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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2021

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36192

Civista Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Ohio |  | 34-1558688
(State or other jurisdiction of |  | (I.R.S. Employer
incorporation or organization) |  | Identification No.)
100 East Water Street, Sandusky, Ohio |  | 44870
(Address of principal executive offices) |  | (Zip Code)

Registrant’s telephone number, including area code: (419) 625-4121

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common |  | CIVB |  | NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer |  | ☐ |  |  | Accelerated filer |  | ☒
Non-accelerated filer |  | ☐ |  |  | Smaller reporting company |  | ☐
Emerging growth company |  | ☐ |  |  |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Shares, no par value, outstanding at November 4, 2021—15,025,972 shares

CIVISTA BANCSHARES, INC.

Index

PART I. |  | Financial Information |  |  |  |
Item 1. |  | Financial Statements: |  |  |  |
|  | Consolidated Balance Sheets (Unaudited) September 30, 2021 and December 31, 2020 |  |  | 2 |
|  | Consolidated Statements of Operations (Unaudited) Three- and nine-months ended September 30, 2021 and 2020 |  |  | 3 |
|  | Consolidated Statements of Comprehensive Income (Unaudited) Three- and nine-months ended September 30, 2021 and 2020 |  |  | 4 |
|  | Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) Three- and nine-months ended September 30, 2021 and 2020 |  |  | 5 |
|  | Condensed Consolidated Statements of Cash Flows (Unaudited) Nine months ended September 30, 2021 and 2020 |  |  | 7 |
|  | Notes to Interim Consolidated Financial Statements (Unaudited) |  |  | 8-37 |
Item 2. |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  |  | 38-51 |
Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk |  |  | 52-53 |
Item 4. |  | Controls and Procedures |  |  | 54 |
PART II. |  | Other Information |  |  | 55 |
Item 1. |  | Legal Proceedings |  |  | 55 |
Item 1A. |  | Risk Factors |  |  | 55 |
Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds |  |  | 55 |
Item 3. |  | Defaults Upon Senior Securities |  |  | 55 |
Item 4. |  | Mine Safety Disclosures |  |  | 55 |
Item 5. |  | Other Information |  |  | 55 |
Item 6. |  | Exhibits |  |  | 56 |
Signatures |  |  |  |  | 57 |

Part I – Financial Information

ITEM 1. | Financial Statements

CIVISTA BANCSHARES, INC.

Consolidated Balance Sheets

(In thousands, except share data)

|  | September 30, 2021 |  |  |  |  |
|  | (Unaudited) |  |  | December 31, 2020 |
ASSETS |  |  |  |  |  |  |  |
Cash and due from financial institutions |  | $ | 246,165 |  |  | $ | 128,222 |
Restricted cash |  |  | 7,000 |  |  |  | 11,300 |
Cash and cash equivalents |  |  | 253,165 |  |  |  | 139,522 |
Securities available for sale |  |  | 498,149 |  |  |  | 363,464 |
Equity securities |  |  | 1,077 |  |  |  | 886 |
Loans held for sale |  |  | 5,810 |  |  |  | 7,001 |
Loans, net of allowance of $26,568 and $25,028 |  |  | 1,978,246 |  |  |  | 2,032,474 |
Other securities |  |  | 17,011 |  |  |  | 20,537 |
Premises and equipment, net |  |  | 22,716 |  |  |  | 22,580 |
Accrued interest receivable |  |  | 7,728 |  |  |  | 9,421 |
Goodwill |  |  | 76,851 |  |  |  | 76,851 |
Other intangible assets, net |  |  | 7,738 |  |  |  | 8,075 |
Bank owned life insurance |  |  | 46,728 |  |  |  | 45,976 |
Swap assets |  |  | 12,858 |  |  |  | 21,700 |
Other assets |  |  | 24,159 |  |  |  | 20,375 |
Total assets |  | $ | 2,952,236 |  |  | $ | 2,768,862 |
LIABILITIES |  |  |  |  |  |  |  |
Deposits |  |  |  |  |  |  |  |
Noninterest-bearing |  | $ | 832,492 |  |  | $ | 720,809 |
Interest-bearing |  |  | 1,602,274 |  |  |  | 1,468,589 |
Total deposits |  |  | 2,434,766 |  |  |  | 2,189,398 |
Long-term Federal Home Loan Bank advances |  |  | 75,000 |  |  |  | 125,000 |
Securities sold under agreements to repurchase |  |  | 23,331 |  |  |  | 28,914 |
Subordinated debentures |  |  | 29,427 |  |  |  | 29,427 |
Swap liabilities |  |  | 12,858 |  |  |  | 21,764 |
Accrued expenses and other liabilities |  |  | 28,404 |  |  |  | 24,251 |
Total liabilities |  |  | 2,603,786 |  |  |  | 2,418,754 |
SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |
Common shares, no par value, 40,000,000 shares authorized, 17,711,815 shares issued at September 30, 2021 and 17,664,951 shares issued at December 31, 2020, including Treasury Shares |  |  | 277,627 |  |  |  | 277,039 |
Retained earnings |  |  | 116,680 |  |  |  | 93,048 |
Treasury shares, 2,681,843 common shares at September 30, 2021 and 1,766,919 common shares at December 31, 2020, at cost |  |  | (55,155 | ) |  |  | (34,598 | )
Accumulated other comprehensive income |  |  | 9,298 |  |  |  | 14,619 |
Total shareholders’ equity |  |  | 348,450 |  |  |  | 350,108 |
Total liabilities and shareholders’ equity |  | $ | 2,952,236 |  |  | $ | 2,768,862 |

See notes to interim unaudited consolidated financial statements

Page 2

CIVISTA BANCSHARES, INC.

Consolidated Statements of Operations (Unaudited)

(In thousands, except per share data)

|  | Three months ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Interest and dividend income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans, including fees |  | $ | 22,704 |  |  | $ | 21,638 |  |  | $ | 68,140 |  |  | $ | 64,924 |
Taxable securities |  |  | 1,423 |  |  |  | 1,325 |  |  |  | 3,928 |  |  |  | 4,100 |
Tax-exempt securities |  |  | 1,555 |  |  |  | 1,536 |  |  |  | 4,599 |  |  |  | 4,589 |
Deposits in other banks |  |  | 102 |  |  |  | 59 |  |  |  | 341 |  |  |  | 531 |
Total interest and dividend income |  |  | 25,784 |  |  |  | 24,558 |  |  |  | 77,008 |  |  |  | 74,144 |
Interest expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 970 |  |  |  | 1,631 |  |  |  | 3,366 |  |  |  | 5,418 |
Federal Home Loan Bank advances |  |  | 194 |  |  |  | 452 |  |  |  | 968 |  |  |  | 1,480 |
Subordinated debentures |  |  | 182 |  |  |  | 194 |  |  |  | 553 |  |  |  | 757 |
Securities sold under agreements to repurchase and other |  |  | 5 |  |  |  | 275 |  |  |  | 19 |  |  |  | 293 |
Total interest expense |  |  | 1,351 |  |  |  | 2,552 |  |  |  | 4,906 |  |  |  | 7,948 |
Net interest income |  |  | 24,433 |  |  |  | 22,006 |  |  |  | 72,102 |  |  |  | 66,196 |
Provision for loan losses |  |  | — |  |  |  | 2,250 |  |  |  | 830 |  |  |  | 7,862 |
Net interest income after provision for loan losses |  |  | 24,433 |  |  |  | 19,756 |  |  |  | 71,272 |  |  |  | 58,334 |
Noninterest income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service charges |  |  | 1,519 |  |  |  | 1,414 |  |  |  | 4,092 |  |  |  | 3,812 |
Net gain on sale of securities |  |  | 4 |  |  |  | 92 |  |  |  | 1,787 |  |  |  | 92 |
Net gain (loss) on equity securities |  |  | 50 |  |  |  | 20 |  |  |  | 191 |  |  |  | (126 | )
Net gain on sale of loans |  |  | 1,612 |  |  |  | 2,413 |  |  |  | 6,575 |  |  |  | 5,501 |
ATM/Interchange fees |  |  | 1,330 |  |  |  | 1,183 |  |  |  | 3,950 |  |  |  | 3,226 |
Wealth management fees |  |  | 1,236 |  |  |  | 1,006 |  |  |  | 3,570 |  |  |  | 2,916 |
Bank owned life insurance |  |  | 261 |  |  |  | 243 |  |  |  | 752 |  |  |  | 733 |
Tax refund processing fees |  |  | — |  |  |  | — |  |  |  | 2,375 |  |  |  | 2,375 |
Swap fees |  |  | 41 |  |  |  | 158 |  |  |  | 135 |  |  |  | 1,260 |
Other |  |  | 373 |  |  |  | 257 |  |  |  | 1,214 |  |  |  | 727 |
Total noninterest income |  |  | 6,426 |  |  |  | 6,786 |  |  |  | 24,641 |  |  |  | 20,516 |
Noninterest expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation expense |  |  | 11,390 |  |  |  | 10,595 |  |  |  | 34,578 |  |  |  | 32,063 |
Net occupancy expense |  |  | 985 |  |  |  | 1,010 |  |  |  | 3,216 |  |  |  | 3,050 |
Equipment expense |  |  | 444 |  |  |  | 494 |  |  |  | 1,340 |  |  |  | 1,507 |
Contracted data processing |  |  | 429 |  |  |  | 415 |  |  |  | 1,362 |  |  |  | 1,340 |
FDIC assessment |  |  | 247 |  |  |  | 288 |  |  |  | 829 |  |  |  | 531 |
State franchise tax |  |  | 511 |  |  |  | 427 |  |  |  | 1,607 |  |  |  | 1,394 |
Professional services |  |  | 776 |  |  |  | 669 |  |  |  | 2,255 |  |  |  | 2,289 |
Amortization of intangible assets |  |  | 223 |  |  |  | 227 |  |  |  | 668 |  |  |  | 686 |
ATM/Interchange expense |  |  | 594 |  |  |  | 538 |  |  |  | 1,843 |  |  |  | 1,316 |
Marketing |  |  | 359 |  |  |  | 361 |  |  |  | 1,000 |  |  |  | 1,056 |
Software maintenance expense |  |  | 819 |  |  |  | 506 |  |  |  | 1,872 |  |  |  | 1,350 |
Other operating expenses |  |  | 2,677 |  |  |  | 2,197 |  |  |  | 10,741 |  |  |  | 7,115 |
Total noninterest expense |  |  | 19,454 |  |  |  | 17,727 |  |  |  | 61,311 |  |  |  | 53,697 |
Income before taxes |  |  | 11,405 |  |  |  | 8,815 |  |  |  | 34,602 |  |  |  | 25,153 |
Income tax expense |  |  | 1,763 |  |  |  | 1,133 |  |  |  | 5,038 |  |  |  | 3,134 |
Net Income |  | $ | 9,642 |  |  | $ | 7,682 |  |  | $ | 29,564 |  |  | $ | 22,019 |
Earnings per common share, basic |  | $ | 0.64 |  |  | $ | 0.48 |  |  | $ | 1.90 |  |  | $ | 1.36 |
Earnings per common share, diluted |  | $ | 0.64 |  |  | $ | 0.48 |  |  | $ | 1.90 |  |  | $ | 1.36 |
Weighted average common shares, basic |  |  | 15,096,162 |  |  |  | 15,991,270 |  |  |  | 15,479,424 |  |  |  | 16,154,652 |
Weighted average common shares, diluted |  |  | 15,096,162 |  |  |  | 15,991,270 |  |  |  | 15,479,424 |  |  |  | 16,154,652 |

See notes to interim unaudited consolidated financial statements

Page 3

CIVISTA BANCSHARES, INC.

Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Net income |  | $ | 9,642 |  |  | $ | 7,682 |  |  | $ | 29,564 |  |  | $ | 22,019 |
Other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unrealized holding gains (losses) on available for sale securities |  |  | (3,107 | ) |  |  | 948 |  |  |  | (6,977 | ) |  |  | 9,386 |
Tax effect |  |  | 652 |  |  |  | (199 | ) |  |  | 1,465 |  |  |  | (1,971 | )
Reclassification of gains recognized in net income |  |  | (4 | ) |  |  | (92 | ) |  |  | (2 | ) |  |  | (92 | )
Tax effect |  |  | — |  |  |  | 19 |  |  |  | — |  |  |  | 19 |
Pension liability adjustment |  |  | 81 |  |  |  | 72 |  |  |  | 244 |  |  |  | 217 |
Tax effect |  |  | (17 | ) |  |  | (15 | ) |  |  | (51 | ) |  |  | (46 | )
Total other comprehensive income (loss) |  |  | (2,395 | ) |  |  | 733 |  |  |  | (5,321 | ) |  |  | 7,513 |
Comprehensive income |  | $ | 7,247 |  |  | $ | 8,415 |  |  | $ | 24,243 |  |  | $ | 29,532 |

See notes to interim unaudited consolidated financial statements

Page 4

CIVISTA BANCSHARES, INC.

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

(In thousands, except share data)

|  | Common Shares |  |  |  |  |  |  |  |  |  |  | Accumulated Other |  |  | Total |
|  | Outstanding Shares |  |  | Amount |  |  | Retained Earnings |  |  | Treasury Shares |  |  | Comprehensive Income |  |  | Shareholders’ Equity |
Balance, June 30, 2021 |  |  | 15,434,592 |  |  | $ | 277,495 |  |  | $ | 109,178 |  |  | $ | (45,953 | ) |  | $ | 11,693 |  |  | $ | 352,413 |
Net Income |  |  | — |  |  |  | — |  |  |  | 9,642 |  |  |  | — |  |  |  | — |  |  |  | 9,642 |
Other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,395 | ) |  |  | (2,395 | )
Stock-based compensation |  |  | — |  |  |  | 132 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 132 |
Common stock dividends ($0.14 per share) |  |  | — |  |  |  | — |  |  |  | (2,140 | ) |  |  | — |  |  |  | — |  |  |  | (2,140 | )
Purchase of common stock |  |  | (404,620 | ) |  |  | — |  |  |  | — |  |  |  | (9,202 | ) |  |  | — |  |  |  | (9,202 | )
Balance, September 30, 2021 |  |  | 15,029,972 |  |  | $ | 277,627 |  |  | $ | 116,680 |  |  | $ | (55,155 | ) |  | $ | 9,298 |  |  | $ | 348,450 |
|  | Common Shares |  |  |  |  |  |  |  |  |  |  | Accumulated Other |  |  | Total |
|  | Outstanding Shares |  |  | Amount |  |  | Retained Earnings |  |  | Treasury Shares |  |  | Comprehensive Income |  |  | Shareholders’ Equity |
Balance, June 30, 2020 |  |  | 16,052,979 |  |  | $ | 276,841 |  |  | $ | 78,712 |  |  | $ | (32,594 | ) |  | $ | 13,654 |  |  | $ | 336,613 |
Net Income |  |  | — |  |  |  | — |  |  |  | 7,682 |  |  |  | — |  |  |  | — |  |  |  | 7,682 |
Other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 733 |  |  |  | 733 |
Stock-based compensation |  |  | — |  |  |  | 99 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 99 |
Common stock dividends ($0.11 per share) |  |  | — |  |  |  | — |  |  |  | (1,766 | ) |  |  | — |  |  |  | — |  |  |  | (1,766 | )
Purchase of common stock |  |  | (107,500 | ) |  |  | — |  |  |  | — |  |  |  | (1,306 | ) |  |  | — |  |  |  | (1,306 | )
Balance, September 30, 2020 |  |  | 15,945,479 |  |  | $ | 276,940 |  |  | $ | 84,628 |  |  | $ | (33,900 | ) |  | $ | 14,387 |  |  | $ | 342,055 |

See notes to interim unaudited consolidated financial statements

Page 5

CIVISTA BANCSHARES, INC.

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

(In thousands, except share data)

|  | Common Shares |  |  |  |  |  |  |  |  |  |  | Accumulated Other |  |  | Total |
|  | Outstanding Shares |  |  | Amount |  |  | Retained Earnings |  |  | Treasury Shares |  |  | Comprehensive Income |  |  | Shareholders’ Equity |
Balance, December 31, 2020 |  |  | 15,898,032 |  |  | $ | 277,039 |  |  | $ | 93,048 |  |  | $ | (34,598 | ) |  | $ | 14,619 |  |  | $ | 350,108 |
Net Income |  |  | — |  |  |  | — |  |  |  | 29,564 |  |  |  | — |  |  |  | — |  |  |  | 29,564 |
Other comprehensive loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5,321 | ) |  |  | (5,321 | )
Stock-based compensation |  |  | 46,864 |  |  |  | 588 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 588 |
Common stock dividends ($0.38 per share) |  |  | — |  |  |  | — |  |  |  | (5,932 | ) |  |  | — |  |  |  | — |  |  |  | (5,932 | )
Purchase of common stock |  |  | (914,924 | ) |  |  | — |  |  |  | — |  |  |  | (20,557 | ) |  |  | — |  |  |  | (20,557 | )
Balance, September 30, 2021 |  |  | 15,029,972 |  |  | $ | 277,627 |  |  | $ | 116,680 |  |  | $ | (55,155 | ) |  | $ | 9,298 |  |  | $ | 348,450 |
|  | Common Shares |  |  |  |  |  |  |  |  |  |  | Accumulated Other |  |  | Total |
|  | Outstanding Shares |  |  | Amount |  |  | Retained Earnings |  |  | Treasury Shares |  |  | Comprehensive Income |  |  | Shareholders’ Equity |
Balance, December 31, 2019 |  |  | 16,687,542 |  |  | $ | 276,422 |  |  | $ | 67,974 |  |  | $ | (21,144 | ) |  | $ | 6,874 |  |  | $ | 330,126 |
Net Income |  |  | — |  |  |  | — |  |  |  | 22,019 |  |  |  | — |  |  |  | — |  |  |  | 22,019 |
Other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,513 |  |  |  | 7,513 |
Stock-based compensation |  |  | 41,245 |  |  |  | 518 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 518 |
Common stock dividends ($0.33 per share) |  |  | — |  |  |  | — |  |  |  | (5,365 | ) |  |  | — |  |  |  | — |  |  |  | (5,365 | )
Purchase of common stock |  |  | (783,308 | ) |  |  | — |  |  |  | — |  |  |  | (12,756 | ) |  |  | — |  |  |  | (12,756 | )
Balance, September 30, 2020 |  |  | 15,945,479 |  |  | $ | 276,940 |  |  | $ | 84,628 |  |  | $ | (33,900 | ) |  | $ | 14,387 |  |  | $ | 342,055 |

See notes to interim unaudited consolidated financial statements

Page 6

CIVISTA BANCSHARES, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |
Net cash from operating activities |  | $ | 34,295 |  |  | $ | 25,301 |
Cash flows used for investing activities: |  |  |  |  |  |  |  |
Maturities, paydowns and calls of securities, available-for-sale |  |  | 43,277 |  |  |  | 38,869 |
Purchases of securities, available-for-sale |  |  | (184,119 | ) |  |  | (39,144 | )
Proceeds from sale of securities available for sale |  |  | — |  |  |  | 1,455 |
Purchase of other securities |  |  | — |  |  |  | (257 | )
Redemption of other securities |  |  | 3,526 |  |  |  | — |
Sale of equity securities |  |  | — |  |  |  | 247 |
Net loan repayments (originations) |  |  | 54,926 |  |  |  | (339,683 | )
Proceeds from sale of other real estate owned properties |  |  | 118 |  |  |  | — |
Proceeds from sale of premises and equipment |  |  | 13 |  |  |  | 12 |
Premises and equipment purchases |  |  | (1,689 | ) |  |  | (1,780 | )
Net cash used for investing activities |  |  | (83,948 | ) |  |  | (340,281 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |
Repayment of long-term FHLB advances |  |  | (50,000 | ) |  |  | — |
Net change in short-term FHLB advances |  |  | — |  |  |  | (101,500 | )
Proceeds from other borrowings |  |  | — |  |  |  | 183,695 |
Increase in deposits |  |  | 245,368 |  |  |  | 390,005 |
Increase (decrease) in securities sold under repurchase agreements |  |  | (5,583 | ) |  |  | 7,139 |
Purchase of treasury shares |  |  | (20,557 | ) |  |  | (12,756 | )
Common dividends paid |  |  | (5,932 | ) |  |  | (5,365 | )
Net cash provided by financing activities |  |  | 163,296 |  |  |  | 461,218 |
Increase in cash and cash equivalents |  |  | 113,643 |  |  |  | 146,238 |
Cash and cash equivalents at beginning of period |  |  | 139,522 |  |  |  | 48,535 |
Cash and cash equivalents at end of period |  | $ | 253,165 |  |  | $ | 194,773 |
Cash paid during the period for: |  |  |  |  |  |  |  |
Interest |  | $ | 4,995 |  |  | $ | 7,733 |
Income taxes |  |  | 4,690 |  |  |  | 4,595 |
Supplemental cash flow information: |  |  |  |  |  |  |  |
Transfer of loans from portfolio to other real estate owned |  |  | 26 |  |  |  | — |
Transfer of premises to held-for-sale |  |  | 73 |  |  |  | — |
Change in fair value of swap asset |  |  | 8,906 |  |  |  | (15,809 | )
Change in fair value of swap liability |  |  | (8,906 | ) |  |  | 15,809 |
Securities purchased not settled |  |  | 3,857 |  |  |  | — |

See notes to interim unaudited consolidated financial statements

Page 7

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(1) Consolidated Financial Statements

Nature of Operations and Principles of Consolidation: Civista Bancshares, Inc. (CBI) is an Ohio corporation and a registered financial holding company. The Consolidated Financial Statements include the accounts of CBI and its wholly-owned subsidiaries: Civista Bank (Civista), First Citizens Insurance Agency, Inc. (FCIA), Water Street Properties, Inc. (Water St.) and CIVB Risk Management, Inc. (CRMI). CRMI is a wholly-owned captive insurance company which allows CBI and its subsidiaries to insure against certain risks unique to their operations. The operations of CRMI are located in Wilmington, Delaware. First Citizens Capital LLC (FCC) is wholly-owned by Civista and holds inter-company debt. The operations of FCC are located in Wilmington, Delaware. First Citizens Investments, Inc. (FCI) is wholly-owned by Civista and holds and manages its securities portfolio. The operations of FCI are located in Wilmington, Delaware. FCIA was formed to allow the Company to participate in commission revenue generated through its third party insurance agreement. Water St. was formed to hold properties repossessed by CBI subsidiaries. The above companies together are referred to as the “Company.” Intercompany balances and transactions are eliminated in consolidation. Management considers the Company to operate primarily in one reportable segment, banking.

