PR Newswire | Jul 24, 2020 08:30AM EDT

07/24 07:30 CDT

Civista Bancshares, Inc. Announces Second Quarter 2020 Earnings SANDUSKY, Ohio, July 24, 2020

SANDUSKY, Ohio, July 24, 2020 /PRNewswire/ -- Civista Bancshares, Inc. (NASDAQ:CIVB) ("Civista") reported net income available to common shareholders of $6.5 million, or $0.41 per diluted share, for the second quarter of 2020, compared with $8.5 million, or $0.51 per diluted share, for the prior year period. For the six-month period ended June 30, 2020, Civista reported net income available to common shareholders of $14.3 million or $0.88 per diluted share, compared to $18.0 million or $1.08 per diluted share, in the same period of 2019.

"The challenges for 2020 continued through the second quarter. Much of our market area was under a stay at home order during a large part of the second quarter. We continued to work with customers providing loan payment deferrals as well as relief from overdraft and service charge fees. Along with this economic uncertainty comes the need to increase our provision for loan losses. Despite these challenging times, we are extremely pleased with our second quarter earnings," said Dennis G. Shaffer, President and CEO of Civista.

Results of Operations

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

Net interest income increased $333 thousand, or 1.5%, for the second quarter of 2020 compared to the same period of 2019. The decrease in net interest income is a result of a decrease in interest income, partially offset by a decrease in interest expense.

Interest income decreased $342 thousand, or 1.4%, for the second quarter of 2020. Average yields decreased 113 basis points which resulted in a $5.3 million decrease in interest income. The decrease in average yields was partially offset by an increase in average earning assets of $541.2 million, which resulted in a $4.9 million increase in interest income. Accretion income associated with purchased loan portfolios totaled $758 thousand for the second quarter of 2020 and $1.1 million for the second quarter of 2019. During the quarter, the Bank had average Paycheck Protection Program ("PPP") Loans totaling $189.4 million. These loans had an average yield of 3.46% including the amortization of PPP fees. Removing the impact of PPP loans, Interest income would have decreased $1.6 million and average asset yield would have been 4.29%.

Interest expense decreased $675 thousand, or 21.2%, for the second quarter of 2020 compared to the same period of 2019. Average interest-bearing liabilities increased $303.5 million, resulting in a $141 thousand increase in interest expense. Average rates decreased 35 basis points, resulting in an $816 thousand decrease in interest expense.

Net interest margin decreased 88 basis points to 3.61% for the second quarter of 2020, compared to 4.49% for the same period a year ago. Accretion income associated with purchased loan portfolios contributed approximately 13 basis points and 25 basis points to net interest margin for the second quarter of 2020 and 2019, respectively.

For the six-month period ended June 30, 2020 and 2019

Net interest income increased $730 thousand, or 1.7%, compared to the same period in 2019.

Interest income increased $76 thousand, or 0.2%, for the first six months of 2020. Average earning assets increased $378.0 million, which resulted in a $7.5 million increase in interest income. Average yields decreased 78 basis points which resulted in a $7.4 million decrease in interest income. Year-to-date accretion income associated with purchased loan portfolios totaled $1.5 million for 2020 and $2.1 million for 2019. During the six-month period, the Bank had average PPP Loans totaling $94.7 million. These loans had an average yield of 3.46% including the amortization of PPP fees. Removing the impact of PPP loans Interest income would have decreased $1.6 million and average yields would have been 4.45%.

Interest expense decreased $654 thousand, or 10.8%, for the first six months of 2020 compared to the same period of 2019. Average interest-bearing liabilities increased $206.9 million, resulting in a $546 thousand increase in interest expense. Average rates decreased 22 basis points, resulting in a $1.2 million decrease in interest expense.

Net interest margin decreased 63 basis points to 3.84% for the first six months of 2020, compared to 4.47% for the same period a year ago. Accretion income associated with purchased loan portfolios contributed approximately 14 basis points and 23 basis points to net interest margin for the first six months of 2020 and 2019, respectively.

