EX-99.1

EX-99.1 2 d358845dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

LOGO

Civista Bancshares, Inc. Announces Fourth Quarter and Year-to-date 2022 Financial Results

Sandusky, Ohio, February 7, 2023 /PRNewswire/– Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) announced its unaudited financial results for the three and twelve month periods ending December 31, 2022.

Fourth quarter and year-to-date 2022 highlights:

•

Net income of $12.1 million, or $0.77 per diluted share, for the fourth quarter of 2022, compared to $11.0 million, or $0.73 per diluted share, for the fourth quarter of 2021.

•

Net income of $39.4 million, or $2.60 per diluted share, compared to $40.5 million, or $2.63 per diluted share, for the twelve months ended December 31, 2022 and 2021, respectively.

•

Low cost of deposits of 22 basis points and total funding costs of 102 basis points for the quarter.

•

Based on the December 31, 2022 market close share price of $22.01, the $0.14 fourth quarter dividend is equivalent to an annualized yield of 2.54% and a dividend payout ratio of 18.18%.

•

On July 1, 2022, we consummated the merger of Comunibanc Corp. with and into Civista and Henry County Bank (“HCB”), a wholly owned subsidiary of Comunibanc, with and into Civista Bank.

•

On October 3, 2022, we consummated the merger of Vision Financial Group (“VFG”), a leasing and finance company based in Pittsburgh, PA, with and into Civista Bank.

“We are extremely pleased with our fourth quarter results. Due to our strong core funding, our disciplined approach to pricing deposits and the rising interest rate environment, we had another quarter of net interest margin expansion. Our net interest margin improved 11 basis points over the linked quarter to 4.14%. In addition, loan growth for the quarter was strong and loans, exclusive of our VFG acquisition, grew by $151 million or at an annualized rate of 26%”, said Dennis G. Shaffer, CEO and President of Civista.

Results of Operations:

For the three-month periods ended December 31, 2022 and 2021

Net interest income increased $9.2 million, or 39.6%, for the fourth quarter of 2022 compared to the same period of 2021. Interest income increased $13.3 million while interest expense increased $4.0 million. Both increases were primarily due to increases in rates. Accretion of PPP fees was $38 thousand during the fourth quarter 2022 compared to $1.6 million for the same period in 2021.

Net interest margin increased 72 basis points to 4.14% for the fourth quarter of 2022, compared to 3.42% for the same period a year ago. The increase in margin is primarily due to increases in the volume of earning assets and to the yield on earning assets.

The increase in interest income was primarily due to a $326.0 million increase in average earning assets, which led to a $7.1 million increase in interest income. Additionally, increased interest rates led to a 118 basis point increase in asset yield and a $6.2 million increase in interest income.

Interest expense increased $4.0 million, or 284.2%, for the fourth quarter of 2022, compared to the same period last year. The average rate paid on interest-bearing liabilities increased 70 basis points, while average interest-bearing liabilities increased $343.1 million. The increase in interest-bearing liabilities was primarily in short-term borrowings to fund growth. The increase in the funding rate is primarily due to the issuance of $75 million, 3.25% subordinated debt in November 2021. Interest-bearing deposit costs have increased 21 basis points compared to a year ago.

Average Balance Analysis

(Unaudited - Dollars in thousands)


	Three Months Ended December 31,
	2022									2021
	Average balance			Interest			Yield/ rate *			Average balance			Interest		Yield/ rate *
Assets:
Interest-earning assets:
Loans **	$	2,458,980		$	33,086			5.34	%	$	1,973,989		$	21,430		4.31	%
Taxable securities ***		365,258			2,692			2.61	%		285,734			1,545		2.17	%
Non-taxable securities ***		264,869			2,190			3.65	%		236,324			1,651		3.76	%
Interest-bearing deposits in other banks		10,394			22			0.84	%		277,451			108		0.15	%

Total interest-earning assets ***	$	3,099,501			37,990			4.81	%	$	2,773,498			24,734		3.63	%

Noninterest-earning assets:
Cash and due from financial institutions		16,435									28,401
Premises and equipment, net		64,952									22,734
Accrued interest receivable		10,385									7,609
Intangible assets		132,516									84,541
Bank owned life insurance		53,378									46,807
Other assets		67,557									33,315
Less allowance for loan losses		(28,025	)								(26,595	)

Total Assets	$	3,416,699								$	2,970,310

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand and savings	$	1,449,412		$	582			0.16	%	$	1,368,640		$	240		0.07	%
Time		260,607			907			1.38	%		250,920			569		0.90	%
Short-term FHLB advances		258,254			2,517			3.87	%		543			1		0.73	%
Long-term FHLB advances		5,694			(5	)		-0.35	%		75,000			195		1.03	%
Fed funds purchased		543			6			4.38	%
Other borrowings		16,006			334			8.28	%		—			—		0.00	%
Subordinated debentures		103,784			1,081			4.13	%		54,961			402		2.90	%
Repurchase agreements		23,429			3			0.05	%		24,590			4		0.60	%

