offset by a~~office equipment purchases of $101. Contracted data processing fees increased due to the payment of deconversion fees related to the merger with Comunibanc Corp. of $349. The quarter-over-quarter decrease in ~~commission and incentive based costs.~~FDIC assessments was attributable to lower assessment multipliers charged to Civista. The increase in state franchise tax ~~is the result of~~expense was attributable to an increase in equity capital, ~~and apportionment rate.~~which is the basis of the Ohio Financial Institutions tax. Professional services increased due to anacquisition and merger related legal, accounting and tax professional fees of $430, accompanied by increases in recruitment fees and increased call volumes at the Company’s call center. The increase in ~~consulting fees~~amortization of intangible assets is related to ~~cost savings initiatives and customer service programs. The quarter-over-quarter increase in ATM/Interchange expense is~~ the ~~result of an increase in volume of transactions as compared to the third quarter of 2020.~~merger with Comunibanc Corp. The increase in software maintenance expense is due to a general increase in legacy software maintenance contracts and the implementation of our new digital banking. The ~~quarter-over-quarter~~ increase in other operating expense is primarily due to ~~increases in loan~~merger related expenses ~~the amortization~~ of ~~low income housing investments, education~~$116 and ~~training expense~~travel, lodging and ~~mortgage servicing rights valuation. Equipment expense decreased due to a decrease in equipment depreciation as compared to the third quarter~~meals of ~~2020. The quarter-over-quarter decrease in FDIC assessments was attributable to lower assessment multipliers charged to Civista.~~$64.

Income tax expense for the three months ended September 30, ~~2021~~2022 totaled ~~$1,763,~~$2,206, up ~~$630~~$240 compared to the same period in ~~2020.~~2021. The effective tax rates for the three-month periods ended September 30, 2022 and 2021 were 16.7% and ~~2020 were 15.5% and 12.9%~~16.9%, 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.

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

The Company had net income of ~~$29,564~~$27,279 for the nine months ended September 30, ~~2021, an increase~~2022, a decrease of ~~$7,545~~$2,285 from net income of ~~$22,019~~$29,564 for the same nine months of ~~2020.~~2021. Basic earnings per common share were ~~$1.90~~$1.82 for the period ended September 30, ~~2021,~~2022, compared to ~~$1.36~~$1.90 for the same period in ~~2020.~~2021. Diluted earnings per common share were ~~$1.90~~$1.82 for the period ended September 30, ~~2021,~~2022, compared to ~~$1.36~~$1.90 for the same period in ~~2020.~~2021. The primary reasons for the changes in net income are explained below.

Net interest income for the nine months ended September 30, ~~2021~~2022 was ~~$72,102,~~$77,639, an increase of ~~$5,906~~$5,537 from ~~$66,196 for~~$72,102 in the same nine months of ~~2020.~~2021. This increase is the result of an increase of ~~$2,864~~$6,255 in total interest income, ~~with a decrease~~partially offset by an increase of ~~$3,042~~$718 in interest expense. Interest-earning assets averaged ~~$2,842,462~~$2,895,090 during the nine months ended September 30, ~~2021,~~2022, an increase of ~~$382,529~~$52,628 from ~~$2,459,933~~$2,842,462 for the same period of ~~2020.~~2021. The Company’s average interest-bearing liabilities increased from ~~$1,590,433~~$1,724,858 for the first nine months of ~~2020~~2021 to ~~$1,723,936~~$1,850,724 for the same period in ~~2021.~~2022. The Company’s fully tax equivalent net interest margin for the nine months ended September 30, 2022 and 2021 was 3.62% and ~~2020 was~~ 3.48% ~~and 3.70%~~, respectively.

Total interest income increased ~~$2,864~~$6,255 to ~~$77,008~~$83,263 for the ~~nine-month~~ period ended September 30, ~~2021, which is attributable to an increase of $3,216 in interest and fees on loans.~~2022. This change was the result of ~~an increase~~increases in the average balance of ~~loans,~~interest-earning assets, accompanied by ~~a lower yield~~higher yields on the portfolio. The average balance of loans increased by ~~$131,227,~~$66,278, or ~~6.9%~~3.2%, to $2,111,019 for the period ended September 30, 2022, as compared to $2,044,741 for the ~~nine-month~~ period ended September 30, ~~2021, as compared to $1,913,514 for the nine-month period ended September 30, 2020.~~2021. The loan yield decreased to 4.44% for 2022, from 4.46% ~~for 2021, from 4.53%~~ in ~~2020. During the nine months ended September 30, 2021, the average balance of PPP loans was $187,363. These loans had an average yield of 7.01%, which includes the amortization of PPP fees.~~2021.