The Consolidated Financial Statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Company’s financial position as of September 30, 2021 and its results of operations and changes in cash flows for the periods ended September 30, 2021 and 2020 have been made. The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with instructions of Form 10-Q, and therefore certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted. The results of operations for the period ended September 30, 2021 are not necessarily indicative of the operating results for the full year. Reference is made to the accounting policies of the Company described in the notes to the audited financial statements contained in the Company’s 2020 annual report. The Company has consistently followed these policies in preparing this Form 10-Q.

Civista provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Franklin, Logan, Madison, Summit, Huron, Ottawa, Richland, Montgomery and Cuyahoga, in the Indiana counties of Dearborn and Ripley and in the Kentucky county of Kenton. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Civista has two loan concentrations, one is to Lessors of Non-Residential Buildings and Dwellings totaling $572,533, or 28.4% of total loans, as of September 30, 2021, and the other is to Lessors of Residential Buildings and Dwellings totaling $290,758, or 14.4% of total loans, as of September 30, 2021. These segments of the loan portfolio have been underwritten, monitored and managed by experienced commercial bankers. However, the customers’ ability to repay their loans is dependent on the real estate market and general economic conditions in the area. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions that are in excess of federally insured limits.

(2) Significant Accounting Policies

Allowance for Loan Losses: The allowance for loan losses is regularly reviewed by management to determine that the amount is considered adequate to absorb probable losses in the loan portfolio. If not, an additional provision is made to increase the allowance. This evaluation includes specific loss estimates on certain individually reviewed impaired loans, the pooling of commercial credits risk graded as special mention and substandard that are not individually analyzed, and general loss estimates that are based upon the size, quality, and concentration characteristics of the various loan portfolios, adverse situations that may affect a borrower’s ability to repay, and current economic and industry conditions, among other items.

Those judgments and assumptions that are most critical to the application of this accounting policy are assessing the initial and on-going credit-worthiness of the borrower, the amount and timing of future cash flows of the borrower that are available for repayment of the loan, the sufficiency of underlying collateral, the enforceability of third-party guarantees, the frequency and subjectivity of loan reviews and risk ratings, emerging or changing trends that might not be fully captured in the historical loss experience, and charges against the allowance for actual losses that are greater than previously estimated. These judgments and assumptions are dependent upon or can be influenced by a variety of factors, including the breadth and depth of experience of lending officers, credit administration and the corporate loan review staff that periodically review the status of the loan,

Page 8

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

changing economic and industry conditions, changes in the financial condition of the borrower and changes in the value and availability of the underlying collateral and guarantees.

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, consideration of impairment of goodwill, fair values of financial instruments, deferred taxes, swap assets/liabilities and pension obligations are particularly subject to change.

Adoption of New Accounting Standards:

In October 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs, which clarifies that, for each reporting period, an entity should reevaluate whether a callable debt security is within the scope of ASC 310-20-35-33. We adopted ASU 2020-08 effective January 1, 2021, which did not have a material impact on the Company’s Consolidated Financial Statements.

Effect of Newly Issued but Not Yet Effective Accounting Standards:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of ASU 2016-13 is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. ASU 2016-13 was to be effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted for annual and interim periods beginning after December 15, 2018. In November 2019, however, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update deferred the effective date of ASU 2016-13 for U.S. Securities and Exchange Commission (“SEC”) filers that are eligible to be smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Management is in the process of evaluating the impact adoption of ASU 2016-13 will have on the Company’s Consolidated Financial Statements. This process has engaged multiple areas of the Company in evaluating loss estimation methods and application of these methods to specific segments of the loan portfolio. Management has been actively monitoring FASB developments and evaluating the use of different methods allowed. Due to continuing development of our methodology, additional time is required to quantify the effect this ASU will have on the Company’s Consolidated Financial Statements. Management plans on running parallel calculations and finalizing a method or methods of adoption in time for the effective date.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. A public business entity that is an SEC filer, such as the Company, was to adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. In November 2019, however, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), which deferred the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

Page 9

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. Topic 326, Financial Instruments – Credit Losses amendments are effective for SEC registrants for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments to Topic 825 were to be effective for interim and annual reporting periods beginning after December 15, 2019. In November 2019, however, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This Update is not expected to have a material impact on the Company’s financial statements.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses, Topic 326, which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted ASU 2016-13, the effective dates and transition requirements are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU 2016-13 has been adopted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). The Update defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial statements.

In November 2019, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). The Update defers the effective dates of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This Update also amends the mandatory effective date for the elimination of Step 2 from the goodwill impairment test under ASU No. 2017-04, Intangibles ‒ Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (Goodwill), to align with those used for credit losses. Furthermore, the ASU provides a one-year deferral of the effective dates of the ASUs on derivatives and hedging and leases for companies that are not public business entities. The Company qualified as a smaller reporting company and does not expect to early adopt these ASUs.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. The effective dates in this Update are the same as those applicable for ASU 2019-10. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim

Page 10

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

periods within those years. Other amendments are effective upon issuance of this ASU. This Update is not expected to have a significant impact on the Company’s financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The Update is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements necessitated by reference rate reform. The Update also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. The amendments in this Update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is working through this transition via a multi-disciplinary project team. We are still evaluating the impact the change from LIBOR to a benchmark like SOFR or Prime Rate will have on our financial condition, results of operations or cash flows.

Other recent ASU’s issued by the FASB did not, or are not believed by management to have, a material effect on the Company’s present or future Consolidated Financial Statements.

(3) Securities

The amortized cost and fair market value of available for sale securities and the related gross unrealized gains and losses recognized were as follows:

September 30, 2021 |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury securities and obligations of U.S. government agencies |  | $ | 53,247 |  |  | $ | 186 |  |  | $ | (156 | ) |  | $ | 53,277 |
Obligations of states and political subdivisions |  |  | 240,179 |  |  |  | 17,086 |  |  |  | (550 | ) |  |  | 256,715 |
Mortgage-backed securities in government sponsored entities |  |  | 184,553 |  |  |  | 3,974 |  |  |  | (370 | ) |  |  | 188,157 |
Total debt securities |  | $ | 477,979 |  |  | $ | 21,246 |  |  | $ | (1,076 | ) |  | $ | 498,149 |

December 31, 2020 |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury securities and obligations of U.S. government agencies |  | $ | 21,479 |  |  | $ | 220 |  |  | $ | (6 | ) |  | $ | 21,693 |
Obligations of states and political subdivisions |  |  | 208,013 |  |  |  | 21,000 |  |  |  | (1 | ) |  |  | 229,012 |
Mortgage-backed securities in government sponsored entities |  |  | 106,824 |  |  |  | 5,963 |  |  |  | (28 | ) |  |  | 112,759 |
Total debt securities |  | $ | 336,316 |  |  | $ | 27,183 |  |  | $ | (35 | ) |  | $ | 363,464 |

The amortized cost and fair value of securities at September 30, 2021, by contractual maturity, is shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

Available for sale |  | Amortized Cost |  |  | Fair Value |
Due in one year or less |  | $ | 9,132 |  |  | $ | 9,172 |
Due after one year through five years |  |  | 31,533 |  |  |  | 31,732 |
Due after five years through ten years |  |  | 45,283 |  |  |  | 47,236 |
Due after ten years |  |  | 207,478 |  |  |  | 221,852 |
Mortgage-backed securities |  |  | 184,553 |  |  |  | 188,157 |
Total securities available for sale |  | $ | 477,979 |  |  | $ | 498,149 |

Page 11

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Proceeds from sales of securities available for sale, gross realized gains and gross realized losses were as follows:

|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Sale proceeds |  | $ | — |  |  | $ | 1,455 |  |  | $ | 1,785 |  |  | $ | 1,455 |
Gross realized gains |  |  | — |  |  |  | 94 |  |  |  | 1,785 |  |  |  | 94 |
Gross realized losses |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Gains (losses) from securities called or settled by the issuer |  |  | 4 |  |  |  | (2 | ) |  |  | 2 |  |  |  | (2 | )

During the second quarter of 2021, the Company recorded a $1.785 million gain on the sale of its 7,361 shares of Visa Class B shares. As a result of this sale, the Company no longer owns any Visa Class B shares. The carrying value of the Visa Class B shares on the Company’s balance sheet was nominal as the Bank had no other historical cost basis in the shares.

Securities were pledged to secure public deposits, other deposits and liabilities as required by law. The carrying value of pledged securities was approximately $174,794 and $159,527 as of September 30, 2021 and December 31, 2020, respectively.

Securities with unrealized losses at September 30, 2021 and December 31, 2020 not recognized in income are set forth in the tables below, segregated by securities with maturities of 12 months or less and securities with maturities of more than 12 months:

September 30, 2021 |  | 12 Months or less |  |  | More than 12 months |  |  | Total |
Description of Securities |  | Fair Value |  |  | Unrealized Loss |  |  | Fair Value |  |  | Unrealized Loss |  |  | Fair Value |  |  | Unrealized Loss |
U.S. Treasury securities and obligations of U.S. government agencies |  | $ | 23,327 |  |  | $ | (119 | ) |  | $ | 2,048 |  |  | $ | (37 | ) |  | $ | 25,375 |  |  | $ | (156 | )
Obligations of states and political subdivisions |  |  | 36,646 |  |  |  | (550 | ) |  |  | — |  |  |  | — |  |  |  | 36,646 |  |  |  | (550 | )
Mortgage-backed securities in gov’t sponsored entities |  |  | 72,464 |  |  |  | (282 | ) |  |  | 3,521 |  |  |  | (88 | ) |  |  | 75,985 |  |  |  | (370 | )
Total temporarily impaired |  | $ | 132,437 |  |  | $ | (951 | ) |  | $ | 5,569 |  |  | $ | (125 | ) |  | $ | 138,006 |  |  | $ | (1,076 | )

December 31, 2020 |  | 12 Months or less |  |  | More than 12 months |  |  | Total |
Description of Securities |  | Fair Value |  |  | Unrealized Loss |  |  | Fair Value |  |  | Unrealized Loss |  |  | Fair Value |  |  | Unrealized Loss |
U.S. Treasury securities and obligations of U.S. government agencies |  | $ | 6,501 |  |  | $ | (5 | ) |  | $ | 126 |  |  | $ | (1 | ) |  | $ | 6,627 |  |  | $ | (6 | )
Obligations of states and political subdivisions |  |  | 1,874 |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | 1,874 |  |  |  | (1 | )
Mortgage-backed securities in gov’t sponsored entities |  |  | 5,755 |  |  |  | (28 | ) |  |  | — |  |  |  | — |  |  |  | 5,755 |  |  |  | (28 | )
Total temporarily impaired |  | $ | 14,130 |  |  | $ | (34 | ) |  | $ | 126 |  |  | $ | (1 | ) |  | $ | 14,256 |  |  | $ | (35 | )

At September 30, 2021, there were a total of 60 securities in the portfolio with unrealized losses mainly due to higher current market rates when compared to the time of purchase. Unrealized losses on securities have not been recognized into income because the issuers’ securities are of high credit quality, management has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to currently higher market rates when compared to the time of purchase. The fair value is expected to recover as the securities approach their maturity date or reset date. The Company does not intend to sell until recovery and does not believe selling will be required before recovery.

Page 12

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following table presents the net gains and losses on equity investments recognized in earnings for the three- and nine-months ended September 30, 2021 and 2020, and the portion of unrealized gains and losses for the period that relates to equity investments held at September 30, 2021 and 2020:

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Net gains (losses) recognized on equity securities during the period |  | $ | 50 |  |  | $ | 20 |  |  | $ | 191 |  |  | $ | (126 | )
Less: Net losses realized on the sale of equity securities during the period |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6 |
Unrealized gains (losses) recognized on equity securities held at reporting date |  | $ | 50 |  |  | $ | 20 |  |  | $ | 191 |  |  | $ | (120 | )

(4) Loans

Loan balances were as follows:

|  | September 30, 2021 |  |  | December 31, 2020 |
Commercial & Agriculture |  | $ | 276,741 |  |  | $ | 409,876 |
Commercial Real Estate- Owner Occupied |  |  | 292,725 |  |  |  | 278,413 |
Commercial Real Estate- Non-Owner Occupied |  |  | 788,898 |  |  |  | 705,072 |
Residential Real Estate |  |  | 424,553 |  |  |  | 442,588 |
Real Estate Construction |  |  | 179,491 |  |  |  | 175,609 |
Farm Real Estate |  |  | 30,147 |  |  |  | 33,102 |
Consumer and Other |  |  | 12,259 |  |  |  | 12,842 |
Total loans |  |  | 2,004,814 |  |  |  | 2,057,502 |
Allowance for loan losses |  |  | (26,568 | ) |  |  | (25,028 | )
Net loans |  | $ | 1,978,246 |  |  | $ | 2,032,474 |

Included in Commercial & Agriculture loans above are $83,287 and $217,295 of Paycheck Protection Program (“PPP”) loans as of September 30, 2021 and December 31, 2020, respectively.

Included in total loans above are net deferred loan fees of $4,444 and $5,998 at September 30, 2021 and December 31, 2020, respectively. Included in net deferred loan fees as of September 30, 2021 and December 31, 2020 are $3,340 and $5,194, respectively, of net deferred loans fees from PPP loans.

Paycheck Protection Program

In response to the novel COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended (the “CARES Act”), was signed into law on March 27, 2020, to provide national emergency economic relief measures. The CARES Act amended the loan program of the Small Business Administration (the “SBA”), in which Civista participates, to create a guaranteed, unsecured loan program, the Paycheck Protection Program (the “PPP”), to fund operational costs of eligible businesses, organizations and self-employed persons during COVID-19. During 2020, Civista processed over 2,300 PPP loans totaling $268.3 million.

The Consolidated Appropriations Act 2021, was signed into law on December 27, 2020 to provide an additional funding of $284.5 billion under the PPP and the establishment of PPP Second Draw Loans under the Economic Aid to Hard-Hit Small Businesses, Nonprofit, and Venues Act (the “Relief Act”). This additional funding was made available from original PPP lenders on January 19, 2021. As required by the Relief Act, on January 7, 2021, the SBA issued additional guidance (the “SBA Guidance”) providing additional details on certain changes to the existing PPP structure and the new PPP Second Draw Loans, and the PPP Second Draw Loan applications were released on January 11, 2021. The deadline (as extended) for submitting applications for PPP Second Draw Loans was May 31, 2021.

Funds provided under the Relief Act were earmarked both for first time PPP borrowers (subject to original PPP eligibility and limits) as well as ‘Second Draw’ Loans for borrowers that already received an original PPP loan. Additional Second Draw

Page 13

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

eligibility requirements were as follows: (1) entities must have no more than 300 employees, (2) entities must have suffered a 25% of more reduction in gross revenues between comparable quarters in 2019 and 2020, (3) some entities previously excluded are eligible for this round, such as local TV, newspaper, and radio, and (4) loan size limited to 2.5 times average monthly payroll with a maximum allowable amount of $2 million.

During the nine months ended September 30, 2021, Civista received SBA approval on, and funded, 1,340 PPP loans totaling $131,109 under the Relief Act.

(5) Allowance for Loan Losses

Management has an established methodology for determining the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Company has segmented certain loans in the portfolio by product type. Loss migration rates for each risk category are calculated and used as the basis for calculating loan loss allowance allocations. Loss migration rates are calculated over a three-year period for all portfolio segments. Management also considers certain economic factors for trends that management uses to account for the qualitative and environmental changes in risk, which affects the level of the reserve.

The following economic factors are analyzed:

| • | Changes in lending policies and procedures

| • | Changes in experience and depth of lending and management staff

| • | Changes in quality of credit review system

| • | Changes in nature and volume of the loan portfolio

| • | Changes in past due, classified and nonaccrual loans and TDRs

| • | Changes in economic and business conditions

| • | Changes in competition or legal and regulatory requirements

| • | Changes in concentrations within the loan portfolio

| • | Changes in the underlying collateral for collateral dependent loans

The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of $26,568 adequate to cover loan losses inherent in the loan portfolio, at

Page 14

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

September 30, 2021. The following tables present, by portfolio segment, the changes in the allowance for loan losses for the three- and nine-months ended September 30, 2021 and 2020.

Allowance for loan losses:

For the three months ended September 30, 2021 |  | Beginning balance |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Ending Balance |
Commercial & Agriculture |  | $ | 2,320 |  |  | $ | — |  |  | $ | 1 |  |  | $ | 191 |  |  | $ | 2,512 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 4,027 |  |  |  | — |  |  |  | — |  |  |  | 389 |  |  |  | 4,416 |
Non-Owner Occupied |  |  | 13,546 |  |  |  | — |  |  |  | 381 |  |  |  | (757 | ) |  |  | 13,170 |
Residential Real Estate |  |  | 2,531 |  |  |  | (77 | ) |  |  | 53 |  |  |  | 89 |  |  |  | 2,596 |
Real Estate Construction |  |  | 2,177 |  |  |  | — |  |  |  | — |  |  |  | 282 |  |  |  | 2,459 |
Farm Real Estate |  |  | 290 |  |  |  | — |  |  |  | 3 |  |  |  | 15 |  |  |  | 308 |
Consumer and Other |  |  | 202 |  |  |  | — |  |  |  | 10 |  |  |  | — |  |  |  | 212 |
Unallocated |  |  | 1,104 |  |  |  | — |  |  |  | — |  |  |  | (209 | ) |  |  | 895 |
Total |  | $ | 26,197 |  |  | $ | (77 | ) |  | $ | 448 |  |  | $ | — |  |  | $ | 26,568 |

For the three months ended September 30, 2021, the Company provided $0 to the allowance for loan losses, as compared to a provision of $2,250 for the three months ended September 30, 2020. The decrease in the provision in the third quarter of 2021, as compared to the third quarter of 2020, was due to the stability of our credit quality metrics coupled with the stabilization and, in some cases, improvement of international, national, regional and local economic conditions that were adversely impacted by the 2020 economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations in 2021 have created some level of optimism in the business community, there remains uncertainty due to the continued concern over increased infections from the Delta variant of COVID. We remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry as well as the challenges businesses face in today’s environment. Economic impacts related to the COVID-19 pandemic since March 2020 have included 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. While some of these pressures have eased, ongoing supply chain and staffing challenges, as well as the threat of inflation remain.