Average Balance Analysis

(Unaudited - Dollars in thousands)

Three Months Ended June 30,

2020 2019

Average Yield Average Yield / /

Assets: balance Interest rate balance Interest rate * *

Interest-earningassets:

Loans ** $ 1,972,969 $ 21,613 4.41% $ 1,583,533 $ 21,657 5.49%

Taxable securities 185,956 1,359 3.05% 202,995 1,694 3.39%

Non-taxable 200,882 1,541 4.19% 171,004 1,408 4.39%securities

Interest-bearingdeposits in other 168,199 71 0.17% 29,309 167 2.29%banks

Totalinterest-earning $ 2,528,006 24,584 4.01% $ 1,986,841 24,926 5.14%assets

Noninterest-earningassets:

Cash and due fromfinancial 84,961 38,558institutions

Premises and 22,535 21,819equipment, net

Accrued interest 9,312 7,324receivable

Intangible assets 84,906 85,865

Bank owned life 45,334 44,328insurance

Other assets 43,297 22,193

Less allowance for (17,098) (13,884)loan losses

Total Assets $ 2,801,253 $ 2,193,044

Liabilities andShareholders'Equity:

Interest-bearingliabilities:

Demand and savings $ 1,027,678 $ 439 0.17% $ 858,781 $ 721 0.34%

Time 289,658 1,363 1.89% 271,183 1,255 1.86%

FHLB 125,034 447 1.44% 138,271 831 2.41%

Other borrowings 124,819 4 0.01% - - 0.00%

Subordinated 29,427 250 3.42% 29,427 372 5.07%debentures

Repurchase 22,987 6 0.15% 18,442 5 0.11%agreements

Totalinterest-bearing $ 1,619,603 2,509 0.62% $ 1,316,104 3,184 0.97%liabilities

Noninterest-bearing 790,891 540,283deposits

Other liabilities 60,235 21,219

Shareholders' 330,524 315,438equity

Total Liabilitiesand Shareholders' $ 2,801,253 $ 2,193,044Equity

Net interest income and interest $ 22,075 3.39% $ 21,742 4.17%rate spread

Net interest margin 3.61% 4.49%

* - Average yields are presented on a tax equivalent basis. The tax equivalenteffect associated with loans and investments, included in the yields above, was$413 thousand and $378 thousand for the periods ended June 30, 2020 and 2019,respectively.

** - Average balance includes nonaccrual loans

Average Balance Analysis

(Unaudited - Dollars in thousands)

Six Months Ended June 30,

2020 2019

Average Yield Average Yield / /

Assets: balance Interest rate balance Interest rate * *

Interest-earningassets:

Loans ** $ 1,849,327 $ 43,286 4.71% $ 1,573,924 $ 42,619 5.46%

Taxable securities 186,780 2,775 3.10% 205,285 3,442 3.41%

Non-taxable 199,233 3,053 4.21% 164,349 2,760 4.44%securities

Interest-bearingdeposits in other 144,748 472 0.66% 58,541 689 2.37%banks

Totalinterest-earning $ 2,380,088 49,586 4.30% $ 2,002,099 49,510 5.08%assets

Noninterest-earningassets:

Cash and due fromfinancial 126,655 65,567institutions

Premises and 22,636 21,872equipment, net

Accrued interest 8,031 6,931receivable

Intangible assets 84,994 85,990

Bank owned life 45,210 43,987insurance

Other assets 36,229 22,394

Less allowance for (16,013) (13,885)loan losses

Total Assets $ 2,687,830 $ 2,234,955

Liabilities andShareholders'Equity:

Interest-bearingliabilities:

Demand and savings $ $ 0.22% $ $ 0.34% 961,285 1,044 857,232 1,429

Time 285,179 2,743 1.93% 270,847 2,438 1.82%

FHLB 141,391 1,028 1.46% 117,882 1,429 2.44%

Other borrowings 62,410 4 0.01% - - 0.00%

Federal funds 305 3 1.98% - - 0.00%purchased

Subordinated 29,427 563 3.85% 29,427 744 5.10%debentures

Repurchase 22,555 11 0.10% 20,309 10 0.10%agreements

Totalinterest-bearing $ 1,502,552 5,396 0.72% $ 1,295,697 6,050 0.94%liabilities

Noninterest-bearing 795,215 610,265deposits

Other liabilities 58,500 20,408

Shareholders' 331,563 308,585equity

Total Liabilitiesand Shareholders' $ 2,687,830 $ 2,234,955Equity

Net interest income and interest $ 44,190 3.58% $ 43,460 4.14%rate spread

Net interest margin 3.84% 4.47%

* - Average yields are presented on a tax equivalent basis. The tax equivalenteffect associated with loans and investments, included in the yields above,was $819 thousand and $741 thousand for the periods ended June 30, 2020 and2019, respectively.