Total interest-bearing liabilities	$	2,117,729			5,425			1.02	%	$	1,774,654			1,411		0.32	%

Noninterest-bearing deposits		939,736									811,053
Other liabilities		59,725									35,632
Shareholders’ equity		299,509									348,971

Total Liabilities and Shareholders’ Equity	$	3,416,699								$	2,970,310


Net interest income and interest rate spread				$	32,565			3.80	%				$	23,323		3.31	%

Net interest margin ***								4.14	%							3.42	%

*	Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $582 thousand and $440 thousand for the periods ended December 31, 2022 and 2021, respectively.

**	Average balance includes nonaccrual loans

***

Average yield on investments were calculated by adjusting the average balances of taxable and nontaxable securities by unrealized losses of $80.8 million in 2022 and by unrealized gains of $18.6 million in 2021. These adjustments were also made when calculating the yield on earning assets and the margin.

For the twelve-month periods ended December 31, 2022 and 2021

Net interest income increased $14.8 million, or 15.5%, compared to the same period in 2021.

Interest income increased $19.5 million, or 19.2%, for the twelve months of 2022. Average earning assets increased $126.4 million, resulting in an increase in interest income of $13.2 million. Average yields increased 43 basis points, resulting in an increase in interest income of $6.3 million. During the twelve-month period, the Bank had average PPP Loans totaling $10.5 million compared to $155.3 million for the same period last year. For the twelve months ended December 31, 2022, these loans had an average yield of 17.86% including the amortization of PPP fees, which increased the margin by 5 basis points.

Interest expense increased $4.7 million, or 74.9%, for the twelve months of 2022 compared to the same period of 2021. Average rates increased 22 basis points compared to 2021 and average interest-bearing liabilities increased $182.2 million, resulting in a $4.6 million increase in interest expense.

Net interest margin increased 28 basis points to 3.75% for the twelve months of 2022, compared to 3.47% for the same period a year ago.

Average Balance Analysis

(Unaudited - Dollars in thousands)


	Twelve Months Ended December 31,
	2022								2021
	Average balance			Interest		Yield/ rate *			Average balance			Interest		Yield/ rate *
Assets:
Interest-earning assets:
Loans **	$	2,199,082		$	103,151		4.69	%	$	2,026,907		$	89,570		4.42	%
Taxable securities ***		341,600			9,123		2.49	%		232,813			5,473		2.41	%
Non-taxable securities ***		263,981			7,859		3.56	%		217,786			6,250		3.96	%
Interest-bearing deposits in other banks		146,849			1,120		0.76	%		347,573			449		0.13	%

Total interest-earning assets ***	$	2,951,512			121,253		4.12	%	$	2,825,079			101,742		3.69	%

Noninterest-earning assets:
Cash and due from financial institutions		84,777								35,404
Premises and equipment, net		34,577								22,617
Accrued interest receivable		8,650								8,010
Intangible assets		96,492								84,747
Bank owned life insurance		50,076								46,435
Other assets		50,765								36,456
Less allowance for loan losses		(27,721	)							(26,366	)

Total Assets	$	3,249,128							$	3,032,382

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand and savings	$	1,423,134		$	1,442		0.10	%	$	1,315,220		$	1,219		0.09	%
Time		253,399			2,398		0.95	%		265,294			2,956		1.11	%
Short-term FHLB advances		66,875			2,566		3.84	%		137			1		0.73	%
Long-term FHLB advances		45,325			510		1.13	%		94,041			1,163		1.24	%
Fed funds purchased		137			6		4.38	%
Other borrowings		4,002			335		3.64	%
Subordinated debentures		103,741			3,781		8.37	%		35,863			955		3.28	%
Repurchase agreements		22,293			11		0.05	%		26,165			23		0.09	%

Total interest-bearing liabilities	$	1,918,906			11,049		0.58	%	$	1,736,720			6,317		0.36	%

Noninterest-bearing deposits		937,890								907,591
Other liabilities		76,189								38,868
Shareholders’ equity		316,143								349,203

Total Liabilities and Shareholders’ Equity	$	3,249,128							$	3,032,382

Net interest income and interest rate spread				$	110,204		3.55	%				$	95,425		3.33	%

Net interest margin ***							3.75	%							3.47	%

*	Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $2.09 million and $1.67 million for the periods ended December 31, 2022 and 2021, respectively.

**	Average balance includes nonaccrual loans

***

Average yield on investments were calculated by adjusting the average balances of taxable and nontaxable securities by unrealized losses of $39.8 million in 2022 and by unrealized gains of $23.9 million in 2021. These adjustments were also made when calculating the yield on earning assets and the margin.