During the three months ended September 30, 2021, the allowance for Commercial & Agriculture loans increased due to an increase in general reserves required for this type as a result of an increase in non-PPP loan balances. Commercial and Agriculture loan balances decreased during the quarter mainly from Civista’s participation in the PPP loan program. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Owner Occupied loans increased due to an increase in general reserves required for this type as a result of increased loan balances, offset by a decrease in classified loans balances. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans decreased due to decreases in classified loan balances and loss rates, offset by an increase in general reserves required as a result of an increase in loan balances. This was represented as a decrease in the provision. The allowance for Residential Real Estate loans increased due to an increase in loss rates for this type of loan. The result was represented by an increase in the provision. The allowance for Real Estate Construction loans increased due to an increase in loss rates on substandard classified loan balances, offset by lower loan balances. This was represented as an increase in the provision. Management feels that the unallocated amount is appropriate and within the relevant range for the allowance that is reflective of the risk in the portfolio at September 30, 2021.

Page 15

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Allowance for loan losses:

For the three months ended September 30, 2020 |  | Beginning balance |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Ending Balance |
Commercial & Agriculture |  | $ | 2,799 |  |  | $ | — |  |  | $ | 1 |  |  | $ | (139 | ) |  | $ | 2,661 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 3,411 |  |  |  | (147 | ) |  |  | 6 |  |  |  | 685 |  |  |  | 3,955 |
Non-Owner Occupied |  |  | 9,169 |  |  |  | — |  |  |  | 3 |  |  |  | 1,406 |  |  |  | 10,578 |
Residential Real Estate |  |  | 2,434 |  |  |  | (11 | ) |  |  | 117 |  |  |  | (83 | ) |  |  | 2,457 |
Real Estate Construction |  |  | 1,844 |  |  |  | — |  |  |  | 1 |  |  |  | 500 |  |  |  | 2,345 |
Farm Real Estate |  |  | 361 |  |  |  | — |  |  |  | 3 |  |  |  | (4 | ) |  |  | 360 |
Consumer and Other |  |  | 247 |  |  |  | (27 | ) |  |  | 21 |  |  |  | (21 | ) |  |  | 220 |
Unallocated |  |  | 155 |  |  |  | — |  |  |  | — |  |  |  | (94 | ) |  |  | 61 |
Total |  | $ | 20,420 |  |  | $ | (185 | ) |  | $ | 152 |  |  | $ | 2,250 |  |  | $ | 22,637 |

For the three months ended September 30, 2020, the Company provided $2,250 to the allowance for loan losses. The provision was primarily the result of an increase in Civista’s qualitative factors, primarily changes in international, national, regional and local conditions, related to the economic shutdown driven by the ongoing COVID-19 pandemic, as well as the significant increase in classified assets during the quarter, particularly in the special mention category. Economic impacts from the COVID-19 pandemic during the three months ended September 30, 2020 included 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 three months ended September 30, 2020, the allowance for Commercial & Agriculture loans decreased due to a decrease in general reserves required for this type as a result of a decrease in loan balances. The result was represented as a decrease in the provision. The allowance for Commercial Real Estate – Owner Occupied loans increased due to an increase in general reserves required for this type as a result of factors related to the COVID-19 pandemic, increased loan balances and loss rates and by increased classified and non-accrual loans. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans increased due to an increase in general reserves required as a result of an increase in loan balances and by an increase in classified loans. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in recoveries for this type of loan. The result was represented by a decrease in the provision. The allowance for Real Estate Construction loans increased due to an increase in loss rates on classified loans, represented by an increase in the provision. Management determined that the unallocated amount was appropriate and within the relevant range for the allowance that was reflective of the risk in the portfolio at September 30, 2020.

Page 16

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Allowance for loan losses:

For the nine months ended September 30, 2021 |  | Beginning balance |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Ending Balance |
Commercial & Agriculture |  | $ | 2,810 |  |  | $ | (15 | ) |  | $ | 164 |  |  | $ | (447 | ) |  | $ | 2,512 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 4,057 |  |  |  | — |  |  |  | 6 |  |  |  | 353 |  |  |  | 4,416 |
Non-Owner Occupied |  |  | 12,451 |  |  |  | — |  |  |  | 392 |  |  |  | 327 |  |  |  | 13,170 |
Residential Real Estate |  |  | 2,484 |  |  |  | (114 | ) |  |  | 232 |  |  |  | (6 | ) |  |  | 2,596 |
Real Estate Construction |  |  | 2,439 |  |  |  | — |  |  |  | 1 |  |  |  | 19 |  |  |  | 2,459 |
Farm Real Estate |  |  | 338 |  |  |  | — |  |  |  | 9 |  |  |  | (39 | ) |  |  | 308 |
Consumer and Other |  |  | 209 |  |  |  | (19 | ) |  |  | 54 |  |  |  | (32 | ) |  |  | 212 |
Unallocated |  |  | 240 |  |  |  | — |  |  |  | — |  |  |  | 655 |  |  |  | 895 |
Total |  | $ | 25,028 |  |  | $ | (148 | ) |  | $ | 858 |  |  | $ | 830 |  |  | $ | 26,568 |

For the nine months ended September 30, 2021, the Company provided $830 to the allowance for loan losses, as compared to a provision of $7,862 for the nine months ended September 30, 2020. The decrease in the provision in the first nine months of 2021 as compared to the same period of 2020, was due to the stability of our credit quality metrics coupled with the stabilization and, in some cases, improvement of international, national, regional and local economic conditions that were adversely impacted by the 2020 economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations in 2021 have created some level of optimism in the business community, there remains uncertainty due to the continued concern over increased infections from the Delta variant of COVID. We remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry as well as the challenges business face in today’s environment. Economic impacts related to the COVID-19 pandemic since March 2020 have included 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. While some of these pressures have eased, ongoing supply chain and staffing challenges, as well as the threat of inflation remain.

For the nine months ended September 30, 2021, the allowance for Commercial & Agriculture loans decreased due to a decrease in general reserves required for this type as a result of a decrease in loss rates. Commercial & Agriculture loan balances decreased during the period mainly from Civista’s participation in the PPP loan program. The result was represented as a decrease in the provision. The allowance for Commercial Real Estate – Owner Occupied loans increased due to an increase in general reserves required for this type as a result of increased loan balances, offset by decreases in classified loan balances. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans increased due to an increase in general reserves required as a result of an increase in loan balances, offset by a decrease in classified loan balances and by a decrease in loss rates. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in recoveries for this type of loan. The result was represented by a decrease in the provision. The allowance for Real Estate Construction loans increased due to an increase in loan balances, represented by an increase in the provision. The allowance for Farm Real Estate loans decreased due to a decrease in general reserves required for this type as a result of decreased loan balances. The result was represented as a decrease in the provision. Management feels that the unallocated amount is appropriate and within the relevant range for the allowance that is reflective of the risk in the portfolio at September 30, 2021.

Page 17

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Allowance for loan losses:

For the nine months ended September 30, 2020 |  | Beginning balance |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Ending Balance |
Commercial & Agriculture |  | $ | 2,219 |  |  | $ | (15 | ) |  | $ | 5 |  |  | $ | 452 |  |  | $ | 2,661 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 2,541 |  |  |  | (148 | ) |  |  | 20 |  |  |  | 1,542 |  |  |  | 3,955 |
Non-Owner Occupied |  |  | 6,584 |  |  |  | — |  |  |  | 44 |  |  |  | 3,950 |  |  |  | 10,578 |
Residential Real Estate |  |  | 1,582 |  |  |  | (108 | ) |  |  | 196 |  |  |  | 787 |  |  |  | 2,457 |
Real Estate Construction |  |  | 1,250 |  |  |  | — |  |  |  | 3 |  |  |  | 1,092 |  |  |  | 2,345 |
Farm Real Estate |  |  | 344 |  |  |  | — |  |  |  | 10 |  |  |  | 6 |  |  |  | 360 |
Consumer and Other |  |  | 247 |  |  |  | (54 | ) |  |  | 55 |  |  |  | (28 | ) |  |  | 220 |
Unallocated |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 61 |  |  |  | 61 |
Total |  | $ | 14,767 |  |  | $ | (325 | ) |  | $ | 333 |  |  | $ | 7,862 |  |  | $ | 22,637 |

For the nine months ended September 30, 2020, the Company provided $7,862 to the allowance for loan losses. The provision was primarily the result of an increase in Civista’s qualitative factors, primarily changes in international, national, regional and local conditions, related to the economic shutdown driven by the ongoing COVID-19 pandemic. Economic impacts related to the COVID-19 pandemic during the nine months ended September 30, 2020 included 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.

The allowance for Commercial & Agriculture loans increased due to an increase in general reserves required for this type as a result of an increase in loan balances mainly from Civista’s participation in the PPP loan program, offset by a decrease in loss rates, resulting in an increase in the provision. PPP loans are eligible for a 100% guaranty by the SBA. However, in the event of a loss resulting from a default on a PPP loan, and a determination by the SBA that there was a deficiency in the manner on which the PPP loan was originated or funded, the SBA may deny its liability under the guaranty. The reserve percentage for PPP loans is substantially less than the other loans in this segment resulting in an overall decrease in the reserve percentage. The allowance for Commercial Real Estate – Owner Occupied loans increased due to an increase in general reserves required for this type as a result of higher loan balances, an increase in classified and non-accrual loans and an increase in loss rates. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans increased due to an increase in general reserves required as a result of an increase in loan balances, an increase in classified loans, offset by a decrease in loss rates. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in general reserves required for this type as a result of factors related to the COVID-19 pandemic, offset by a decrease in loan balances and loss rates, represented by an increase in the provision. The allowance for Real Estate Construction loans increased due to an increase in general reserves required as a result of an increase in loan balances and an increase in loss rates on classified loans, represented by an increase in the provision. The allowance for Farm Real Estate loans increased due to an increase in general reserves required as a result of an increase in loan balances. The result was represented as an increase in the provision. Management determined that the unallocated amount was appropriate and within the relevant range for the allowance that was reflective of the risk in the portfolio at September 30, 2020.

Page 18

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following tables present, by portfolio segment, the allocation of the allowance for loan losses and related loan balances as of September 30, 2021 and December 31, 2020.

September 30, 2021 |  | Loans acquired with credit deterioration |  |  | Loans individually evaluated for impairment |  |  | Loans collectively evaluated for impairment |  |  | Total |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Agriculture |  | $ | — |  |  | $ | — |  |  | $ | 2,512 |  |  | $ | 2,512 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | 55 |  |  |  | 4,361 |  |  |  | 4,416 |
Non-Owner Occupied |  |  | — |  |  |  | — |  |  |  | 13,170 |  |  |  | 13,170 |
Residential Real Estate |  |  | — |  |  |  | 18 |  |  |  | 2,578 |  |  |  | 2,596 |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | 2,459 |  |  |  | 2,459 |
Farm Real Estate |  |  | — |  |  |  | — |  |  |  | 308 |  |  |  | 308 |
Consumer and Other |  |  | — |  |  |  | — |  |  |  | 212 |  |  |  | 212 |
Unallocated |  |  | — |  |  |  | — |  |  |  | 895 |  |  |  | 895 |
Total |  | $ | — |  |  | $ | 73 |  |  | $ | 26,495 |  |  | $ | 26,568 |
Outstanding loan balances: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Agriculture |  | $ | — |  |  | $ | — |  |  | $ | 276,741 |  |  | $ | 276,741 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | 205 |  |  |  | 292,520 |  |  |  | 292,725 |
Non-Owner Occupied |  |  | — |  |  |  | — |  |  |  | 788,898 |  |  |  | 788,898 |
Residential Real Estate |  |  | 296 |  |  |  | 545 |  |  |  | 423,712 |  |  |  | 424,553 |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | 179,491 |  |  |  | 179,491 |
Farm Real Estate |  |  | — |  |  |  | 522 |  |  |  | 29,625 |  |  |  | 30,147 |
Consumer and Other |  |  | — |  |  |  | — |  |  |  | 12,259 |  |  |  | 12,259 |
Total |  | $ | 296 |  |  | $ | 1,272 |  |  | $ | 2,003,246 |  |  | $ | 2,004,814 |

December 31, 2020 |  | Loans acquired with credit deterioration |  |  | Loans individually evaluated for impairment |  |  | Loans collectively evaluated for impairment |  |  | Total |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Agriculture |  | $ | — |  |  | $ | 73 |  |  | $ | 2,737 |  |  | $ | 2,810 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | 5 |  |  |  | 4,052 |  |  |  | 4,057 |
Non-Owner Occupied |  |  | — |  |  |  | — |  |  |  | 12,451 |  |  |  | 12,451 |
Residential Real Estate |  |  | — |  |  |  | 29 |  |  |  | 2,455 |  |  |  | 2,484 |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | 2,439 |  |  |  | 2,439 |
Farm Real Estate |  |  | — |  |  |  | — |  |  |  | 338 |  |  |  | 338 |
Consumer and Other |  |  | — |  |  |  | — |  |  |  | 209 |  |  |  | 209 |
Unallocated |  |  | — |  |  |  | — |  |  |  | 240 |  |  |  | 240 |
Total |  | $ | — |  |  | $ | 107 |  |  | $ | 24,921 |  |  | $ | 25,028 |
Outstanding loan balances: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Agriculture |  | $ | — |  |  | $ | 74 |  |  | $ | 409,802 |  |  | $ | 409,876 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | 980 |  |  |  | 277,433 |  |  |  | 278,413 |
Non-Owner Occupied |  |  | — |  |  |  | 48 |  |  |  | 705,024 |  |  |  | 705,072 |
Residential Real Estate |  |  | 388 |  |  |  | 946 |  |  |  | 441,254 |  |  |  | 442,588 |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | 175,609 |  |  |  | 175,609 |
Farm Real Estate |  |  | — |  |  |  | 618 |  |  |  | 32,484 |  |  |  | 33,102 |
Consumer and Other |  |  | — |  |  |  | — |  |  |  | 12,842 |  |  |  | 12,842 |
Total |  | $ | 388 |  |  | $ | 2,666 |  |  | $ | 2,054,448 |  |  | $ | 2,057,502 |

Page 19

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following tables present credit exposures by internally assigned risk grades as of September 30, 2021 and December 31, 2020. The risk rating analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans.

The Company’s internally assigned risk grades are as follows:

| • | Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

| • | Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.

| • | Substandard – loans that have a well-defined weakness based on objective evidence and are characterized by the distinct possibility that Civista will sustain some loss if the deficiencies are not corrected.

| • | Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

| • | Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

Generally, Residential Real Estate, Real Estate Construction and Consumer and Other loans are not risk-graded, except when collateral is used for a business purpose. Only those loans that have been risk rated are included below.

September 30, 2021 |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Ending Balance |
Commercial & Agriculture |  | $ | 273,617 |  |  | $ | 1,700 |  |  | $ | 1,424 |  |  | $ | — |  |  | $ | 276,741 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 279,409 |  |  |  | 5,120 |  |  |  | 8,196 |  |  |  | — |  |  |  | 292,725 |
Non-Owner Occupied |  |  | 706,117 |  |  |  | 45,334 |  |  |  | 37,447 |  |  |  | — |  |  |  | 788,898 |
Residential Real Estate |  |  | 75,337 |  |  |  | 266 |  |  |  | 4,387 |  |  |  | — |  |  |  | 79,990 |
Real Estate Construction |  |  | 162,772 |  |  |  | 268 |  |  |  | 457 |  |  |  | — |  |  |  | 163,497 |
Farm Real Estate |  |  | 28,711 |  |  |  | 206 |  |  |  | 1,230 |  |  |  | — |  |  |  | 30,147 |
Consumer and Other |  |  | 913 |  |  |  | — |  |  |  | 21 |  |  |  | — |  |  |  | 934 |
Total |  | $ | 1,526,876 |  |  | $ | 52,894 |  |  | $ | 53,162 |  |  | $ | — |  |  | $ | 1,632,932 |

December 31, 2020 |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Ending Balance |
Commercial & Agriculture |  | $ | 401,636 |  |  | $ | 4,472 |  |  | $ | 3,768 |  |  | $ | — |  |  | $ | 409,876 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 248,316 |  |  |  | 19,429 |  |  |  | 10,668 |  |  |  | — |  |  |  | 278,413 |
Non-Owner Occupied |  |  | 604,909 |  |  |  | 58,270 |  |  |  | 41,893 |  |  |  | — |  |  |  | 705,072 |
Residential Real Estate |  |  | 81,409 |  |  |  | 668 |  |  |  | 5,524 |  |  |  | — |  |  |  | 87,601 |
Real Estate Construction |  |  | 158,207 |  |  |  | 962 |  |  |  | 492 |  |  |  | — |  |  |  | 159,661 |
Farm Real Estate |  |  | 30,486 |  |  |  | 216 |  |  |  | 2,400 |  |  |  | — |  |  |  | 33,102 |
Consumer and Other |  |  | 833 |  |  |  | — |  |  |  | 33 |  |  |  | — |  |  |  | 866 |
Total |  | $ | 1,525,796 |  |  | $ | 84,017 |  |  | $ | 64,778 |  |  | $ | — |  |  | $ | 1,674,591 |

Page 20

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following tables present performing and nonperforming loans based solely on payment activity for the periods ended September 30, 2021 and December 31, 2020 that have not been assigned an internal risk grade. The types of loans presented here are not assigned a risk grade unless there is evidence of a problem. Payment activity is reviewed by management on a monthly basis to evaluate performance. Loans are considered to be nonperforming when they become 90 days past due and if management determines that we may not collect all of our principal and interest. Nonperforming loans also include certain loans that have been modified in Troubled Debt Restructurings (TDRs) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions due to economic status. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

September 30, 2021 |  | Residential Real Estate |  |  | Real Estate Construction |  |  | Consumer and Other |  |  | Total |
Performing |  | $ | 344,563 |  |  | $ | 15,994 |  |  | $ | 11,325 |  |  | $ | 371,882 |
Nonperforming |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 344,563 |  |  | $ | 15,994 |  |  | $ | 11,325 |  |  | $ | 371,882 |

December 31, 2020 |  | Residential Real Estate |  |  | Real Estate Construction |  |  | Consumer and Other |  |  | Total |
Performing |  | $ | 354,987 |  |  | $ | 15,948 |  |  | $ | 11,976 |  |  | $ | 382,911 |
Nonperforming |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 354,987 |  |  | $ | 15,948 |  |  | $ | 11,976 |  |  | $ | 382,911 |

The following tables include an aging analysis of the recorded investment of past due loans outstanding as of September 30, 2021 and December 31, 2020.

