Civista Bancshares (CIVB) 8-K Civista Bancshares, Inc. Announces Strong First Quarter 2016 Earnings

Exhibit 99.1

Civista Bancshares, Inc. Announces Strong First Quarter 2016 Earnings

Sandusky, Ohio, April 22, 2016 /PRNewswire/– Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) reported net income attributable to common shares of $4.3 million, or $0.43 per diluted share, for the first quarter of 2016, compared with $2.8 million, or $0.29 per diluted share, for the prior year period.

“We increased our first quarter 2016 diluted earnings per share by 48% over the same quarter in 2015. We have also seen the impact of organic and acquisitive growth now that a year has passed since the Dayton acquisition. We have improved noninterest income, primarily due to the large portion of the tax refund processing fees in the first quarter. At the same time, noninterest expenses have increased modestly, largely attributable to growth and the merger.” said James O. Miller, Chairman, President and CEO of Civista.

Results of Operations:

Net interest income for the first quarter of 2016 increased $1.3 million, or 12.1% compared to the same period of 2015. The increase in net interest income for the quarter was due both to an increase in average loans outstanding as well as a decrease in cost of funds. Tax equivalent net interest margin was 3.53% for the first quarter, compared to 3.65% for the same period a year ago. Net interest margin was reduced in both periods due to the impact of additional interest-earning cash on deposit related to the tax refund processing program. Average cash related to the tax refund processing program in the first quarter 2016 and 2015 was $216 million and $111 million, respectively. The reduction to net interest margin was 54 basis points in 2016 and 34 basis points in 2015.

Mr. Miller continued, “Our net interest margin is consistently lower in the first quarter due to the amount of cash the tax refund processing program generates. In spite of the current rate environment, we have maintained a strong core net interest margin, kept our asset duration under two years and have not diluted our lending standards.”

Summary Average Balance Sheet

(Tax-equivalent basis / dollars in thousands)

	Three months ended March 31,
	2016							2015
	Average balance		Interest		Yield / rate			Average balance		Interest		Yield / rate
Assets
Loans	$	1,000,720	$	11,317		4.55	%	$	927,105	$	10,246		4.49	%
Securities		211,995		1,456		3.54	%		211,521		1,456		3.54	%
Interest-bearing deposits		227,738		280		0.49	%		116,298		60		0.21	%
Total interest earning assets	$	1,440,453	$	13,053		3.76	%	$	1,254,924	$	11,762		3.93	%
Liabilities
Int-bearing demand and savings	$	556,240	$	113		0.08	%	$	525,363	$	98		0.08	%
Time deposits		209,550		377		0.72	%		224,596		444		0.80	%
FHLB advances and other borrowings		91,724		328		1.44	%		84,079		305		1.47	%
Total interest-bearing liabilities	$	857,514	$	818		0.38	%	$	834,038	$	847		0.41	%
Noninterest-bearing deposits	$	608,085						$	414,715
Net interest income and interest rate spread			$	12,235		3.38	%			$	10,915		3.52	%
Net interest margin						3.53	%						3.65	%

The provision for loan losses was $400 thousand in the first quarter of 2015 while no provision was made during the first quarter of 2016. The decrease in provision for loan losses for the three months of 2016 is due to improved asset quality, compared to the same period a year ago. Management believes the level of reserve for loan losses is adequate.

During the quarter, noninterest income totaled $5.3 million, an increase of $858 thousand, or 19.5%, compared to the prior year’s first quarter.

Noninterest income

(dollars in thousands)	Three months ended March 31,
	2016			2015
Service charges	$	1,129		$	1,055
Net gain on sale of securities		(5	)		—
Net gain on sale of loans		394			204
ATM fees		508			449
Trust fees		634			767
Tax refund processing fees		2,200			1,600
Other		400			327
Total noninterest income	$	5,260		$	4,402

Service charge income increased in the first quarter, primarily due to an increase in business service charges, as well as service charge fees instituted in our Dayton market since the acquisition of

TCNB. Gain on sale of mortgage loans increased $190 thousand due to additional volume of mortgage loans sold as well as an increase in the related premium. Trust fees decreased $133 thousand due to a decrease in trust assets. Tax refund processing fees increased $600 thousand, or 37.5% when compared to the three months of 2015, due to an increase in the volume of refunds processed.