Interest on taxable securities ~~decreased $172~~increased $2,503 to ~~$3,928~~$6,431 for the ~~nine-month~~ period ended September 30, ~~2021,~~2022, compared to ~~$4,100~~$3,928 for the same period in ~~2020.~~2021. The average balance of taxable securities increased ~~$29,402~~$107,283 to $322,262 for the period ended September 30, 2022, as compared to $214,979 for the ~~nine-month~~ period ended September 30, ~~2021 as compared to $185,577 for the nine-month period ended September 30, 2020.~~2021. The yield on taxable securities ~~decreased 56~~increased 2 basis points to 2.53% for 2022, compared to 2.51% for ~~2021, compared to 3.07% for 2020.~~2021. Interest on tax-exempt securities increased ~~$10~~$1,070 to ~~$4,599~~$5,669 for the ~~nine-month~~ period ended September 30, ~~2021,~~2022, compared to ~~$4,589~~$4,599 for the same period in ~~2020.~~2021. The average balance of tax-exempt securities increased ~~$10,235~~$51,252 to $262,790 for the period ended September 30, 2022, as compared to $211,538 for the ~~nine-month~~ period ended September 30, ~~2021 as compared to $201,303 for the nine-month period ended September 30, 2020.~~2021. The yield on tax-exempt securities decreased 1647 basis points to 3.55% for 2022, compared to 4.02% for ~~2021, compared to 4.18% for 2020.~~2021.

Interest on interest-bearing deposits in other banks ~~decreased $190~~increased $757 to ~~$341~~$1,098 for the ~~nine-month~~ period ended September 30, ~~2021,~~2022, compared to ~~$531~~$341 for the same period in ~~2020.~~2021. The average balance of interest-bearing deposits in other banks ~~increased $211,665~~decreased $172,185 to $199,019 for the period ended September 30, 2022, as compared to $371,204 for the ~~nine-month~~ period ended September 30, ~~2021 as compared to $159,539 for the nine-month period ended September 30, 2020.~~2021. The yield on interest-bearing deposits in other banks ~~decreased 32~~increased 62 basis points to 0.74% for 2022, compared to 0.12% for ~~2021, compared to 0.44% for 2020.~~2021.

Interest expense ~~decreased $3,042,~~increased $718, or ~~38.3%~~14.6%, to ~~$4,906~~$5,624 for the ~~nine-month~~ period ended September 30, ~~2021,~~2022, compared with ~~$7,948~~$4,906 for the same period in ~~2020.~~2021. The change in interest expense can be attributed to an increase in rate, accompanied by an increase in the average balance of interest-bearing ~~liabilities accompanied by a decrease in rate.~~liabilities. For the ~~nine-month~~ period ended September 30, ~~2021,~~2022, the average balance of interest-bearing liabilities increased ~~$133,503~~$125,866 to ~~$1,723,936,~~$1,850,724, as compared to ~~$1,590,433~~$1,724,858 for the ~~nine-month~~ period ended September 30, ~~2020.~~2021. Interest incurred on deposits decreased by ~~$2,052~~$1,015 to ~~$3,366~~$2,351 for the ~~nine-month~~ period ended September 30, ~~2021,~~2022, compared to ~~$5,418~~$3,366 for the same period in ~~2020.~~2021. Although the average balance of interest-bearing deposits increased by ~~$268,897~~$97,088 for the ~~nine-month~~ period ended September 30, ~~2021~~2022, as compared to the same period in ~~2020,~~2021, deposit expense decreased due to a decrease in the rate paid on demand and savings accounts from ~~0.19% in 2020 to~~ 0.10% in ~~2021.~~2021 to 0.08% in 2022. The rate paid on time deposits decreased from ~~1.85% to~~ 1.18% in ~~2021.~~2021 to 0.80% in 2022. Interest expense incurred on FHLB advances and subordinated debentures ~~decreased 32.0%~~increased 114.7% from ~~2020.~~2021. The average balance on FHLB balances decreased ~~$35,430~~$39,815 as a result of the ~~prepayment~~repayment of a long-term advance for the ~~nine-month~~ period ended September 30, ~~2021~~2022, as compared to the same period in ~~2020,~~2021, while the rate paid decreased 1511 basis points. In addition, the average balance of subordinated debentures increased $73,377 to $103,726, as compared to $30,349 for the same period in 2021. During the fourth quarter of 2021, the Company entered into a Subordinated Note Purchase Agreement pursuant to which the Company sold and issued $75,000 aggregate principal amount of its 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031. The rate paid on subordinated debentures ~~decreased 93~~increased 97 basis points for the ~~nine-month~~ period ended September 30, ~~2021~~2022, as compared to the same period in 2020. The average balance of other borrowings decreased $103,133 for the nine-month period ended September 30, 2021 as compared to the same period in 2020 as a result of the Company’s repayment of amounts borrowed under the Paycheck Protection Program Liquidity Facility.2021.