Provision for loan losses was $752 thousand for the fourth quarter of 2022 while there was no provision in the fourth quarter of 2021. Provision for loan losses was $1.8 million for the twelve months of 2022 compared to $830 thousand for the twelve months of 2021. The reserve ratio was 1.12% at December 31, 2022 and 1.33% at December 31, 2021. Loans outstanding at December 31, 2022 include balances acquired related to the acquisition of Comunibanc of approximately $174.3 million, and balances acquired related to the acquisition of VFG of approximately $67.2 million. These two acquired portfolios have a combined credit mark of $5.4 million.

Civista currently estimates that, upon adoption of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), that the allowance for credit losses will increase by approximately $3.3 million. In addition, the Bank expects to recognize a liability for unfunded loan commitments of approximately $3.4 million upon adoption. The impact of adoption will not be significant to the Banks regulatory capital. The Bank will not elect to phase in the over a three-year period, the standards impact on regulatory capital as permitted by the regulatory transition rules. The Bank will finalize the adoption during the first quarter of 2023.

For the fourth quarter of 2022, noninterest income totaled $10.1 million, an increase of $3.3 million, or 47.8%, compared to the prior year’s fourth quarter.

Noninterest income

(unaudited - dollars in thousands)


	Three months ended December 31,
	2022		2021			$ change			% change
Service charges	$	2,070	$	1,813		$	257			14.2	%
Net gain/(loss) on sale of securities		—		(1	)		1			100.0	%
Net gain/(loss) on equity securities		162		(5	)		167			N/M
Net gain on sale of loans		1,251		1,467			(216	)		-14.7	%
ATM/Interchange fees		1,509		1,493			16			1.1	%
Wealth management fees		1,189		1,287			(98	)		-7.6	%
Lease revenue and residual income		2,310		—			2,310			0.0	%
Bank owned life insurance		252		448			(196	)		-43.8	%
Swap fees		247		72			175			243.1	%
Other		1,074		237			837			353.2	%

Total noninterest income	$	10,064	$	6,811		$	3,253			47.8	%

N/M - not meaningful

Service charges increased due to a $145 thousand increase service charges, primarily on personal deposit accounts, and a $83 thousand increase in overdraft fees.

Net loss on equity securities increased as a result of market value increases.

Net gain on sale of loans decreased primarily because of a decrease in volume of loans sold, which was driven by increased interest rates. The volume of loans sold totaled $20.2 million and $55.1 million during the three months ended December 31, 2022 and 2021, respectively.

Lease revenue and residual income increased $2.3 million due to the acquisition of VFG.

Bank owned life insurance decreased due to a $187 thousand death benefit paid in 2021.

Swap fees increased due to the volume of swaps performed during the quarter ended December 31, 2022 as compared to the same period of 2021.

Other income increased $352 thousand due to rental income and $341 thousand due to brokerage fee income, both related to the acquisition of VFG. Additionally, mortgage servicing rights amortization increased $201 thousand.

For the twelve months ended December 31, 2022, noninterest income totaled $29.1 million, a decrease of $2.4 million, or 7.6%, compared to the same period in the prior year.

Noninterest income

(unaudited - dollars in thousands)


	Twelve months ended December 31,
	2022		2021		$ change			% change
Service charges	$	7,074	$	5,905	$	1,169			19.8	%
Net gain on sale of securities		10		1,786		(1,776	)		-99.4	%
Net gain/(loss) on equity securities		118		186		(68	)		-36.6	%
Net gain on sale of loans		3,397		8,042		(4,645	)		-57.8	%
ATM/Interchange fees		5,499		5,443		56			1.0	%
Wealth management fees		4,902		4,857		45			0.9	%
Lease revenue and residual income		2,310		—		2,310			0.0	%
Bank owned life insurance		984		1,200		(216	)		-18.0	%
Tax refund processing fees		2,375		2,375		—			0.0	%
Swap fees		247		207		40			19.3	%
Other		2,160		1,451		709			48.9	%

Total noninterest income	$	29,076	$	31,452	$	(2,376	)		-7.6	%

Service charges increased due to a $680 thousand increase overdraft fees and a $462 thousand increase in service charges on deposit accounts.

Net gain on sale of securities decreased due to the $1.8 million nonrecurring gain on the sale of Visa Class B shares in 2021.

Net loss on equity securities increased due to market value decreases.

Net gain on sale of loans decreased primarily because of a decrease in volume of loans sold, which was driven by increased interest rates. The volume of loans sold totaled $127.8 million and $260.3 million during the twelve months ended December 31, 2022 and 2021, respectively.

Lease revenue and residual income increased due to the acquisition of Vision Financial Group.