Noninterest expense totaled $10.9 million, an increase of $304 thousand, or 2.9%, compared to the prior year’s first quarter.

Noninterest expense

(dollars in thousands)	Three months ended March 31,
	2016		2015
Salaries, Wages and benefits	$	6,324	$	5,899
Net occupancy and equipment		927		987
Contracted data processing		355		448
Taxes and assessments		470		476
Professional services		501		456
Amortization of intangible assets		183		142
Marketing		287		236
Other		1,860		1,959
Total noninterest expense	$	10,907	$	10,603

Salaries, wages and benefits expense increased $425 thousand for the first quarter of 2016 compared to the same period of 2015. The increase in salaries, wages and benefits expense was primarily due to the addition of TCNB employees, as well as normal merit increases.

The efficiency ratio improved to 60.1% in the first quarter of 2016 compared to 66.9% for the first quarter of 2015. The improvement in the efficiency ratio is due to the increase in net interest income, as well as the increase in noninterest income, partially offset by a modest increase in noninterest expense.

Mr. Miller continued, “While we have had success increasing revenues, the success we have had in minimizing costs is also important in our increase in net income. We added three offices in the acquisition of TCNB, added loans and increased mortgage production. At the same time we were successful in limiting the increase of costs to less than 3%.”

Balance Sheet

Total assets increased $191.9 million, or 14.6%, from December 31, 2015 to March 31, 2016. This was due primarily to the additional cash balances related to the tax refund processing program. Total tax refund processing related cash was $239.2 million, compared to $22.1 million at year-end.

Total loans increased $4.3 million or 0.4% from December 31, 2015 to March 31, 2016. The increase in total loans is due to increased Residential Real Estate and Real Estate Construction lending, offset by declines in our other lending segments.

End of period loan balances

(dollars in thousands)

	March 31, 2016		December 31, 2015
Commercial and Agriculture	$	122,207	$	124,402
Commercial Real Estate - Owner Occupied		166,859		167,897
Commercial Real Estate - Non-owner Occupied		344,717		348,439
Residential Real Estate		243,835		236,338
Real Estate Construction		64,176		58,898
Farm Real Estate		44,960		46,993
Consumer and Other		19,049		18,560
Total Loans	$	1,005,803	$	1,001,527

Jim Miller continued, “While we had a very modest increase in loans for the first quarter of 2016, we normally experience seasonal run-off of Agriculture loans during this period.”

Total deposits increased $227.7 million, or 21.6%, from December 31, 2015 to March 31, 2016. This was due primarily to the additional cash balances related to the tax refund processing program.

End of period deposit balances

(dollars in thousands)

	March 31, 2016		December 31, 2015
Noninterest-bearing demand	$	511,024	$	300,615
Interest-bearing demand		190,815		176,303
Savings and money market		373,389		364,067
Time deposits		204,552		211,048
Total Deposits	$	1,279,780	$	1,052,033

Total shareholder’s equity increased $5.4 million, or 4.3%, from December 31, 2015 to March 31, 2016 primarily due to increased retained earnings of $3.9 million and a $1.3 million increase in other comprehensive income related to unrealized gains in the investment portfolio.

Asset Quality

Nonperforming assets at March 31, 2016 were $15.5 million, a $2.2 million increase from December 31, 2015, primarily due to two loan relationships. The Company recorded net recoveries of $72 thousand for the first quarter of 2016 compared to net charge-offs of $353 thousand for the same period of 2015.