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

The following table presents the condensed average balance sheets for the nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021. 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.

	Nine Months Ended September 30,																Nine Months Ended September 30,
	2021								2020								2022								2021
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**	$	2,044,741		$	68,140		4.46	%	$	1,913,514		$	64,924		4.53	%	$	2,111,019		$	70,065		4.44	%	$	2,044,741		$	68,140		4.46	%
Taxable securities		214,979			3,928		2.51	%		185,577			4,100		3.07	%		322,262			6,431		2.53	%		214,979			3,928		2.51	%
Tax-exempt securities		211,538			4,599		4.02	%		201,303			4,589		4.18	%		262,790			5,669		3.55	%		211,538			4,599		4.02	%
Interest-bearing deposits in other banks		371,204			341		0.12	%		159,539			531		0.44	%		199,019			1,098		0.74	%		371,204			341		0.12	%
Total interest-earning assets	$	2,842,462		$	77,008		3.71	%	$	2,459,933		$	74,144		4.13	%	$	2,895,090		$	83,263		3.88	%	$	2,842,462		$	77,008		3.71	%
Noninterest-earning assets:
Cash and due from financial institutions		37,763								94,083								108,220								37,763
Premises and equipment, net		22,578								22,830								24,429								22,578
Accrued interest receivable		8,146								8,729								8,025								8,146
Intangible assets		84,817								84,965								84,268								84,817
Other assets		37,504								37,802								44,077								38,426
Bank owned life insurance		46,310								45,332								48,965								46,310
Less allowance for loan losses		(26,288	)							(17,759	)							(27,168	)							(26,288	)
Total Assets	$	3,053,292							$	2,735,915							$	3,185,906							$	3,054,214
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	1,297,217		$	979		0.10	%	$	1,010,719		$	1,433		0.19	%	$	1,414,215		$	860		0.08	%	$	1,297,217		$	979		0.10	%
Time		270,139			2,387		1.18	%		287,740			3,985		1.85	%		250,230			1,491		0.80	%		270,139			2,387		1.18	%
Short-term FHLB advance		—			—		—			10,888			134		1.64	%		2,380			49		2.75	%		—			—		—
Long-term FHLB advance		100,458			968		1.29	%		125,000			1,346		1.44	%		58,263			515		1.18	%		100,458			968		1.29	%
Other borrowings		—			—		—			103,133			275		0.36	%
Federal funds purchased		—			—		—			385			1		0.35	%
Subordinated debentures		29,427			553		2.51	%		29,427			757		3.44	%		103,726			2,701		3.48	%		30,349			553		2.51	%
Repurchase Agreements		26,695			19		0.10	%		23,141			17		0.10	%		21,910			8		0.05	%		26,695			19		0.10	%
Total interest-bearing liabilities	$	1,723,936		$	4,906		0.38	%	$	1,590,433		$	7,948		0.67	%	$	1,850,724		$	5,624		0.41	%	$	1,724,858		$	4,906		0.38	%
Noninterest-bearing deposits		940,123								757,696								936,686								940,123
Other liabilities		39,952								53,633								76,748								39,952
Shareholders’ Equity		349,281								334,153								321,748								349,281
Total Liabilities and Shareholders’ Equity	$	3,053,292							$	2,735,915							$	3,185,906							$	3,054,214
Net interest income and interest rate spread				$	72,102		3.33	%				$	66,196		3.46	%				$	77,639		3.47	%				$	72,102		3.33	%
Net interest margin							3.48	%							3.70	%							3.62	%							3.48	%

*—Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was ~~$1,228~~$1,508 and ~~$1,130~~$1,228 for the periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, 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 nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021. The table is presented on a fully tax-equivalent basis.

	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	$	4,389		$	(1,173	)	$	3,216		$	2,201		$	(276	)	$	1,925
Taxable securities		637			(809	)		(172	)		2,470			33			2,503
Tax-exempt securities		196			(186	)		10			1,657			(587	)		1,070
Interest-bearing deposits in other banks		375			(565	)		(190	)		(225	)		982			757
Total interest income	$	5,597		$	(2,733	)	$	2,864		$	6,103		$	152		$	6,255
Interest expense:
Demand and savings	$	335		$	(789	)	$	(454	)	$	83		$	(202	)	$	(119	)
Time		(231	)		(1,367	)		(1,598	)		(165	)		(731	)		(896	)
Short-term FHLB advance		(134	)		—			(134	)		49			—			49
Long-term FHLB advance		(246	)		(132	)		(378	)		(378	)		(75	)		(453	)
Other borrowings		(275	)		—			(275	)
Federal funds purchased		(1	)		—			(1	)
Subordinated debentures		—			(204	)		(204	)		1,824			324			2,148
Repurchase agreements		3			(1	)		2			(3	)		(8	)		(11	)
Total interest expense	$	(549	)	$	(2,493	)	$	(3,042	)	$	1,410		$	(692	)	$	718
Net interest income	$	6,146		$	(240	)	$	5,906		$	4,693		$	844		$	5,537

