EX-99.1

EX-99.1 2 d37291dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

LOGO

Civista Bancshares, Inc. Announces Second Quarter 2021 Financial Results

Sandusky, Ohio, July 23, 2021 /PRNewswire/ – Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) announced its unaudited financial results for the three and six months ending June 30, 2021.

Second quarter and year-to-date 2021 highlights:

•

Net income of $9.2 million, or $0.59 per diluted share, for the second quarter of 2021, compared to $6.5 million, or $0.41 per diluted share, for the second quarter of 2020.

•

Net income of $19.9 million, or $1.27 per diluted share, compared to $14.3 million, or $0.88 per diluted share, for the six months ended June 30, 2021 and 2020, respectively.

•

COVID–19 loan deferrals decreased to 2.5% of total loans at period end, compared to 3.6% at December 31, 2020 and 21.3% at June 30, 2020.

•

Second quarterly dividend of $0.12 is equivalent to an annualized yield of 2.17% based on the June 30, 2021 market close of $22.10 and a dividend payout ratio of 20.43%.

•

Executed a balance sheet restructuring to deploy excess liquidity which included the prepayment of a 2.05%, $50.0 million FHLB advance, with a $3.7 million prepayment penalty. In addition, we recognized a $1.8 million gain on the sale of our VISA B shares. We also invested $100.0 million dollars into a mix of investment securities yielding 1.50%.

“Our team executed another great quarter financially as well as several key initiatives operationally. On June 9^th, we introduced the new Civista Digital Banking which provides for a better customer experience in both the mobile and online platform. We restructured our balance sheet to reduce cost in the future. Our mortgage team had another great quarter and our commercial lending team has seen increases in demand. In July, we also increased our third quarter dividend 17%.” said Dennis G. Shaffer, CEO and President of Civista.

Results of Operations:

For the three-month period ended June 30, 2021 and 2020

Net interest income increased $1.8 million, or 8.0%, for the second quarter of 2021 compared to the same period of 2020, due to a $914 thousand increase in interest income of as well as an $852 thousand decrease in interest expense. Interest income included $2.8 million of accretion of PPP loan fees during the quarter.

The increase in interest income was due to an increase in average earning assets of $248.1 million, partially offset by a 24 basis point decrease in average yields. Interest income included $2.8 million of PPP fees as well as accretion income of purchased loan portfolios of $565.3 thousand.

The decrease in interest expense is primarily due to a decrease in average rates of 24 basis points offset by an increase in average interest-bearing liabilities of $118.3 million.

Net interest margin decreased 8 basis points to 3.53% for the second quarter of 2021, compared to 3.61% for the same period a year ago.

PPP loans averaged $207.5 million during the quarter at an average yield of 6.39%, including the related fee accretion, which increased the margin by 23 basis points.

Average Balance Analysis

(Unaudited - Dollars in thousands)


	Three Months Ended June 30,
	2021								2020
	Average					Yield/			Average					Yield/
Assets:	balance			Interest		rate *			balance			Interest		rate *
Interest-earning assets:
Loans **	$	2,054,784		$	22,653		4.42	%	$	1,972,969		$	21,613		4.41	%
Taxable securities		204,554			1,230		2.47	%		185,956			1,359		3.05	%
Non-taxable securities		208,940			1,525		4.04	%		200,882			1,541		4.19	%
Interest-bearing deposits in other banks		307,853			90		0.12	%		168,199			71		0.17	%

Total interest-earning assets	$	2,776,131			25,498		3.77	%	$	2,528,006			24,584		4.01	%

Noninterest-earning assets:
Cash and due from financial institutions		45,626								84,961
Premises and equipment, net		22,375								22,535
Accrued interest receivable		8,463								9,312
Intangible assets		84,638								84,906
Bank owned life insurance		46,305								45,334
Other assets		37,173								43,297
Less allowance for loan losses		(26,580	)							(17,098	)

Total Assets	$	2,994,131							$	2,801,253

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand and savings	$	1,310,998		$	334		0.10	%	$	1,027,678		$	439		0.17	%
Time		269,624			802		1.19	%		289,658			1,363		1.89	%
FHLB		101,923			330		1.30	%		125,034			447		1.44	%
Other borrowings		—			—		0.00	%		124,819			4		0.01	%
Subordinated debentures		29,427			185		2.52	%		29,427			250		3.42	%
Repurchase agreements		25,914			6		0.09	%		22,987			6		0.15	%