Bank owned life insurance decreased due to a $187 thousand death benefit paid in 2021.

Other income increased due to increases in wire transfer fees, merchant credit card fees, loan servicing fees, amortization of mortgage servicing rights. Rental income increased $352 thousand and brokerage fee income increased $341 thousand, both related to the acquisition of VFG.

For the fourth quarter of 2022, noninterest expense totaled $27.3 million, an increase of $10.3 million, or 61.0%, compared to the prior year’s fourth quarter. The increase in noninterest expense includes $2.2 million of one-time costs related to the Comunibanc and VFG acquisitions.

Noninterest expense

(unaudited - dollars in thousands)


	Three months ended December 31,
	2022		2021		$ change			% change
Compensation expense	$	14,407	$	10,112	$	4,295			42.5	%
Net occupancy and equipment		4,649		1,495		3,154			211.0	%
Contracted data processing		889		363		526			144.9	%
Taxes and assessments		356		804		(448	)		-55.7	%
Professional services		1,795		460		1,335			290.2	%
Amortization of intangible assets		406		222		184			82.9	%
ATM/Interchange expense		589		471		118			25.1	%
Marketing		444		103		341			331.1	%
Software maintenance expense		993		883		110			12.5	%
Other		2,773		2,049		724			35.3	%

Total noninterest expense	$	27,301	$	16,962	$	10,339			61.0	%

Compensation expense increased primarily due to the acquisition of Comunibanc Corp and VFG. The quarter-to-date average full time equivalent (FTE) employees were 530.5 at December 31, 2022, an increase of 86.2 FTEs over the same period in 2021 due to the two acquisitions completed in 2022.

The increase in occupancy expense is due to increases in utilities and ground maintenance as a result of adding eight additional branches and general cost increases.

The increase in data processing expense was due to deconversion fees of $460 related to the acquisition of Comunibanc Corp.

The decrease in taxes and assessments was attributable to a $532 thousand refund of overpayment of quarterly estimated taxes paid.

Professional services increased primarily due to one-time merger related legal and audit fees of $637 thousand, accompanied by increases in accounting and tax professional fees, accompanied by increases in recruitment fees.

The increase in amortization of intangible assets is related to the merger with Comunibanc Corp.

Marketing expense increased due to a general increase in marketing and increased marketing efforts in newly acquired markets.

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, introduced in June 2021.

Other operating expenses increased primarily due to other operating expenses of VFG of $516 thousand, accompanied by increases in travel and lodging of $93 thousand, and donations of $114 thousand.

The efficiency ratio was 63.3% for the quarter ended December 31, 2022 compared to 55.5% for the quarter ended December 31, 2021. The change in the efficiency ratio is primarily due to an increase in net interest expense. partially offset by an increase in net interest income.

Civista’s effective income tax rate for the fourth quarter 2022 was 16.7% compared to 16.6% in 2021.

For the twelve months ended December 31, 2022, noninterest expense totaled $90.5 million, an increase of $12.8 million, or 16.5%, compared to the same period in the prior year. The increase in noninterest expense includes $3.8 million of one-time costs related to the Comunibanc and VFG acquisitions.

Noninterest expense

(unaudited - dollars in thousands)


	Twelve months ended December 31,
	2022		2021		$ change			% change
Compensation expense	$	51,061	$	44,690	$	6,371			14.3	%
Net occupancy and equipment		9,771		6,051		3,720			61.5	%
Contracted data processing		2,788		1,725		1,063			61.6	%
Taxes and assessments		2,772		3,240		(468	)		-14.4	%
Professional services		5,388		2,715		2,673			98.5	%
Amortization of intangible assets		1,296		890		406			45.6	%
ATM/Interchange expense		2,248		2,314		(66	)		-2.9	%
Marketing		1,513		1,103		410			37.2	%
Software maintenance expense		3,433		2,755		678			24.6	%
Other		10,223		12,183		(1,960	)		-16.1	%

Total noninterest expense	$	90,493	$	77,666	$	12,827			16.5	%

The increase in compensation expense was due to increased payroll, 401k expenses, payroll taxes and commission and incentive-based costs. Payroll and payroll related expenses increased due to annual pay increases. The additions of Comunibanc and VFG also contributed $3.4 million to the increase.

The increase in occupancy and equipment expense was primarily due to a $2.4 million increase in equipment depreciation related to the acquisition of VFG. The expense also increased related to building maintenance and deprecation, purchases of security and other equipment purchases and grounds maintenance.

Contracted data processing fees increased due deconversion fees of $1.0 million related to the acquisition of Comunibanc Corp.

Professional services primarily increased due to a $1.7 million increase in merger related expenses, accompanied by increases in legal and audit fees and consulting fees.

The increase in amortization expense is due to $428 thousand related to the acquisition of Comunibanc Corp.