** - Average balance includes nonaccrual loans

Provision for loan losses was $3.5 million for the second quarter of 2020 and $5.6 million for the six months ended June 30, 2020. No provision was recorded during the first six months of 2019. The reserve ratio increased to 1.01% from 0.86% at December 31, 2019 due to an increase in the bank's qualitative factors related to the economic shutdown that is driven by COVID-19. The reserve ratio without $257.6 million of PPP loans would have been 1.16% at June 30, 2020. Economic impacts include the loss of revenue being experience 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. We expect our Commercial, Commercial Real Estate and Consumer portfolios to be impacted the most.

For the second quarter of 2020, noninterest income totaled $6.9 million, an increase of $1.8 million, or 34.3%, compared to the prior year's second quarter.

Noninterest income

(unaudited - dollars in Three months ended June 30,thousands)

2020 2019 $ change % change

Service charges $ 930 $ 1,552 $ (622) -40.1%

Net gain on sale of securities - 10 (10) -100.0%

Net loss on equity securities (5) (33) 28 84.8%

Net gain on sale of loans 2,261 555 1,706 307.4%

ATM/Interchange fees 1,149 951 198 20.8%

Wealth management fees 904 911 (7) -0.8%

Bank owned life insurance 240 252 (12) -4.8%

Tax refund processing fees 475 550 (75) -13.6%

Swap fees 764 15 749 NM

Other 136 341 (205) -60.1%

Total noninterest income $ 6,854 $ 5,104 $ 1,750 34.3%

N/M - not meaningful

Service charge income decreased primarily due to a $476.8 thousand decrease in overdraft fees. The Company also waived $93 thousand in service charges related to the COVID-19 pandemic.

Gain on sale of loans increased due to an increase in the volume of loans sold of $63.5 million, from $27.9 million in the second quarter of 2019 to $91.4 million in the second quarter of 2020. The premium on sold loans also increased by 49 basis points in the second quarter this year compared to last year.

ATM/Interchange fees increased as a result of increased transaction fees and the receipt of MasterCard fees.

Swap fees increased as a result of the declining interest rate environment and more customers looking to lock in lower fixed rate loans. During the quarter, we swapped $44.8 million in loans.

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

For the six months ended June 30, 2020, noninterest income totaled $13.7 million, an increase of $2.3 million, or 20.6%, compared to the same period in the prior year.

Noninterest income

(unaudited - dollars in Six months ended June 30,thousands)

2020 2019 $ change % change

Service charges $ 2,398 $ 3,008 $ (610) -20.3%

Net gain on sale of securities - 14 (14) -100.0%

Net loss on equity securities (146) (31) (115) -371.0%

Net gain on sale of loans 3,088 886 2,202 248.5%

ATM/Interchange fees 2,043 1,857 186 10.0%

Wealth management fees 1,910 1,758 152 8.6%

Bank owned life insurance 490 499 (9) -1.8%

Tax refund processing fees 2,375 2,750 (375) -13.6%

Swap fees 1,102 88 1,014 NM

Other 470 559 (89) -15.9%

Total noninterest income $ 13,730 $ 11,388 $ 2,342 20.6%

N/M - not meaningful

Service charge income decreased primarily due to a $447.5 thousand decrease in overdraft fees. The Company also waived $93 thousand in service charges related to the COVID-19 pandemic.

The increased gain on sale of loans is primarily due to an increase in volume of loans sold of $82.4 million, from $44.4 million year-to-date in 2019 to $126.8 million year-to-date in 2020. The premium on sold loans also increased by 44 basis points during the six months this year compared to last year.

ATM/Interchange fees increased as a result of increased transaction fees and the receipt of MasterCard fees.