Total interest-bearing liabilities	$	1,737,886			1,657		0.38	%	$	1,619,603			2,509		0.62	%

Noninterest-bearing deposits		867,561								790,891
Other liabilities		39,428								60,235
Shareholders’ equity		349,256								330,524

Total Liabilities and Shareholders’ Equity	$	2,994,131							$	2,801,253

Net interest income and interest rate spread				$	23,841		3.39	%				$	22,075		3.39	%

Net interest margin							3.53	%							3.61	%

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

** -	Average balance includes nonaccrual loans

For the six-month period ended June 30, 2021 and 2020

Net interest income increased $3.5 million, or 7.9%, compared to the same period in 2020.

Interest income increased $1.6 million, or 3.3%, for the first six months of 2021. Average earning assets increased $510.7 million, which resulted in a $5.3 million increase in interest income. Average yields decreased 64 basis points which resulted in a $3.7 million decrease in interest income. During the six-month period, the Bank had average PPP Loans totaling $228.1 million. These loans had an average yield of 6.22% including the amortization of PPP fees, which increased the margin by 24 basis points.

Interest expense decreased $1.8 million, or 34.1%, for the first six months of 2021 compared to the same period of 2020. Average rates decreased 31 basis points, resulting in a $1.8 million decrease in interest expense. Average interest-bearing liabilities increased $225.6 million, but led to a decrease in interest expense of $20 thousand, primarily due to a mix shift toward interest-bearing demand deposits.

Net interest margin decreased 43 basis points to 3.41% for the first six months of 2021, compared to 3.84% for the same period a year ago.

Average Balance Analysis

(Unaudited - Dollars in thousands)


	Six Months Ended June 30,
	2021								2020
	Average					Yield/			Average					Yield/
Assets:	balance			Interest		rate *			balance			Interest		rate *
Interest-earning assets:
Loans **	$	2,062,061		$	45,436		4.44	%	$	1,849,327		$	43,286		4.71	%
Taxable securities		189,729			2,505		2.75	%		186,780			2,775		3.10	%
Non-taxable securities		208,260			3,044		4.08	%		199,233			3,053		4.21	%
Interest-bearing deposits in other banks		430,705			239		0.11	%		144,748			472		0.66	%

Total interest-earning assets	$	2,890,755			51,224		3.66	%	$	2,380,088			49,586		4.30	%

Noninterest-earning assets:
Cash and due from financial institutions		39,777								126,655
Premises and equipment, net		22,442								22,636
Accrued interest receivable		8,515								8,031
Intangible assets		84,749								84,994
Bank owned life insurance		46,185								45,210
Other assets		37,157								36,229
Less allowance for loan losses		(26,087	)							(16,013	)

Total Assets	$	3,103,493							$	2,687,830

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand and savings	$	1,280,030		$	677		0.11	%	$	961,285		$	1,044		0.22	%
Time		276,793			1,719		1.25	%		285,179			2,743		1.93	%
FHLB		113,398			774		1.38	%		141,391			1,028		1.46	%
Other borrowings		—			—		0.00	%		62,410			4		0.01	%
Federal funds purchased		—			—		0.00	%		305			3		1.98	%
Subordinated debentures		29,427			371		2.54	%		29,427			563		3.85	%
Repurchase agreements		28,531			14		0.10	%		22,555			11		0.10	%

Total interest-bearing liabilities	$	1,728,179			3,555		0.41	%	$	1,502,552			5,396		0.72	%

Noninterest-bearing deposits		986,185								795,215
Other liabilities		39,690								58,500
Shareholders’ equity		349,439								331,563

Total Liabilities and Shareholders’ Equity	$	3,103,493							$	2,687,830

Net interest income and interest rate spread				$	47,669		3.25	%				$	44,190		3.58	%

Net interest margin							3.41	%							3.84	%

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

** -	Average balance includes nonaccrual loans

No provision for loan losses was recorded during the second quarter and was $830 thousand for the first six months of 2021. Provision for loan losses was $3.5 million for the second quarter of 2020 and $5.6 million for the first six months of 2020. The reserve ratio increased to 1.30% at June 30, 2021 from 1.22% at December 31, 2020. The reserve ratio without $153.0 million of PPP loans would have been 10 basis points higher.