(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 ~~$830~~$1,000 and ~~$7,862~~$830 during the periods ended September 30, 2022 and 2021, ~~and 2020.~~ respectively. The ~~decrease~~increase in provision was due to the ~~provision for~~strong loan growth during the first nine months of ~~2021 was due to~~2022. The challenges of the ~~stability of our credit quality metrics coupled with the stabilization and, in some cases, improvement of~~ international, national, regional and local economic conditions, ~~that were adversely impacted by~~particularly inflation, has taken greater focus from the ~~2020~~prior economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. Despite these concerns, our portfolio quality has remained stable overall with decreases in criticized loans. We continue to be optimistic that asset quality will continue to remain strong despite ongoing headwinds. While vaccinations in 2021 have created some level of optimism in the business community, there remains uncertainty due to the continued concern over increased infections from the Delta variant of COVID. Wewe remain cautious given the ~~level~~impact of ~~classified~~inflation on all of our borrowers, we are encouraged by strong loan growth.

Noninterest income for the nine-month periods ended September 30, 2022 and 2021 are as follows:

Noninterest income for the nine months ended September 30, 2022 was $19,012, a decrease of $5,629, or 22.8%, from $24,641 for the same period of 2021. The decrease was primary due to decreases in net gain on the sale of securities of $1,777, net gain (loss) on equity securities of $235, net gain on sale of loans of $4,429, swap fees of $135 and other income of $1289, which was offset by an increase in the portfolio, particularly loans to borrowers in the hotel industry as well as the challenges businesses face in today’s environment. Economic impacts related to the COVID-19 pandemic since March 2020 have included the lossservice charges of ~~revenue experienced by our business clients, disruption~~$912. Net gain on sale of ~~supply chains, additional employee costs for businesses~~securities decreased due to the ~~pandemic, higher unemployment rates throughout our footprint and~~sale of Visa Class B shares in 2021. Net gain (loss) on equity securities decreased as a ~~large number~~result of ~~customers requesting payment relief. While some~~market value decreases. Net gain on sale 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 portfolios have been, and are expected to continue to be, impacted the most.

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

~~Noninterest income for the nine-month periods ended September 30, 2021 and 2020 are as follows:~~

Noninterest income for the nine months ended September 30, 2021 was $24,641, an increase of $4,125, or 20.1%, from $20,516 for the same period of 2020. The increase was primary due to increases in net gain (loss) on equity securities of $317, net gain on sale of securities of $1,695, net gain on sale of loans of $1,074, ATM/Interchange fees of $724, wealth management fees of $654 and other income of $487, which was offset by a decrease in swap fees of $1,125. Net gain on sale of securities increased as a result of the sale of Visa Class B shares. Net gain (loss) on equity securities increased as a result of market value increases. Net gain on sale of loans increased due to an increase in the premium on loans sold. ATM/Interchange fees increased as a result of increased transaction fees and MasterCard fees. Wealth management fees increaseddecreased primarily as a result of ~~an increase~~a decrease in ~~trust and brokerage fees of $501 and $153, respectively. Trust income increased as a result of new accounts and market conditions while brokerage income has increased due to~~ volume of ~~business.~~loans sold. During the nine-months ended September 30, 2022, 571 loans were sold, totaling $107,587. During the nine-months ended September 30, 2021, 1,055 loans were sold, totaling $204,728. Swap fees decreased due to the volume of swaps performed during the nine-months ended September 30, ~~2021~~2022, as compared to the same period of ~~2020.~~2021. Other income decreased as result of an increase in insurance loss reserves from the Company’s reinsurance subsidiary. Service charges increased due to ~~increases~~an increase in ~~wire transfer~~service charges and overdraft fees ~~the amortization~~ of ~~mortgage servicing rights, merchant credit card fees~~$336 and ~~gains on the sale of OREO properties.~~$576, respectively.

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 nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021. These fees are received for processing state and federal income tax refund payments for customers of third-party income tax preparation vendors. This fee income is seasonal in nature, the majority of which is earned in the first quarter of the year.

