Civista Bancshares (CIVB) 8-K Civista Bancshares, Inc. Announces Third Quarter 2020 Earnings

Exhibit 99.1

Civista Bancshares, Inc. Announces Third Quarter 2020 Earnings

Sandusky, Ohio, October 23, 2020 /PRNewswire/ – Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) reported net income available to common shareholders of $7.7 million, or $0.48 per diluted share, for the third quarter of 2020, compared with $7.5 million, or $0.46 per diluted share, for the prior year period. For the nine-month period ended September 30, 2020, Civista reported net income available to common shareholders of $22.0 million or $1.36 per diluted share, compared to $25.5 million or $1.54 per diluted share, in the same period of 2019.

“As we navigate through 2020, I am reminded of what differentiates us as a community bank. The great people that we have working at Civista and the quality customers that choose to work with us. We couldn’t have one without the other. Our people have accomplished a lot during 2020 and we still have one more quarter to go. To report earnings per share for the third quarter of 2020 which exceeds 2019 is a great feat. The challenges for 2020 include a global pandemic that has had far reaching impacts on our economy. We continue to weather the storm despite these challenges and I am extremely pleased with our third quarter earnings.” said Dennis G. Shaffer, President and CEO of Civista.

Results of Operations:

For the three-month period ended September 30, 2020 and 2019

Net interest income increased $1.6 million, or 7.8%, for the third quarter of 2020 compared to the same period of 2019, primarily due to the accretion of $1.2 million of Paycheck Protection Program (“PPP”) fees.

Net interest margin decreased 68 basis points to 3.44% for the third quarter of 2020, compared to 4.12% for the same period a year ago.

Interest income increased $535 thousand, or 2.2%, for the third quarter of 2020. Average yields decreased 100 basis points which resulted in a $4.3 million decrease in interest income. Average earning assets increased $596.1 million, which resulted in a $4.9 million increase in interest income. PPP loans accounted for $259 million of the increase in average earning assets at a yield of 2.90%. Removing the impact of PPP loans, the yield on earning assets would have been 43 basis points higher. Accretion income associated with purchased loan portfolios totaled $554 thousand for the third quarter of 2020.

Interest expense decreased $1.1 million, or 29.2%, for the third quarter of 2020. The average rate paid on interest-bearing liabilities decreased 45 basis points, while average interest-bearing liabilities increased $378.4 million.

Average Balance Analysis

(Unaudited - Dollars in thousands)

	Three Months Ended September 30,
	2020								2019
	Average					Yield/			Average					Yield/
	balance			Interest		rate*			balance			Interest		rate*
Assets:
Interest-earning assets:
Loans **	$	2,040,492		$	21,638		4.22	%	$	1,626,010		$	20,776		5.07	%
Taxable securities		183,196			1,325		3.01	%		198,994			1,712		3.50	%
Non-taxable securities		205,398			1,536		4.14	%		180,531			1,449		4.33	%
Interest-bearing deposits in other banks		188,798			59		0.12	%		16,245			86		2.10	%
Total interest-earning assets	$	2,617,884			24,558		3.83	%	$	2,021,780			24,023		4.83	%
Noninterest-earning assets:
Cash and due from financial institutions		29,647								29,745
Premises and equipment, net		23,214								21,790
Accrued interest receivable		10,109								6,926
Intangible assets		84,906								85,617
Bank owned life insurance		45,574								44,579
Other assets		42,916								25,432
Less allowance for loan losses		(21,214	)							(13,920	)
Total Assets	$	2,833,036							$	2,221,949
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand and savings	$	1,108,512		$	389		0.14	%	$	871,673		$	730		0.33	%
Time		292,806			1,242		1.69	%		267,959			1,369		2.03	%
FHLB		125,000			452		1.44	%		201,977			1,152		2.26	%
Other borrowings		184,238			269		0.58	%		—			—		0.00	%
Subordinated debentures		29,427			194		2.62	%		29,427			350		4.72	%
Repurchase agreements		24,300			6		0.10	%		14,831			4		0.11	%
Total interest-bearing liabilities	$	1,764,283			2,552		0.58	%	$	1,385,867			3,605		1.03	%
Noninterest-bearing deposits		683,473								482,895
Other liabilities		46,002								27,084
Shareholders’ equity		339,278								326,103
Total Liabilities and Shareholders’ Equity	$	2,833,036							$	2,221,949
Net interest income and interest rate spread				$	22,006		3.25	%				$	20,418		3.80	%
Net interest margin							3.44	%							4.12	%

* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $411 thousand and $389 thousand for the periods ended September 30, 2020 and 2019, respectively.