Wealth management fees increased due to an increase in average assets under management as well as a 5 basis point increase in the conversion ratio, to 0.71%, in 2020.

Swap fees increased as a result of the declining interest rate environment and more customers looking to lock in lower fixed rate loans. Year to date we have swapped $77.4 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 second quarter of 2020, noninterest expense totaled $18.1 million, an increase of $1.5 million, or 8.9%, compared to the prior year's second quarter.

Noninterest expense

(unaudited - dollars in thousands) Three months ended June 30,

2020 2019 $ change % change

Compensation expense $ 10,597 $ 9,548 $ 1,049 11.0%

Net occupancy and equipment 1,571 1,444 127 8.8%

Contracted data processing 475 447 28 6.3%

Taxes and assessments 631 605 26 4.3%

Professional services 883 700 183 26.1%

Amortization of intangible assets 228 235 (7) -3.0%

ATM/Interchange expense 331 546 (215) -39.4%

Marketing 339 367 (28) -7.6%

Software maintenance expense 407 356 51 14.3%

Other 2,652 2,391 261 10.9%

Total noninterest expense $ 18,114 $ 16,639 $ 1,475 8.9%

Compensation expense increased due to an increase in employees, annual pay increases and commission expense. Full time equivalent ("FTE") employees increased by 20, or 4.6%, to 456 FTE. Annual pay increases in 2020 were an average of 3.3%. Employee insurance decreased 4.1% for 2020. Commission expense increased $418.1 thousand, or 88.7%, and overtime expense increased $166.2 thousand, or 119.2%, both as a result of increased loan activity.

The increase in net occupancy is a result of the COVID-19 pandemic related increases in janitorial services and supplies of $123 thousand.

The increase in professional services costs is the result of increased consulting services to implement cost savings and customer services.

The decrease in ATM/interchange expense is primarily due to a settlement received in the second quarter of 2020 and savings realized by a vendor change.

The increase in software maintenance expense is due to a general increase in software maintenance contracts.

The increase in other operating expense is primarily due to increases in loan origination expense of $137.4 thousand, Mortgage Servicing Rights ("MSR") valuation expense of $121.6 thousand, postage expense of $50.4 thousand, communications expense of $38.6 thousand and education and training expense of $25.0 thousand. These increases were partially offset by a decrease in travel and lodging expense of $182.3 thousand.

The efficiency ratio was 61.7% for the quarter ended June 30, 2020 compared to 61.1% for the quarter ended June 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 second quarter 2020 was 11.3% compared to 15.1% in 2019.

For the six months ended June 30, 2020, noninterest expense totaled $36.0 million, an increase of $2.9 million, or 8.7%, compared to the same period in the prior year.

Noninterest expense

(unaudited - dollars in thousands) Six months ended June 30,

2020 2019 $ change % change

Compensation expense $ 21,468 $ 19,353 $ 2,115 10.9%

Net occupancy and equipment 3,053 2,947 106 3.6%

Contracted data processing 925 866 59 6.8%

Taxes and assessments 1,210 1,197 13 1.1%

Professional services 1,620 1,395 225 16.1%

Amortization of intangible assets 459 475 (16) -3.4%

ATM/Interchange expense 778 924 (146) -15.8%

Marketing 695 707 (12) -1.7%

Software maintenance expense 844 705 139 19.7%

Other 4,918 4,519 399 8.8%

Total noninterest expense $ 35,970 $ 33,088 $ 2,882 8.7%

Compensation expense increased due to an increase in employees, annual pay increases and commission expense. FTE employees increased by 21, or 4.8%, to 454 FTE. Annual pay increases in 2020 were an average of 3.3%. Employee insurance increased 2.6% for 2020. Commission expense increased $508.7 thousand, or 54.8%, and overtime expense increased $189.6 thousand, or 78.5%, both as a result of increased loan activity.

The decrease in ATM/Interchange expense is primarily due to a settlement received in the second quarter of 2020 and savings realized by a vendor change.

The increase in software maintenance expense is due to a general increase in software maintenance contracts.

The increase in other operating expense is primarily due to increases in loan origination expense of $207.5 thousand, MSR valuation expense of $162.7 thousand, postage expense of $100.9 thousand, communications expense of $55.2 thousand, ATM/debit card losses of $51.5 thousand and education and training expense of $50.0 thousand. These increases were partially offset by a decrease in travel and lodging expense of $255.4 thousand.