For the second quarter of 2021, noninterest income totaled $9.0 million, an increase of $2.2 million, or 31.7%, compared to the prior year’s second quarter.


Noninterest income
(unaudited - dollars in thousands)	Three months ended June 30,
	2021		2020			$ change			% change
Service charges	$	1,317	$	930		$	387			41.6	%
Net loss on sale of securities		1,784		—			1,784			0.0	%
Net gain/(loss) on equity securities		53		(5	)		58			N/M
Net gain on sale of loans		2,218		2,261			(43	)		-1.9	%
ATM/Interchange fees		1,373		1,149			224			19.5	%
Wealth management fees		1,188		904			284			31.4	%
Bank owned life insurance		248		240			8			3.3	%
Tax refund processing fees		475		475			—			0.0	%
Swap fees		17		764			(747	)		-97.8	%
Other		352		136			216			158.8	%

Total noninterest income	$	9,025	$	6,854		$	2,171			31.7	%

N/M - not meaningful

Service charges increased as a result of higher overdraft fees and service charges. During 2020, customer behavior changed as a result of the COVID-19 pandemic, resulting in fewer overdrafts. Civista also waived service fees on deposit accounts of $93 thousand during 2020. Overdraft fees are rebounding to pre-pandemic levels.

Net gain on sale of securities increased as a result of the sale of Visa Class B shares.

ATM/Interchange fees increased as a result of increased volume of transactions and incentives from our network providers.

Wealth management fees increased due to an increase in average assets under management as well as an increase in the average rate earned on the assets in 2021.

Swap fees decreased due to the volume. For the quarter, we swapped $4.2 million compared to $44.8 million during the same period last year. We reduced the loans we entered into swaps on as a part of our asset liability management program.

For the six months ended June 30, 2021, noninterest income totaled $18.2 million, an increase of $4.5 million, or 32.7%, compared to the same period in the prior year.


Noninterest income
(unaudited - dollars in thousands)	Six months ended June 30,
	2021		2020			$ change			% change
Service charges	$	2,573	$	2,398		$	175			7.3	%
Net loss on sale of securities		1,783		—			1,783			0.0	%
Net gain/(loss) on equity securities		141		(146	)		287			196.6	%
Net gain on sale of loans		4,963		3,088			1,875			60.7	%
ATM/Interchange fees		2,620		2,043			577			28.2	%
Wealth management fees		2,334		1,910			424			22.2	%
Bank owned life insurance		491		490			1			0.2	%
Tax refund processing fees		2,375		2,375			—			0.0	%
Swap fees		94		1,102			(1,008	)		-91.5	%
Other		841		470			371			78.9	%

Total noninterest income	$	18,215	$	13,730		$	4,485			32.7	%

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 loans sold of $21.0 million and an increase in the premium on sold loans of 93 basis points.

ATM/Interchange fees increased as a result of increased volume of transactions and incentives from our network providers.

Wealth management fees increased due to an increase in average assets under management as well as an increase in the average rate earned on the assets in 2021.

Swap fees decreased as a result of a decline in the volume of loans. Year to date we swapped $5.7 million compared to $77.4 million during the same period last year. We reduced the loans we entered into swaps on as a part of our asset liability management program.

For the second quarter of 2021, noninterest expense totaled $22.5 million, an increase of $4.4 million, or 24.0%, compared to the prior year’s second quarter.


Noninterest expense
(unaudited - dollars in thousands)	Three months ended June 30,
	2021		2020		$ change			% change
Compensation expense	$	11,406	$	10,597	$	809			7.6	%
Net occupancy and equipment		1,489		1,571		(82	)		-5.2	%
Contracted data processing		490		475		15			3.2	%
Taxes and assessments		793		631		162			25.7	%
Professional services		741		883		(142	)		-16.1	%
Amortization of intangible assets		223		228		(5	)		-2.2	%
ATM/Interchange expense		656		331		325			98.2	%
Marketing		343		339		4			1.2	%
Software maintenance expense		545		407		138			33.9	%
Other		5,781		2,652		3,129			118.0	%

Total noninterest expense	$	22,467	$	18,114	$	4,353			24.0	%

The increase in other expense is due to the prepayment penalty of $3.7 million related to the early payoff of an FHLB long-term advance. This was partially offset by a $465 thousand credit valuation adjustment to mortgage servicing rights.