September 30, 2021 |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90 Days or Greater |  |  | Total Past Due |  |  | Current |  |  | Purchased Credit- Impaired Loans |  |  | Total Loans |  |  | Past Due 90 Days and Accruing |
Commercial & Agriculture |  | $ | 400 |  |  | $ | — |  |  | $ | — |  |  | $ | 400 |  |  | $ | 276,341 |  |  | $ | — |  |  | $ | 276,741 |  |  | $ | — |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | 10 |  |  |  | 575 |  |  |  | 585 |  |  |  | 292,140 |  |  |  | — |  |  |  | 292,725 |  |  |  | 430 |
Non-Owner Occupied |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 4 |  |  |  | 788,894 |  |  |  | — |  |  |  | 788,898 |  |  |  | — |
Residential Real Estate |  |  | 147 |  |  |  | 248 |  |  |  | 766 |  |  |  | 1,161 |  |  |  | 423,096 |  |  |  | 296 |  |  |  | 424,553 |  |  |  | — |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 179,491 |  |  |  | — |  |  |  | 179,491 |  |  |  | — |
Farm Real Estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 30,147 |  |  |  | — |  |  |  | 30,147 |  |  |  | — |
Consumer and Other |  |  | 87 |  |  |  | 4 |  |  |  | 9 |  |  |  | 100 |  |  |  | 12,159 |  |  |  | — |  |  |  | 12,259 |  |  |  | — |
Total |  | $ | 634 |  |  | $ | 262 |  |  | $ | 1,354 |  |  | $ | 2,250 |  |  | $ | 2,002,268 |  |  | $ | 296 |  |  | $ | 2,004,814 |  |  | $ | 430 |

December 31, 2020 |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90 Days or Greater |  |  | Total Past Due |  |  | Current |  |  | Purchased Credit- Impaired Loans |  |  | Total Loans |  |  | Past Due 90 Days and Accruing |
Commercial & Agriculture |  | $ | 117 |  |  | $ | 25 |  |  | $ | 50 |  |  | $ | 192 |  |  | $ | 409,684 |  |  | $ | — |  |  | $ | 409,876 |  |  | $ | — |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | 4 |  |  |  | 102 |  |  |  | 106 |  |  |  | 278,307 |  |  |  | — |  |  |  | 278,413 |  |  |  | — |
Non-Owner Occupied |  |  | — |  |  |  | — |  |  |  | 6 |  |  |  | 6 |  |  |  | 705,066 |  |  |  | — |  |  |  | 705,072 |  |  |  | — |
Residential Real Estate |  |  | 1,059 |  |  |  | 867 |  |  |  | 1,314 |  |  |  | 3,240 |  |  |  | 438,960 |  |  |  | 388 |  |  |  | 442,588 |  |  |  | — |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 175,609 |  |  |  | — |  |  |  | 175,609 |  |  |  | — |
Farm Real Estate |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 4 |  |  |  | 33,098 |  |  |  | — |  |  |  | 33,102 |  |  |  | — |
Consumer and Other |  |  | 59 |  |  |  | 1 |  |  |  | 16 |  |  |  | 76 |  |  |  | 12,766 |  |  |  | — |  |  |  | 12,842 |  |  |  | — |
Total |  | $ | 1,235 |  |  | $ | 897 |  |  | $ | 1,492 |  |  | $ | 3,624 |  |  | $ | 2,053,490 |  |  | $ | 388 |  |  | $ | 2,057,502 |  |  | $ | — |

Page 21

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following table presents loans on nonaccrual status, excluding purchased credit-impaired (PCI) loans, as of September 30, 2021 and December 31, 2020.

|  | September 30, 2021 |  |  | December 31, 2020 |
Commercial & Agriculture |  | $ | — |  |  | $ | 139 |
Commercial Real Estate: |  |  |  |  |  |  |  |
Owner Occupied |  |  | 359 |  |  |  | 964 |
Non-Owner Occupied |  |  | 4 |  |  |  | 6 |
Residential Real Estate |  |  | 3,129 |  |  |  | 3,893 |
Real Estate Construction |  |  | 6 |  |  |  | 7 |
Farm Real Estate |  |  | — |  |  |  | 85 |
Consumer and Other |  |  | 21 |  |  |  | 31 |
Total |  | $ | 3,519 |  |  | $ | 5,125 |

Nonaccrual Loans: Loans are considered for nonaccrual status upon reaching 90 days delinquency, unless the loan is well secured and in the process of collection, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is deducted from interest income. Payments received on nonaccrual loans are applied to the unpaid principal balance. A loan may be returned to accruing status only if one of three conditions are met: the loan is well-secured and none of the principal and interest has been past due for a minimum of 90 days; the loan is a TDR and has made a minimum of six months payments; or the principal and interest payments are reasonably assured and a sustained period of performance has occurred, generally six months.

Modifications: A modification of a loan constitutes a TDR when the Company for economic or legal reasons related to a borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Exceptions to this policy exist for loan modifications granted as part of the Company’s COVID-19 deferral program, which allows the Company to not classify a modification so long as certain criteria as established in the CARES Act are met at the time of the modification. The Company offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Commercial Real Estate loans modified in a TDR often involve reducing the interest rate lower than the current market rate for new debt with similar risk. Residential Real Estate loans modified in a TDR primarily involve interest rate reductions where monthly payments are lowered to accommodate the borrowers’ financial needs.

Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan. An allowance for impaired loans that have been modified in a TDR are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates. As of September 30, 2021, TDRs accounted for $73 of the allowance for loan losses. As of December 31, 2020, TDRs accounted for $35 of the allowance for loan losses.

There were no loans modified as TDRs during the three-and nine-month periods ended September 30, 2021 or 2020.

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans.

During the three- and nine-month periods ended September 30, 2021 and September 30, 2020, there were no defaults on loans that were modified and considered TDRs during the respective previous twelve months.

Impaired Loans: Larger (greater than $350) Commercial & Agricultural and Commercial Real Estate loan relationships, all TDRs and Residential Real Estate and Consumer loans that are part of a larger relationship are tested for impairment on a quarterly basis. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

Page 22

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Loan Modifications/Troubled Debt Restructurings

In the second quarter of 2020, in the initial days of the pandemic, Civista booked 90-day payment modifications on 813 loans with an aggregate principal balance outstanding of $431.3 million. Additional 90-day modifications were extended on 100 loans with an aggregate principal balance outstanding of $124.4 million. Both deferral programs primarily consisted of the deferral of principal and/or interest payments. All such modified loans were performing at December 31, 2019 and complied with the provisions of the CARES Act to not be considered a TDR.

As of September 30, 2021, Civista had 18 loans with an aggregate principal balance outstanding of $18,787 that remained on CARES Act modifications. Details with respect to loan modifications that remain on deferred status are as follows:

Type of Loan |  | Number of Loans |  |  | Balance |  |  | Percent of Loans Outstanding |
|  |  |  |  |  | (In thousands) |  |  |  |  |
Commercial & Agriculture |  |  | 6 |  |  | $ | 1,571 |  |  |  | 0.08 | %
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 2 |  |  |  | 2,591 |  |  |  | 0.13 | %
Non-Owner Occupied |  |  | 9 |  |  |  | 14,174 |  |  |  | 0.71 | %
Real Estate Construction |  |  | 1 |  |  |  | 451 |  |  |  | 0.02 | %
Total |  |  | 18 |  |  | $ | 18,787 |  |  |  | 0.94 | %

The following table includes the recorded investment and unpaid principal balances for impaired loans, excluding PCI loans, with the associated allowance amount, if applicable, as of September 30, 2021 and December 31, 2020.

|  | September 30, 2021 |  |  | December 31, 2020 |
|  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  | $ | 12 |  |  | $ | 12 |  |  |  |  |  |  | $ | 757 |  |  | $ | 757 |  |  |  |  |
Non-Owner Occupied |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 48 |  |  |  | 48 |  |  |  |  |
Residential Real Estate |  |  | 514 |  |  |  | 539 |  |  |  |  |  |  |  | 915 |  |  |  | 940 |  |  |  |  |
Farm Real Estate |  |  | 522 |  |  |  | 522 |  |  |  |  |  |  |  | 618 |  |  |  | 618 |  |  |  |  |
Total |  |  | 1,048 |  |  |  | 1,073 |  |  |  |  |  |  |  | 2,338 |  |  |  | 2,363 |  |  |  |  |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Agriculture |  |  | — |  |  |  | — |  |  | $ | — |  |  |  | 74 |  |  |  | 74 |  |  | $ | 73 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 193 |  |  |  | 193 |  |  |  | 55 |  |  |  | 223 |  |  |  | 223 |  |  |  | 5 |
Residential Real Estate |  |  | 31 |  |  |  | 34 |  |  |  | 18 |  |  |  | 31 |  |  |  | 35 |  |  |  | 29 |
Total |  |  | 224 |  |  |  | 227 |  |  |  | 73 |  |  |  | 328 |  |  |  | 332 |  |  |  | 107 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Agriculture |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 74 |  |  |  | 74 |  |  |  | 73 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 205 |  |  |  | 205 |  |  |  | 55 |  |  |  | 980 |  |  |  | 980 |  |  |  | 5 |
Non-Owner Occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 48 |  |  |  | 48 |  |  |  | — |
Residential Real Estate |  |  | 545 |  |  |  | 573 |  |  |  | 18 |  |  |  | 946 |  |  |  | 975 |  |  |  | 29 |
Farm Real Estate |  |  | 522 |  |  |  | 522 |  |  |  | — |  |  |  | 618 |  |  |  | 618 |  |  |  | — |
Total |  | $ | 1,272 |  |  | $ | 1,300 |  |  | $ | 73 |  |  | $ | 2,666 |  |  | $ | 2,695 |  |  | $ | 107 |

Page 23

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following table includes the average recorded investment and interest income recognized for impaired financing receivables for the three- and nine-month periods ended September 30, 2021 and 2020.

|  | September 30, 2021 |  |  | September 30, 2020 |
For the three months ended |  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
Commercial Real Estate—Owner Occupied |  | $ | 252 |  |  | $ | 4 |  |  | $ | 391 |  |  | $ | 7 |
Commercial Real Estate—Non-Owner Occupied |  |  | 15 |  |  |  | — |  |  |  | 212 |  |  |  | 5 |
Residential Real Estate |  |  | 551 |  |  |  | 8 |  |  |  | 1,175 |  |  |  | 10 |
Farm Real Estate |  |  | 557 |  |  |  | 6 |  |  |  | 644 |  |  |  | 7 |
Total |  | $ | 1,375 |  |  | $ | 18 |  |  | $ | 2,422 |  |  | $ | 29 |

|  | September 30, 2021 |  |  | September 30, 2020 |
For the nine months ended |  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
Commercial & Agriculture |  | $ | 19 |  |  | $ | — |  |  | $ | 92 |  |  | $ | 4 |
Commercial Real Estate—Owner Occupied |  |  | 449 |  |  |  | 15 |  |  |  | 406 |  |  |  | 21 |
Commercial Real Estate—Non-Owner Occupied |  |  | 29 |  |  |  | 1 |  |  |  | 292 |  |  |  | 15 |
Residential Real Estate |  |  | 654 |  |  |  | 24 |  |  |  | 1,464 |  |  |  | 34 |
Farm Real Estate |  |  | 584 |  |  |  | 18 |  |  |  | 655 |  |  |  | 20 |
Total |  | $ | 1,735 |  |  | $ | 58 |  |  | $ | 2,909 |  |  | $ | 94 |

Changes in the accretable yield for PCI loans were as follows, since acquisition:

|  | For the Three-Month Period Ended September 30, 2021 |  |  | For the Three-Month Period Ended September 30, 2020 |
|  | (In Thousands) |  |  | (In Thousands) |
Balance at beginning of period |  | $ | 224 |  |  | $ | 205 |
Acquisition of PCI loans |  |  | — |  |  |  | — |
Accretion |  |  | (6 | ) |  |  | (101 | )
Transfer from non-accretable to accretable |  |  | — |  |  |  | 74 |
Balance at end of period |  | $ | 218 |  |  | $ | 178 |

|  | For the Nine-Month Period Ended September 30, 2021 |  |  | For the Nine-Month Period Ended September 30, 2020 |
|  | (In Thousands) |  |  | (In Thousands) |
Balance at beginning of period |  | $ | 225 |  |  | $ | 255 |
Acquisition of PCI loans |  |  | — |  |  |  | — |
Accretion |  |  | (62 | ) |  |  | (270 | )
Transfer from non-accretable to accretable |  |  | 55 |  |  |  | 193 |
Balance at end of period |  | $ | 218 |  |  | $ | 178 |

Page 24

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30:

|  | At September 30, 2021 |  |  | At December 31, 2020 |
|  | Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30) |  |  | Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30) |
|  | (In Thousands) |
Outstanding balance |  | $ | 525 |  |  | $ | 687 |
Carrying amount |  |  | 296 |  |  |  | 388 |

There was no allowance for loan losses recorded for acquired loans with or without specific evidence of deterioration in credit quality as of September 30, 2021 or December 31, 2020.

Foreclosed Assets Held For Sale

Foreclosed assets acquired in settlement of loans are carried at fair value less estimated costs to sell and are included in other assets on the Consolidated Balance Sheet. As of September 30, 2021, there were $26 of foreclosed assets included in Other assets. As of December 31, 2020, there were $31 of foreclosed assets included in Other assets. As of September 30, 2021 and December 31, 2020, the Company had initiated formal foreclosure procedures on $296 and $741, respectively, of consumer residential mortgages.

(6) Accumulated Other Comprehensive Income

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax for the three month periods ended September 30, 2021 and September 30, 2020.

|  | For the Three-Month Period Ended |  |  | For the Three-Month Period Ended |
|  | September 30, 2021(a) |  |  | September 30, 2020(a) |
|  | Unrealized Gains and (Losses) on Available-for- Sale Securities (a) |  |  | Defined Benefit Pension Items (a) |  |  | Total (a) |  |  | Unrealized Gains and (Losses) on Available-for- Sale Securities (a) |  |  | Defined Benefit Pension Items (a) |  |  | Total (a) |
Beginning balance |  | $ | 18,392 |  |  | $ | (6,699 | ) |  | $ | 11,693 |  |  | $ | 19,549 |  |  | $ | (5,895 | ) |  | $ | 13,654 |
Other comprehensive income (loss) before reclassifications |  |  | (2,455 | ) |  |  | — |  |  |  | (2,455 | ) |  |  | 749 |  |  |  | — |  |  |  | 749 |
Amounts reclassified from accumulated other comprehensive income (loss) |  |  | (4 | ) |  |  | 64 |  |  |  | 60 |  |  |  | (73 | ) |  |  | 57 |  |  |  | (16 | )
Net current-period other comprehensive income (loss) |  |  | (2,459 | ) |  |  | 64 |  |  |  | (2,395 | ) |  |  | 676 |  |  |  | 57 |  |  |  | 733 |
Ending balance |  | $ | 15,933 |  |  | $ | (6,635 | ) |  | $ | 9,298 |  |  | $ | 20,225 |  |  | $ | (5,838 | ) |  | $ | 14,387 |

(a) | Amounts in parentheses indicate debits on the Consolidated Balance Sheets.

Page 25

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three month periods ended September 30, 2021 and September 30, 2020.

|  | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a) |  |  |
Details about Accumulated Other Comprehensive Income (Loss) Components |  | For the Three months ended September 30, 2021 |  |  | For the Three months ended September 30, 2020 |  |  | Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains on available-for-sale securities |  | $ | 4 |  |  | $ | 92 |  |  | Net gain on sale of securities
Tax effect |  |  | — |  |  |  | (19 | ) |  | Income tax expense
|  |  | 4 |  |  |  | 73 |  |  |
Amortization of defined benefit pension items |  |  |  |  |  |  |  |  |  |
Actuarial gains/(losses) (b) |  |  | (81 | ) |  |  | (72 | ) |  | Other operating expenses
Tax effect |  |  | 17 |  |  |  | 15 |  |  | Income tax expense
|  |  | (64 | ) |  |  | (57 | ) |  |
Total reclassifications for the period |  | $ | (60 | ) |  | $ | 16 |  |  |

(a) | Amounts in parentheses indicate expenses/losses and other amounts indicate income/benefit.

(b) | These accumulated other comprehensive income components are included in the computation of net periodic pension cost.

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax for the nine month periods ended September 30, 2021 and September 30, 2020.

|  | For the Nine-Month Period Ended |  |  | For the Nine-Month Period Ended |
|  | September 30, 2021(a) |  |  | September 30, 2020(a) |
|  | Unrealized Gains and (Losses) on Available-for- Sale Securities (a) |  |  | Defined Benefit Pension Items (a) |  |  | Total (a) |  |  | Unrealized Gains and (Losses) on Available-for- Sale Securities (a) |  |  | Defined Benefit Pension Items (a) |  |  | Total (a) |
Beginning balance |  | $ | 21,447 |  |  | $ | (6,828 | ) |  | $ | 14,619 |  |  | $ | 12,883 |  |  | $ | (6,009 | ) |  | $ | 6,874 |
Other comprehensive income (loss) before reclassifications |  |  | (5,512 | ) |  |  | — |  |  |  | (5,512 | ) |  |  | 7,415 |  |  |  | — |  |  |  | 7,415 |
Amounts reclassified from accumulated other comprehensive income (loss) |  |  | (2 | ) |  |  | 193 |  |  |  | 191 |  |  |  | (73 | ) |  |  | 171 |  |  |  | 98 |
Net current-period other comprehensive income (loss) |  |  | (5,514 | ) |  |  | 193 |  |  |  | (5,321 | ) |  |  | 7,342 |  |  |  | 171 |  |  |  | 7,513 |
Ending balance |  | $ | 15,933 |  |  | $ | (6,635 | ) |  | $ | 9,298 |  |  | $ | 20,225 |  |  | $ | (5,838 | ) |  | $ | 14,387 |

(a)Amounts in parentheses indicate debits on the Consolidated Balance Sheets

Page 26

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the nine month periods ended September 30, 2021 and September 30, 2020.

|  | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a) |  |  |
Details about Accumulated Other Comprehensive Income (Loss) Components |  | For the Nine months ended September 30, 2021 |  |  | For the Nine months ended September 30, 2020 |  |  | Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains on available-for-sale securities |  | $ | 2 |  |  | $ | 92 |  |  | Net gain on sale of securities
Tax effect |  |  | — |  |  |  | (19 | ) |  | Income tax expense
|  |  | 2 |  |  |  | 73 |  |  |
Amortization of defined benefit pension items |  |  |  |  |  |  |  |  |  |
Actuarial gains/(losses) (b) |  |  | (244 | ) |  |  | (217 | ) |  | Other operating expenses
Tax effect |  |  | 51 |  |  |  | 46 |  |  | Income tax expense
|  |  | (193 | ) |  |  | (171 | ) |  |
Total reclassifications for the period |  | $ | (191 | ) |  | $ | (98 | ) |  |

(a) | Amounts in parentheses indicate expenses/losses and other amounts indicate income/benefit.

(b) | These accumulated other comprehensive income components are included in the computation of net periodic pension cost.

(7) Goodwill and Intangible Assets

There was no change in the carrying amount of goodwill of $76,851 for the periods ended September 30, 2021 and December 31, 2020.

Acquired intangible assets, other than goodwill, as of September 30, 2021 and December 31, 2020 were as follows:

|  | 2021 |  |  | 2020 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |  |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |
Amortized intangible assets(1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Core deposit intangibles |  | $ | 8,527 |  |  | $ | 3,365 |  |  | $ | 5,162 |  |  | $ | 8,527 |  |  | $ | 2,698 |  |  | $ | 5,829 |
Total amortized intangible assets |  | $ | 8,527 |  |  | $ | 3,365 |  |  | $ | 5,162 |  |  | $ | 8,527 |  |  | $ | 2,698 |  |  | $ | 5,829 |

(1) | Excludes fully amortized intangible assets. Certain fully amortized assets were removed from the 2020 presentation.

Aggregate core deposit intangible amortization expense was $223 and $227 for the three months ended September 30, 2021 and 2020, respectively, and $668 and $686 for the nine-months ended September 30, 2021 and 2020, respectively.