Marketing expense increased due to a $233 thousand increase, primarily related to marketing efforts in newly acquired markets.

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, introduced in June 2021.

The decrease in other expense is due to the 2021 prepayment penalty of $3.7 million related to the early payoff of an FHLB long-term advance. This was partially offset by a credit to the valuation adjustment for mortgage servicing rights posted in 2021 and increases in travel, lodging and meals, donations, stationery and supplies and bad check expense.

The efficiency ratio was 64.3% for the twelve months ended December 31, 2022 compared to 60.6% for the twelve months ended December 31, 2021. The change in the efficiency ratio is primarily due to an increase in noninterest expense and a decrease in noninterest interest income.

Civista’s effective income tax rate for the twelve months of 2022 was 16.2% compared to 16.2% in same period in 2021.

Balance Sheet

Total assets increased $524.9 million, or 17.4%, from December 31, 2021 to December 31, 2022, due to both organic growth and to the acquisitions of Comunibanc Corp. on July 1, 2022 and VFG on October 3, 2022. The growth from acquisitions was $234.7 million.

End of period loan balances

(unaudited - dollars in thousands)


	September 30, 2022		December 31, 2021		$ Change			% Change
Commercial and Agriculture	$	278,029	$	203,293	$	74,736			36.8	%
Paycheck protection program loans		566		43,209		(42,643	)		-98.7	%
Commercial Real Estate:
Owner Occupied		371,147		295,452		75,695			25.6	%
Non-owner Occupied		1,018,736		829,310		189,426			22.8	%
Residential Real Estate		552,781		430,060		122,721			28.5	%
Real Estate Construction		243,127		157,127		86,000			54.7	%
Farm Real Estate		24,708		28,419		(3,711	)		-13.1	%
Lease financing receivable		36,797		—		36,797			0.0	%
Consumer and Other		20,775		11,009		9,766			88.7	%

Total Loans	$	2,546,666	$	1,997,879	$	548,787			27.5	%

Loan balances increased $548.8 million, or 27.5% since December 31, 2021, including the $167.5 million portfolio related to Comunibanc Corp and the $67.2 million portfolio related to VFG. The growth is partially offset by a $42.6 million decrease in PPP loans. Removing the balances in the portfolios related to Comunibanc, VFG and PPP loans, the loan portfolio increased $314.1 million or 15.7%. Commercial Real Estate grew across all categories except Farm Real Estate. Even with interest rates rising, there was consistent demand in both the Non-owner Occupied and Owner Occupied categories. The growth has come from all regions and continued to be exceptionally strong in our major metropolitan areas of Cleveland, Columbus, and Cincinnati. Residential Real Estate has increased due to more need this year for the on-balance sheet products of residential construction loans, Jumbo Loans, and our Community View CRA product. Commercial and Agriculture loans continue to grow as we successfully onboard new Commercial & Industrial clients. Real Estate Construction increased as the construction demand remained steady and many of the projects are nearing completion.

Deposits

Total deposits increased $203.3 million, or 8.4%, from December 31, 2021 to December 31, 2022, due to the addition of the $203.3 million of deposits related to the Comunibanc deal.

End of period deposit balances

(unaudited - dollars in thousands)


	December 31, 2022		December 31, 2021		$ Change			% Change
Noninterest-bearing demand	$	896,333	$	788,906	$	107,427			13.6	%
Interest-bearing demand		527,879		537,510		(9,631	)		-1.8	%
Savings and money market		876,427		843,837		32,590			3.9	%
Time deposits		319,345		246,448		72,897			29.6	%

Total Deposits	$	2,619,984	$	2,416,701	$	203,283			8.4	%

The increase in noninterest-bearing demand of $107.4 million was primarily due to $71.2 million of deposits related to the merger with Comunibanc Corp and a $29.4 million increase in cash balances related to the Company’s participation in a tax refund processing program. Interest-bearing demand deposits decreased $9.6 million, attributable to decreases in business and public-fund interest bearing demand accounts of $34.3 million and $12.3 million, respectively. These decreases were partially offset by the increase in interest bearing demand deposits related to the Comunibanc merger of $36.3 million. Savings and money market balances increased $32.6 million, resulting from Comunibanc Corp balances of $79.4 million and increases in personal savings but partially offset by decreases in money market deposits of $35.5 million and brokered money market deposits of $19.1 million. Decreases in time deposits including accounts over $100K and public time deposits were partially offset by the addition of time deposits related to Comunibanc of $31.1 million combined with an increase in brokered time deposits of $90.0 million resulting in the overall increase of $73 million, year over year.

FHLB advances totaled $75.0 million at December 31, 2021. The entire outstanding balance was called in July. This was replaced by $3.6 million of term advances related to Comunibanc and to overnight advances of $393.7 million.

