PR Newswire | Oct 23, 2020 08:30AM EDT

10/23 07:30 CDT

Civista Bancshares, Inc. Announces Third Quarter 2020 Earnings SANDUSKY, Ohio, Oct. 23, 2020

SANDUSKY, Ohio, Oct. 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 / /

Assets: balance Interest rate balance Interest rate * *

Interest-earningassets:

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 205,398 1,536 4.14% 180,531 1,449 4.33%securities

Interest-bearingdeposits in other 188,798 59 0.12% 16,245 86 2.10%banks

Totalinterest-earning $ 2,617,884 24,558 3.83% $ 2,021,780 24,023 4.83%assets

Noninterest-earningassets:

Cash and due fromfinancial 29,647 29,745institutions

Premises and 23,214 21,790equipment, net

Accrued interest 10,109 6,926receivable

Intangible assets 84,906 85,617

Bank owned life 45,574 44,579insurance

Other assets 42,916 25,432

Less allowance for (21,214) (13,920)loan losses

Total Assets $ 2,833,036 $ 2,221,949

Liabilities andShareholders'Equity:

Interest-bearingliabilities:

Demand and savings $ 1,108,512 $ 389 0.14% $ $ 730 0.33% 871,673

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 29,427 194 2.62% 29,427 350 4.72%debentures

Repurchase 24,300 6 0.10% 14,831 4 0.11%agreements

Totalinterest-bearing $ 1,764,283 2,552 0.58% $ 1,385,867 3,605 1.03%liabilities

Noninterest-bearing 683,473 482,895deposits

Other liabilities 46,002 27,084

Shareholders' equity 339,278 326,103

Total Liabilitiesand Shareholders' $ 2,833,036 $ 2,221,949Equity

Net interest income and interest $ 22,006 3.25% $ 20,418 3.80%rate spread

Net interest margin 3.44% 4.12%

* - Average yields are presented on a tax equivalent basis. The tax equivalenteffect associated with loans and investments, included in the yields above, was$411 thousand and $389 thousand for the periods ended September 30, 2020 and2019, 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 / /

Assets: balance Interest rate balance Interest rate * *

Interest-earningassets:

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 201,303 4,589 4.18% 169,802 4,208 4.40%securities

Interest-bearingdeposits in other 159,539 531 0.44% 44,287 775 2.34%banks

Totalinterest-earning $ 2,459,933 74,144 4.13% $ 2,008,731 73,533 5.00%assets

Noninterest-earningassets:

Cash and due fromfinancial 94,083 53,517institutions

Premises and 22,830 21,844equipment, net

Accrued interest 8,729 6,929receivable

Intangible assets 84,965 85,863

Bank owned life 45,332 44,186insurance

Other assets 37,802 22,607

Less allowance for (17,759) (13,896)loan losses

Total Assets $ 2,735,915 $ 2,229,781

Liabilities andShareholders' Equity:

Interest-bearingliabilities:

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 385 1 0.35% - - 0.00%purchased

Subordinated 29,427 757 3.44% 29,427 1,094 4.97%debentures

Repurchase agreements 23,141 17 0.10% 18,463 14 0.10%

Totalinterest-bearing $ 1,590,433 7,948 0.67% $ 1,326,084 9,655 0.97%liabilities

Noninterest-bearing 757,696 567,365deposits

Other liabilities 53,633 21,843

Shareholders' equity 334,153 314,489

Total Liabilities and $ 2,735,915 $ 2,229,781Shareholders' Equity

Net interest incomeand interest rate $ 66,196 3.46% $ 63,878 4.03%spread

Net interest margin 3.70% 4.35%

* - Average yields are presented on a tax equivalent basis. The tax equivalenteffect 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 and2019, 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%



N/M - not meaningful

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 periodloan balances

(unaudited -dollars inthousands)

September 30, December 31,

2020 2019 $ Change % Change

Commercial and $ 435,285 $ 203,110 $ 232,175 114.3%Agriculture ^1

Commercial RealEstate:

Owner Occupied 261,235 245,606 15,629 6.4%

Non-owner 683,579 592,222 91,357 15.4%Occupied

Residential Real 443,960 463,032 (19,072) -4.1%Estate

Real Estate 167,560 155,825 11,735 7.5%Construction

Farm Real Estate 35,232 34,114 1,118 3.3%

Consumer and 14,089 15,061 (972) -6.5%Other

Total Loans $ 2,040,940 $ 1,708,970 $ 331,970 19.4%

^1 includes PPPloans

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)

Number of Percent ofType of Loan Loans Balance 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%

^1excluding PPP loans

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

End of perioddeposit balances

(unaudited -dollars inthousands)

September 30, December 31,

2020 2019 $ Change % Change

Noninterest-bearing $ 660,120 $ 512,553 $ 147,567 28.8%demand

Interest-bearing 394,975 301,674 93,301 30.9%demand

Savings and money 721,571 588,697 132,874 22.6%market

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".