** - Average balance includes nonaccrual loans

For the nine-month period ended September 30, 2020 and 2019

Net interest income increased $2.3 million, or 3.6%, compared to the same period in 2019.

Interest income increased $611 thousand, or 0.8%, for the first nine months of 2020. The increase in interest income was primarily due to an increase in average earning assets of $451.2 million, partially offset by a decrease in yield of 87 basis points. During the nine-month period, the Bank had average PPP Loans totaling $149.5 million with an average yield of 3.14%, including amortization of fees. Removing the impact of PPP loans yields would have been 27 basis points higher.

Interest expense decreased $1.7 million, or 17.7%, for the first nine months of 2020 compared to the same period of 2019. Average interest-bearing liabilities increased $264.3 million, resulting in a $448 thousand increase in interest expense. Average rates decreased 30 basis points, resulting in a $2.2 million decrease in interest expense.

Despite an increase in net interest income, the net interest margin decreased 65 basis points to 3.70% for the first nine months of 2020, compared to 4.35% for the same period a year ago.

Average Balance Analysis

(Unaudited - Dollars in thousands)

	Nine Months Ended September 30,
	2020								2019
	Average					Yield/			Average					Yield/
	balance			Interest		rate*			balance			Interest		rate*
Assets:
Interest-earning assets:
Loans**	$	1,913,514		$	64,924		4.53	%	$	1,591,477		$	63,395		5.33	%
Taxable securities		185,577			4,100		3.07	%		203,165			5,155		3.44	%
Non-taxable securities		201,303			4,589		4.18	%		169,802			4,208		4.40	%
Interest-bearing deposits in other banks		159,539			531		0.44	%		44,287			775		2.34	%
Total interest-earning assets	$	2,459,933			74,144		4.13	%	$	2,008,731			73,533		5.00	%
Noninterest-earning assets:
Cash and due from financial institutions		94,083								53,517
Premises and equipment, net		22,830								21,844
Accrued interest receivable		8,729								6,929
Intangible assets		84,965								85,863
Bank owned life insurance		45,332								44,186
Other assets		37,802								22,607
Less allowance for loan losses		(17,759	)							(13,896	)
Total Assets	$	2,735,915							$	2,229,781
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand and savings	$	1,010,719		$	1,433		0.19	%	$	862,098		$	2,159		0.33	%
Time		287,740			3,985		1.85	%		269,874			3,807		1.89	%
FHLB		135,888			1,480		1.46	%		146,222			2,581		2.36	%
Other borrowings		103,133			275		0.36	%		—			—		0.00	%
Federal funds purchased		385			1		0.35	%		—			—		0.00	%
Subordinated debentures		29,427			757		3.44	%		29,427			1,094		4.97	%
Repurchase agreements		23,141			17		0.10	%		18,463			14		0.10	%
Total interest-bearing liabilities	$	1,590,433			7,948		0.67	%	$	1,326,084			9,655		0.97	%
Noninterest-bearing deposits		757,696								567,365
Other liabilities		53,633								21,843
Shareholders’ equity		334,153								314,489
Total Liabilities and Shareholders’ Equity	$	2,735,915							$	2,229,781
Net interest income and interest rate spread				$	66,196		3.46	%				$	63,878		4.03	%
Net interest margin							3.70	%							4.35	%

* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1.2 million and $1.1 million for the periods ended September 30, 2020 and 2019, respectively.

** - Average balance includes nonaccrual loans

Provision for loan losses was $2.3 million for the third quarter of 2020 and $7.9 million for the nine months ended September 30, 2020. Provision for loan losses was $150 thousand for both the third quarter and nine months ended September 30, 2019. The increase in provision is due to an increase in the bank’s qualitative factors related to the economic shutdown that is driven by COVID-19 and the ongoing payment deferrals on loans modified under the CARES Act. Economic impacts 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.

For the third quarter of 2020, noninterest income totaled $6.8 million, an increase of $1.4 million, or 25.0%, compared to the prior year’s third quarter.