Noninterest expense for the nine-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021 are as follows:

	Nine months ended September 30,										Nine months ended September 30,
	2021		2020		$ Change			% Change			2022		2021		$ Change			% Change
Compensation expense	$	34,578	$	32,063	$	2,515			7.8	%	$	36,654	$	34,578	$	2,076			6.0	%
Net occupancy expense		3,216		3,050		166			5.4	%		3,428		3,216		212			6.6	%
Equipment expense		1,340		1,507		(167	)		-11.1	%		1,694		1,340		354			26.4	%
Contracted data processing		1,362		1,340		22			1.6	%		1,899		1,362		537			39.4	%
FDIC assessment		829		531		298			56.1	%		568		829		(261	)		-31.5	%
State franchise tax		1,607		1,394		213			15.3	%		1,848		1,607		241			15.0	%
Professional services		2,255		2,289		(34	)		-1.5	%		3,593		2,255		1,338			59.3	%
Amortization of intangible assets		668		686		(18	)		-2.6	%		890		668		222			33.2	%
ATM/Interchange expense		1,843		1,316		527			40.0	%		1,659		1,843		(184	)		-10.0	%
Marketing		1,000		1,056		(56	)		-5.3	%		1,069		1,000		69			6.9	%
Software maintenance expense		1,872		1,350		522			38.7	%		2,440		1,872		568			30.3	%
Other operating expenses		10,741		7,115		3,626			51.0	%		7,450		10,132		(2,682	)		-26.5	%
Total noninterest expense	$	61,311	$	53,697	$	7,614			14.2	%	$	63,192	$	60,702	$	2,490			4.1	%

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

Noninterest expense for the nine months ended September 30, ~~2021~~2022 was ~~$61,311,~~$63,192, an increase of ~~$7,614,~~$2,490, or ~~14.2%~~4.1%, from ~~$53,697~~$60,702 reported for the same period of ~~2020.~~2021. The primary reasons for the increase were increases in compensation expenses of ~~$2,515, FDIC assessments~~$2,076, equipment expense of ~~$298,~~$354, contracted data processing of $537, state franchise tax of ~~$213,~~$241, professional services of $1,338, amortization of intangible assets of $222 and software maintenance expense of $568, offset by decreases in FDIC assessments of $261, ATM/Interchange expense of ~~$527, software maintenance expense of $522~~$184 and other operating expenses of ~~$3,626, offset by a decrease in expense in equipment expenses of $167.~~$2,682. The increase in compensation expense was due to increased payroll, ~~employee insurance, employer savings contributions,~~401k expenses, payroll taxes and commission and incentive based ~~costs.~~costs and the acquisition by merger of Comunibanc Corp. Payroll and payroll related expenses increased due to annual pay ~~increases,~~increases. Equipment expense increased due to an increase in computer and ~~increases~~security equipment purchases of $202 and reimbursement of COVID-19 expenses of $12 in ~~commission based costs are~~2021. Contracted data processing fees increased due to merger related system deconversion fees of $564, offset by a ~~result of increased loan activity.~~decrease in computer processing fees. The ~~year-over-year increase~~decrease in FDIC assessments was attributable to ~~small bank~~lower assessment ~~credits applied~~multipliers charged to ~~the 2020 assessments.~~Civista. The increase in state franchise tax expense was attributable to an increase in equity capital, which is ~~related to~~the basis of the Ohio Financial Institutions tax, offset by the payment of $172 of additional taxes ~~paid on the Company’s 2019 franchise tax return~~in 2021 as a result of findings from a State of Ohio audit. Professional services increased due to merger related legal, accounting and tax professional fees, accompanied by increases in recruitment fees and increased call volumes at the Company’s call center. The ~~increase~~decrease in ATM/Interchange expense is ~~primarily due to increased transaction fees~~the result of a decrease in billings from Mastercard in 2022 and ~~a settlement received in the second quarter of 2020.~~lower processing fees. The increase in software maintenance expense is due to a general increase in legacy software maintenance contracts and the implementation of our new digital banking. The ~~increase~~decrease in other operating expense is primarily due to the prepayment expense of $3,717 related to the early payoff of an FHLB long-term ~~advance. Equipment expense decreased as~~advance, offset by a ~~result of a decrease~~credit to the valuation adjustment for mortgage servicing rights and increases in ~~equipment depreciation.~~travel, lodging and meals, stationery and supplies and bad check expense.

Income tax expense for the nine months ended September 30, ~~2021~~2022 totaled ~~$5,038, up $1,904~~$5,180, down $467 compared to the same period in ~~2020.~~2021. The effective tax rates for the nine-month periods ended September 30, 2022 and 2021 were 16.0% and ~~2020 were 14.6% and 12.5%~~16.0%, 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 increase in the effective tax rate is due to higher taxable income for the nine-months ended September 30, 2021, as compared to the same period in 2020.~~

Shareholders’ equity totaled $348,450 at September 30, 2021 compared to $350,108 at December 31, 2020. Shareholders’ equity was impacted by net income of $29,564, a $193 net decrease in the Company’s pension liability, which was offset by a decrease in the fair value of securities available for sale, net of tax, of $5,514, dividends on common stock of $5,932 and the Company’s repurchase of common shares during the period, which totaled $20,557.