The efficiency ratio was 61.2% for the six months ended June 30, 2020 compared to 59.5% for the six months ended June 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 six months of 2020 was 12.2% compared to 15.8% in same period in 2019.

Balance Sheet

Total assets increased $502.6 million, or 21.8%, from December 31, 2019 to June 30, 2020, due primarily to a $314.0 million, or 18.4%, increase in the loan portfolio. Loans that are held for sale increased $16.2 million, or 710.6%, and cash increased $148.0 million, primarily related to the proceeds from Small Business Association's ("SBA") Paycheck Protection Program ("PPP") loans held on deposit.

End of periodloan balances

(unaudited -dollars inthousands)

June 30, December 31,

2020 2019 $ Change % Change

Commercial and $ 442,444 $ 203,110 $ 239,334 117.8%Agriculture

Commercial RealEstate:

Owner Occupied 252,914 245,606 7,308 3.0%

Non-owner 646,792 592,222 54,570 9.2%Occupied

Residential Real 453,067 463,032 (9,965) -2.2%Estate

Real Estate 178,318 155,825 22,493 14.4%Construction

Farm Real Estate 35,441 34,114 1,327 3.9%

Consumer and 13,989 15,061 (1,072) -7.1%Other

Total Loans $ 2,022,965 $ 1,708,970 $ 313,995 18.4%

Loan growth during 2020 totaled $314.0 million, including $257.6 million of PPP loans. Otherwise, loan growth was led by increases of $61.9 million in Commercial Real Estate and $22.5 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 Central Ohio market. The decrease in Residential Real Estate was expected as we successfully refinance many on balance sheet mortgages and home equity loans into saleable mortgage products. All regions have contributed to the growth in the first six 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 six months of 2020 processed 2,290 loans totaling $257.6 million. SBA fees, which will be earned over the life of the PPP loans, total approximately $9.8 million, which are being recognized in interest income over the life of the loans. We are approved to borrow from the Paycheck Protection Program Lending Facility ("PPPLF"), and have borrowed $183.7 million.

"By participating in the SBA PPP lending program we were able to directly assist our small business customers, impacting more than 36,000 jobs. This program will make a real difference in the businesses and lives of our customers and their employees," said Dennis G. Shaffer, President and CEO of Civista.

COVID-19 Loan Modifications

During the first six months, Civista modified 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 the time of the modification and comply with the provisions of the CARES Act to not be considered a troubled debt restructuring. Details with respect to actual loan modifications processed through June 30, 2020 are as follows:

Loans modified under COVID-19 programs

(unaudited - dollars in thousands)

Number of WeightedType of Loan Loans Balance average interest rate

Commercial and Agriculture 229 $ 47,686 4.56%

Commercial Real Estate:

Owner Occupied 193 91,831 4.82%

Non-owner Occupied 179 234,543 4.47%

Residential Real Estate 170 29,012 4.67%

Real Estate Construction 18 26,296 4.39%

Farm Real Estate 9 1,783 4.94%

Consumer and Other 15 132 8.01%

813 $ 431,283 4.57%

"We took a very proactive approach with our customers to offer deferrals with the onset of COVID-19 and the stay at home orders. The deferrals were for 90 days and many are expiring late this month," said Dennis G. Shaffer, President and CEO of Civista.

Total deposits increased $390.5 million, or 23.3%, from December 31, 2019 to June 30, 2020.

End of perioddeposit balances

(unaudited -dollars inthousands)

June 30, December 31,

2020 2019 $ Change % Change

Noninterest-bearing $ 693,848 $ 512,553 $ 181,295 35.4%demand

Interest-bearing 408,980 301,674 107,306 35.6%demand

Savings and money 673,524 588,697 84,827 14.4%market

Time deposits 292,909 275,840 17,069 6.2%

Total Deposits $ 2,069,261 $ 1,678,764 $ 390,497 23.3%

The increase in noninterest-bearing demand of $181.3 million was due to a $134.1 million increase in business demand deposit accounts and a $21.4 million increase in personal demand deposit accounts. Much of the increase in the business demand deposit accounts is due to the PPP loan proceeds. Interest-bearing demand deposits increased, primarily due to increases in 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. The increase in time deposits is due to public fund time deposit accounts.