Noninterest income
(unaudited - dollars in thousands)	Three months ended September 30,
	2020		2019		$ change			% change
Service charges	$	1,414	$	1,726	$	(312	)		-18.1	%
Net gain on sale of securities		92		3		89			N/M
Net loss on equity securities		20		112		(92	)		-82.1	%
Net gain on sale of loans		2,413		815		1,598			196.1	%
ATM/Interchange fees		1,183		1,014		169			16.7	%
Wealth management fees		1,006		975		31			3.2	%
Bank owned life insurance		243		254		(11	)		-4.3	%
Swap fees		158		199		(41	)		-20.6	%
Other		257		331		(74	)		-22.4	%
Total noninterest income	$	6,786	$	5,429	$	1,357			25.0	%

N/M - not meaningful    

Service charge income decreased primarily due a $332.7 thousand decrease in overdraft fees due to the COVID-19 pandemic.

Net gain on sale of loans increased due to an increase in the volume of loans sold of $48.1 million. During the third quarter of 2019 loans sold totaled $36.0 million compared to $84.1 million in the third quarter of 2020. The premium on sold loans also increased by 63 basis points in the third quarter this year compared to last year.

ATM/Interchange fees increased as a result of increased volume of transactions.

For the nine months ended September 30, 2020, noninterest income increased $3.7 million, or 22.0%, compared to the same period in the prior year.

Noninterest income
(unaudited - dollars in thousands)	Nine months ended September 30,
	2020			2019		$ change			% change
Service charges	$	3,812		$	4,733	$	(921	)		-19.5	%
Net gain on sale of securities		92			17		75			441.2	%
Net loss on equity securities		(126	)		81		(207	)		-255.6	%
Net gain on sale of loans		5,501			1,701		3,800			223.4	%
ATM/Interchange fees		3,226			2,871		355			12.4	%
Wealth management fees		2,916			2,733		183			6.7	%
Bank owned life insurance		733			753		(20	)		-2.7	%
Tax refund processing fees		2,375			2,750		(375	)		-13.6	%
Swap fees		1,260			287		973			339.0	%
Other		727			890		(163	)		-18.3	%
Total noninterest income	$	20,516		$	16,816	$	3,700			22.0	%

Service charge income decreased primarily due a $780.2 thousand decrease in overdraft fees and $93 thousand in waived service charges, both related to the COVID-19 pandemic.

During the nine-months ended September 30, 2020 Civista sold $211.1 million of mortgage loans, an increase of $130.6 million from the same period in 2019. The premium on sold loans also increased by 50 basis points during the nine months this year compared to last year. These two factors contributed to the increase in net gain on sale of loans.

ATM/Interchange fees increased as a result of increased transaction volume.

Swap fees increased as a result of the declining interest rate environment and more customers looking to lock in lower fixed rate loans. During 2020, new swaps totaled $92.4 million in loans to provide low fixed rate loans for customers and variable rate loans for Civista.

Tax refund processing fees decreased due to a decline in volume processed.

For the third quarter of 2020, noninterest expense totaled $17.7 million, an increase of $1.0 million, or 6.0%, compared to the prior year’s third quarter.

Noninterest expense
(unaudited - dollars in thousands)	Three months ended September 30,
	2020		2019		$ change			% change
Compensation expense	$	10,595	$	9,707	$	888			9.1	%
Net occupancy and equipment		1,504		1,463		41			2.8	%
Contracted data processing		415		435		(20	)		-4.6	%
Taxes and assessments		715		498		217			43.6	%
Professional services		669		756		(87	)		-11.5	%
Amortization of intangible assets		227		235		(8	)		-3.4	%
ATM/Interchange expense		538		514		24			4.7	%
Marketing		361		404		(43	)		-10.6	%
Software maintenance expense		506		396		110			27.8	%
Other		2,197		2,323		(126	)		-5.4	%
Total noninterest expense	$	17,727	$	16,731	$	996			6.0	%

Compensation expense increased primarily due to annual pay increases and commission and incentive expense. Annual pay increases in 2020 were an average of 3.3%. Employee insurance decreased $308.3 thousand, or 26.5%, for 2020. Commission and incentive expense increased $956.9 thousand, or 89.5% as a result of increased loan activity.

The quarter-over-quarter increase in taxes and assessments was attributable to an increase in the FDIC assessment base and a $147.6 thousand credit for small banks, applied to the September 2019 assessments. State franchise tax decreased related to a refund of taxes paid in 2020.