Stock Repurchase Program

During the twelve months of 2022, Civista repurchased 742,015 shares for $16.8 million at a weighted average price of $22.58 per share, including 392,847 shares repurchased under the previous authorization for $9.3 million. We have approximately $6.1 million remaining of the current $13.5 million repurchase authorization, which was approved in April 2022. In addition, Civista liquidated 5,403 shares held by employees, at $24.66 per share, to satisfy tax obligations stemming from vesting of restricted shares.

Shareholders’ Equity

Total shareholders’ equity decreased $20.4 million from December 31, 2021 to December 31, 2022, primarily due to a $66.9 million increase in accumulated other comprehensive loss caused by an increase in interest rates. The increase in other comprehensive loss does not impact our regulatory capital adequacy ratios. Shareholders’ equity also decreased due to a $16.9 million repurchase of treasury shares. The decrease in equity was partially offset by a $30.9 million increase in retained earnings and a $32.4 million increase in common stock. The increase in common stock was primarily a result of shares issued related to the Comunibanc and VFG acquisitions.

Asset Quality

Civista recorded net recoveries of $118 thousand for the twelve months of 2022 compared to net recoveries of $783 thousand for the same period of 2021. The allowance for loan losses to loans ratio was 1.12% at December 31, 2022 and 1.33% at December 31, 2021.

Allowance for Loan Losses

(dollars in thousands)


	December 31, 2022			December 31, 2021
Beginning of period	$	26,641		$	25,028
Charge-offs		(222	)		(159	)
Recoveries		340			942
Provision		1,752			830

End of period	$	28,511		$	26,641

Non-performing assets at December 31, 2022 were $10.9 million, a 103.1% increase from December 31, 2021. The non-performing assets to assets ratio was 0.31% at December 31, 2022 and 0.18% at December 31, 2021. The allowance for loan losses to non-performing loans decreased from 496.10% at December 31, 2021 to 261.45% at December 31, 2022.

Non-performing Assets

(dollars in thousands)


	December 31, 2022		December 31, 2021
Non-accrual loans	$	7,890	$	3,873
Restructured loans		3,015		1,497

Total non-performing loans		10,905		5,370
Other Real Estate Owned		—		—

Total non-performing assets	$	10,905	$	5,370

Conference Call and Webcast

Civista Bancshares, Inc. will also host a conference call to discuss the Company’s financial results for the fourth quarter of 2022 at 1:00 p.m. ET on Tuesday, February 7, 2023. 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. 2022 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, 2022, 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 $3.5 billion financial holding company headquartered in Sandusky, Ohio. Its primary subsidiary, Civista Bank, was founded in 1884 and provides full-service banking, commercial lending, mortgage, and wealth management services. Today, Civista Bank operates 43 locations across Ohio, Southeastern Indiana and Northern Kentucky. Civista Bank also offers commercial equipment leasing services for businesses nationwide through its subsidiary, Vision Financial Group, Inc., centered in Pittsburgh, Pennsylvania. Civista Bancshares’ common shares are traded on the NASDAQ Capital Market under the symbol “CIVB”. Learn more at www.civb.com.

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						Twelve Months Ended
	December 31,						December 31,
	2022			2021			2022			2021
Interest income	$	37,990		$	24,735		$	121,253		$	101,742
Interest expense		5,425			1,412			11,049			6,317

Net interest income		32,565			23,323			110,204			95,425
Provision for loan losses		752			—			1,752			830

Net interest income after provision		31,813			23,323			108,452			94,595
Noninterest income		10,064			6,811			29,076			31,452
Noninterest expense		27,301			16,962			90,493			77,666

Income before taxes		14,576			13,172			47,035			48,381
Income tax expense		2,428			2,190			7,608			7,835

Net income		12,148			10,982			39,427			40,546

Dividends paid per common share	$	0.14		$	0.14		$	0.56		$	0.52

Earnings per common share
Basic
Net income	$	12,148		$	10,982		$	39,427		$	40,546

Less allocation of earnings and dividends to participating securities		54			51			177			173

Net income available to common shareholders - basic	$	12,094		$	10,931		$	39,250		$	40,373

Weighted average common shares outstanding		15,717,439			15,009,376			15,162,033			15,408,863
Less average participating securities		70,179			70,349			68,043			65,648

Weighted average number of shares outstanding used to calculate basic earnings per share		15,647,260			14,939,027			15,093,990			15,343,215

Earnings per common share ⁽¹⁾
Basic	$	0.77		$	0.73		$	2.60		$	2.63
Diluted		0.77			0.73			2.60			2.63

Selected financial ratios:
Return on average assets		1.41	%		1.47	%		1.21	%		1.34	%
Return on average equity		16.09	%		12.49	%		12.47	%		11.61	%
Dividend payout ratio		18.11	%		19.13	%		21.54	%		19.76	%
Net interest margin (tax equivalent)		4.14	%		3.42	%		3.75	%		3.47	%