Non-performing Assets

(dollars in thousands)	March 31, 2016		December 31, 2015
Non-accrual loans	$	11,252	$	9,890
Restructured loans		4,191		3,294
Total non-performing loans		15,443		13,184
Other Real Estate Owned		56		116
Total non-performing assets	$	15,499	$	13,300

Civista Bancshares, Inc. is a $1.5 billion financial holding company headquartered in Sandusky, Ohio. The Company’s banking subsidiary, Civista Bank, operates 28 locations in North Central, West Central and Southwestern Ohio.

Civista Bancshares, Inc. may be accessed atwww.civb.com. The Company’s common shares are traded on the NASDAQ Capital Market under the symbol “CIVB”. The Company’s depositary shares, each representing a 1/40^th ownership interest in a Series B Preferred Share, are traded on the NASDAQ Capital Market under the symbol “CIVBP”.

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Civista. For these statements, Civista claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Civista, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Civista’ reports filed with the Securities and Exchange Commission, including those described in “Item 1A Risk Factors” of Part I of Civista’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Civista does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

For additional information, contact:

James O. Miller

Chairman, President and CEO

Civista Bancshares, Inc.

888-645-4121

Civista Bancshares, Inc.

Financial Highlights

(dollars in thousands, except share amounts)

Consolidated Condensed Statement of Income

	Three Months Ended March 31, (unaudited)
	2016			2015
Interest income		13,053			11,762
Interest expense		818			847
Net interest income		12,235			10,915
Provision for loan losses		—			400
Net interest income after provision		12,235			10,515
Noninterest income		5,260			4,402
Noninterest expense		10,907			10,603
Income before taxes		6,588			4,314
Income tax expense		1,863			1,143
Net income		4,725			3,171
Preferred stock dividends		391			404
Net income available to common shareholders		4,334			2,767
Dividends per common share	$	0.05		$	0.05
Earnings per common share,
basic	$	0.55		$	0.36
diluted	$	0.43		$	0.29
Average shares outstanding,
basic		7,860,716			7,758,998
diluted		10,938,961			10,907,674
Selected financial ratios:
Return on average assets		1.17	%		0.93	%
Return on average equity		14.97	%		10.99	%
Dividend payout ratio		8.32	%		12.23	%
Net interest margin (tax equivalent)		3.53	%		3.65	%

Selected Balance Sheet Items

	March 31, 2016			December 31, 2015
	(unaudited)			(unaudited)
Cash and due from financial institutions	$	214,407		$	35,561
Investment securities		201,786			196,249
Loans held for sale		2,193			2,698
Loans		1,005,803			1,001,527
Less allowance for loan losses		14,433			14,361
Net loans		991,370			987,166
Other securities		13,550			13,452
Fixed assets		16,773			16,944
Goodwill and other intangibles		29,337			29,504
Bank owned life insurance		23,218			20,104
Other assets		14,262			13,363
Total assets	$	1,506,896		$	1,315,041
Total deposits	$	1,279,780		$	1,052,033
Federal Home Loan Bank advances		17,500			71,200
Securities sold under agreements to repurchase		24,272			25,040
Subordinated debentures		29,427			29,427
Accrued expenses and other liabilities		25,377			12,168
Total shareholders’ equity		130,540			125,173
Total liabilities and shareholders’ equity	$	1,506,896		$	1,315,041
Shares outstanding at period end		7,875,172			7,843,578
Book value per share	$	13.75		$	13.12
Tangible book value per share		10.02			9.36
Equity to asset ratio		8.66	%		9.52	%
Selected asset quality ratios:
Allowance for loan losses to total loans		1.43	%		1.43	%
Non-performing assets to total assets		1.03	%		1.01	%
Allowance for loan losses to non-performing loans		93.46	%		108.93	%
Non-performing asset analysis
Nonaccrual loans	$	11,252		$	9,890
Troubled debt restructurings		4,191			3,294
Other real estate owned		56			116
Total	$	15,499		$	13,300

Average Balance Analysis

(Unaudited - Dollars in thousands except share data)