The increase in software maintenance expense is due to contracts related to new services.

The decrease in other operating expense is primarily due to a decreases in travel and lodging expense of $222.9 thousand and education and training of $54.4 thousand. These decreases were partially offset by increases in loan origination expense of $129.4 thousand and communications expense of $19.9 thousand.

The efficiency ratio was 60.7% for the quarter ended September 30, 2020 compared to 63.8% for the quarter ended September 30, 2019. The change in the efficiency ratio is due to increases in both noninterest income and the increase in net interest income.

Civista’s effective income tax rate for the third quarter 2020 was 12.9% compared to 14.0% in 2019.

For the nine months ended September 30, 2020, noninterest expense totaled $53.7 million, an increase of $3.9 million, or 7.8%, compared to the same period in the prior year.

Noninterest expense
(unaudited - dollars in thousands)	Nine months ended September 30,
	2020		2019		$ change			% change
Compensation expense	$	32,063	$	29,059	$	3,004			10.3	%
Net occupancy and equipment		4,557		4,410		147			3.3	%
Contracted data processing		1,340		1,301		39			3.0	%
Taxes and assessments		1,925		1,695		230			13.6	%
Professional services		2,289		2,151		138			6.4	%
Amortization of intangible assets		686		710		(24	)		-3.4	%
ATM/Interchange expense		1,316		1,437		(121	)		-8.4	%
Marketing		1,056		1,111		(55	)		-5.0	%
Software maintenance expense		1,350		1,101		249			22.6	%
Other		7,115		6,843		272			4.0	%
Total noninterest expense	$	53,697	$	49,818	$	3,879			7.8	%

The increase in compensation expense was due to increased payroll and commission and incentive based costs, offset by a decrease in employee insurance costs. Annual pay increases in 2020 were an average of 3.3%. Commission expense increased $1.5 million, or 46.5% as a result of increased loan activity. Employee insurance decreased $235.3 thousand, or 5.8%, for 2020.

The increase in taxes and assessments was attributable to a $147.6 thousand FDIC assessment credit for small banks that was applied to the 2019 assessment charges.

The increase in software maintenance expense is due to contracts related to new services.

The increase in other operating expense is primarily due to increases in loan origination expense of $336.9 thousand. MSR valuation expense of $137.4 thousand, postage expense of $66.8 thousand and communications expense of $75.1 thousand. These increases were partially offset by a decrease in travel and lodging expense of $478.3 thousand.

The efficiency ratio was 61.1% for the nine months ended September 30, 2020 compared to 60.9% for the nine months ended September 30, 2019. The change in the efficiency ratio is due primarily to the increase in noninterest expense.

Civista’s effective income tax rate for the first nine months of 2020 was 12.5% compared to 15.3% in same period in 2019.

Balance Sheet

Total assets increased $508.4 million, or 22.0%, from December 31, 2019 to September 30, 2020, due primarily to a $332.0 million, or 19.4%, increase in the loan portfolio. Loans held for sale increased $11.0 million, or 480.1%, and cash increased $146.2 million, primarily related to the proceeds from PPP loans held on deposit.

End of period loan balances
(unaudited - dollars in thousands)
	September 30, 2020		December 31, 2019		$ Change			% Change
Commercial and Agriculture 1	$	435,285	$	203,110	$	232,175			114.3	%
Commercial Real Estate:
Owner Occupied		261,235		245,606		15,629			6.4	%
Non-owner Occupied		683,579		592,222		91,357			15.4	%
Residential Real Estate		443,960		463,032		(19,072	)		-4.1	%
Real Estate Construction		167,560		155,825		11,735			7.5	%
Farm Real Estate		35,232		34,114		1,118			3.3	%
Consumer and Other		14,089		15,061		(972	)		-6.5	%
Total Loans	$	2,040,940	$	1,708,970	$	331,970			19.4	%

¹  includes PPP loans

Loan growth during 2020 totaled $332.0 million, including $259.1 million of PPP loans. Otherwise, loan growth was led by increases of $107.0 million in Commercial Real Estate and $11.7 million in Real Estate Construction. The Commercial Real Estate growth continues to be aided by some successful real estate projects we kept on balance sheet by using longer term swaps that might otherwise have been refinanced on the commercial mortgage-backed securities market. Our construction portfolio continues to be vibrant, especially in the Metro markets. The decrease in Residential Real Estate continued as we successfully refinanced many on balance sheet mortgages and home equity loans into saleable mortgage products. All regions have contributed to the growth in the first nine months, aided by many new clients and prospects from our success in PPP originations.