Compensation expense included increases in commissions of $465 thousand as well as salaries of $183 thousand. The increase in commissions is due to increased mortgage loan activity. The increase in salaries is due to annual pay increases, which occur every year in April.

Taxes and assessments increased due to an increase in the FDIC assessment base, as well as a $64 thousand credit for small banks that was applied to the June 2020 assessments.

The increase in ATM/Interchange expense is primarily due to additional volume and to a settlement received in the second quarter of 2020.

The increase in software maintenance expense is due to both increases in software maintenance contracts the implementation of our new digital banking.

The efficiency ratio was 67.5% for the quarter ended June 30, 2021 compared to 61.7% for the quarter ended June 30, 2020. Removing the effect of the FHLB prepayment and the gain on the sale of the VISA B shares, the efficiency ratio would have been 59.5%.

Civista’s effective income tax rate for the second quarter 2021 was 11.9% compared to 11.3% in 2020.

For the six months ended June 30, 2021, noninterest expense totaled $41.9 million, an increase of $5.9 million, or 16.4%, compared to the same period in the prior year.


Noninterest expense
(unaudited - dollars in thousands)	Six months ended June 30,
	2021		2020		$ change			% change
Compensation expense	$	23,188	$	21,468	$	1,720			8.0	%
Net occupancy and equipment		3,127		3,053		74			2.4	%
Contracted data processing		933		925		8			0.9	%
Taxes and assessments		1,678		1,210		468			38.7	%
Professional services		1,479		1,620		(141	)		-8.7	%
Amortization of intangible assets		445		459		(14	)		-3.1	%
ATM/Interchange expense		1,249		778		471			60.5	%
Marketing		641		695		(54	)		-7.8	%
Software maintenance expense		1,053		844		209			24.8	%
Other		8,064		4,918		3,146			64.0	%

Total noninterest expense	$	41,857	$	35,970	$	5,887			16.4	%

Compensation expense included increases in commissions of $1.1 million as well as salaries of $375 thousand. The increase in commission expense is a result of increased mortgage loan activity. The increase in salaries is due to annual pay increases which occur in April.

The increase in ATM/Interchange expense is primarily due to additional volume and to a settlement received in the second quarter of 2020.

The increase in software maintenance expense is due to both increases in software maintenance contracts as well as the implementation of the new digital banking platform.

The efficiency ratio was 62.8% for the six months ended June 30, 2021 compared to 61.2% for the six months ended June 30, 2020. Removing the effect of the FHLB prepayment and the gain on the sale of the VISA B shares, the efficiency ratio would have been 58.8%.

Civista’s effective income tax rate for the first six months of 2021 was 14.1% compared to 12.2% in same period in 2020.

Balance Sheet

Total assets increased $155.8 million, or 5.6%, from December 31, 2020 to June 30, 2021, primarily due to an increase in cash of $105.8 million, or 75.8%. Securities available for sale increased $94.3 million, or 26.0%. The loan portfolio decreased $38.3 million, which includes a decrease in PPP loans of $64.3 million.


End of period loan balances
(unaudited - dollars in thousands)
	June 30,		December 31,
	2021		2020		$ Change			% Change
Commercial and Agriculture ¹	$	328,871	$	409,876	$	(81,005	)		-19.8	%
Commercial Real Estate:
Owner Occupied		271,667		278,413		(6,746	)		-2.4	%
Non-owner Occupied		762,983		705,072		57,911			8.2	%
Residential Real Estate		426,731		442,588		(15,857	)		-3.6	%
Real Estate Construction		188,368		175,609		12,759			7.3	%
Farm Real Estate		28,616		33,102		(4,486	)		-13.6	%
Consumer and Other		11,960		12,842		(882	)		-6.9	%

Total Loans	$	2,019,196	$	2,057,502	$	(38,306	)		-1.9	%

¹	June 30, 2021 includes PPP loans totaling $153,007 and December 31, 2020 includes PPP loans totaling $217,295.