	Three Months Ended March 31,
	2016								2015
	Average balance			Interest		Yield/ rate *			Average balance			Interest		Yield/ rate *
Assets:
Interest-earning assets:
Loans	$	1,000,720		$	11,317		4.55	%	$	927,105		$	10,246		4.49	%
Taxable securities		137,795			801		2.38	%		141,902			832		2.42	%
Non-taxable securities		74,200			655		5.69	%		69,619			624		5.82	%
Interest-bearing deposits in other banks		227,738			280		0.49	%		116,298			60		0.21	%
Total interest-earning assets	$	1,440,453			13,053		3.76	%	$	1,254,924			11,762		3.93	%
Noninterest-earning assets:
Cash and due from financial institutions		114,551								66,687
Premises and equipment, net		16,871								15,407
Accrued interest receivable		4,019								3,885
Intangible assets		29,447								24,760
Other assets		9,906								9,512
Bank owned life insurance		21,562								19,678
Less allowance for loan losses		(14,504	)							(14,446	)
Total Assets	$	1,622,305							$	1,380,407
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	556,240		$	113		0.08	%	$	525,363		$	98		0.08	%
Time		209,550			377		0.72	%		224,596			444		0.80	%
FHLB		38,436			110		1.15	%		34,447			121		1.42	%
Subordinated debentures		29,427			212		2.90	%		29,427			179		2.47	%
Repurchase Agreements		23,861			6		0.10	%		20,205			5		0.10	%
Total interest-bearing liabilities	$	857,514			818		0.38	%	$	834,038			847		0.41	%
Noninterest-bearing deposits		608,085								414,715
Other liabilities		29,730								14,633
Shareholders’ Equity		126,976								117,021
Total Liabilities and Shareholders’ Equity	$	1,622,305							$	1,380,407
Net interest income and interest rate spread				$	12,235		3.38	%				$	10,915		3.52	%
Net interest margin							3.53	%							3.65	%

* - All yields and costs are presented on an annualized basis

Supplemental Financial Information

(Unaudited - Dollars in thousands except share data)

	March 31,			December 31,			September 30,			June 30,			March 31,
End of Period Balances	2016			2015			2015			2015			2015
Assets
Cash and due from banks	$	214,407		$	35,561		$	33,619		$	35,092		$	142,339
Securities available for sale		201,786			196,249			198,655			197,429			199,693
Loans held for sale		2,193			2,698			1,223			4,034			2,919
Loans		1,005,803			1,001,527			1,000,275			1,002,917			984,105
Allowance for loan losses		(14,433	)		(14,361	)		(14,760	)		(14,707	)		(14,315	)
Net Loans		991,370			987,166			985,515			988,210			969,790
Other securities		13,550			13,452			13,324			13,261			13,400
Fixed assets		16,773			16,944			16,200			16,308			16,163
Goodwill and other intangibles		29,337			29,504			29,683			29,608			29,790
Bank owned life insurance		23,218			20,104			19,987			19,870			19,754
Other assets		14,262			13,363			15,125			13,460			13,391
Total Assets	$	1,506,896		$	1,315,041		$	1,313,331		$	1,317,272		$	1,407,239
Liabilities
Total Deposits	$	1,279,780		$	1,052,033		$	1,055,959		$	1,075,806		$	1,197,316
Federal Home Loan Bank advances		17,500			71,200			72,200			55,300			17,500
Securities sold under agreement to repurchase		24,272			25,040			20,887			17,460			21,488
Subordinated debentures		29,427			29,427			29,427			29,427			29,427
Accrued expenses and other liabilities		25,377			12,168			11,521			19,257			22,581
Total liabilities		1,376,356			1,189,868			1,189,994			1,197,250			1,288,312
Shareholders’ equity
Preferred shares, Series B		22,273			22,273			22,273			22,273			22,309
Common Stock		115,442			115,330			115,267			115,248			115,193
Accumulated earnings (deficit)		9,242			5,300			2,884			414			(1,924	)
Treasury stock		(17,235	)		(17,235	)		(17,235	)		(17,235	)		(17,235	)
Accumulated other comprehensive income (loss)		818			(495	)		148			(678	)		584
Total shareholders’ equity		130,540			125,173			123,337			120,022			118,927
Total liabilities and shareholders’ equity	$	1,506,896		$	1,315,041		$	1,313,331		$	1,317,272		$	1,407,239
Quarterly Average Balances
Assets:
Earning assets	$	1,440,453		$	1,218,797		$	1,230,249		$	1,246,731		$	1,254,924
Securities		211,995			212,463			210,209			211,553			211,521
Loans		1,000,720			996,861			1,009,372			991,487			927,105
Liabilities and shareholders’ equity
Total deposits	$	1,373,875		$	1,059,271		$	1,073,930		$	1,133,432		$	1,164,674
Interest-bearing deposits		765,790			756,422			773,625			788,191			749,959
Interest-bearing liabilities		91,724			111,481			111,797			72,687			84,079
Total shareholders’ equity		126,976			124,025			121,057			119,212			117,021