Paycheck Protection Program

We began accepting applications for the PPP loans on April 3, 2020 and during the first nine months of 2020 processed over 2,300 loans totaling $259.1 million. SBA fees total approximately $9.9 million, which are being recognized in interest income over the life of the PPP loans. We borrowed $183.7 million from the Paycheck Protection Program Lending Facility (“PPPLF”).

“As we begin the forgiveness stage of the PPP loans, I am reminded of the difference we have made to our customers and their employees. We expect to see many of our customers begin the forgiveness process during the fourth quarter of 2020.” said Dennis G. Shaffer, President and CEO of Civista.

COVID-19 Loan Modifications

During 2020, Civista modified a total of 813 loans totaling $431.3 million, primarily consisting of the deferral of principal and/or interest payments. All of the loans modified were performing at December 31, 2019 and comply with the provisions of the CARES Act to not be considered a troubled debt restructuring. As of September 30, 2020, the loans that remain on a CARES Act modification total $52.2 million.

Details with respect to the loan modifications that remain on deferred status are as follows:

Loans currently modified under COVID-19 programs
(unaudited - dollars in thousands)
Type of Loan	Number of Loans		Balance		Percent of loans outstanding 1
Commercial and Agriculture		12	$	1,370		0.08	%
Commercial Real Estate:
Owner Occupied		19		16,076		0.90	%
Non-owner Occupied		14		27,720		1.56	%
Real Estate Construction		2		7,020		0.39	%
		47	$	52,186		2.93	%

¹  excluding PPP loans

Total deposits increased $390.0 million, or 23.2%, from December 31, 2019 to September 30, 2020.

End of period deposit balances
(unaudited - dollars in thousands)
	September 30, 2020		December 31, 2019		$ Change		% Change
Noninterest-bearing demand	$	660,120	$	512,553	$	147,567		28.8	%
Interest-bearing demand		394,975		301,674		93,301		30.9	%
Savings and money market		721,571		588,697		132,874		22.6	%
Time deposits		292,103		275,840		16,263		5.9	%
Total Deposits	$	2,068,769	$	1,678,764	$	390,005		23.2	%

The increase in noninterest-bearing demand of $147.6 million was primarily due to a $107.5 million increase in business demand deposit accounts and a $16.2 million increase in personal demand deposit accounts. Much of the increase in the business demand deposit accounts is due to PPP loan proceeds. Interest-bearing demand deposits increased, split nearly evenly between increases in public fund accounts non-public fund accounts. The increase in savings and money market was primarily due to an increases in money markets and brokered money market accounts.

FHLB advances totaled $125.0 million at September 30, 2020, a decrease of $101.5 million, or 44.8%, from December 31, 2019. The increase in deposits reduced the need for wholesale funding. The Company also borrowed $183.7 million from the PPPLF to help fund PPP loans.

Stock Repurchase Program

An important part of capital management are share repurchases. During the third quarter of 2020 Civista repurchased 107,000 shares for $1.3 million at a weighted average price of $12.15 per share. This is part of the $13.5 million repurchase authorization which was approved in April 2020. Earlier in 2020, Civista repurchased 672,000 shares for $11.4 million, at a weighted average price of $16.90 per share. In addition, Civista liquidated 3,808 shares held by employees, at $24.07 per share, to satisfy tax obligations stemming from vesting of restricted shares. Year to date, Civista has repurchased a total of 783,308 shares for $12.8 million, at a weighted average price of $16.29 per share.

Shareholder Equity

Total shareholders’ equity increased $11.9 million, or 3.6%, from December 31, 2019 to September 30, 2020 as a result of a $16.7 million increase in retained earnings and an increase in other comprehensive income of $7.5 million. These increases were partially offset by a $12.8 million decrease related to the repurchase of treasury shares.

Asset Quality

Civista recorded net recoveries of $8 thousand for the nine months of 2020 compared to net recoveries of $315 thousand for the same period of 2019. The allowance for loan losses to loans was 1.11% at September 30, 2020 and 0.86% at December 31, 2019. Without the PPP loans, the allowance ratio would have been 16 basis points higher, as the reserve percentage on these loans is very low compared to the remaining portfolio due to the SBA guaranteeing 100 percent of the balance.