Page 27

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Activity for mortgage servicing rights (MSRs) and the related valuation allowance for the three- and nine-month periods ended September 30, 2021 and September 30, 2020 were as follows:

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Loan Servicing Rights: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at Beginning of Period |  | $ | 2,745 |  |  | $ | 1,717 |  |  | $ | 2,246 |  |  | $ | 1,562 |
Additions |  |  | 164 |  |  |  | 381 |  |  |  | 562 |  |  |  | 924 |
Disposals |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Amortized to expense |  |  | (144 | ) |  |  | (135 | ) |  |  | (436 | ) |  |  | (361 | )
Other charges |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Change in valuation allowance |  |  | (189 | ) |  |  | 25 |  |  |  | 204 |  |  |  | (137 | )
Balance at End of Period |  | $ | 2,576 |  |  | $ | 1,988 |  |  | $ | 2,576 |  |  | $ | 1,988 |
Valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at Beginning of Period |  | $ | (189 | ) |  | $ | 264 |  |  | $ | 204 |  |  | $ | 102 |
Additions expensed |  |  | 189 |  |  |  | — |  |  |  | 261 |  |  |  | 162 |
Reductions credited to operations |  |  | — |  |  |  | (25 | ) |  |  | (465 | ) |  |  | (25 | )
Direct write-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Balance at End of Period |  | $ | — |  |  | $ | 239 |  |  | $ | — |  |  | $ | 239 |

Estimated amortization expense for each of the next five years and thereafter is as follows:

|  | MSRs |  |  | Core deposit intangibles |  |  | Total |
2021 |  | $ | 33 |  |  | $ | 223 |  |  | $ | 256 |
2022 |  |  | 134 |  |  |  | 868 |  |  |  | 1,002 |
2023 |  |  | 133 |  |  |  | 841 |  |  |  | 974 |
2024 |  |  | 133 |  |  |  | 804 |  |  |  | 937 |
2025 |  |  | 132 |  |  |  | 708 |  |  |  | 840 |
Thereafter |  |  | 2,011 |  |  |  | 1,718 |  |  |  | 3,729 |
|  | $ | 2,576 |  |  | $ | 5,162 |  |  | $ | 7,738 |

(8) Short-Term and Other Borrowings

Short-term and other borrowings, which consist of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings, are summarized as follows:

|  | At September 30, 2021 |  |  | At December 31, 2020 |
|  | Federal Funds Purchased |  |  | Short-term Borrowings |  |  | Federal Funds Purchased |  |  | Short-term Borrowings |
Outstanding balance |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest rate on balance |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2021 |  |  | 2020 |  |  | 2020 |  |  | 2021 |  |  | 2021 |  |  | 2020 |  |  | 2020 |
|  | Federal Funds Purchased |  |  | Short-term Borrowings |  |  | Federal Funds Purchased |  |  | Short-term Borrowings |  |  | Federal Funds Purchased |  |  | Short-term Borrowings |  |  | Federal Funds Purchased |  |  | Short-term Borrowings |
Maximum indebtedness |  | $ | — |  |  | $ | — |  |  | $ | 35,000 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 50,000 |  |  | $ | 102,700 |
Average balance |  |  | — |  |  |  | — |  |  |  | 543 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 385 |  |  |  | 10,888 |
Average rate paid |  |  | — |  |  |  | — |  |  |  | (1.47 | )% |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 0.35 | % |  |  | 1.64 | %

Page 28

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Average balance during the period represents daily averages. Average rate paid represents interest expense divided by the related average balances.

These borrowing transactions can range from overnight to six months in maturity. The average maturity was one day at September 30, 2021.

Securities sold under agreements to repurchase are used to facilitate the needs of our customers as well as to facilitate our short-term funding needs. Securities sold under repurchase agreements are carried at the amount of cash received in association with the agreement. We continuously monitor the collateral levels and may be required, from time to time, to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents.

The following table presents detail regarding the securities pledged as collateral under repurchase agreements as of September 30, 2021 and December 31, 2020. All of the repurchase agreements are overnight agreements.

|  | September 30, 2021 |  |  | December 31, 2020 |
Securities pledged for repurchase agreements: |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 7,656 |  |  | $ | 899 |
Obligations of U.S. government agencies |  |  | 15,675 |  |  |  | 28,015 |
Total securities pledged |  | $ | 23,331 |  |  | $ | 28,914 |
Gross amount of recognized liabilities for repurchase agreements |  | $ | 23,331 |  |  | $ | 28,914 |
Amounts related to agreements not included in offsetting disclosures above |  | $ | — |  |  | $ | — |

(9) Earnings per Common Share

The Company has granted restricted stock awards with non-forfeitable rights, which are considered participating securities. Accordingly, earnings per share is computed using the two-class method as required by ASC 260-10-45. Basic earnings per common share are computed as net income available to common shareholders divided by the weighted average number of common shares outstanding during the period, which excludes the participating securities. Diluted earnings per common share include the dilutive effect, if any, of additional potential common shares issuable under the Company’s equity incentive plan, computed using the treasury stock method. The Company had no dilutive securities for the three- and nine-months ended September 30, 2021 and 2020.

|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Basic |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 9,642 |  |  | $ | 7,682 |  |  | $ | 29,564 |  |  | $ | 22,019 |
Less allocation of earnings and dividends to participating securities |  |  | 46 |  |  |  | 26 |  |  |  | 122 |  |  |  | 64 |
Net income available to common shareholders—basic |  | $ | 9,596 |  |  | $ | 7,656 |  |  | $ | 29,442 |  |  | $ | 21,955 |
Weighted average common shares outstanding |  |  | 15,168,233 |  |  |  | 16,045,544 |  |  |  | 15,543,488 |  |  |  | 16,201,898 |
Less average participating securities |  |  | 72,071 |  |  |  | 54,274 |  |  |  | 64,064 |  |  |  | 47,246 |
Weighted average number of shares outstanding used in the calculation of basic earnings per common share |  |  | 15,096,162 |  |  |  | 15,991,270 |  |  |  | 15,479,424 |  |  |  | 16,154,652 |
Earnings per common share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 0.64 |  |  | $ | 0.48 |  |  | $ | 1.90 |  |  | $ | 1.36 |
Diluted |  |  | 0.64 |  |  |  | 0.48 |  |  |  | 1.90 |  |  |  | 1.36 |

The presentation for earnings per common share for prior periods was revised to present under the two-class method. Earnings per common share for prior periods was not impacted.

Page 29

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(10) Commitments, Contingencies and Off-Balance Sheet Risk

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customers’ financing needs. These are agreements to provide credit or to support the credit of others, as long as the conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk of credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of commitment. The contractual amounts of financial instruments with off-balance-sheet risk were as follows at September 30, 2021 and December 31, 2020:

|  | Contract Amount |
|  | September 30, 2021 |  |  | December 31, 2020 |
|  | Fixed Rate |  |  | Variable Rate |  |  | Fixed Rate |  |  | Variable Rate |
Commitment to extend credit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Lines of credit and construction loans |  | $ | 31,205 |  |  | $ | 465,902 |  |  | $ | 38,474 |  |  | $ | 427,864 |
Overdraft protection |  |  | 7 |  |  |  | 42,925 |  |  |  | 6 |  |  |  | 41,707 |
Letters of credit |  |  | 615 |  |  |  | 885 |  |  |  | 615 |  |  |  | 986 |
|  | $ | 31,827 |  |  | $ | 509,712 |  |  | $ | 39,095 |  |  | $ | 470,557 |

Commitments to make loans are generally made for a period of one year or less. Fixed rate loan commitments included in the table above had interest rates ranging from 3.50% to 8.00% at September 30, 2021 and from 3.50% to 8.00% at December 31, 2020. Maturities extend up to 30 years.

Civista is required to maintain certain reserve balances on hand in accordance with the Federal Reserve Board requirements. The reserve balance maintained in accordance with such requirements was $0 on September 30, 2021 and December 31, 2020.

(11) Pension Information

The Company sponsors a pension plan which is a noncontributory defined benefit retirement plan. Annual payments, subject to the maximum amount deductible for federal income tax purposes, are made to a pension trust fund. In 2006, the Company amended the pension plan to provide that no employee could be added as a participant to the pension plan after December 31, 2006. In 2014, the Company amended the pension plan again to provide that no additional benefits would accrue beyond April 30, 2014.

Net periodic pension cost was as follows:

|  | Three months ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Service cost |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest cost |  |  | 95 |  |  |  | 121 |  |  |  | 285 |  |  |  | 363 |
Expected return on plan assets |  |  | (160 | ) |  |  | (187 | ) |  |  | (480 | ) |  |  | (561 | )
Other components |  |  | 81 |  |  |  | 72 |  |  |  | 244 |  |  |  | 217 |
Net periodic pension cost |  | $ | 16 |  |  | $ | 6 |  |  | $ | 49 |  |  | $ | 19 |

The Company does not expect to make any contribution to its pension plan in 2021. The Company made no contribution to its pension plan in 2020.

(12) Equity Incentive Plan

At the Company’s 2014 annual meeting, the shareholders adopted the Company’s 2014 Incentive Plan (“2014 Incentive Plan”). The 2014 Incentive Plan authorizes the Company to grant options, stock awards, stock units and other awards for up to 375,000 common shares of the Company. There were 151,892 shares available for future grants under this plan at September 30, 2021.

No options were granted under the 2014 Incentive Plan during the periods ended September 30, 2021 and 2020.

Page 30

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Each year, the Board of Directors has awarded restricted common shares to senior officers of the Company. The restricted shares vest ratably over a three-year or five-year period following the grant date. The product of the number of restricted shares granted and the grant date market price of the Company’s common shares determines the fair value of restricted shares awarded under the Company’s 2014 Incentive Plan. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period for the entire award.

On May 28, 2021, directors of the Company’s banking subsidiary, Civista, were paid a retainer in the form of non-restricted common shares of the Company. The aggregate of 8,792 common shares were issued to Civista directors as payment of their retainer for their service on the Civista Board of Directors covering the period up to the 2022 Annual Meeting. This issuance was expensed in its entirety when the shares were issued in the amount of $196.

The Company classifies share-based compensation for employees with “Compensation expense” in the Consolidated Statements of Operations.

The following is a summary of the Company’s outstanding restricted shares and changes therein for the three- and nine-month periods ended September 30, 2021:

|  | Three months ended |  |  | Nine Months Ended |
|  | September 30, 2021 |  |  | September 30, 2021 |
|  | Number of Restricted Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Number of Restricted Shares |  |  | Weighted Average Grant Date Fair Value |
Nonvested at beginning of period |  |  | 72,071 |  |  | $ | 20.13 |  |  |  | 54,274 |  |  | $ | 20.90 |
Granted |  |  | — |  |  |  | — |  |  |  | 39,139 |  |  |  | 19.17 |
Vested |  |  | — |  |  |  | — |  |  |  | (20,275 | ) |  |  | 20.35 |
Forfeited |  |  | — |  |  |  | — |  |  |  | (1,067 | ) |  |  | 19.56 |
Nonvested at end of period |  |  | 72,071 |  |  | $ | 20.13 |  |  |  | 72,071 |  |  | $ | 20.13 |

The following is a summary of the status of the Company’s outstanding restricted shares as of September 30, 2021:

At September 30, 2021 |
Date of Award |  | Shares |  |  | Remaining Expense |  |  | Remaining Vesting Period (Years) |
March 20, 2017 |  |  | 1,198 |  |  | $ | 6 |  |  |  | 0.25 |
April 10, 2018 |  |  | 3,114 |  |  |  | 41 |  |  |  | 1.25 |
March 14, 2019 |  |  | 3,401 |  |  |  | 16 |  |  |  | 0.25 |
March 14, 2019 |  |  | 6,560 |  |  |  | 89 |  |  |  | 2.25 |
March 14, 2020 |  |  | 9,139 |  |  |  | 114 |  |  |  | 1.25 |
March 14, 2020 |  |  | 10,390 |  |  |  | 160 |  |  |  | 3.25 |
March 3, 2021 |  |  | 16,277 |  |  |  | 243 |  |  |  | 4.25 |
March 3, 2021 |  |  | 21,992 |  |  |  | 323 |  |  |  | 2.25 |
|  |  | 72,071 |  |  | $ | 992 |  |  |  | 2.55 |

The Company recorded $132 and $99, of share-based compensation expense during the three months ended September 30, 2021 and 2020, respectively. During the nine months ended September 30, 2021 and 2020, $392 and $322 of share-based compensation expense was recorded, respectively. The Company recorded $196 of director retainer fees for shares granted under the 2014 Incentive Plan during the nine months ended September 30, 2021. At September 30, 2021, the total compensation cost related to unvested awards not yet recognized is $922, which is expected to be recognized over the weighted average remaining life of the grants of 2.55 years.

Page 31

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(13) Fair Value Measurement

The Company uses a fair value hierarchy to measure fair value. This hierarchy describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices for identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; and Level 3: Significant unobservable inputs that reflect the Company’s own view about the assumptions that market participants would use in pricing an asset.

Debt securities: The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Equity securities: The Company’s equity securities are not actively traded in an open market. The fair value of these equity security available for sale not actively traded in an open market is determined by using market data inputs for similar securities that are observable (Level 2 inputs).

The fair value of the swap asset/liability: The fair value of the swap asset and liability is based on an external derivative model using data inputs based on similar transactions as of the valuation date and classified Level 2. The changes in fair value of these assets/liabilities had no impact on net income or comprehensive income.

Mortgage servicing rights: Mortgage servicing rights do not trade in an active market with readily observable market data. As a result, the Company estimates the fair value of mortgage servicing rights by using a discounted cash flow model to calculate the present value of estimated future net servicing income. The Company stratifies its mortgage servicing portfolio on the basis of loan type. The assumptions used in the discounted cash flow model are those that the Company believes market participants would use in estimating future net servicing income. Significant assumptions in the valuation of mortgage servicing rights include estimated loan repayment rates, the discount rate, servicing costs, and the timing of cash flows, among other factors. Mortgage servicing rights are classified as Level 3 measurements due to the use of significant unobservable inputs, as well as significant management judgment and estimation.

Impaired loans: The Company has measured impairment on impaired loans based on the discounted cash flows of the loan or the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property which are also included in the net realizable value. If the fair value of the collateral dependent loan is less than the carrying amount of the loan, a specific reserve for the loan is made in the allowance for loan losses or a charge-off is taken to reduce the loan to the fair value of the collateral (less estimated selling costs) and the loan is included as a Level 3 measurement. If the fair value of the collateral exceeds the carrying amount of the loan, then the loan is not included in the table below as it is not currently being carried at its fair value.

Page 32

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Assets and liabilities measured at fair value are summarized in the table below.

|  | Fair Value Measurements at September 30, 2021 Using: |
Assets: |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
Assets measured at fair value on a recurring basis: |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ | — |  |  | $ | 53,277 |  |  | $ | — |
Obligations of states and political subdivisions |  |  | — |  |  |  | 256,715 |  |  |  | — |
Mortgage-backed securities in government sponsored entities |  |  | — |  |  |  | 188,157 |  |  |  | — |
Total securities available for sale |  |  | — |  |  |  | 498,149 |  |  |  | — |
Equity securities |  |  | — |  |  |  | 1,077 |  |  |  | — |
Swap asset |  |  | — |  |  |  | 12,858 |  |  |  | — |
Liabilities measured at fair value on a recurring basis: |  |  |  |  |  |  |  |  |  |  |  |
Swap liability |  | $ | — |  |  | $ | 12,858 |  |  | $ | — |
Assets measured at fair value on a nonrecurring basis: |  |  |  |  |  |  |  |  |  |  |  |
Mortgage Servicing Rights |  | $ | — |  |  | $ | — |  |  | $ | 2,576 |
Impaired loans |  |  | — |  |  |  | — |  |  |  | 11 |
Other real estate owned |  |  | — |  |  |  | — |  |  |  | 26 |

|  | Fair Value Measurements at December 31, 2020 Using: |
Assets: |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
Assets measured at fair value on a recurring basis: |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ | — |  |  | $ | 21,693 |  |  | $ | — |
Obligations of states and political subdivisions |  |  | — |  |  |  | 229,012 |  |  |  | — |
Mortgage-backed securities in government sponsored entities |  |  | — |  |  |  | 112,759 |  |  |  | — |
Total securities available for sale |  |  | — |  |  |  | 363,464 |  |  |  | — |
Equity securities |  |  | — |  |  |  | 886 |  |  |  | — |
Swap asset |  |  | — |  |  |  | 21,700 |  |  |  | — |
Liabilities measured at fair value on a recurring basis: |  |  |  |  |  |  |  |  |  |  |  |
Swap liability |  |  | — |  |  |  | 21,764 |  |  |  | — |
Assets measured at fair value on a nonrecurring basis: |  |  |  |  |  |  |  |  |  |  |  |
Mortgage Servicing Rights |  | $ | — |  |  | $ | — |  |  | $ | 2,246 |
Impaired loans |  |  | — |  |  |  | — |  |  |  | 1 |
Other real estate owned |  |  | — |  |  |  | — |  |  |  | 31 |

The following tables present quantitative information about the Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2021 and December 31, 2020.

|  | Quantitative Information about Level 3 Fair Value Measurements |
September 30, 2021 |  | Fair Value |  |  | Valuation Technique |  | Unobservable Input |  | Range |  |  | Weighted Average |
Impaired loans |  | $ | 11 |  |  | Appraisal of collateral |  | Appraisal adjustments |  | 10% |  |  | 10% |
|  |  |  |  |  |  |  | Holding period |  | 24 Months |  |  | 24 Months |
Other real estate owned |  | $ | 26 |  |  | Appraisal of collateral |  | Appraisal adjustments |  | 10% |  |  | 10% |
Mortgage Servicing Rights |  | $ | 2,576 |  |  | Discounted Cash Flow |  | Constant Prepayment Rate |  | 8.7% - 35% |  |  | 16% |
|  |  |  |  |  |  |  | Discount Rate |  | 12% |  |  | 12% |

Page 33

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

|  | Quantitative Information about Level 3 Fair Value Measurements |
December 31, 2020 |  | Fair Value |  |  | Valuation Technique |  | Unobservable Input |  | Range |  |  | Weighted Average |
Impaired loans |  | $ | 1 |  |  | Appraisal of collateral |  | Appraisal adjustments |  | 0% - 30% |  |  | 19% |
|  |  |  |  |  |  |  | Holding period |  | 23 months |  |  | 23 months |
Other real estate owned |  | $ | 31 |  |  | Appraisal of collateral |  | Appraisal adjustments |  | 10% |  |  | 10% |
Mortgage Servicing Rights |  | $ | 2,246 |  |  | Discounted Cash Flow |  | Constant Prepayment Rate |  | 12% - 50% |  |  | 22% |
|  |  |  |  |  |  |  | Discount Rate |  | 12% |  |  | 12% |

The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at September 30, 2021 were as follows:

September 30, 2021 |  | Carrying Amount |  |  | Total Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from financial institutions |  | $ | 253,165 |  |  | $ | 253,165 |  |  | $ | 253,165 |  |  | $ | — |  |  | $ | — |
Other securities |  |  | 17,011 |  |  |  | 17,011 |  |  |  | 17,011 |  |  |  | — |  |  |  | — |
Loans, held for sale |  |  | 5,810 |  |  |  | 5,926 |  |  |  | 5,926 |  |  |  | — |  |  |  | — |
Loans, net of allowance |  |  | 1,978,246 |  |  |  | 1,996,174 |  |  |  | — |  |  |  | — |  |  |  | 1,996,174 |
Bank owned life insurance |  |  | 46,728 |  |  |  | 46,728 |  |  |  | 46,728 |  |  |  | — |  |  |  | — |
Accrued interest receivable |  |  | 7,728 |  |  |  | 7,728 |  |  |  | 7,728 |  |  |  | — |  |  |  | — |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonmaturing deposits |  |  | 2,181,931 |  |  |  | 2,181,931 |  |  |  | 2,181,931 |  |  |  | — |  |  |  | — |
Time deposits |  |  | 252,835 |  |  |  | 253,643 |  |  |  | — |  |  |  | — |  |  |  | 253,643 |
Long-term FHLB advances |  |  | 75,000 |  |  |  | 76,617 |  |  |  | — |  |  |  | — |  |  |  | 76,617 |
Securities sold under agreement to repurchase |  |  | 23,331 |  |  |  | 23,331 |  |  |  | 23,331 |  |  |  | — |  |  |  | — |
Subordinated debentures |  |  | 29,427 |  |  |  | 29,534 |  |  |  | — |  |  |  | — |  |  |  | 29,534 |
Accrued interest payable |  |  | 115 |  |  |  | 115 |  |  |  | 115 |  |  |  | — |  |  |  | — |

The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at December 31, 2020 were as follows:

December 31, 2020 |  | Carrying Amount |  |  | Total Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from financial institutions |  | $ | 139,522 |  |  | $ | 139,522 |  |  | $ | 139,522 |  |  | $ | — |  |  | $ | — |
Other securities |  |  | 20,537 |  |  |  | 20,537 |  |  |  | 20,537 |  |  |  | — |  |  |  | — |
Loans, held for sale |  |  | 7,001 |  |  |  | 7,141 |  |  |  | 7,141 |  |  |  | — |  |  |  | — |
Loans, net of allowance |  |  | 2,032,474 |  |  |  | 2,063,249 |  |  |  | — |  |  |  | — |  |  |  | 2,063,249 |
Bank owned life insurance |  |  | 45,976 |  |  |  | 45,976 |  |  |  | 45,976 |  |  |  | — |  |  |  | — |
Accrued interest receivable |  |  | 9,421 |  |  |  | 9,421 |  |  |  | 9,421 |  |  |  | — |  |  |  | — |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonmaturing deposits |  |  | 1,902,560 |  |  |  | 1,902,560 |  |  |  | 1,902,560 |  |  |  | — |  |  |  | — |
Time deposits |  |  | 286,838 |  |  |  | 288,298 |  |  |  | — |  |  |  | — |  |  |  | 288,298 |
Long-term FHLB advances |  |  | 125,000 |  |  |  | 130,942 |  |  |  | — |  |  |  | — |  |  |  | 130,942 |
Securities sold under agreement to repurchase |  |  | 28,914 |  |  |  | 28,914 |  |  |  | 28,914 |  |  |  | — |  |  |  | — |
Subordinated debentures |  |  | 29,427 |  |  |  | 31,479 |  |  |  | — |  |  |  | — |  |  |  | 31,479 |
Accrued interest payable |  |  | 204 |  |  |  | 204 |  |  |  | 204 |  |  |  | — |  |  |  | — |

Page 34

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(14) Derivatives

To accommodate customer need and to support the Company’s asset/liability positioning, on occasion we enter into interest rate swaps with a customer and a bank counterparty. The interest rate swaps are free-standing derivatives and are recorded at fair value. The Company enters into a floating rate loan and a fixed rate swap with our customer. Simultaneously, the Company enters into an offsetting fixed rate swap with a bank counterparty. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay a bank counterparty the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. These transactions allow the Company’s customer to effectively convert variable rate loans to fixed rate loans. Since the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not significantly impact the Company’s results of operations. None of the Company’s derivatives are designated as hedging instruments.