Supplemental Financial Information

(Unaudited - Dollars in thousands except share data)

	Three Months Ended
Income statement	March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015
Total interest income	$	13,053		$	12,976		$	13,223		$	12,740		$	11,762
Total interest expense		818			815			821			824			847
Net interest income		12,235			12,161			12,402			11,916			10,915
Provision for loan losses		—			—			400			400			400
Noninterest income		5,260			3,146			3,076			3,652			4,402
Noninterest expense		10,907			10,741			10,666			10,933			10,603
Income before taxes		6,588			4,566			4,412			4,235			4,314
Income tax expense		1,863			1,367			1,159			1,113			1,143
Net income		4,725			3,199			3,253			3,122			3,171
Preferred stock dividends		391			391			391			391			404
Net income available to common shareholders	$	4,334		$	2,808		$	2,862		$	2,731		$	2,767
Common stock dividend paid	$	393		$	392		$	392		$	392		$	385
Per share data
Basic net income per common share	$	0.55		$	0.36		$	0.36		$	0.35		$	0.36
Diluted net income per common share		0.43			0.29			0.30			0.29			0.29
Dividends per common share		0.05			0.05			0.05			0.05			0.05
Average common shares outstanding - basic		7,860,716			7,843,578			7,843,578			7,842,159			7,758,998
Average common shares outstanding - diluted		10,938,961			10,921,823			10,921,823			10,921,824			10,907,674
Asset quality
Allowance for loan losses, beginning of period	$	14,361		$	14,760		$	14,707		$	14,315		$	14,268
Charge-offs		(126	)		(525	)		(634	)		(305	)		(585	)
Recoveries		198			126			287			297			232
Provision		—			—			400			400			400
Allowance for loan losses, end of period	$	14,433		$	14,361		$	14,760		$	14,707		$	14,315
Ratios
Allowance to total loans		1.43	%		1.43	%		1.48	%		1.47	%		1.45	%
Allowance to nonperforming assets		93.12	%		107.98	%		102.90	%		86.33	%		74.69	%
Allowance to nonperforming loans		93.46	%		108.93	%		106.57	%		88.80	%		76.81	%
Nonperforming assets
Nonperforming loans	$	15,443		$	13,184		$	13,851		$	16,562		$	18,638
Other real estate owned		56			116			494			474			528
Total nonperforming assets	$	15,499		$	13,300		$	14,345		$	17,036		$	19,166
Capital and liquidity
Tier 1 leverage ratio		8.24	%		9.96	%		9.68	%		9.38	%		8.91	%
Tier 1 risk-based capital ratio		12.52	%		12.70	%		12.47	%		12.20	%		12.10	%
Total risk-based capital ratio		13.77	%		13.96	%		13.72	%		13.45	%		13.35	%
Tangible common equity ratio		5.34	%		5.71	%		5.56	%		5.29	%		4.79	%