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 $ 24,558 24,023 $ 74,144 73,533income

Interest 2,552 3,605 7,948 9,655expense

Net interest 22,006 20,418 66,196 63,878income

Provisionfor loan 2,250 150 7,862 150losses

Net interestincome after 19,756 20,268 58,334 63,728provision

Noninterest 6,786 5,429 20,516 16,816income

Noninterest 17,727 16,731 53,697 49,818expense

Income 8,815 8,966 25,153 30,726before taxes

Income tax 1,133 1,258 3,134 4,688expense

Net income 7,682 7,708 22,019 26,038

Preferredstock - 162 - 490dividends

Net incomeavailable

to common $ 7,682 $ 7,546 $ 22,019 $ 25,548shareholders

Dividendspaid per $ 0.11 $ 0.11 $ 0.33 $ 0.31common share

Earnings percommonshare,

basic $ 0.48 $ 0.48 $ 1.36 $ 1.64

diluted $ 0.48 $ 0.46 $ 1.36 $ 1.54

Averagesharesoutstanding,

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

Selectedfinancialratios:

Return onaverage 1.08% 1.38% 1.08% 1.56%assets(annualized)

Return onaverage 9.01% 9.38% 8.80% 11.07%equity(annualized)

Dividend 22.98% 22.23% 24.28% 18.58%payout ratio

Net interestmargin (tax 3.44% 4.12% 3.70% 4.35%equivalent)

Selected Balance Sheet Items

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

September 30, December 31,

2020 2019

(unaudited)

Cash and due from $ 194,773 $ 48,535financial institutions

Investment securities 366,691 359,690

Loans held for sale 13,256 2,285

Loans 2,040,940 1,708,970

Less: allowance for (22,637) (14,767)loan losses

Net loans 2,018,303 1,694,203

Other securities 20,537 20,280

Premises and equipment, 22,958 22,871net

Goodwill and other 84,896 85,156intangibles

Bank owned life 45,732 44,999insurance

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 125,000 226,500advances

Securities sold underagreements to 25,813 18,674repurchase

Other borrowings 183,695 -

Subordinated 29,427 29,427debentures

Accrued expenses and 43,234 26,066other liabilities

Total shareholders' 342,055 330,126equity

Total liabilities and $ 2,817,993 $ 2,309,557shareholders' equity

Shares outstanding at 15,945,479 16,687,542period end

Book value per share $ 21.45 $ 19.78

Equity to asset ratio 12.14% 14.29%

Selected asset qualityratios:

Allowance for loan 1.11% 0.86%losses to total loans

Non-performing assets to 0.27% 0.39%total assets

Allowance for loanlosses to non-performing 292.88% 161.95%loans

Non-performing assetanalysis

Nonaccrual loans $ 5,736 $ 6,115

Troubled debt 1,993 3,004restructurings

Other real estate owned - -

Total $ 7,729 $ 9,119

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)

September 30, June 30, March 31, December 31, September 30,

End of Period 2020 2020 2020 2019 2019Balances

Assets

Cash and due $ 194,773 $ 196,520 $ 256,023 $ 48,535 $ 62,219from banks

Investment 366,691 369,181 366,689 359,690 356,439securities

Loans held for 13,256 18,523 7,632 2,285 8,983sale

Loans 2,040,940 2,022,965 1,743,125 1,708,970 1,648,640

Allowance for (22,637) (20,420) (16,948) (14,767) (14,144)loan losses

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 22,958 23,137 22,443 22,871 22,201equipment, net

Goodwill andother 84,896 84,852 84,919 85,156 85,461intangibles

Bank owned life 45,732 45,489 45,249 44,999 44,745insurance

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 HomeLoan Bank 125,000 125,000 142,000 226,500 236,100advances

Securities soldunder agreement 25,813 23,608 22,699 18,674 15,088to repurchase

Other borrowings 183,695 183,695 - - -

Subordinated 29,427 29,427 29,427 29,427 29,427debentures

Accrued expensesand other 43,234 44,549 61,624 26,066 26,566liabilities

Total 2,475,938 2,475,540 2,247,689 1,979,431 1,939,802liabilities

Shareholders' Equity

Preferred - - - - 9,158shares, Series B

Common shares 276,940 276,841 276,546 276,422 267,559

Retained 84,628 78,712 73,972 67,974 62,023earnings

Treasury shares (33,900) (32,594) (32,239) (21,144) (21,144)

Accumulatedother 14,387 13,654 9,888 6,874 11,667comprehensiveincome

Totalshareholders' 342,055 336,613 328,167 330,126 329,263equity

TotalLiabilities and $ 2,817,993 $ 2,812,153 $ 2,575,856 $ 2,309,557 $ 2,269,065Shareholders'Equity