The following table summarizes the Company’s interest rate swap positions as of September 30, 2021.

|  | Classification on the Consolidated Balance Sheet |  | Notional Amount |  |  | Fair Value |
Derivative Assets |  | Swap assets |  | $ | 239,230 |  |  | $ | 12,858 |
Derivative Liabilities |  | Swap liabilities |  |  | (239,230 | ) |  |  | (12,858 | )
Net Exposure |  |  |  | $ | — |  |  | $ | — |

The following table summarizes the Company’s interest rate swap positions as of December 31, 2020.

|  | Classification on the Consolidated Balance Sheet |  | Notional Amount |  |  | Fair Value |
Derivative Assets |  | Swap assets |  | $ | 244,748 |  |  | $ | 21,700 |
Derivative Liabilities |  | Swap liabilities |  |  | (244,748 | ) |  |  | (21,764 | )
Net Exposure |  |  |  | $ | — |  |  | $ | (64 | )

The Company monitors and controls all derivative products with a comprehensive Board of Director approved commercial loan swap policy. All interest rate swap transactions must be approved in advance by the Lenders Loan Committee or the Directors Loan Committee of the Board of Directors. The Company classifies changes in fair value of derivatives with “Other” in the Consolidated Statements of Operation.

At September 30, 2021, the Company had cash and securities with a fair value of $7,000 and $7,035, respectively, pledged for collateral on its interest rate swaps with third party financial institutions. At December 31, 2020, the Company had cash and securities with a fair value of $11,300 and $11,705, respectively, pledged as collateral. Cash pledged for collateral on interest rate swaps is classified as restricted cash on the Consolidated Balance Sheet.

(15) Qualified Affordable Housing Project Investments

The Company invests in certain qualified affordable housing projects. At September 30, 2021 and December 31, 2020, the balance of the investment for qualified affordable housing projects was $13,303 and $11,911, respectively. These balances are reflected in the Other assets line on the Consolidated Balance Sheet. The unfunded commitments related to the investments in qualified affordable housing projects totaled $6,629 and $5,944 at September 30, 2021 and December 31, 2020, respectively. These balances are reflected in the Accrued expenses and other liabilities line on the Consolidated Balance Sheet. Other assets and Accrued expenses and other liabilities were revised at December 31, 2020 to reflect the unfunded commitments of $5,944.

During the three months ended September 30, 2021 and 2020, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $203 and $156, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $339 and $304, respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $608 and $489, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $1,015 and $888, respectively. During the three- and nine-months ended September 30, 2021 and 2020, the Company did not incur any impairment losses related to its investments in qualified affordable housing projects.

Page 35

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(16) Revenue Recognition

The Company accounts for revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers. Revenue associated with financial instruments, including revenue from loans and securities are outside the scope of the new standard and accounted for under other existing GAAP. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also not in scope of the new guidance. Noninterest revenue streams in-scope of ASC 606 are discussed below.

Service Charges

Service charges consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

ATM/Interchange Fees

Fees, exchange, and other service charges are primarily comprised of debit and credit card income, ATM fees and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Wealth Management Fees

Wealth management fees are primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received in the following month through a direct charge to customers’ accounts. The Company does not earn performance-based incentives. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

Tax Refund Processing Fees

The Company facilitates the payment of federal and state income tax refunds in partnership with a third-party vendor. Refund Transfers (“RTs”) are fee-based products whereby a tax refund is issued to the taxpayer after the Company has received the refund from the federal or state government. As part of this agreement the Company earns fee income, the majority of which is received in the first quarter of the year. The Company’s fee income revenue is recognized based on the estimated percent of business completed by each date.

Other

Other noninterest income consists of other recurring revenue streams such as check order fees, wire transfer fees, safety deposit box rental fees, item processing fees and other miscellaneous revenue streams. Check order income mainly represents fees charged to customers for checks. Wire transfer fees represent revenue from processing wire transfers. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. Item processing fee income represents fees charged to other financial institutions for processing their transactions. Payment is typically received in the following month.

Page 36

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three- and nine-months ended September 30, 2021 and 2020.

|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Noninterest Income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
In-scope of Topic 606: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service charges |  | $ | 1,519 |  |  | $ | 1,414 |  |  | $ | 4,092 |  |  | $ | 3,812 |
ATM/Interchange fees |  |  | 1,330 |  |  |  | 1,183 |  |  |  | 3,950 |  |  |  | 3,226 |
Wealth management fees |  |  | 1,236 |  |  |  | 1,006 |  |  |  | 3,570 |  |  |  | 2,916 |
Tax refund processing fees |  |  | — |  |  |  | — |  |  |  | 2,375 |  |  |  | 2,375 |
Other |  |  | 267 |  |  |  | 214 |  |  |  | 944 |  |  |  | 633 |
Noninterest Income (in-scope of Topic 606) |  |  | 4,352 |  |  |  | 3,817 |  |  |  | 14,931 |  |  |  | 12,962 |
Noninterest Income (out-of-scope of Topic 606) |  |  | 2,074 |  |  |  | 2,969 |  |  |  | 9,710 |  |  |  | 7,554 |
Total Noninterest Income |  | $ | 6,426 |  |  | $ | 6,786 |  |  | $ | 24,641 |  |  | $ | 20,516 |

Page 37

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following discussion focuses on the consolidated financial condition of the Company at September 30, 2021 compared to December 31, 2020, and the consolidated results of operations for the three- and nine-month periods ended September 30, 2021, compared to the same periods in 2020. This discussion should be read in conjunction with the Consolidated Financial Statements and footnotes included in this Form 10-Q.

Forward-Looking Statements

This Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to such matters as the Company’s financial condition, anticipated operating results, cash flows, business line results, credit quality expectations, prospects for new lines of business, economic trends (including interest rates) and similar matters. Forward-looking statements reflect our expectations, estimates or projections concerning future results or events. These statements are generally identified by the use of forward-looking words or phrases such as “believe,” “belief,” “expect,” “anticipate,” “may,” “could,” “intend,” “intent,” “estimate,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results, performance or achievements to differ materially from those expressed in or implied by the forward-looking statements. Factors that could cause actual results, performance or achievements to differ from those discussed in the forward-looking statements include, but are not limited to, adverse affects from the ongoing COVID-19 pandemic, or an outbreak of another highly infectious or contagious disease; changes in financial markets or national or local economic conditions, including impacts from the COVID-19 pandemic on local, national and global economic conditions; higher default rates on loans made to our customers related to the impact of COVID-19 on our customers’ operations and financial conditions; the effects of various governmental responses to the COVID-19 pandemic, including stimulus packages and programs; potential litigation or other risks related to participating in the U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”); sustained weakness or deterioration in the real estate market; volatility and direction of market interest rates; credit risks of lending activities; changes in the allowance for loan losses; the transition away from LIBOR as a reference rate for financial contracts; legislation or regulatory changes or actions; increases in Federal Deposit Insurance Corporation (“FDIC”) insurance premiums and assessments; changes in tax laws; operational risks; failure of or breach in our information and data processing systems; unforeseen litigation; and other risks identified from time-to-time in the Company’s other public documents on file with the SEC, including those risks identified in “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as supplemented by “Item 1A. Risk Factors” of Part II of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021. The Company does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.

Financial Condition

Total assets of the Company at September 30, 2021 were $2,952,236 compared to $2,768,862 at December 31, 2020, an increase of $183,374, or 6.6%. The increase in total assets was due to increases in cash and cash equivalents of $113,643, accompanied by other increases in securities available for sale and other assets of $134,685 and $3,784, respectively, partially offset by decreases in other securities, loans held for sale, loans and swap assets of $3,526, $1,191, $54,228 and $8,842, respectively. Total liabilities at September 30, 2021 were $2,603,786 compared to $2,418,754 at December 31, 2020, an increase of $185,032, or 7.6%. The increase in total liabilities was primarily attributable to increases in noninterest-bearing demand accounts and interest-bearing demand accounts of $111,683 and $133,685, respectively, accompanied by an increase in accrued expenses and other liabilities of $4,153, partially offset by decreases in long-term Federal Home Loan advances and swap liabilities of $50,000 and $8,906, respectively.

Page 38

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Loans outstanding as of September 30, 2021 and December 31, 2020 were as follows:

|  | September 30, 2021 |  |  | December 31, 2020 |  |  | $ Change |  |  | % Change |
Commercial & Agriculture |  | $ | 276,741 |  |  | $ | 409,876 |  |  | $ | (133,135 | ) |  |  | -32.5 | %
Commercial Real Estate—Owner Occupied |  |  | 292,725 |  |  |  | 278,413 |  |  |  | 14,312 |  |  |  | 5.1 | %
Commercial Real Estate—Non-Owner Occupied |  |  | 788,898 |  |  |  | 705,072 |  |  |  | 83,826 |  |  |  | 11.9 | %
Residential Real Estate |  |  | 424,553 |  |  |  | 442,588 |  |  |  | (18,035 | ) |  |  | -4.1 | %
Real Estate Construction |  |  | 179,491 |  |  |  | 175,609 |  |  |  | 3,882 |  |  |  | 2.2 | %
Farm Real Estate |  |  | 30,147 |  |  |  | 33,102 |  |  |  | (2,955 | ) |  |  | -8.9 | %
Consumer and Other |  |  | 12,259 |  |  |  | 12,842 |  |  |  | (583 | ) |  |  | -4.5 | %
Total loans |  |  | 2,004,814 |  |  |  | 2,057,502 |  |  |  | (52,688 | ) |  |  | -2.6 | %
Allowance for loan losses |  |  | (26,568 | ) |  |  | (25,028 | ) |  |  | (1,540 | ) |  |  | 6.2 | %
Net loans |  | $ | 1,978,246 |  |  | $ | 2,032,474 |  |  | $ | (54,228 | ) |  |  | -2.7 | %

Included in Commercial & Agriculture loans above were $83,287 of PPP loans as of September 30, 2021 and $217,295 of PPP loans as of December 31, 2020.

Loans held for sale decreased $1,191 or 17.0% since December 31, 2020. The decrease was due to a decrease in the average loan balance held for sale. At September 30, 2021, 34 loans totaling $5,810 were held for sale as compared to 29 loans totaling $7,001 at December 31, 2020.

Net loans have decreased $54,228 or 2.7% since December 31, 2020. The Commercial Real Estate – Owner Occupied, Commercial Real Estate – Non-Owner Occupied and Real Estate Construction loan portfolios increased $14,312, $83,826 and $3,882, respectively, since December 31, 2020, while the Commercial & Agriculture, Residential Real Estate, Farm Real Estate and Consumer and Other loan portfolios decreased $133,135, $18,035, $2,955 and $583, respectively, since December 31, 2020. At September 30, 2021, the net loan to deposit ratio was 81.2% compared to 92.8% at December 31, 2020. The decrease in the net loan to deposit ratio is primarily the result of an increase in deposits.

During the first nine months of 2021, provisions made to the allowance for loan losses totaled $830, compared to a provision of $7,862 during the same period in 2020. The decrease in provision was due to the stability of our credit quality metrics coupled with the stabilization and, in some cases, improvement of international, national, regional and local economic conditions that were adversely impacted by the 2020 economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations in the first nine months of 2021 have created some level of optimism in the business community, there remains uncertainty due to the continued concern over increased infections from the Delta variant of COVID. We remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry as well as challenges businesses face in today’s environment. Economic impacts related to the COVID-19 pandemic since March 2020 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. While some of these pressures have eased, ongoing supply chain and staffing challenges, as well as the threat of inflation remain.

Net recoveries for the first nine months of 2021 totaled $710, compared to net recoveries of $8 in the first nine months of 2020. For the first nine months of 2021, the Company charged off a total of sixteen loans. Nine Residential Real Estate loans totaling $114, one Commercial and Agriculture loan totaling $15 and six Consumer and Other loans totaling $19 were charged off in the first nine months of the year. In addition, during the first nine months of 2021, the Company had recoveries on previously charged-off Commercial and Agriculture loans of $164, Commercial Real Estate – Owner Occupied loans of $6, Commercial Real Estate – Non-Owner Occupied loans of $392, Residential Real Estate loans of $232, Real Estate Construction loans of $1, Farm Real Estate loans of $9 and Consumer and Other loans of $54. For each loan category, as well as in total, the percentage of net charge-offs to loans was less than one percent. Nonperforming loans decreased by $1,176 since December 31, 2020, which was due to a decrease in loans on nonaccrual status of $1,606 and an increase in loans past due and accruing of $430. Each of these factors was considered by management as part of the examination of both the level and mix of the allowance by loan type as well as the overall level of the allowance.

Management specifically evaluates loans that are impaired for estimates of loss. To evaluate the adequacy of the allowance for loan losses to cover probable losses in the portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for delinquencies and historical reserve allocations. Loss migration rates are calculated over a three-year period

Page 39

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

for all portfolio segments. Management also considers certain economic factors for trends that management uses to account for the qualitative and environmental changes in risk, which affects the level of the reserve.

Management analyzes each impaired Commercial and Commercial Real Estate loan relationship with a balance of $350 or larger, on an individual basis and designates a loan as impaired when it is in nonaccrual status or when an analysis of the borrower’s operating results and financial condition indicates that underlying cash flows are not adequate to meet its debt service requirements. Loans held for sale are excluded from consideration as impaired. Loans are generally moved to nonaccrual status when 90 days or more past due. Impaired loans, or portions thereof, are charged-off when deemed uncollectible. The allowance for loan losses as a percent of total loans was 1.33% at September 30, 2021 and 1.22% at December 31, 2020.

The available for sale security portfolio increased by $134,685, from $363,464 at December 31, 2020 to $498,149 at September 30, 2021. Management continually evaluates our securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability and the level of interest rate risk to which the Company is exposed. These evaluations may cause the Company to change the level of funds it deploys into investment securities and change the composition of its investment securities portfolio. As of September 30, 2021, the Company was in compliance with all pledging requirements.

Other securities decreased $3,526 from December 31, 2020 to September 30, 2021. The decrease is the result of the FHLB of Indianapolis calling FHLB securities held by the Company during the third quarter of 2021.

Premises and equipment, net, increased $136 from December 31, 2020 to September 30, 2021. The increase is the result of new purchases of $1,467, offset by depreciation of $1,689 and disposals of $13.

Bank owned life insurance (BOLI) increased $752 from December 31, 2020 to September 30, 2021. The increase is the result of increases in the cash surrender value of the underlying insurance policies.

Swap assets decreased $8,842 from December 31, 2020 to September 30, 2021. The decrease of $8,842 is primarily the result of a decrease in market value.

Other assets increased $3,784 from December 31, 2020 to September 30, 2021. The increase is the result of a $1,000 refund receivable related to an alternative minimum tax (AMT) credit refundable under the CARES Act, an increase in prepaid franchise taxes of $585, an increase in prepaid software of $641 and an increase in low income housing investments of $1,392.

Total deposits as of September 30, 2021 and December 31, 2020 were as follows:

|  | September 30, 2021 |  |  | December 31, 2020 |  |  | $ Change |  |  | % Change |
Noninterest-bearing demand |  | $ | 832,492 |  |  | $ | 720,809 |  |  | $ | 111,683 |  |  |  | 15.5 | %
Interest-bearing demand |  |  | 502,865 |  |  |  | 410,139 |  |  |  | 92,726 |  |  |  | 22.6 | %
Savings and money market |  |  | 846,573 |  |  |  | 771,612 |  |  |  | 74,961 |  |  |  | 9.7 | %
Time deposits |  |  | 252,836 |  |  |  | 286,838 |  |  |  | (34,002 | ) |  |  | -11.9 | %
Total Deposits |  | $ | 2,434,766 |  |  | $ | 2,189,398 |  |  | $ | 245,368 |  |  |  | 11.2 | %

Total deposits at September 30, 2021 increased $245,368 from year-end 2020. Noninterest-bearing deposits increased $111,683 from year-end 2020, while interest-bearing deposits, including savings and time deposits, increased $133,685 from December 31, 2020. The increase in noninterest-bearing deposits was partially due to increases in cash balances related to the Company’s participation in a tax refund processing program, which added noninterest-bearing deposits of $31,500. In addition, business demand deposit and public fund demand deposit accounts increased $48,937 and $28,515, respectively. Much of the increase in business demand deposit accounts resulted from customer deposits of PPP loan proceeds. The increase in interest-bearing deposits was primarily due to an increase in non-public interest-bearing demand and public fund interest-bearing demand accounts of $36,448 and $52,121, respectively, accompanied by an increase in IOLTA accounts of $3,832. Statement savings, money market savings, business money market savings and public fund money market savings accounts increased by $45,336, $25,157, $23,723 and $18,182, respectively, accompanied by a decrease in brokered money market savings accounts of $40,137. Time certificates over $250, time certificates and Jumbo time certificates decreased

Page 40

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

$16,836, $10,325 and $6,247, respectively. The year-to-date average balance of total deposits in creased $451,324 compared to the average balance for the same period in 20 20 mainly due to increases in noninterest-bearing business demand accounts of $1 13,158, accompanied by increases in non-public interest-bearing demand, non-public savings and money markets, public funds interest-bearing demand and public funds money market accounts of $60,534, $150,178, $49,993 and $8,949, respectively. In add ition, the average balance of time deposits de creased $17,601 as compared to the same period in 2020.

Securities sold under agreements to repurchase, which tend to fluctuate based on the liquidity needs of customers and short-term nature of the instrument, decreased $5,583 from December 31, 2020 to September 30, 2021.

Long-term Federal Home Loan advances decreased $50,000 from December 31, 2020 to September 30, 2021. During the second quarter of 2021, the Company prepaid a $50,000 advance with a rate of 2.05% and a remaining maturity of approximately 8 years at a pre-tax loss of approximately $3,717. The prepayment penalty of $3,717 was recorded in other operating expenses on the Consolidated Statements of Operations.

Swap liabilities decreased $8,906 from December 31, 2020 to September 30, 2021. The decrease of $8,906 is primarily the result of a decrease in market value.

Accrued expenses and other liabilities increased $4,153 from December 31, 2020 to September 30, 2021. The increase is primarily the result of securities purchased, not yet funded of $3,857.

Shareholders’ equity at September 30, 2021 was $348,450, or 11.8% of total assets, compared to $350,108, or 12.7% of total assets, at December 31, 2020. The decrease was the result of net income of $29,564, a decrease in the Company’s pension liability, net of tax, of $193, offset by a decrease in the fair value of securities available for sale, net of tax, of $5,514, dividends on common shares of $5,932 and the purchase of treasury shares of $20,557.