FHLB advances totaled $125.0 million at June 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

Civista approved a share repurchase plan in December 2019, authorizing the repurchase of up to 672,000 shares of outstanding common stock. As of April 4 2020, Civista repurchased all 672,000 shares for $11.4 million, which equates to a weighted average price of $16.90 per share. A new share repurchase program for $13.5 million was approved in April 2020. There have not been any share repurchases under this new program.

Shareholder Equity

Total shareholders' equity increased $6.5 million, or 2.0%, from December 31, 2019 to June 30, 2020 as a result of a $10.7 million increase in retained earnings and an increase in other comprehensive income of $6.8 million. These increases were partially offset by an $11.5 million decrease related to the repurchase of shares.

Asset Quality

Civista recorded net recoveries of $41 thousand for the six months of 2020 compared to net recoveries of $107 thousand for the same period of 2019. The allowance for loan losses to loans was 1.01% at June 30, 2020 and 0.86% at December 31, 2019. The allowance ratio at June 30, 2020, without the PPP loans was 1.16%.

Allowance for Loan Losses

(unaudited - dollars in thousands)

Six months ended June 30,

2020 2019

Beginning of period $ 14,767 $ 13,679

Charge-offs (140) (395)

Recoveries 181 502

Provision 5,612 -

End of period $ 20,420 $ 13,786

Non-performing assets at June 30, 2020 were $7.8 million, a 14.6% decrease from December 31, 2019. The non-performing assets to assets ratio decreased to 0.28% from 0.39% at December 31, 2019. The allowance for loan losses to non-performing loans increased to 262.13% from 161.95% At December 31, 2019.

Non-performing Assets

(unaudited - dollars in thousands) June 30, December 31,

2020 2019

Non-accrual loans $ 5,441 $ 6,115

Restructured loans 2,349 3,004

Total non-performing loans 7,790 9,119

Other Real Estate Owned - -

Total non-performing assets $ 7,790 $ 9,119

Conference Call and WebcastCivista Bancshares, Inc. will also host a conference call to discuss the Company's financial results for the second quarter of 2020 at 1:00 p.m. ET on Friday, July 24, 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. second 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 StatementsThis 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 Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Interest $ 24,584 $ 24,926 $ 49,586 $ 49,510income

Interest 2,509 3,184 5,396 6,050expense

Net interest 22,075 21,742 44,190 43,460income

Provisionfor loan 3,486 - 5,612 -losses

Net interestincome after 18,589 21,742 38,578 43,460provision

Noninterest 6,854 5,104 13,730 11,388income

Noninterest 18,114 16,639 35,970 33,088expense

Income 7,329 10,207 16,338 21,760before taxes

Income tax 825 1,546 2,001 3,430expense

Net income 6,504 8,661 14,337 18,330

Preferredstock - 164 - 328dividends

Net incomeavailable

to common $ 6,504 $ 8,497 $ 14,337 $ 18,002shareholders

Dividendspaid per $ 0.11 $ 0.11 $ 0.22 $ 0.20common share

Earnings percommonshare,

basic $ 0.41 $ 0.54 $ 0.88 $ 1.15

diluted $ 0.41 $ 0.51 $ 0.88 $ 1.08

Averagesharesoutstanding,

basic 16,044,125 15,628,537 16,280,935 15,618,154

diluted 16,044,125 16,922,712 16,280,935 16,912,329

Selectedfinancialratios:

Return onaverage 0.93% 1.58% 1.07% 1.65%assets

Return onaverage 7.91% 11.01% 8.70% 11.98%equity

Dividend 27.13% 19.85% 24.98% 17.04%payout ratio

Net interestmargin (tax 3.61% 4.49% 3.84% 4.47%equivalent)

Selected Balance Sheet Items

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

June 30, December 31,

2020 2019

(unaudited)