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

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

Shareholders’ equity totaled $302,602 at September 30, 2022, compared to $355,212 at December 31, 2021. Shareholders’ equity decreased during the first nine months of 2022 as a result of a decrease in fair value of securities available-for-sale, net of tax, of $78,802, dividends on common stock of $6,291 and the Company’s repurchase of common shares during the period, which totaled $16,734, offset by net income of $27,279 and a $164 net decrease in the Company’s pension liability.

All of the Company’s capital ratios exceeded the regulatory minimum guidelines as of September 30, 2022 and December 31, 2021 as identified in the following table:

The Company maintains a conservative liquidity position. All securities, with the exception of equity securities, are classified as ~~available for sale.~~available-for-sale. Securities, with maturities of one year or less, totaled ~~$9,172,~~$1,490, or ~~1.8%~~0.3% of the total security portfolio at September 30, ~~2021.~~2022. The ~~available for sale~~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 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 ~~$34,295~~$27,421 and ~~$25,301~~$34,295 for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The primary additions to cash from operating activities are from proceeds from the sale of loans. The primary use of cash from operating activities is from loans originated for sale. Net cash used by investing activities was ~~$83,948~~$207,756 and ~~$340,281~~$83,948 for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, 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 ~~$163,296~~$42,990 and ~~$461,218~~$163,296 for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, 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.~~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 September 30, ~~2020,~~2022, Civista had total credit availability with the FHLB of ~~$630,339~~$753,521 with standby letters of credit totaling ~~$21,300~~$110,900 and a remaining borrowing capacity of approximately ~~$550,849.~~$580,827. In addition, CBI maintains a credit line with a third party lender totaling $10,000. No borrowings were outstanding by CBI under this credit line as of September 30, 2022.

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, issue policy statements and guidance on sound practices for managing interest-rate risk, which form the basis for ongoing evaluation of the adequacy of interest-rate risk management at supervised institutions. The guidance also outlines fundamental elements of sound management and discusses the importance of these elements in the context of managing interest-rate risk. 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, ~~2020~~2021 and September 30, ~~2021,~~2022, 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 September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

The Company had derivative financial instruments as of December 31, ~~2020~~2021 and September 30, ~~2021.~~2022. 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
		September 30, 2021							December 31, 2020								September 30, 2022								December 31, 2021
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			480,898		34,618		8	%		515,754		44,930		10	%			536,144		27,071			5	%		531,385		44,276		9	%
+100bp			463,817		17,537		4	%		503,010		32,186		7	%			525,656		16,583			3	%		521,707		34,598		7	%
Base			446,820		—		—			470,824		—		—				509,073		—			—			487,109		—		—
-100bp			496,401		50,121		11	%		501,686		30,862		7	%			498,583		(10,490	)		(2	)%		495,963		8,854		2	%
-200bp			438,655		92,375		21	%		527,360		56,536		12	%			483,999		(25,074	)		(5	)%		548,326		61,217		13	%

The change in net portfolio value from December 31, ~~2020~~2021 to September 30, ~~2021,~~2022, can be attributed to a couple of factors. The yield curve has ~~shifted up~~risen and ~~steepened on the short end from~~inverted compared to the end of the year, and both the volume and mix of assets and funding sources has changed. The volume of ~~loans~~cash has decreased, and the mix has shifted toward ~~cash~~loans. While the loan portfolio increased due to growth and ~~investment securities. The decrease in~~acquisition, the market value of loans ~~is result of PPP loan forgiveness. Cash increased as a result of the increase in deposits. Some of our excess liquidity~~ has ~~been redeployed into our investment portfolio.~~decreased due to market rate increases. The volume ~~and mix of liabilities~~non-maturing deposits has ~~shifted toward deposits~~increased due to acquisition, but the market value has decreased. The volume and ~~away from certificates of deposit and other borrowings. Deposits increased as a result of personal, business and public fund account increases. The~~ mix shifts from the end of the year, ~~particularly to deposits, led~~along with market rate changes, contributed to a small decrease in the base net portfolio ~~value.~~value, which partially offset the increase due to acquisition. 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~~The change in the rates down scenario for both the 100 and 200 basis point ~~downward changes~~movements would lead to a larger increase in ~~rates, the market value of assets would increase faster than~~ the market value of liabilities than assets, leading to ~~an increase~~a decrease 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 September 30, ~~2021,~~2022, 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.

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~~the Company 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.

There were no material changes during the current period to 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, ~~2020, as supplemented by the risk factors disclosed in “Item 1A. Risk Factors” of the Company’s Quarterly Report on Form 10Q for the quarterly period ended June 30,~~ 2021.