Loan balances have declined during the first half of 2021, primarily due to a net decline in PPP loans. Removing the effects of PPP loans, the loan portfolio would have increased $26.0 million, or 1.4%. Commercial Real Estate continued to grow due to consistent demand in the Non-owner Occupied category. Real Estate Construction loans increased as the construction season got underway during the second quarter. Construction availability remains near all-time highs. Commercial and Agriculture loans have been negatively impacted by the amount of governmental stimulus money. The decrease in Residential Real Estate continues as a result of portfolio loans refinanced into saleable mortgage products.

Paycheck Protection Program

During 2021, we processed approximately 1,300 loans totaling $131.1 million of PPP loans as part of the second round of the PPP. This is in addition to the $268.3 million that we processed in round one during 2020. Of the total PPP loans we have originated, $246.4 million have been forgiven or have paid off. We recognized $2.8 million of PPP fees in income during the quarter, and $5.9 million for the six months ended June 30, 2021. At June 30, 2021, $5.9 million of prepaid SBA fees remain.

COVID-19 Loan Modifications

As of June 30, 2021, the remaining loans modified under the CARES Act total $50.4 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
Commercial and Agriculture		13	$	4,222		0.21	%
Commercial Real Estate:
Owner Occupied		5		8,185		0.41	%
Non-owner Occupied		15		37,544		1.86	%
Real Estate Construction		1		485		0.02	%

		34	$	50,436		2.50	%

Deposits

Total deposits increased $213.6 million, or 9.8%, from December 31, 2020 to June 30, 2021.


End of period deposit balances
(unaudited - dollars in thousands)
	June 30,		December 31,
	2021		2020		$ Change			% Change
Noninterest-bearing demand	$	853,724	$	720,809	$	132,915			18.4	%
Interest-bearing demand		480,281		410,139		70,142			17.1	%
Savings and money market		809,530		771,612		37,918			4.9	%
Time deposits		259,457		286,838		(27,381	)		-9.5	%

Total Deposits	$	2,402,992	$	2,189,398	$	213,594			9.8	%

The increase in noninterest-bearing demand of $132.9 million was primarily due to a $61.1 million increase in business demand deposit accounts, primarily due to the deposit of PPP loan proceeds. Additionally, balances related to the tax refund processing program increased $50.8 million, which is temporary, and is expected to return to levels more consistent with December 31, 2020 over the next two quarters. Interest-bearing demand deposits increased due to a $47.6 million increase in public fund accounts and a $26.7 million increase in non-public fund accounts. The increase in savings and money market was primarily due to a $40.9 million increase in statement savings, a $26.7 million increase in personal money markets and a $14.8 million increase in public fund money markets. These increases were partially offset by a decrease of $40.1 million increase in brokered money market accounts.

FHLB advances totaled $75.0 million at June 30, 2021, down $50.0 million from December 31, 2020. The decrease was due to the prepayment of a $50 million, 2.05% long-term advance.

Stock Repurchase Program

During the first six months of 2021, Civista repurchased 505,239 shares for $11.3 million at a weighted average price of $22.30 per share. We have approximately $7.4 million remaining of the current $13.5 million repurchase authorization, which was approved in April 2021. In addition, Civista liquidated 5,065 shares held by employees, at $17.71 per share, to satisfy tax obligations stemming from vesting of restricted shares.

Shareholder Equity

Total shareholders’ equity increased $2.3 million from December 31, 2020 to June 30, 2021. Retained earnings increased $16.1 million and was partially offset by an $11.4 million repurchase of treasury shares and a $3.1 million decrease in accumulated other comprehensive income.

Asset Quality

Civista recorded net recoveries of $339 thousand for the six months of 2021 compared to net recoveries of $41 thousand for the same period of 2020. The allowance for loan losses to loans was 1.30% at June 30, 2021 and 1.22% at December 31, 2020. Removing the PPP loans, the allowance ratio would have been 10 basis points higher.


Allowance for Loan Losses
(unaudited - dollars in thousands)
	Six months ended June 30,
	2021			2020
Beginning of period	$	25,028		$	14,767
Charge-offs		(71	)		(140	)
Recoveries		410			181
Provision		830			5,612

End of period	$	26,197		$	20,420

Non-performing assets at June 30, 2021 were $5.9 million, a 19.4% decrease from December 31, 2020. The non-performing assets to assets ratio decreased to 0.20 % from 0.27% at December 31, 2020. The allowance for loan losses to non-performing loans increased to 443.50% from 343.05% at December 31, 2020.