Cash and due from $ 196,520 $ 48,535financial institutions

Investment securities 369,181 359,690

Loans held for sale 18,523 2,285

Loans 2,022,965 1,708,970

Less: allowance for (20,420) (14,767)loan losses

Net loans 2,002,545 1,694,203

Other securities 20,537 20,280

Premises and equipment, 23,137 22,871net

Goodwill and other 84,852 85,156intangibles

Bank owned life 45,489 44,999insurance

Other assets 51,369 31,538

Total assets $ 2,812,153 $ 2,309,557

Total deposits $ 2,069,261 $ 1,678,764

Federal Home Loan Bank 125,000 226,500advances

Securities sold underagreements to 23,608 18,674repurchase

Other borrowings 183,695 -

Subordinated 29,427 29,427debentures

Accrued expenses and 44,549 26,066other liabilities

Total shareholders' 336,613 330,126equity

Total liabilities and $ 2,812,153 $ 2,309,557shareholders' equity

Shares outstanding at 16,052,979 16,687,542period end

Book value per share $ 20.97 $ 19.78

Equity to asset ratio 11.97% 14.29%

Selected asset qualityratios:

Allowance for loan 1.01% 0.86%losses to total loans

Non-performing assets to 0.28% 0.39%total assets

Allowance for loanlosses to non-performing 262.13% 161.95%loans

Non-performing assetanalysis

Nonaccrual loans $ 5,441 $ 6,115

Troubled debt 2,349 3,004restructurings

Other real estate owned - -

Total $ 7,790 $ 9,119

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)

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

End of Period 2020 2020 2019 2019 2019Balances

Assets

Cash and due $ 196,520 $ 256,023 $ 48,535 $ 62,219 $ 49,839from banks

Investment 369,181 366,689 359,690 356,439 360,512securities

Loans held for 18,523 7,632 2,285 8,983 2,563sale

Loans 2,022,965 1,743,125 1,708,970 1,648,640 1,598,770

Allowance for (20,420) (16,948) (14,767) (14,144) (13,786)loan losses

Net Loans 2,002,545 1,726,177 1,694,203 1,634,496 1,584,984

Other securities 20,537 20,280 20,280 20,280 20,280

Premises and 23,137 22,443 22,871 22,201 21,720equipment, net

Goodwill andother 84,852 84,919 85,156 85,461 85,706intangibles

Bank owned life 45,489 45,249 44,999 44,745 44,491insurance

Other assets 51,369 46,444 31,538 34,241 32,900

Total Assets $ 2,812,153 $ 2,575,856 $ 2,309,557 $ 2,269,065 $ 2,202,995

Liabilities

Total deposits $ 2,069,261 $ 1,991,939 $ 1,678,764 $ 1,632,621 $ 1,632,720

Federal HomeLoan Bank 125,000 142,000 226,500 236,100 176,300advances

Securities soldunder agreement 23,608 22,699 18,674 15,088 15,554to repurchase

Other borrowings 183,695 - - - -

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

Accrued expensesand other 44,549 61,624 26,066 26,566 24,782liabilities

Total 2,475,540 2,247,689 1,979,431 1,939,802 1,878,783liabilities

Shareholders'Equity

Preferred - - - 9,158 9,364shares, Series B

Common shares 276,841 276,546 276,422 267,559 267,275

Retained 78,712 73,972 67,974 62,023 56,199earnings

Treasury shares (32,594) (32,239) (21,144) (21,144) (17,235)

Accumulatedother 13,654 9,888 6,874 11,667 8,609comprehensiveincome

Totalshareholders' 336,613 328,167 330,126 329,263 324,212equity

TotalLiabilities and $ 2,812,153 $ 2,575,856 $ 2,309,557 $ 2,269,065 $ 2,202,995Shareholders'Equity

QuarterlyAverage Balances

Assets:

Earning assets $ 2,528,006 $ 2,232,168 $ 2,070,175 $ 2,021,780 $ 1,986,841

Securities 386,838 385,187 372,639 379,525 373,999

Loans 1,972,969 1,725,685 1,676,769 1,626,010 1,583,533

Liabilities andShareholders'Equity

Total deposits $ 2,108,227 $ 1,975,133 $ 1,661,452 $ 1,622,527 $ 1,670,247

Interest-bearing 1,317,336 1,175,593 1,160,499 1,139,632 1,129,964deposits

Otherinterest-bearing 302,267 209,909 252,908 246,235 186,140liabilities

Totalshareholders' 330,524 332,602 329,634 326,103 315,438equity

Supplemental Financial Information

(Unaudited - dollars in thousands except share data)