Total outstanding common shares at September 30, 2021 were 15,029,972, which decreased from 15,898,032 common shares outstanding at December 31, 2020. Common shares outstanding decreased as a result of 914,924 common shares being repurchased by the Company at an average repurchase price of $22.47. The Company repurchased 239,536 common shares pursuant to a stock repurchase program announced on May 4, 2020, 562,489 common shares pursuant to a stock repurchase program announced on April 20, 2021 and 107,834 common shares pursuant to a stock repurchase program announced August 12, 2021. An additional 5,065 common shares were surrendered to pay taxes upon vesting of restricted shares, and 1,067 restricted common shares were forfeited during the period. A repurchase program publicly-announced on May 4, 2020 authorized the Company to repurchase a maximum aggregate value of $13,500 of the Company’s common shares until April 20, 2021. A repurchase program publicly-announced on April 20, 2021 authorized the Company to repurchase a maximum aggregate value of $13,500 of the Company’s common shares until April 19 2022. On August 12, 2021, the Company publicly announced a new repurchase program, which replaced the April 20, 2021 repurchase program and authorizes the Company to repurchase up to a maximum of $13,500 of the Company’s common shares until August 10, 2022. The repurchase of common shares was offset by the grant of 39,139 restricted common shares to certain officers under the Company’s 2014 Incentive Plan. In addition, 8,792 common shares were issued to Civista directors as a retainer payment for service on the Civista Board of Directors.

Results of Operations

Three Months Ended September 30, 2021 and 2020

The Company had net income of $9,642 for the three months ended September 30, 2021, an increase of $1,960 from net income of $7,682 for the same three months of 2020. Basic earnings per common share were $0.64 for the quarter ended September 30, 2021, compared to $0.48 for the same period in 2020. Diluted earnings per common share were $0.64 for the quarter ended September 30, 2021, compared to $0.48 for the same period in 2020. The primary reasons for the changes in net income are explained below.

Net interest income for the three months ended September 30, 2021 was $24,433, an increase of $2,427 from $22,006 for the same three months of 2020. This increase is the result of an increase of $1,226 in total interest income with a decrease of $1,201 in interest expense. Interest-earning assets averaged $2,747,450 during the three months ended September 30, 2021, an increase of $129,566 from $2,617,884 for the same period of 2020. The Company’s average interest-bearing liabilities decreased from $1,764,283 during the three months ended September 30, 2020 to $1,715,590 during the three months ended

Page 41

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

September 3 0, 20 2 1. The Company’s fully tax equivalent net interest margin for the three months ended September 3 0, 20 2 1 and 20 20 was 3.62% and 3.44%, respectively.

Total interest income was $25,784 for the three months ended September 30, 2021, an increase of $1,226 from $24,558 of total interest income for the same period in 2020. The increase in interest income is attributable to an increase of $1,066 in interest and fees on loans, which resulted from an increase in loan yield, offset by a decrease in the average balance of loans. The average balance of loans decreased by $29,827 or 1.5% to $2,010,665 for the three months ended September 30, 2021 as compared to $2,040,492 for the same period in 2020. The loan yield increased to 4.48% for the three months ended September 30, 2021, from 4.22% for the same period in 2020. During the quarter, the average balance of PPP loans was $105,886. These loans had an average yield of 10.44%, which includes the amortization of PPP fees.

Interest on taxable securities increased $98 to $1,423 for the three months ended September 30, 2021, compared to $1,325 for the same period in 2020. The average balance of taxable securities increased $81,459 to $264,655 for the three months ended September 30, 2021 as compared to $183,196 for the same period in 2020. The yield on taxable securities decreased 83 basis points to 2.18% for 2021, compared to 3.01% for 2020. Interest on tax-exempt securities increased $19 to $1,555 for the three months ended September 30, 2021, compared to $1,536 for the same period in 2020. The average balance of tax-exempt securities increased $12,589 to $217,987 for the three months ended September 30, 2020 as compared to $205,398 for the same period in 2020. The yield on tax-exempt securities decreased 23 basis points to 3.91% for 2021, compared to 4.14% for 2020 due to the impact of lower interest rates in 2021 as compared to the same period of 2020.

Interest expense decreased $1,201, or 47.1%, to $1,351 for the three months ended September 30, 2021, compared with $2,552 for the same period in 2020. The change in interest expense can be attributed to both a decrease in both the average balance of interest-bearing liabilities and a decrease in rates on demand and savings accounts, FHLB borrowings and subordinated debentures. For the three months ended September 30, 2021, the average balance of interest-bearing liabilities decreased $48,693 to $1,715,590, as compared to $1,764,283 for the same period in 2020. Interest incurred on deposits decreased by $661 to $970 for the three months ended September 30, 2021, compared to $1,631 for the same period in 2020. Although the average balance of interest-bearing deposits increased by $186,761 for the three months ended September 30, 2021 as compared to the same period in 2020, deposit expense decreased due to a decrease in the rate paid on demand and savings accounts from 0.14% in 2020 to 0.09% in 2021. The rate paid on time deposits decreased from 1.69% to 1.03% in 2021. Interest expense incurred on FHLB advances and subordinated debentures decreased 41.8% from 2020. The average balance on FHLB balances decreased $50,000 for the three months ended September 30, 2021 as compared to the same period in 2020 as a result of the prepayment of a long-term advance. In addition, the rate paid on subordinated debentures decreased 17 basis points for the three months ended September 30, 2021 as compared to the same period in 2020.

Page 42

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

The following table presents the condensed average balance sheets for the three months ended September 3 0, 20 2 1 and 20 20. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a 21% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.

|  | Three Months Ended September 30, |
|  | 2021 |  |  | 2020 |
Assets: |  | Average balance |  |  | Interest |  |  | Yield/ rate* |  |  | Average balance |  |  | Interest |  |  | Yield/ rate* |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans, including fees** |  | $ | 2,010,665 |  |  | $ | 22,704 |  |  |  | 4.48 | % |  | $ | 2,040,492 |  |  | $ | 21,638 |  |  |  | 4.22 | %
Taxable securities |  |  | 264,655 |  |  |  | 1,423 |  |  |  | 2.18 | % |  |  | 183,196 |  |  |  | 1,325 |  |  |  | 3.01 | %
Tax-exempt securities |  |  | 217,987 |  |  |  | 1,555 |  |  |  | 3.91 | % |  |  | 205,398 |  |  |  | 1,536 |  |  |  | 4.14 | %
Interest-bearing deposits in other banks |  |  | 254,143 |  |  |  | 102 |  |  |  | 0.16 | % |  |  | 188,798 |  |  |  | 59 |  |  |  | 0.12 | %
Total interest-earning assets |  | $ | 2,747,450 |  |  | $ | 25,784 |  |  |  | 3.82 | % |  | $ | 2,617,884 |  |  | $ | 24,558 |  |  |  | 3.83 | %
Noninterest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from financial institutions |  |  | 33,803 |  |  |  |  |  |  |  |  |  |  |  | 29,647 |  |  |  |  |  |  |  |  |
Premises and equipment, net |  |  | 22,845 |  |  |  |  |  |  |  |  |  |  |  | 23,214 |  |  |  |  |  |  |  |  |
Accrued interest receivable |  |  | 7,417 |  |  |  |  |  |  |  |  |  |  |  | 10,109 |  |  |  |  |  |  |  |  |
Intangible assets |  |  | 84,949 |  |  |  |  |  |  |  |  |  |  |  | 84,906 |  |  |  |  |  |  |  |  |
Other assets |  |  | 38,189 |  |  |  |  |  |  |  |  |  |  |  | 42,916 |  |  |  |  |  |  |  |  |
Bank owned life insurance |  |  | 46,557 |  |  |  |  |  |  |  |  |  |  |  | 45,574 |  |  |  |  |  |  |  |  |
Less allowance for loan losses |  |  | (26,683 | ) |  |  |  |  |  |  |  |  |  |  | (21,214 | ) |  |  |  |  |  |  |  |
Total Assets |  | $ | 2,954,527 |  |  |  |  |  |  |  |  |  |  | $ | 2,833,036 |  |  |  |  |  |  |  |  |
Liabilities and Shareholders Equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand and savings |  | $ | 1,331,032 |  |  | $ | 302 |  |  |  | 0.09 | % |  | $ | 1,108,512 |  |  | $ | 389 |  |  |  | 0.14 | %
Time |  |  | 257,047 |  |  |  | 668 |  |  |  | 1.03 | % |  |  | 292,806 |  |  |  | 1,242 |  |  |  | 1.69 | %
Long-term FHLB advances |  |  | 75,000 |  |  |  | 194 |  |  |  | 1.03 | % |  |  | 125,000 |  |  |  | 452 |  |  |  | 1.44 | %
Other borrowings |  |  | — |  |  |  | — |  |  |  | 0.00 | % |  |  | 183,695 |  |  |  | 271 |  |  |  | 0.59 | %
Federal funds purchased |  |  | — |  |  |  | — |  |  |  | 0.00 | % |  |  | 543 |  |  |  | (2 | ) |  |  | -1.47 | %
Subordinated debentures |  |  | 29,427 |  |  |  | 182 |  |  |  | 2.45 | % |  |  | 29,427 |  |  |  | 194 |  |  |  | 2.62 | %
Repurchase Agreements |  |  | 23,084 |  |  |  | 5 |  |  |  | 0.09 | % |  |  | 24,300 |  |  |  | 6 |  |  |  | 0.10 | %
Total interest-bearing liabilities |  | $ | 1,715,590 |  |  | $ | 1,351 |  |  |  | 0.31 | % |  | $ | 1,764,283 |  |  | $ | 2,552 |  |  |  | 0.58 | %
Noninterest-bearing deposits |  |  | 849,501 |  |  |  |  |  |  |  |  |  |  |  | 683,473 |  |  |  |  |  |  |  |  |
Other liabilities |  |  | 40,466 |  |  |  |  |  |  |  |  |  |  |  | 46,002 |  |  |  |  |  |  |  |  |
Shareholders’ Equity |  |  | 348,970 |  |  |  |  |  |  |  |  |  |  |  | 339,278 |  |  |  |  |  |  |  |  |
Total Liabilities and Shareholders’ Equity |  | $ | 2,954,527 |  |  |  |  |  |  |  |  |  |  | $ | 2,833,036 |  |  |  |  |  |  |  |  |
Net interest income and interest rate spread |  |  |  |  |  | $ | 24,433 |  |  |  | 3.51 | % |  |  |  |  |  | $ | 22,006 |  |  |  | 3.25 | %
Net interest margin |  |  |  |  |  |  |  |  |  |  | 3.62 | % |  |  |  |  |  |  |  |  |  |  | 3.44 | %

*—Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $414 and $411 for the periods ended September 30, 2021 and 2020, respectively.

**—Average balance includes nonaccrual loans.

Page 43

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the three months ended September 3 0, 20 2 1 and 20 20.

|  | Increase (decrease) due to: |
|  | Volume (1) |  |  | Rate (1) |  |  | Net |
|  | (Dollars in thousands) |
Interest income: |  |  |  |  |  |  |  |  |  |  |  |
Loans, including fees |  | $ | (320 | ) |  | $ | 1,386 |  |  | $ | 1,066 |
Taxable securities |  |  | 520 |  |  |  | (422 | ) |  |  | 98 |
Tax-exempt securities |  |  | 100 |  |  |  | (81 | ) |  |  | 19 |
Interest-bearing deposits in other banks |  |  | 24 |  |  |  | 19 |  |  |  | 43 |
Total interest income |  | $ | 324 |  |  | $ | 902 |  |  | $ | 1,226 |
Interest expense: |  |  |  |  |  |  |  |  |  |  |  |
Demand and savings |  | $ | 68 |  |  | $ | (155 | ) |  | $ | (87 | )
Time |  |  | (138 | ) |  |  | (436 | ) |  |  | (574 | )
Long-term FHLB advances |  |  | (151 | ) |  |  | (107 | ) |  |  | (258 | )
Other borrowings |  |  | (271 | ) |  |  | — |  |  |  | (271 | )
Federal funds purchased |  |  | 2 |  |  |  | — |  |  |  | 2 |
Subordinated debentures |  |  | — |  |  |  | (12 | ) |  |  | (12 | )
Repurchase agreements |  |  | — |  |  |  | (1 | ) |  |  | (1 | )
Total interest expense |  | $ | (490 | ) |  | $ | (711 | ) |  | $ | (1,201 | )
Net interest income |  | $ | 814 |  |  | $ | 1,613 |  |  | $ | 2,427 |

(1) | The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate.

The Company provides for loan losses through regular provisions to the allowance for loan losses. Provisions for loan losses totaled $0 and $2,250 during the quarters ended September 30, 2021 and 2020, respectively. The decrease in the provision in the third quarter of 2021 was due to the stability of our credit quality metrics coupled with the stabilization and, in some cases, improvement of international, national, regional and local economic conditions that were adversely impacted by the 2020 economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations in 2021 have created some level of optimism in the business community, there remains uncertainty due to the continued concern over increased infections from the Delta variant of COVID. We remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry as well as the challenges businesses face in today’s environment. Economic impacts related to the COVID-19 pandemic since March 2020 have included 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. While some of the pressures have eased, ongoing supply chain and staffing challenges, as well as the threat of inflation remain. Our Commercial and Commercial Real Estate portfolios have been, and are expected to continue to be impacted the most.

Noninterest income for the three-month periods ended September 30, 2021 and 2020 are as follows:

|  | Three months ended September 30, |
|  | 2021 |  |  | 2020 |  |  | $ Change |  |  | % Change |
Service charges |  | $ | 1,519 |  |  | $ | 1,414 |  |  | $ | 105 |  |  |  | 7.4 | %
Net gain on sale of securities |  |  | 4 |  |  |  | 92 |  |  |  | (88 | ) |  |  | -95.7 | %
Net gain on equity securities |  |  | 50 |  |  |  | 20 |  |  |  | 30 |  |  |  | 150.0 | %
Net gain on sale of loans |  |  | 1,612 |  |  |  | 2,413 |  |  |  | (801 | ) |  |  | -33.2 | %
ATM/Interchange fees |  |  | 1,330 |  |  |  | 1,183 |  |  |  | 147 |  |  |  | 12.4 | %
Wealth management fees |  |  | 1,236 |  |  |  | 1,006 |  |  |  | 230 |  |  |  | 22.9 | %
Bank owned life insurance |  |  | 261 |  |  |  | 243 |  |  |  | 18 |  |  |  | 7.4 | %
Swap fees |  |  | 41 |  |  |  | 158 |  |  |  | (117 | ) |  |  | -74.1 | %
Other |  |  | 373 |  |  |  | 257 |  |  |  | 116 |  |  |  | 45.1 | %
Total noninterest income |  | $ | 6,426 |  |  | $ | 6,786 |  |  | $ | (360 | ) |  |  | -5.3 | %

Page 44

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Noninterest income for the three months ended September 30, 2021 was $6,426, a decrease of $360, or 5.3%, from $6,786 for the same period of 2020. The decrease was primarily due to decreases in net gain on sale of securities, net gain on sale of loans and swap fees, offset by increases in net gain on equity securities, ATM/Interchange fees, wealth management fees and other. Net gain on sale of securities decreased as a result of fewer securities sales for the quarter. Net gain on sale of loans decreased primarily as a result of a decrease in volume of loans sold. During the three-months ended September 30, 2021, 303 loans were sold, totaling $56,887. During the three-months ended September 30, 2020, 418 loans were sold, totaling $84,315. Swap fees decreased due to the volume of swaps performed during the quarter ended September 30, 2021 as compared to the same period of 2020. Net gain on equity securities increased as a result of market value increases. ATM/Interchange fees increased as a result of increased transaction volume and incentives. Wealth management fees increased primarily as a result of an increase in trust and brokerage fees of $158 and $71, respectively. Trust income increased as a result of new accounts and market conditions while brokerage income increased due to volume of business. Other income increased due to increases in amortization of mortgage servicing rights and merchant credit card fees.

Noninterest expense for the three-month periods ended September 30, 2021 and 2020 are as follows:

|  | Three months ended September 30, |
|  | 2021 |  |  | 2020 |  |  | $ Change |  |  | % Change |
Compensation expense |  | $ | 11,390 |  |  | $ | 10,595 |  |  | $ | 795 |  |  |  | 7.5 | %
Net occupancy expense |  |  | 985 |  |  |  | 1,010 |  |  |  | (25 | ) |  |  | -2.5 | %
Equipment expense |  |  | 444 |  |  |  | 494 |  |  |  | (50 | ) |  |  | -10.1 | %
Contracted data processing |  |  | 429 |  |  |  | 415 |  |  |  | 14 |  |  |  | 3.4 | %
FDIC assessment |  |  | 247 |  |  |  | 288 |  |  |  | (41 | ) |  |  | -14.2 | %
State franchise tax |  |  | 511 |  |  |  | 427 |  |  |  | 84 |  |  |  | 19.7 | %
Professional services |  |  | 776 |  |  |  | 669 |  |  |  | 107 |  |  |  | 16.0 | %
Amortization of intangible assets |  |  | 223 |  |  |  | 227 |  |  |  | (4 | ) |  |  | -1.8 | %
ATM/Interchange expense |  |  | 594 |  |  |  | 538 |  |  |  | 56 |  |  |  | 10.4 | %
Marketing |  |  | 359 |  |  |  | 361 |  |  |  | (2 | ) |  |  | -0.6 | %
Software maintenance expense |  |  | 819 |  |  |  | 506 |  |  |  | 313 |  |  |  | 61.9 | %
Other |  |  | 2,677 |  |  |  | 2,197 |  |  |  | 480 |  |  |  | 21.8 | %
Total noninterest expense |  | $ | 19,454 |  |  | $ | 17,727 |  |  | $ | 1,727 |  |  |  | 9.7 | %

Noninterest expense for the three months ended September 30, 2021 was $19,454, an increase of $1,727, or 9.7%, from $17,727 reported for the same period of 2020. The primary reasons for the increase were increases in compensation expense, state franchise tax, professional services, ATM/Interchange expense, software maintenance expense and other expenses, offset by decreases in expense for equipment and FDIC assessment. The increase in compensation expense was due to increased salary, payroll taxes, employer savings contributions and employee insurance costs, offset by a decrease in commission and incentive based costs. The increase in state franchise tax is the result of an increase in capital and apportionment rate. Professional services increased due to an increase in consulting fees related to cost savings initiatives and customer service programs. The quarter-over-quarter increase in ATM/Interchange expense is the result of an increase in volume of transactions as compared to the third quarter of 2020. The increase in software maintenance expense is due to a general increase in legacy software maintenance contracts and the implementation of our new digital banking. The quarter-over-quarter increase in other expense is due to increases in loan related expenses, the amortization of low income housing investments, education and training expense and mortgage servicing rights valuation. Equipment expense decreased due to a decrease in equipment depreciation as compared to the third quarter of 2020. The quarter-over-quarter decrease in FDIC assessments was attributable to lower assessment multipliers charged to Civista.

Income tax expense for the three months ended September 30, 2021 totaled $1,763, up $630 compared to the same period in 2020. The effective tax rates for the three-month periods ended September 30, 2021 and 2020 were 15.5% and 12.9%, respectively. The difference between the statutory federal income tax rate and the Company’s effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low income housing tax credits and bank owned life insurance income.

Page 45

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Nine Months Ended September 30, 2021 and 2020

The Company had net income of $29,564 for the nine months ended September 30, 2021, an increase of $7,545 from net income of $22,019 for the same nine months of 2020. Basic earnings per common share were $1.90 for the period ended September 30, 2021, compared to $1.36 for the same period in 2020. Diluted earnings per common share were $1.90 for the period ended September 30, 2021, compared to $1.36 for the same period in 2020. The primary reasons for the changes in net income are explained below.

Net interest income for the nine months ended September 30, 2021 was $72,102, an increase of $5,906 from $66,196 for the same nine months of 2020. This increase is the result of an increase of $2,864 in total interest income with a decrease of $3,042 in interest expense. Interest-earning assets averaged $2,842,462 during the nine months ended September 30, 2021, an increase of $382,529 from $2,459,933 for the same period of 2020. The Company’s average interest-bearing liabilities increased from $1,590,433 for the first nine months of 2020 to $1,723,936 for the same period in 2021. The Company’s fully tax equivalent net interest margin for the nine months ended September 30, 2021 and 2020 was 3.48% and 3.70%, respectively.