Non-performing Assets
(dollars in thousands)	June 30,		December 31,
	2021		2020
Non-accrual loans	$	4,288	$	5,399
Restructured loans		1,619		1,897

Total non-performing loans		5,907		7,296
Other Real Estate Owned		—		31

Total non-performing assets	$	5,907	$	7,327

Conference Call and Webcast

Civista Bancshares, Inc. will also host a conference call to discuss the Company’s financial results for the second quarter of 2021 at 1:00 p.m. ET on Friday, July 23, 2021. 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. second quarter 2021 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, 2020, 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 $2.9 billion financial holding company headquartered in Sandusky, Ohio. The Company’s banking subsidiary, Civista Bank, operates 35 locations in Northern, Central and Southwestern Ohio, Southeastern Indiana and Northern Kentucky. Civista Bancshares, Inc. may be accessed at HUwww.civb.comUH. The Company’s common shares are traded on the NASDAQ Capital Market under the symbol “CIVB”.

For additional information, contact:

Dennis G. Shaffer

CEO and President

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						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Interest income	$	25,498		$	24,584		$	51,224		$	49,586
Interest expense		1,657			2,509			3,555			5,396

Net interest income		23,841			22,075			47,669			44,190
Provision for loan losses		—			3,486			830			5,612

Net interest income after provision		23,841			18,589			46,839			38,578
Noninterest income		9,025			6,854			18,215			13,730
Noninterest expense		22,467			18,114			41,857			35,970

Income before taxes		10,399			7,329			23,197			16,338
Income tax expense		1,235			825			3,275			2,001

Net income		9,164			6,504			19,922			14,337

Dividends paid per common share	$	0.12		$	0.11		$	0.24		$	0.22

Earnings per common share,
basic	$	0.59		$	0.41		$	1.27		$	0.88
diluted	$	0.59		$	0.41		$	1.27		$	0.88

Average shares outstanding, ⁽¹⁾
basic		15,529,766			15,989,851			15,674,231			16,237,242
diluted		15,529,766			15,989,851			15,674,231			16,237,242

Selected financial ratios:
Return on average assets		1.23	%		0.93	%		1.29	%		1.07	%
Return on average equity		10.52	%		7.91	%		11.50	%		8.70	%
Dividend payout ratio		20.34	%		27.04	%		18.88	%		24.92	%
Net interest margin (tax equivalent)		3.53	%		3.61	%		3.41	%		3.84	%

(1)	The Company is now presenting earnings per share using the two-class method. As such, the presentation for the prior periods have been revised. Earnings per share for the prior periods did not change as a result od using the two-class method.

Selected Balance Sheet Items

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


	June 30,			December 31,
	2021			2020
	(unaudited)			(unaudited)
Cash and due from financial institutions	$	245,306		$	139,522
Investment securities		458,831			364,350
Loans held for sale		6,618			7,001
Loans		2,019,196			2,057,502
Less: allowance for loan losses		(26,197	)		(25,028	)

Net loans		1,992,999			2,032,474
Other securities		20,537			20,537
Premises and equipment, net		22,817			22,580
Goodwill and other intangibles		84,980			84,926
Bank owned life insurance		46,467			45,976
Other assets		46,088			51,496

Total assets	$	2,924,643		$	2,768,862

Total deposits	$	2,402,992		$	2,189,398
Federal Home Loan Bank advances		75,000			125,000
Securities sold under agreements to repurchase		24,916			28,914
Subordinated debentures		29,427			29,427
Accrued expenses and other liabilities		39,895			46,015
Total shareholders’ equity		352,413			350,108

Total liabilities and shareholders’ equity	$	2,924,643		$	2,768,862

Shares outstanding at period end		15,434,592			15,898,032

Book value per share	$	22.83		$	22.02
Equity to asset ratio		12.05	%		12.64	%

Selected asset quality ratios:
Allowance for loan losses to total loans		1.30	%		1.22	%
Non-performing assets to total assets		0.20	%		0.26	%
Allowance for loan losses to non-performing loans		443.50	%		343.05	%

Non-performing asset analysis
Nonaccrual loans	$	4,288		$	5,399
Troubled debt restructurings		1,619			1,897
Other real estate owned		—			31