Three Months Ended

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

Income statement 2020 2020 2019 2019 2019

Total interest and $ $ $ $ $ dividend income 24,584 25,002 24,521 24,023 24,926

Total interest 2,509 2,887 3,299 3,605 3,184expense

Net interest income 22,075 22,115 21,222 20,418 21,742

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

Noninterest income 6,854 6,876 5,627 5,429 5,104

Noninterest expense 18,114 17,856 17,128 16,731 16,639

Income before taxes 7,329 9,009 8,836 8,966 10,207

Income tax expense 825 1,176 995 1,258 1,546

Net income 6,504 7,833 7,841 7,708 8,661

Preferred stock - - 157 162 164dividends

Net income availableto

common shareholders $ $ $ $ $ 6,504 7,833 7,684 7,546 8,497

Common shares $ $ $ $ $ dividend paid 1,764 1,835 1,702 1,722 1,719

Per share data

Basic earnings per $ $ $ $ $ common share 0.41 0.47 0.49 0.48 0.54

Diluted earnings per 0.41 0.47 0.47 0.46 0.51common share

Dividends paid per 0.11 0.11 0.11 0.11 0.11common share

Average common shares 16,044,125 16,517,745 15,796,713 15,577,371 15,628,537outstanding - basic

Average common shares 16,044,125 16,517,745 16,734,391 16,849,887 16,922,712outstanding - diluted

Asset quality

Allowance for loan $ $ $ $ $ losses, beginning of 16,948 14,767 14,144 13,786 13,822period

Charge-offs (116) (24) (345) (36) (156)

Recoveries 102 79 83 244 120

Provision 3,486 2,126 885 150 -

Allowance for loan $ $ $ $ $ losses, end of period 20,420 16,948 14,767 14,144 13,786

Ratios

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

Allowance to 262.14% 197.97% 161.95% 149.91% 164.69%nonperforming assets

Allowance to 262.14% 197.97% 161.95% 149.91% 164.69%nonperforming loans

Nonperforming assets

Nonperforming loans $ $ $ $ $ 7,790 8,561 9,119 9,435 8,371

Other real estate - - - - -owned

Total nonperforming $ $ $ $ $ assets 7,790 8,561 9,119 9,435 8,371

Capital and liquidity

Tier 1 leverage ratio 10.43% 10.66% 12.35% 12.37% 12.44%

Tier 1 risk-based 12.99% 14.33% 15.26% 15.50% 15.94%capital ratio

Total risk-based 13.97% 15.25% 16.10% 16.32% 16.78%capital ratio

Tangible common 9.29% 9.82% 11.08% 10.81% 10.89%equity ratio ^(1)

(1) See reconciliation of non-GAAP measuresat 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,

2020 2020 2019 2019 2019

TangibleCommon Equity

TotalShareholder's $ 336,613 $ 328,167 $ 330,126 $ 329,263 $ 324,212Equity - GAAP

Less:Preferred - - - 9,158 9,364Equity

Less:Goodwill and 83,135 83,363 83,595 83,829 84,064intangibleassets

Tangiblecommon equity $ 253,478 $ 244,804 $ 246,531 $ 236,276 $ 230,784(Non-GAAP)

Total Shares 16,052,979 16,064,010 16,687,542 15,473,275 15,633,059Outstanding

Tangible bookvalue per $ 15.79 $ 15.24 $ 14.77 $ 15.27 $ 14.76share

TangibleAssets

Total Assets $ 2,812,153 $ 2,575,856 $ 2,309,557 $ 2,269,065 $ 2,202,995- GAAP

Less:Goodwill and 83,135 83,363 83,595 83,829 84,064intangibleassets

Tangibleassets $ 2,729,018 $ 2,492,493 $ 2,225,962 $ 2,185,236 $ 2,118,931(Non-GAAP)

Tangiblecommon equity 9.29% 9.82% 11.08% 10.81% 10.89%to tangibleassets

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SOURCE Civista Bancshares, Inc.