During the third quarter of ~~2021,~~2022, the Company purchased common shares as follows:

On ~~April 20, 2021,~~May 4, 2022, the Company publicly announced a common share repurchase program which authorized the Company to repurchase a maximum aggregate value of $13,500,000 of its outstanding common shares. Civista repurchased a total of 562,489 common shares for an aggregate purchase price of $12,819,340 under the repurchase program. On August 12, 2021, the Company publicly announced a new common share repurchase program ~~which replaced the~~to replace its previous repurchase ~~program which replaced the April 20, 2020~~program. The new repurchase program ~~and~~ authorizes the Company to repurchase a maximum aggregate value of $13,500,000 of its outstanding common ~~shares. The expiration date~~shares through May 9, 2023. As of ~~the common share repurchase program is August 10, 2022. A~~September 30, 2022 a total of ~~107,834~~341,963 common shares had been repurchased for an aggregate purchase price of ~~$2,439,166 as of September 30, 2021~~$7,291,893 under this 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	2
Item 1.	Financial Statements:	2
	Consolidated Balance Sheets (Unaudited) September 30, ~~2021~~2022 and December 31, ~~2020~~2021	2
	Consolidated Statements of Operations (Unaudited) Three- and nine-months ended September 30, ~~2021~~2022 and ~~2020~~2021	3
	Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three- and nine-months ended September 30, ~~2021~~2022 and ~~2020~~2021	4
	Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) Three- and nine-months ended September 30, ~~2021~~2022 and ~~2020~~2021	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) Nine months ended September 30, ~~2021~~2022 and ~~2020~~2021	7
	Notes to Interim Consolidated Financial Statements (Unaudited)	~~8-37~~8-39
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~38-51~~40-53
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~52-53~~54-55
Item 4.	Controls and Procedures	5456

PART II.	Other Information	5557
Item 1.	Legal Proceedings	5557
Item 1A.	Risk Factors	5557
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5557
Item 3.	Defaults Upon Senior Securities	5557
Item 4.	Mine Safety Disclosures	5557
Item 5.	Other Information	5557
Item 6.	Exhibits	5658
Signatures		5759

	For the Nine-Month Period Ended September 30, 2021			For the Nine-Month Period Ended September 30, 2020
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	225		$	255
Acquisition of PCI loans		0			0
Accretion		(62	)		(270	)
Transfer from non-accretable to accretable		55			193
Balance at end of period	$	218		$	178

	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	$	3,365		$	5,162	$	8,527	$	2,698	$	5,829
Total amortized intangible assets	$	8,527	$	3,365	��	$	5,162	$	8,527	$	2,698	$	5,829

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


Type of Loan	Number of Loans		Balance		Percent of Loans Outstanding
			(In thousands)
Commercial & Agriculture		6	$	1,571		0.08	%
Commercial Real Estate:
Owner Occupied		2		2,591		0.13	%
Non-Owner Occupied		9		14,174		0.71	%
Real Estate Construction		1		451		0.02	%
Total		18	$	18,787		0.94	%

	September 30, 2021				September 30, 2020
For the nine months ended	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	19	$	—	$	92	$	4
Commercial Real Estate—Owner Occupied		449		15		406		21
Commercial Real Estate—Non-Owner Occupied		29		1		292		15
Residential Real Estate		654		24		1,464		34
Farm Real Estate		584		18		655		20
Total	$	1,735	$	58	$	2,909	$	94

	For the Three-Month Period Ended September 30, 2021			For the Three-Month Period Ended September 30, 2020
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	224		$	205
Acquisition of PCI loans		0			0
Accretion		(6	)		(101	)
Transfer from non-accretable to accretable		0			74
Balance at end of period	$	218		$	178

	For the Nine-Month Period Ended									For the Nine-Month Period Ended
	September 30, 2021(a)									September 30, 2020(a)
	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	$	21,447		$	(6,828	)	$	14,619		$	12,883		$	(6,009	)	$	6,874
Other comprehensive income (loss) before reclassifications		(5,512	)		—			(5,512	)		7,415			—			7,415
Amounts reclassified from accumulated other comprehensive income (loss)		(2	)		193			191			(73	)		171			98
Net current-period other comprehensive income (loss)		(5,514	)		193			(5,321	)		7,342			171			7,513
Ending balance	$	15,933		$	(6,635	)	$	9,298		$	20,225		$	(5,838	)	$	14,387

	Fair Value Measurements at September 30, 2022 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	$	—	$	60,544	$	—
Obligations of states and political subdivisions		—		297,807		—
Mortgage-backed securities in government sponsored entities		—		243,695		—
Total securities available-for-sale		—		602,046		—
Equity securities		—		2,028		—
Swap asset		—		18,448		—
Liabilities measured at fair value on a recurring basis:
Swap liability	$	—	$	18,448	$	—
Assets measured at fair value on a nonrecurring basis:
Mortgage servicing rights	$	—	$	—	$	3,079