Total	$	5,907		$	7,327

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)


	June 30,			March 31,			December 31,			September 30,			June 30,
End of Period Balances	2021			2021			2020			2020			2020
Assets
Cash and due from banks	$	245,306		$	437,238		$	139,522		$	194,773		$	196,520
Investment securities		458,831			357,798			364,350			366,691			369,181
Loans held for sale		6,618			10,769			7,001			13,256			18,523
Loans		2,019,196			2,060,239			2,057,502			2,040,940			2,022,965
Allowance for loan losses		(26,197	)		(26,133	)		(25,028	)		(22,637	)		(20,420	)

Net Loans		1,992,999			2,034,106			2,032,474			2,018,303			2,002,545
Other securities		20,537			20,537			20,537			20,537			20,537
Premises and equipment, net		22,817			22,265			22,580			22,958			23,137
Goodwill and other intangibles		84,980			84,682			84,926			84,896			84,852
Bank owned life insurance		46,467			46,219			45,976			45,732			45,489
Other assets		46,088			43,754			51,496			50,847			51,369

Total Assets	$	2,924,643		$	3,057,368		$	2,768,862		$	2,817,993		$	2,812,153

Liabilities
Total deposits	$	2,402,992		$	2,475,907		$	2,189,398		$	2,068,769		$	2,069,261
Federal Home Loan Bank advances		75,000			125,000			125,000			125,000			125,000
Securities sold under agreement to repurchase		24,916			29,513			28,914			25,813			23,608
Other borrowings		—			—			—			183,695			183,695
Subordinated debentures		29,427			29,427			29,427			29,427			29,427
Accrued expenses and other liabilities		39,895			47,463			46,015			43,234			44,549

Total liabilities		2,572,230			2,707,310			2,418,754			2,475,938			2,475,540

Shareholders’ Equity
Common shares		277,495			277,164			277,039			276,940			276,841
Retained earnings		109,178			101,899			93,048			84,628			78,712
Treasury shares		(45,953	)		(38,574	)		(34,598	)		(33,900	)		(32,594	)
Accumulated other comprehensive income		11,693			9,569			14,619			14,387			13,654

Total shareholders’ equity		352,413			350,058			350,108			342,055			336,613

Total Liabilities and Shareholders’ Equity	$	2,924,643		$	3,057,368		$	2,768,862		$	2,817,993		$	2,812,153


Quarterly Average Balances
Assets:
Earning assets	$	2,776,131		$	3,006,653		$	2,603,961		$	2,617,884		$	2,528,006
Securities		413,494			382,313			386,179			388,594			386,838
Loans		2,054,784			2,069,419			2,072,477			2,040,492			1,972,969
Liabilities and Shareholders’ Equity
Total deposits	$	2,448,183		$	2,632,782		$	2,144,865		$	2,084,791		$	2,108,227
Interest-bearing deposits		1,580,622			1,532,759			1,458,967			1,401,318			1,317,336
Other interest-bearing liabilities		157,264			185,605			278,357			362,965			302,267
Total shareholders’ equity		349,256			349,625			343,335			339,278			330,524

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)


	Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
Income statement	2021			2021			2020			2020			2020
Total interest and dividend income	$	25,498		$	25,725		$	25,721		$	24,558		$	24,584
Total interest expense		1,657			1,897			2,190			2,552			2,509

Net interest income		23,841			23,828			23,531			22,006			22,075
Provision for loan losses		—			830			2,250			2,250			3,486
Noninterest income		9,025			9,190			7,666			6,786			6,854
Noninterest expense		22,467			19,390			16,968			17,727			18,114

Income before taxes		10,399			12,798			11,979			8,815			7,329
Income tax expense		1,235			2,040			1,806			1,133			825

Net income	$	9,164		$	10,758		$	10,173		$	7,682		$	6,504

Common shares dividend paid	$	1,885		$	1,907		$	1,753		$	1,766		$	1,764

Per share data
Earnings per common share
Basic	$	0.59		$	0.68		$	0.64		$	0.48		$	0.41
Diluted		0.59			0.68			0.64			0.48			0.41