Allowance for Loan Losses
(unaudited - dollars in thousands)
	Nine months ended September 30,
	2020			2019
Beginning of period	$	14,767		$	13,679
Charge-offs		(325	)		(431	)
Recoveries		333			746
Provision		7,862			150
End of period	$	22,637		$	14,144

Non-performing assets at September 30, 2020 were $7.7 million, a 15.2% decrease from December 31, 2019. The non-performing assets to assets ratio decreased to 0.27% from 0.39% at December 31, 2019. The allowance for loan losses to non-performing loans increased to 292.88% from 161.95% at December 31, 2019.

Non-performing Assets
(unaudited - dollars in thousands)	September 30,		December 31,
	2020		2019
Non-accrual loans	$	5,736	$	6,115
Troubled debt restructurings		1,993		3,004
Total non-performing loans		7,729		9,119
Other Real Estate Owned		—		—
Total non-performing assets	$	7,729	$	9,119

Conference Call and Webcast

Civista Bancshares, Inc. will also host a conference call to discuss the Company’s financial results for the third quarter of 2020 at 1:00 p.m. ET on Friday, October 23, 2020. Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company’s website, www.civb.com. Participants can also listen to the conference call by dialing 855-238-2712 and ask to be joined into the Civista Bancshares, Inc. third quarter 2020 earnings call. Please log in or dial in at least 10 minutes prior to the start time to ensure a connection.

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

Forward Looking Statements

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Civista. For these statements, Civista claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Civista, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Civista’ reports filed with the Securities and Exchange Commission, including those described in “Item 1A Risk Factors” of Part I of Civista’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and any additional risks identified in the Company’s subsequent Form 10-Q’s. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Civista does not undertake, and specifically disclaims any obligation, to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Civista Bancshares, Inc. is a $2.8 billion financial holding company headquartered in Sandusky, Ohio. The Company’s banking subsidiary, Civista Bank, operates 37 locations in Northern, Central and Southwestern Ohio, Southeastern Indiana and Northern Kentucky. Civista Bancshares, Inc. may be accessed at www.civb.com. The Company’s common shares are traded on the NASDAQ Capital Market under the symbol “CIVB”.

For additional information, contact:

Dennis G. Shaffer

President and CEO

Civista Bancshares, Inc.

888-645-4121

Civista Bancshares, Inc.

Financial Highlights

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

Consolidated Condensed Statement of Income

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Interest income	$	24,558			24,023		$	74,144			73,533
Interest expense		2,552			3,605			7,948			9,655
Net interest income		22,006			20,418			66,196			63,878
Provision for loan losses		2,250			150			7,862			150
Net interest income after provision		19,756			20,268			58,334			63,728
Noninterest income		6,786			5,429			20,516			16,816
Noninterest expense		17,727			16,731			53,697			49,818
Income before taxes		8,815			8,966			25,153			30,726
Income tax expense		1,133			1,258			3,134			4,688
Net income		7,682			7,708			22,019			26,038
Preferred stock dividends		—			162			—			490
Net income available to common shareholders	$	7,682		$	7,546		$	22,019		$	25,548
Dividends paid per common share	$	0.11		$	0.11		$	0.33		$	0.31
Earnings per common share,
basic	$	0.48		$	0.48		$	1.36		$	1.64
diluted	$	0.48		$	0.46		$	1.36		$	1.54
Average shares outstanding,
basic		16,045,544			15,577,371			16,201,898			15,604,410
diluted		16,045,544			16,849,887			16,201,898			16,891,286
Selected financial ratios:
Return on average assets (annualized)		1.08	%		1.38	%		1.08	%		1.56	%
Return on average equity (annualized)		9.01	%		9.38	%		8.80	%		11.07	%
Dividend payout ratio		22.98	%		22.23	%		24.28	%		18.58	%
Net interest margin (tax equivalent)		3.44	%		4.12	%		3.70	%		4.35	%