Selected Balance Sheet Items

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


	December 31, 2022			December 31, 2021
	(unaudited)			(unaudited)
Cash and due from financial institutions	$	43,361		$	264,239
Investment in time deposits		1,477			1,730
Investment securities		617,592			560,946
Loans held for sale		683			1,972
Loans		2,546,666			1,997,879
Less: allowance for loan losses		(28,511	)		(26,641	)

Net loans		2,518,155			1,971,238
Other securities		33,585			17,011
Premises and equipment, net		64,018			22,445
Goodwill and other intangibles		133,528			84,432
Bank owned life insurance		53,543			46,641
Other assets		71,888			42,251

Total assets	$	3,537,830		$	3,012,905

Total deposits	$	2,619,984		$	2,416,701
Federal Home Loan Bank advances - short term		393,700			—
Federal Home Loan Bank advances - long term		3,578			75,000
Securities sold under agreements to repurchase		25,143			25,495
Subordinated debentures		103,799			103,735
Other borrowings		15,516			—
Securities purchased payable		1,338			3,524
Tax refunds in process		278			549
Accrued expenses and other liabilities		39,658			32,689
Total shareholders’ equity		334,836			355,212

Total liabilities and shareholders’ equity	$	3,537,830		$	3,012,905

Shares outstanding at period end		15,728,234			14,954,200

Book value per share	$	21.29		$	23.75
Equity to asset ratio		9.46	%		11.79	%

Selected asset quality ratios:
Allowance for loan losses to total loans		1.12	%		1.33	%
Non-performing assets to total assets		0.31	%		0.18	%
Allowance for loan losses to non-performing loans		261.45	%		496.10	%

Non-performing asset analysis
Nonaccrual loans	$	7,890		$	3,873
Troubled debt restructurings		3,015			1,497
Other real estate owned		—			—

Total	$	10,905		$	5,370

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)


End of Period Balances	December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
Assets
Cash and due from banks	$	43,361		$	40,914		$	233,281		$	412,698		$	264,239
Investment in time deposits		1,477			1,479			1,236			1,728			1,730
Investment securities		617,592			604,074			531,978			553,499			560,946
Loans held for sale		683			3,491			4,167			4,794			1,972
Loans		2,546,666			2,328,614			2,064,221			2,018,188			1,997,879
Allowance for loan losses		(28,511	)		(27,773	)		(27,435	)		(27,033	)		(26,641	)

Net Loans		2,518,155			2,300,841			2,036,786			1,991,155			1,971,238
Other securities		33,585			18,578			18,511			18,511			17,011
Premises and equipment, net		64,018			30,168			24,151			22,110			22,445
Goodwill and other intangibles		133,528			113,206			84,021			84,251			84,432
Bank owned life insurance		53,543			53,291			47,118			46,885			46,641
Other assets		71,888			75,677			57,850			48,726			42,251

Total Assets	$	3,537,830		$	3,241,719		$	3,039,099		$	3,184,357		$	3,012,905

Liabilities
Total deposits	$	2,619,984		$	2,708,253		$	2,455,502		$	2,615,137		$	2,416,701
Federal Home Loan Bank advances - short term		393,700			55,000			—			—			—
Federal Home Loan Bank advances - long term		3,578			6,723			75,000			75,000			75,000
Securities sold under agreement to repurchase		25,143			20,155			17,479			23,931			25,495
Subordinated debentures		103,799			103,778			103,737			103,704			103,735
Other borrowings		15,516			—			—			—			—
Securities purchased payable		1,338			2,611			15,025			1,876			3,524
Tax refunds in process		278			2,709			39,448			10,232			549
Accrued expenses and other liabilities		39,658			39,888			30,846			26,785			32,689

Total liabilities		3,202,994			2,939,117			2,737,037			2,856,665			2,657,693

Shareholders’ Equity
Common shares		310,182			299,515			278,240			277,919			277,741
Retained earnings		156,493			146,546			137,592			131,934			125,558
Treasury shares		(73,794	)		(73,641	)		(67,528	)		(61,472	)		(56,907	)
Accumulated other comprehensive income(loss)		(58,045	)		(69,818	)		(46,242	)		(20,689	)		8,820

Total shareholders’ equity		334,836			302,602			302,062			327,692			355,212

Total Liabilities and Shareholders’ Equity	$	3,537,830		$	3,241,719		$	3,039,099		$	3,184,357		$	3,012,905