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 andShareholders'Equity

Total deposits $ 2,084,791 $ 2,108,227 $ 1,975,133 $ 1,661,452 $ 1,622,527

Interest-bearing 1,401,318 1,317,336 1,175,593 1,160,499 1,139,632deposits

Otherinterest-bearing 362,965 302,267 209,909 252,908 246,235liabilities

Totalshareholders' 339,278 330,524 332,602 329,634 326,103equity

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)

Three Months Ended

September 30, June 30, March 31, December 31, September 30,

Income statement 2020 2020 2020 2019 2019

Total interestand dividend $ 24,558 $ 24,584 $ 25,002 $ 24,521 $ 24,023income

Total interest 2,552 2,509 2,887 3,299 3,605expense

Net interest 22,006 22,075 22,115 21,222 20,418income

Provision for 2,250 3,486 2,126 885 150loan losses

Noninterest 6,786 6,854 6,876 5,627 5,429income

Noninterest 17,727 18,114 17,856 17,128 16,731expense

Income before 8,815 7,329 9,009 8,836 8,966taxes

Income tax 1,133 825 1,176 995 1,258expense

Net income 7,682 6,504 7,833 7,841 7,708

Preferred stock - - - 157 162dividends

Net incomeavailable to

common $ 7,682 $ 6,504 $ 7,833 $ 7,684 $ 7,546shareholders

Common shares $ 1,766 $ 1,764 $ 1,835 $ 1,702 $ 1,722dividend paid

Per share data

Basic earnings $ 0.48 $ 0.41 $ 0.47 $ 0.49 $ 0.48per common share

Diluted earnings 0.48 0.41 0.47 0.47 0.46per common share

Dividends paid 0.11 0.11 0.11 0.11 0.11per common share

Average commonshares 16,045,544 16,044,125 16,517,745 15,796,713 15,577,371outstanding -basic

Average commonshares 16,045,544 16,044,125 16,517,745 16,734,391 16,849,887outstanding -diluted

Asset quality

Allowance forloan losses, $ 20,420 $ 16,948 $ 14,767 $ 14,144 $ 13,786beginning ofperiod

Charge-offs (185) (116) (24) (345) (36)

Recoveries 152 102 79 83 244

Provision 2,250 3,486 2,126 885 150

Allowance forloan losses, end $ 22,637 $ 20,420 $ 16,948 $ 14,767 $ 14,144of period

Ratios

Allowance to 1.11% 1.01% 0.97% 0.86% 0.86%total loans

Allowance tononperforming 292.88% 262.14% 197.97% 161.95% 149.91%assets

Allowance tononperforming 292.88% 262.14% 197.97% 161.95% 149.91%loans

Nonperformingassets

Nonperforming $ 7,729 $ 7,790 $ 8,561 $ 9,119 $ 9,435loans

Other real - - - - -estate owned

Totalnonperforming $ 7,729 $ 7,790 $ 8,561 $ 9,119 $ 9,435assets

Capital andliquidity

Tier 1 leverage 10.73% 10.43% 10.66% 12.35% 12.37%ratio

Tier 1risk-based 14.73% 12.99% 14.33% 15.26% 15.50%capital ratio

Total risk-based 15.94% 13.97% 15.25% 16.10% 16.32%capital ratio

Tangible commonequity ratio ^ 9.47% 9.29% 9.82% 11.08% 10.81%(1)

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

Reconciliation of Non-GAAP Financial Measures

(Unaudited - dollars in thousands except share data)

Three Months Ended

September 30, June 30, March 31, December 31, September 30,

2020 2020 2020 2019 2019

TangibleCommon Equity

TotalShareholder's $ 342,055 $ 336,613 $ 328,167 $ 330,126 $ 329,263Equity - GAAP

Less:Preferred - - - - 9,158Equity

Less:Goodwill and 82,907 83,135 83,363 83,595 83,829intangibleassets

Tangiblecommon equity $ 259,148 $ 253,478 $ 244,804 $ 246,531 $ 236,276(Non-GAAP)

Total Shares 15,945,479 16,052,979 16,064,010 16,687,542 15,473,275Outstanding

Tangible bookvalue per $ 16.25 $ 15.79 $ 15.24 $ 14.77 $ 15.27share

TangibleAssets

Total Assets $ 2,817,993 $ 2,812,153 $ 2,575,856 $ 2,309,557 $ 2,269,065- GAAP

Less:Goodwill and 82,907 83,135 83,363 83,595 83,829intangibleassets

Tangibleassets $ 2,735,086 $ 2,729,018 $ 2,492,493 $ 2,225,962 $ 2,185,236(Non-GAAP)

Tangiblecommon equity 9.47% 9.29% 9.82% 11.08% 10.81%to tangibleassets

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SOURCE Civista Bancshares, Inc.