Selected Balance Sheet Items

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

	September 30,			December 31,
	2020			2019
	(unaudited)
Cash and due from financial institutions	$	194,773		$	48,535
Investment securities		366,691			359,690
Loans held for sale		13,256			2,285
Loans		2,040,940			1,708,970
Less: allowance for loan losses		(22,637	)		(14,767	)
Net loans		2,018,303			1,694,203
Other securities		20,537			20,280
Premises and equipment, net		22,958			22,871
Goodwill and other intangibles		84,896			85,156
Bank owned life insurance		45,732			44,999
Other assets		50,847			31,538
Total assets	$	2,817,993		$	2,309,557
Total deposits	$	2,068,769		$	1,678,764
Federal Home Loan Bank advances		125,000			226,500
Securities sold under agreements to repurchase		25,813			18,674
Other borrowings		183,695			—
Subordinated debentures		29,427			29,427
Accrued expenses and other liabilities		43,234			26,066
Total shareholders’ equity		342,055			330,126
Total liabilities and shareholders’ equity	$	2,817,993		$	2,309,557
Shares outstanding at period end		15,945,479			16,687,542
Book value per share	$	21.45		$	19.78
Equity to asset ratio		12.14	%		14.29	%
Selected asset quality ratios:
Allowance for loan losses to total loans		1.11	%		0.86	%
Non-performing assets to total assets		0.27	%		0.39	%
Allowance for loan losses to non-performing loans		292.88	%		161.95	%
Non-performing asset analysis
Nonaccrual loans	$	5,736		$	6,115
Troubled debt restructurings		1,993			3,004
Other real estate owned		—			—
Total	$	7,729		$	9,119

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)

End of Period Balances	September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019
Assets
Cash and due from banks	$	194,773		$	196,520		$	256,023		$	48,535		$	62,219
Investment securities		366,691			369,181			366,689			359,690			356,439
Loans held for sale		13,256			18,523			7,632			2,285			8,983
Loans		2,040,940			2,022,965			1,743,125			1,708,970			1,648,640
Allowance for loan losses		(22,637	)		(20,420	)		(16,948	)		(14,767	)		(14,144	)
Net Loans		2,018,303			2,002,545			1,726,177			1,694,203			1,634,496
Other securities		20,537			20,537			20,280			20,280			20,280
Premises and equipment, net		22,958			23,137			22,443			22,871			22,201
Goodwill and other intangibles		84,896			84,852			84,919			85,156			85,461
Bank owned life insurance		45,732			45,489			45,249			44,999			44,745
Other assets		50,847			51,369			46,444			31,538			34,241
Total Assets	$	2,817,993		$	2,812,153		$	2,575,856		$	2,309,557		$	2,269,065
Liabilities
Total deposits	$	2,068,769		$	2,069,261		$	1,991,939		$	1,678,764		$	1,632,621
Federal Home Loan Bank advances		125,000			125,000			142,000			226,500			236,100
Securities sold under agreement to repurchase		25,813			23,608			22,699			18,674			15,088
Other borrowings		183,695			183,695			—			—			—
Subordinated debentures		29,427			29,427			29,427			29,427			29,427
Accrued expenses and other liabilities		43,234			44,549			61,624			26,066			26,566
Total liabilities		2,475,938			2,475,540			2,247,689			1,979,431			1,939,802
Shareholders’ Equity
Preferred shares, Series B		—			—			—			—			9,158
Common shares		276,940			276,841			276,546			276,422			267,559
Retained earnings		84,628			78,712			73,972			67,974			62,023
Treasury shares		(33,900	)		(32,594	)		(32,239	)		(21,144	)		(21,144	)
Accumulated other comprehensive income		14,387			13,654			9,888			6,874			11,667
Total shareholders’ equity		342,055			336,613			328,167			330,126			329,263
Total Liabilities and Shareholders’ Equity	$	2,817,993		$	2,812,153		$	2,575,856		$	2,309,557		$	2,269,065
Quarterly Average Balances
Assets:
Earning assets	$	2,617,884		$	2,528,006		$	2,232,168		$	2,070,175		$	2,021,780
Securities		388,594			386,838			385,187			372,639			379,525
Loans		2,040,492			1,972,969			1,725,685			1,676,769			1,626,010
Liabilities and Shareholders’ Equity
Total deposits	$	2,084,791		$	2,108,227		$	1,975,133		$	1,661,452		$	1,622,527
Interest-bearing deposits		1,401,318			1,317,336			1,175,593			1,160,499			1,139,632
Other interest-bearing liabilities		362,965			302,267			209,909			252,908			246,235
Total shareholders’ equity		339,278			330,524			332,602			329,634			326,103