Quarterly Average Balances
Assets:
Earning assets	$	3,099,501		$	3,002,256		$	2,866,362		$	2,814,589		$	2,773,498
Securities		630,127			622,924			556,352			575,359			522,058
Loans		2,458,980			2,289,588			2,033,378			2,006,984			1,973,989
Liabilities and Shareholders’ Equity
Total deposits	$	2,649,755		$	2,719,014		$	2,524,971		$	2,557,638		$	2,430,613
Interest-bearing deposits		1,710,019			1,738,015			1,630,084			1,623,984			1,619,560
Other interest-bearing liabilities		407,710			155,077			200,005			204,299			155,094
Total shareholders’ equity		299,509			305,134			313,272			347,302			348,971

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)


	Three Months Ended
Income statement	December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021
Total interest and dividend income	$	37,990	$	32,533	$	26,064	$	24,666	$	24,735
Total interest expense		5,425		2,094		1,796		1,734		1,412

Net interest income		32,565		30,439		24,268		22,932		23,323
Provision for loan losses		752		300		400		300		—
Noninterest income		10,064		5,734		5,635		7,643		6,811
Noninterest expense		27,301		22,555		20,379		20,258		16,963

Income before taxes		14,576		13,318		9,124		10,017		13,171
Income tax expense		2,428		2,206		1,423		1,551		2,189

Net income	$	12,148	$	11,112	$	7,701	$	8,466	$	10,982


Per share data
Earnings per common share
Basic
Net income	$	12,148	$	11,112	$	7,701	$	8,466	$	10,982
Less allocation of earnings and dividends to participating securities		54		52		39		32		51

Net income available to common shareholders - basic	$	12,094	$	11,060	$	7,662	$	8,434	$	10,931

Weighted average common shares outstanding		15,717,979		15,394,898		14,615,154		14,909,192		15,009,376
Less average participating securities		70,719		71,604		74,286		55,905		70,349

Weighted average number of shares outstanding used to calculate basic earnings per share		15,647,260		15,323,294		14,540,868		14,853,287		14,939,027

Earnings per common share
Basic	$	0.77	$	0.72	$	0.53	$	0.57	$	0.73
Diluted		0.77		0.72		0.53		0.57		0.73

Common shares dividend paid	$	2,202	$	2,042	$	2,091	$	2,104	$	2,140

Dividends paid per common share		0.14		0.14		0.14		0.14		0.14

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)


	Three Months Ended
Asset quality	December 2022			September 2022			June 2022			March 2022			December 31, 2021
Allowance for loan losses, beginning of period	$	27,773		$	27,435		$	27,033		$	26,641		$	26,568
Charge-offs		(58	)		(74	)		(60	)		(30	)		(11	)
Recoveries		44			112			62			122			84
Provision		752			300			400			300			—

Allowance for loan losses, end of period	$	28,511		$	27,773		$	27,435		$	27,033		$	26,641

Ratios
Allowance to total loans		1.12	%		1.19	%		1.33	%		1.34	%		1.33	%
Allowance to nonperforming assets		261.45	%		476.24	%		572.78	%		501.50	%		496.10	%
Allowance to nonperforming loans		261.45	%		476.24	%		572.78	%		501.50	%		496.10	%

Nonperforming assets
Nonperforming loans	$	10,905		$	5,832		$	4,790		$	5,390		$	5,370
Other real estate owned		—			—			—			—			—

Total nonperforming assets	$	10,905		$	5,832		$	4,790		$	5,390		$	5,370

Capital and liquidity
Tier 1 leverage ratio		8.92	%		9.32	%		9.87	%		9.50	%		10.21	%
Tier 1 risk-based capital ratio		10.78	%		11.62	%		13.63	%		14.02	%		14.35	%
Total risk-based capital ratio		14.52	%		15.62	%		18.24	%		18.74	%		19.17	%
Tangible common equity ratio ⁽¹⁾		5.91	%		6.05	%		7.38	%		7.85	%		9.25	%

(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
	December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
Tangible Common Equity
Total Shareholder’s Equity - GAAP	$	334,836		$	302,602		$	302,062		$	327,692		$	355,212
Less: Goodwill and intangible assets		133,528			113,206			84,021			84,251			84,432

Tangible common equity (Non-GAAP)	$	201,308		$	189,396		$	218,041		$	243,441		$	270,780

Total Shares Outstanding		15,728,234			15,235,545			14,537,433			14,797,232			14,954,200

Tangible book value per share	$	12.80		$	12.43		$	15.00		$	16.45		$	18.11

Tangible Assets
Total Assets - GAAP	$	3,537,830		$	3,241,719		$	3,039,099		$	3,184,357		$	3,011,983
Less: Goodwill and intangible assets		133,528			113,206			84,021			84,251			84,432

Tangible assets (Non-GAAP)	$	3,404,302		$	3,128,513		$	2,955,078		$	3,100,106		$	2,927,551

Tangible common equity to tangible assets		5.91	%		6.05	%		7.38	%		7.85	%		9.25	%