Dividends paid per common share		0.12			0.12			0.11			0.11			0.11
Average common shares outstanding, ⁽¹⁾
Basic		15,529,766			15,820,301			15,861,095			15,991,270			15,989,851
Diluted		15,529,766			15,820,301			15,861,095			15,991,270			15,989,851

Asset quality
Allowance for loan losses, beginning of period	$	26,133		$	25,028		$	22,637		$	20,420		$	16,948
Charge-offs		(25	)		(46	)		(139	)		(185	)		(116	)
Recoveries		89			321			280			152			102
Provision		—			830			2,250			2,250			3,486

Allowance for loan losses, end of period	$	26,197		$	26,133		$	25,028		$	22,637		$	20,420

Ratios
Allowance to total loans		1.30	%		1.27	%		1.22	%		1.11	%		1.01	%
Allowance to nonperforming assets		443.50	%		423.09	%		341.59	%		292.88	%		262.14	%
Allowance to nonperforming loans		443.50	%		423.09	%		343.05	%		292.88	%		262.14	%

Nonperforming assets
Nonperforming loans	$	5,907		$	6,177		$	7,296		$	7,729		$	7,790
Other real estate owned		—			—			31			—			—

Total nonperforming assets	$	5,907		$	6,177		$	7,327		$	7,729		$	7,790

Capital and liquidity
Tier 1 leverage ratio		9.92	%		9.23	%		10.77	%		10.73	%		10.43	%
Tier 1 risk-based capital ratio		14.65	%		15.20	%		14.74	%		14.73	%		12.99	%
Total risk-based capital ratio		15.90	%		16.45	%		15.99	%		15.94	%		13.97	%
Tangible common equity ratio ⁽²⁾		9.51	%		9.00	%		9.98	%		9.47	%		9.29	%

(1)	The Company is now presenting earnings per share using the two-class method. As such, the presentation for the prior periods have been revised. Earnings per share for the prior periods did not change as a result od using the two-class method.

(2)	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
	June 30,			March 31,			December 31,			September 30,			June 30,
	2021			2021			2020			2020			2020
Tangible Common Equity
Total Shareholder’s Equity - GAAP	$	352,413		$	350,058		$	350,108		$	342,055		$	336,613
Less: Goodwill and intangible assets		82,235			82,458			82,681			82,907			83,135

Tangible common equity (Non-GAAP)	$	270,178		$	267,600		$	267,427		$	259,148		$	253,478

Total Shares Outstanding		15,434,592			15,750,479			15,898,032			15,945,479			16,052,979

Tangible book value per share	$	17.50		$	16.99		$	16.82		$	16.25		$	15.79

Tangible Assets
Total Assets - GAAP	$	2,924,643		$	3,057,368		$	2,762,918		$	2,817,993		$	2,812,153
Less: Goodwill and intangible assets		82,235			82,458			82,681			82,907			83,135

Tangible assets (Non-GAAP)	$	2,842,408		$	2,974,910		$	2,680,237		$	2,735,086		$	2,729,018

Tangible common equity to tangible assets		9.51	%		9.00	%		9.98	%		9.47	%		9.29	%

Reconciliation of Non-GAAP Efficiency Ratio

(Unaudited - dollars in thousands except share data)


For the three months ended:	June 30, 2021									June 30, 2020
	GAAP			Non-GAAP adjustment			Non- GAAP			GAAP			Non-GAAP adjustment		Non- GAAP
Noninterest expense		22,467			(3,717	)⁽¹⁾		18,750			18,114			—		18,114

Net interest income (FTE)		24,247			—			24,247			22,488			—		22,488
Noninterest income		9,025			(1,785	)⁽²⁾		7,240			6,854			—		6,854

Efficiency ratio		67.5	%					59.5	%		61.7	%				61.7	%

For the six months ended:	June 30, 2021									June 30, 2020
	GAAP			Non-GAAP adjustment			Non- GAAP			GAAP			Non-GAAP adjustment		Non- GAAP
Noninterest expense		41,857			(3,717	)⁽¹⁾		38,140			35,970			—		35,970

Net interest income (FTE)		48,483			—			48,483			45,009			—		45,009
Noninterest income		18,215			(1,785	)⁽²⁾		16,430			13,730			—		13,730

Efficiency ratio		62.8	%					58.8	%		61.2	%				61.2	%

(1)	FHLB prepayment penalty

(2)	Gain on sale of VISA B shares