Supplemental Financial Information    

(Unaudited - dollars in thousands except share data)    

	Three Months Ended
Income statement	September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019
Total interest and dividend income	$	24,558		$	24,584		$	25,002		$	24,521		$	24,023
Total interest expense		2,552			2,509			2,887			3,299			3,605
Net interest income		22,006			22,075			22,115			21,222			20,418
Provision for loan losses		2,250			3,486			2,126			885			150
Noninterest income		6,786			6,854			6,876			5,627			5,429
Noninterest expense		17,727			18,114			17,856			17,128			16,731
Income before taxes		8,815			7,329			9,009			8,836			8,966
Income tax expense		1,133			825			1,176			995			1,258
Net income		7,682			6,504			7,833			7,841			7,708
Preferred stock dividends		—			—			—			157			162
Net income available to common shareholders	$	7,682		$	6,504		$	7,833		$	7,684		$	7,546
Common shares dividend paid	$	1,766		$	1,764		$	1,835		$	1,702		$	1,722
Per share data
Basic earnings per common share	$	0.48		$	0.41		$	0.47		$	0.49		$	0.48
Diluted earnings per common share		0.48			0.41			0.47			0.47			0.46
Dividends paid per common share		0.11			0.11			0.11			0.11			0.11
Average common shares outstanding - basic		16,045,544			16,044,125			16,517,745			15,796,713			15,577,371
Average common shares outstanding - diluted		16,045,544			16,044,125			16,517,745			16,734,391			16,849,887
Asset quality
Allowance for loan losses, beginning of period	$	20,420		$	16,948		$	14,767		$	14,144		$	13,786
Charge-offs		(185	)		(116	)		(24	)		(345	)		(36	)
Recoveries		152			102			79			83			244
Provision		2,250			3,486			2,126			885			150
Allowance for loan losses, end of period	$	22,637		$	20,420		$	16,948		$	14,767		$	14,144
Ratios
Allowance to total loans		1.11	%		1.01	%		0.97	%		0.86	%		0.86	%
Allowance to nonperforming assets		292.88	%		262.14	%		197.97	%		161.95	%		149.91	%
Allowance to nonperforming loans		292.88	%		262.14	%		197.97	%		161.95	%		149.91	%
Nonperforming assets
Nonperforming loans	$	7,729		$	7,790		$	8,561		$	9,119		$	9,435
Other real estate owned		—			—			—			—			—
Total nonperforming assets	$	7,729		$	7,790		$	8,561		$	9,119		$	9,435
Capital and liquidity
Tier 1 leverage ratio		10.73	%		10.43	%		10.66	%		12.35	%		12.37	%
Tier 1 risk-based capital ratio		14.73	%		12.99	%		14.33	%		15.26	%		15.50	%
Total risk-based capital ratio		15.94	%		13.97	%		15.25	%		16.10	%		16.32	%
Tangible common equity ratio (1)		9.47	%		9.29	%		9.82	%		11.08	%		10.81	%

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

Reconciliation of Non-GAAP Financial Measures

(Unaudited - dollars in thousands except share data)

	Three Months Ended
	September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019
Tangible Common Equity
Total Shareholder’s Equity - GAAP	$	342,055		$	336,613		$	328,167		$	330,126		$	329,263
Less: Preferred Equity		—			—			—			—			9,158
Less: Goodwill and intangible assets		82,907			83,135			83,363			83,595			83,829
Tangible common equity (Non-GAAP)	$	259,148		$	253,478		$	244,804		$	246,531		$	236,276
Total Shares Outstanding		15,945,479			16,052,979			16,064,010			16,687,542			15,473,275
Tangible book value per share	$	16.25		$	15.79		$	15.24		$	14.77		$	15.27
Tangible Assets
Total Assets - GAAP	$	2,817,993		$	2,812,153		$	2,575,856		$	2,309,557		$	2,269,065
Less: Goodwill and intangible assets		82,907			83,135			83,363			83,595			83,829
Tangible assets (Non-GAAP)	$	2,735,086		$	2,729,018		$	2,492,493		$	2,225,962		$	2,185,236
Tangible common equity to tangible assets		9.47	%		9.29	%		9.82	%		11.08	%		10.81	%