	Quantitative Information about Level 3 Fair Value Measurements
September 30, 2021	Fair Value		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	11	Appraisal of collateral	Appraisal adjustments	10%	10%
				Holding period	24 Months	24 Months
Other real estate owned	$	26	Appraisal of collateral	Appraisal adjustments	10%	10%
Mortgage Servicing Rights	$	2,576	Discounted Cash Flow	Constant Prepayment Rate	8.7% - 35%	16%
				Discount Rate	12%	12%

	Classification on the Consolidated Balance Sheet	Notional Amount			Fair Value
Derivative Assets	Swap assets	$	239,230		$	12,858
Derivative Liabilities	Swap liabilities		(239,230	)		(12,858	)
Net Exposure		$	0		$	0

	Location of	Amount of Gain or (Loss)
Derivatives	Gain or (Loss)	Recognized in
Not Designated	Recognized in	Income on Derivatives
as Hedging Instruments	Income on Derivative	September 30, 2022		September 30, 2021
Interest rate swaps related to customer loans	Other income	$	—	$	64
Total		$	—	$	64

	Actual From Acquisition Date Through September 30, 2022
	(in thousands)
Net interest income after provision for loan losses	$	1,638
Noninterest income		158
Net income		426

	Pro Formas				Pro Formas
	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Net interest income after provision for loan losses	$	30,405	$	26,891	$	82,100	$	78,452
Noninterest income		5,734		6,693		19,387		25,486
Net income		11,176		10,100		26,914		31,015
Pro forma earnings per share:
Basic	$	0.74	$	0.63	$	1.80	$	1.88
Diluted	$	0.74	$	0.63	$	1.80	$	1.88

Cash paid				$	24,968
Common Shares issued (984,723 shares)					21,122
Total				$	46,090


Net assets acquired:
Cash and due from financial institutions	$	3,098
Securities available for sale		120,399
Time deposits		742
Loans, net		169,202
Other securities		1,553
Premises and equipment		6,073
Accrued interest receivable		670
Core deposit intangible		4,426
Bank owned life insurance		5,918
Other assets		3,767
Noninterest-bearing deposits		(122,642	)
Interest-bearing deposits		(148,552	)
Other borrowings		(21,706	)
Other liabilities		(1,659	)
					21,289
Goodwill resulting from Comunibanc Corp. acquisition				$	24,801

	Total Risk Based Capital			Tier I Risk Based Capital			CET1 Risk Based Capital			Leverage Ratio
Company Ratios—September 30, 2021		15.4	%		14.2	%		12.7	%		10.0	%
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	%
To Be Well Capitalized Under Prompt
Corrective Action Provisions		10.0	%		8.0	%		6.5	%		5.0	%

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
July 1, 2021 - July 31, 2021		270,496	$	22.77		270,496	$	680,660
August 1, 2021 - August 31, 2021		42,934	$	22.96		42,934	$	13,117,881
September 1, 2021 - September 30, 2021		91,190	$	22.56		91,190	$	11,060,834
Total		404,620	$	22.74		404,620	$	11,060,834

Exhibit	Description	Location

2.1	Agreement and Plan of Merger, dated January 10, 2022 by and between Civista Bancshares, Inc. and Comunibanc Corp.	Filed as Exhibit 2.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on January 10, 2022 and incorporated herein by reference. (File No. 001-36192)
2.2	Stock Purchase Agreement, dated as of September 29, 2022, by and among Civista Bancshares, Inc., Civista Bank, Vision Financial Group, Inc. and Frederick Summers	Filed as Exhibit 2.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K filed on September 30, 2022 and incorporated herein by reference. (File No. 001-36192)

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 September 30, ~~2021,~~2022, formatted in Inline Extensible Business Reporting Language: (i) Consolidated Balance Sheets (Unaudited) as of September 30, ~~2021~~2022 and December 31, ~~2020;~~2021; (ii) Consolidated Statements of Income (Unaudited) for the three- and nine-months ended September 30, ~~2021~~2022 and ~~2020;~~2021; (iii) Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the three-and nine-months ended September 30, 2022 and 2021; (iv) Consolidated Statement of Shareholders’ Equity (Unaudited) for the three- and nine-months ended September 30, ~~2021~~2022 and ~~2020; (iv) Consolidated Statement of Shareholders’ Equity (Unaudited) for the three-and nine-months ended September 30, 2021 and 2020;~~2021; (v) Condensed Consolidated Statement of Cash Flows (Unaudited) for the nine months ended September 30, ~~2021~~2022 and ~~2020;~~2021; 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		November 9, ~~2021~~2022
Dennis G. Shaffer		Date
Chief Executive Officer and President


/s/ Todd A. Michel		November 9, ~~2021~~2022
Todd A. Michel		Date
Senior Vice President, Controller