Total interest income increased $2,864 to $77,008 for the nine-month period ended September 30, 2021, which is attributable to an increase of $3,216 in interest and fees on loans. This change was the result of an increase in the average balance of loans, accompanied by a lower yield on the portfolio. The average balance of loans increased by $131,227, or 6.9%, to $2,044,741 for the nine-month period ended September 30, 2021, as compared to $1,913,514 for the nine-month period ended September 30, 2020. The loan yield decreased to 4.46% for 2021, from 4.53% in 2020. During the nine months ended September 30, 2021, the average balance of PPP loans was $187,363. These loans had an average yield of 7.01%, which includes the amortization of PPP fees.

Interest on taxable securities decreased $172 to $3,928 for the nine-month period ended September 30, 2021, compared to $4,100 for the same period in 2020. The average balance of taxable securities increased $29,402 to $214,979 for the nine-month period ended September 30, 2021 as compared to $185,577 for the nine-month period ended September 30, 2020. The yield on taxable securities decreased 56 basis points to 2.51% for 2021, compared to 3.07% for 2020. Interest on tax-exempt securities increased $10 to $4,599 for the nine-month period ended September 30, 2021, compared to $4,589 for the same period in 2020. The average balance of tax-exempt securities increased $10,235 to $211,538 for the nine-month period ended September 30, 2021 as compared to $201,303 for the nine-month period ended September 30, 2020. The yield on tax-exempt securities decreased 16 basis points to 4.02% for 2021, compared to 4.18% for 2020.

Interest on interest-bearing deposits in other banks decreased $190 to $341 for the nine-month period ended September 30, 2021, compared to $531 for the same period in 2020. The average balance of interest-bearing deposits in other banks increased $211,665 to $371,204 for the nine-month period ended September 30, 2021 as compared to $159,539 for the nine-month period ended September 30, 2020. The yield on interest-bearing deposits in other banks decreased 32 basis points to 0.12% for 2021, compared to 0.44% for 2020.

Interest expense decreased $3,042, or 38.3%, to $4,906 for the nine-month period ended September 30, 2021, compared with $7,948 for the same period in 2020. The change in interest expense can be attributed to an increase in the average balance of interest-bearing liabilities accompanied by a decrease in rate. For the nine-month period ended September 30, 2021, the average balance of interest-bearing liabilities increased $133,503 to $1,723,936, as compared to $1,590,433 for the nine-month period ended September 30, 2020. Interest incurred on deposits decreased by $2,052 to $3,366 for the nine-month period ended September 30, 2021, compared to $5,418 for the same period in 2020. Although the average balance of interest-bearing deposits increased by $268,897 for the nine-month period ended September 30, 2021 as compared to the same period in 2020, deposit expense decreased due to a decrease in the rate paid on demand and savings accounts from 0.19% in 2020 to 0.10% in 2021. The rate paid on time deposits decreased from 1.85% to 1.18% in 2021. Interest expense incurred on FHLB advances and subordinated debentures decreased 32.0% from 2020. The average balance on FHLB balances decreased $35,430 as a result of the prepayment of a long-term advance for the nine-month period ended September 30, 2021 as compared to the same period in 2020, while the rate paid decreased 15 basis points. In addition, the rate paid on subordinated debentures decreased 93 basis points for the nine-month period ended September 30, 2021 as compared to the same period in 2020. The average balance of other borrowings decreased $103,133 for the nine-month period ended September 30, 2021 as compared to the same period in 2020 as a result of the Company’s repayment of amounts borrowed under the Paycheck Protection Program Liquidity Facility.

Page 46

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

The following table presents the condensed average balance sheets for the nine months ended September 30, 20 21 and 20 20. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a 21% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |
Assets: |  | Average balance |  |  | Interest |  |  | Yield/ rate* |  |  | Average balance |  |  | Interest |  |  | Yield/ rate* |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans, including fees** |  | $ | 2,044,741 |  |  | $ | 68,140 |  |  |  | 4.46 | % |  | $ | 1,913,514 |  |  | $ | 64,924 |  |  |  | 4.53 | %
Taxable securities |  |  | 214,979 |  |  |  | 3,928 |  |  |  | 2.51 | % |  |  | 185,577 |  |  |  | 4,100 |  |  |  | 3.07 | %
Tax-exempt securities |  |  | 211,538 |  |  |  | 4,599 |  |  |  | 4.02 | % |  |  | 201,303 |  |  |  | 4,589 |  |  |  | 4.18 | %
Interest-bearing deposits in other banks |  |  | 371,204 |  |  |  | 341 |  |  |  | 0.12 | % |  |  | 159,539 |  |  |  | 531 |  |  |  | 0.44 | %
Total interest-earning assets |  | $ | 2,842,462 |  |  | $ | 77,008 |  |  |  | 3.71 | % |  | $ | 2,459,933 |  |  | $ | 74,144 |  |  |  | 4.13 | %
Noninterest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from financial institutions |  |  | 37,763 |  |  |  |  |  |  |  |  |  |  |  | 94,083 |  |  |  |  |  |  |  |  |
Premises and equipment, net |  |  | 22,578 |  |  |  |  |  |  |  |  |  |  |  | 22,830 |  |  |  |  |  |  |  |  |
Accrued interest receivable |  |  | 8,146 |  |  |  |  |  |  |  |  |  |  |  | 8,729 |  |  |  |  |  |  |  |  |
Intangible assets |  |  | 84,817 |  |  |  |  |  |  |  |  |  |  |  | 84,965 |  |  |  |  |  |  |  |  |
Other assets |  |  | 37,504 |  |  |  |  |  |  |  |  |  |  |  | 37,802 |  |  |  |  |  |  |  |  |
Bank owned life insurance |  |  | 46,310 |  |  |  |  |  |  |  |  |  |  |  | 45,332 |  |  |  |  |  |  |  |  |
Less allowance for loan losses |  |  | (26,288 | ) |  |  |  |  |  |  |  |  |  |  | (17,759 | ) |  |  |  |  |  |  |  |
Total Assets |  | $ | 3,053,292 |  |  |  |  |  |  |  |  |  |  | $ | 2,735,915 |  |  |  |  |  |  |  |  |
Liabilities and Shareholders Equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand and savings |  | $ | 1,297,217 |  |  | $ | 979 |  |  |  | 0.10 | % |  | $ | 1,010,719 |  |  | $ | 1,433 |  |  |  | 0.19 | %
Time |  |  | 270,139 |  |  |  | 2,387 |  |  |  | 1.18 | % |  |  | 287,740 |  |  |  | 3,985 |  |  |  | 1.85 | %
Short-term FHLB advance |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,888 |  |  |  | 134 |  |  |  | 1.64 | %
Long-term FHLB advance |  |  | 100,458 |  |  |  | 968 |  |  |  | 1.29 | % |  |  | 125,000 |  |  |  | 1,346 |  |  |  | 1.44 | %
Other borrowings |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 103,133 |  |  |  | 275 |  |  |  | 0.36 | %
Federal funds purchased |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 385 |  |  |  | 1 |  |  |  | 0.35 | %
Subordinated debentures |  |  | 29,427 |  |  |  | 553 |  |  |  | 2.51 | % |  |  | 29,427 |  |  |  | 757 |  |  |  | 3.44 | %
Repurchase Agreements |  |  | 26,695 |  |  |  | 19 |  |  |  | 0.10 | % |  |  | 23,141 |  |  |  | 17 |  |  |  | 0.10 | %
Total interest-bearing liabilities |  | $ | 1,723,936 |  |  | $ | 4,906 |  |  |  | 0.38 | % |  | $ | 1,590,433 |  |  | $ | 7,948 |  |  |  | 0.67 | %
Noninterest-bearing deposits |  |  | 940,123 |  |  |  |  |  |  |  |  |  |  |  | 757,696 |  |  |  |  |  |  |  |  |
Other liabilities |  |  | 39,952 |  |  |  |  |  |  |  |  |  |  |  | 53,633 |  |  |  |  |  |  |  |  |
Shareholders’ Equity |  |  | 349,281 |  |  |  |  |  |  |  |  |  |  |  | 334,153 |  |  |  |  |  |  |  |  |
Total Liabilities and Shareholders’ Equity |  | $ | 3,053,292 |  |  |  |  |  |  |  |  |  |  | $ | 2,735,915 |  |  |  |  |  |  |  |  |
Net interest income and interest rate spread |  |  |  |  |  | $ | 72,102 |  |  |  | 3.33 | % |  |  |  |  |  | $ | 66,196 |  |  |  | 3.46 | %
Net interest margin |  |  |  |  |  |  |  |  |  |  | 3.48 | % |  |  |  |  |  |  |  |  |  |  | 3.70 | %

*—Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1,228 and $1,130 for the periods ended September 30, 2021 and 2020, respectively.

**—Average balance includes nonaccrual loans.

Page 47

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the nine months ended September 30, 2021 and 2020. The table is presented on a fully tax-equivalent basis.

|  | Increase (decrease) due to: |
|  | Volume (1) |  |  | Rate (1) |  |  | Net |
|  | (Dollars in thousands) |
Interest income: |  |  |  |  |  |  |  |  |  |  |  |
Loans, including fees |  | $ | 4,389 |  |  | $ | (1,173 | ) |  | $ | 3,216 |
Taxable securities |  |  | 637 |  |  |  | (809 | ) |  |  | (172 | )
Tax-exempt securities |  |  | 196 |  |  |  | (186 | ) |  |  | 10 |
Interest-bearing deposits in other banks |  |  | 375 |  |  |  | (565 | ) |  |  | (190 | )
Total interest income |  | $ | 5,597 |  |  | $ | (2,733 | ) |  | $ | 2,864 |
Interest expense: |  |  |  |  |  |  |  |  |  |  |  |
Demand and savings |  | $ | 335 |  |  | $ | (789 | ) |  | $ | (454 | )
Time |  |  | (231 | ) |  |  | (1,367 | ) |  |  | (1,598 | )
Short-term FHLB advance |  |  | (134 | ) |  |  | — |  |  |  | (134 | )
Long-term FHLB advance |  |  | (246 | ) |  |  | (132 | ) |  |  | (378 | )
Other borrowings |  |  | (275 | ) |  |  | — |  |  |  | (275 | )
Federal funds purchased |  |  | (1 | ) |  |  | — |  |  |  | (1 | )
Subordinated debentures |  |  | — |  |  |  | (204 | ) |  |  | (204 | )
Repurchase agreements |  |  | 3 |  |  |  | (1 | ) |  |  | 2 |
Total interest expense |  | $ | (549 | ) |  | $ | (2,493 | ) |  | $ | (3,042 | )
Net interest income |  | $ | 6,146 |  |  | $ | (240 | ) |  | $ | 5,906 |

(1)The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate.

The Company provides for loan losses through regular provisions to the allowance for loan losses. Provisions for loan losses totaled $830 and $7,862 during the periods ended September 30, 2021 and 2020. The decrease in the provision for the first nine months of 2021 was due to the stability of our credit quality metrics coupled with the stabilization and, in some cases, improvement of international, national, regional and local economic conditions that were adversely impacted by the 2020 economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations in 2021 have created some level of optimism in the business community, there remains uncertainty due to the continued concern over increased infections from the Delta variant of COVID. We remain cautious given the level of classified loans in the portfolio, particularly loans to borrowers in the hotel industry as well as the challenges businesses face in today’s environment. Economic impacts related to the COVID-19 pandemic since March 2020 have included 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. While some of the pressures have eased, ongoing supply chain and staffing challenges, as well as the threat of inflation remain. Our Commercial and Commercial Real Estate portfolios have been, and are expected to continue to be, impacted the most.

Page 48

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Noninterest income for the nine-month periods ended September 30, 20 21 and 20 20 are as follows:

|  | Nine months ended September 30, |
|  | 2021 |  |  | 2020 |  |  | $ Change |  |  | % Change |
Service charges |  | $ | 4,092 |  |  | $ | 3,812 |  |  | $ | 280 |  |  |  | 7.3 | %
Net gain on sale of securities |  |  | 1,787 |  |  |  | 92 |  |  |  | 1,695 |  |  |  | 1842.4 | %
Net gain (loss) on equity securities |  |  | 191 |  |  |  | (126 | ) |  |  | 317 |  |  |  | 251.6 | %
Net gain on sale of loans |  |  | 6,575 |  |  |  | 5,501 |  |  |  | 1,074 |  |  |  | 19.5 | %
ATM/Interchange fees |  |  | 3,950 |  |  |  | 3,226 |  |  |  | 724 |  |  |  | 22.4 | %
Wealth management fees |  |  | 3,570 |  |  |  | 2,916 |  |  |  | 654 |  |  |  | 22.4 | %
Bank owned life insurance |  |  | 752 |  |  |  | 733 |  |  |  | 19 |  |  |  | 2.6 | %
Tax refund processing fees |  |  | 2,375 |  |  |  | 2,375 |  |  |  | — |  |  |  | 0.0 | %
Swap fees |  |  | 135 |  |  |  | 1,260 |  |  |  | (1,125 | ) |  |  | -89.3 | %
Other |  |  | 1,214 |  |  |  | 727 |  |  |  | 487 |  |  |  | 67.0 | %
Total noninterest income |  | $ | 24,641 |  |  | $ | 20,516 |  |  | $ | 4,125 |  |  |  | 20.1 | %

Noninterest income for the nine months ended September 30, 2021 was $24,641, an increase of $4,125, or 20.1%, from $20,516 for the same period of 2020. The increase was primary due to increases in net gain (loss) on equity securities of $317, net gain on sale of securities of $1,695, net gain on sale of loans of $1,074, ATM/Interchange fees of $724, wealth management fees of $654 and other income of $487, which was offset by a decrease in swap fees of $1,125. Net gain on sale of securities increased as a result of the sale of Visa Class B shares. Net gain (loss) on equity securities increased as a result of market value increases. Net gain on sale of loans increased due to an increase in the premium on loans sold. ATM/Interchange fees increased as a result of increased transaction fees and MasterCard fees. Wealth management fees increased primarily as a result of an increase in trust and brokerage fees of $501 and $153, respectively. Trust income increased as a result of new accounts and market conditions while brokerage income has increased due to volume of business. Swap fees decreased due to the volume of swaps performed during the nine-months ended September 30, 2021 as compared to the same period of 2020. Other income increased due to increases in wire transfer fees, the amortization of mortgage servicing rights, merchant credit card fees and gains on the sale of OREO properties.

Additionally, the Company processes state and federal income tax refund payments for customers of third-party income tax preparation vendors for which we receive a fee for processing the refund payments. Tax refund processing fees were $2,375 for each of the nine months ended September 30, 2021 and 2020. This fee income is seasonal in nature, the majority of which is earned in the first quarter of the year.

Noninterest expense for the nine-month periods ended September 30, 2021 and 2020 are as follows:

|  | Nine months ended September 30, |
|  | 2021 |  |  | 2020 |  |  | $ Change |  |  | % Change |
Compensation expense |  | $ | 34,578 |  |  | $ | 32,063 |  |  | $ | 2,515 |  |  |  | 7.8 | %
Net occupancy expense |  |  | 3,216 |  |  |  | 3,050 |  |  |  | 166 |  |  |  | 5.4 | %
Equipment expense |  |  | 1,340 |  |  |  | 1,507 |  |  |  | (167 | ) |  |  | -11.1 | %
Contracted data processing |  |  | 1,362 |  |  |  | 1,340 |  |  |  | 22 |  |  |  | 1.6 | %
FDIC assessment |  |  | 829 |  |  |  | 531 |  |  |  | 298 |  |  |  | 56.1 | %
State franchise tax |  |  | 1,607 |  |  |  | 1,394 |  |  |  | 213 |  |  |  | 15.3 | %
Professional services |  |  | 2,255 |  |  |  | 2,289 |  |  |  | (34 | ) |  |  | -1.5 | %
Amortization of intangible assets |  |  | 668 |  |  |  | 686 |  |  |  | (18 | ) |  |  | -2.6 | %
ATM/Interchange expense |  |  | 1,843 |  |  |  | 1,316 |  |  |  | 527 |  |  |  | 40.0 | %
Marketing |  |  | 1,000 |  |  |  | 1,056 |  |  |  | (56 | ) |  |  | -5.3 | %
Software maintenance expense |  |  | 1,872 |  |  |  | 1,350 |  |  |  | 522 |  |  |  | 38.7 | %
Other operating expenses |  |  | 10,741 |  |  |  | 7,115 |  |  |  | 3,626 |  |  |  | 51.0 | %
Total noninterest expense |  | $ | 61,311 |  |  | $ | 53,697 |  |  | $ | 7,614 |  |  |  | 14.2 | %

Page 49

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Noninterest expense for the nine months ended September 30, 2021 was $61,311, an increase of $7,614, or 14.2%, from $53,697 reported for the same period of 2020. The primary reasons for the increase were increases in compensation expenses of $2,515, FDIC assessments of $298, state franchise tax of $213, ATM/Interchange expense of $527, software maintenance expense of $522 and other operating expenses of $3,626, offset by a decrease in expense in equipment expenses of $167. The increase in compensation expense was due to increased payroll, employee insurance, employer savings contributions, payroll taxes and commission and incentive based costs. Payroll and payroll related expenses increased due to annual pay increases, and increases in commission based costs are a result of increased loan activity. The year-over-year increase in FDIC assessments was attributable to small bank assessment credits applied to the 2020 assessments. The state franchise tax increase is related to $172 of additional taxes paid on the Company’s 2019 franchise tax return as a result of findings from a State of Ohio audit. The increase in ATM/Interchange expense is primarily due to increased transaction fees and a settlement received in the second quarter of 2020. The increase in software maintenance expense is due to a general increase in legacy software maintenance contracts and the implementation of our new digital banking. The increase in other operating expense is primarily due to the prepayment expense of $3,717 related to the early payoff of an FHLB long-term advance. Equipment expense decreased as a result of a decrease in equipment depreciation.

Income tax expense for the nine months ended September 30, 2021 totaled $5,038, up $1,904 compared to the same period in 2020. The effective tax rates for the nine-month periods ended September 30, 2021 and 2020 were 14.6% and 12.5%, respectively. The difference between the statutory federal income tax rate and the Company’s effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low income housing tax credits and bank owned life insurance income. The increase in the effective tax rate is due to higher taxable income for the nine-months ended September 30, 2021, as compared to the same period in 2020.

Capital Resources

Shareholders’ equity totaled $348,450 at September 30, 2021 compared to $350,108 at December 31, 2020. Shareholders’ equity was impacted by net income of $29,564, a $193 net decrease in the Company’s pension liability, which was offset by a decrease in the fair value of securities available for sale, net of tax, of $5,514, dividends on common stock of $5,932 and the Company’s repurchase of common shares during the period, which totaled $20,557.

All of the Company’s capital ratios exceeded the regulatory minimum guidelines as of September 30, 2021 and December 31, 2020 as identified in the following table:

|  | Total Risk Based Capital |  |  | Tier I Risk Based Capital |  |  | CET1 Risk Based Capital |  |  | Leverage Ratio |
Company Ratios—September 30, 2021 |  |  | 15.4 | % |  |  | 14.2 | % |  |  | 12.7 | % |  |  | 10.0 | %
Company Ratios—December 31, 2020 |  |  | 16.0 | % |  |  | 14.7 | % |  |  | 13.2 | % |  |  | 10.8 | %
For Capital Adequacy Purposes |  |  | 8.0 | % |  |  | 6.0 | % |  |  | 4.5 | % |  |  | 4.0 | %
To Be Well Capitalized Under Prompt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corrective Action Provisions |  |  | 10.0 | % |  |  | 8.0 | % |  |  | 6.5 | % |  |  | 5.0 | %

Page 50

Civista Bancshares, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Liquidity

The Company maintains a conservative liquidity position. All securities, with the exception of equity securities, are classified as available for sale. Securities, with maturities of one year or less, totaled $9,172, or 1.8% of the total security portfolio at September 30, 2021. The available for sale portfolio helps to provide the Company with the ability to meet its funding needs. The Condensed Consolidated Statements of Cash Flows (Unaudited) contained in the Consolidated Financial Statements detail the Company’s cash flows from operating activities resulting from net earnings.

As reported in the Condensed Consolidated Statements of Cash Flows (Unaudited), our cash flows are classified for financial reporting purposes as operating, investing or financing cash flows. Net cash provided by operating activities was $34,295 and $25,301 for the nine months ended September 30, 2021 and 2020, respectively. The primary additions to cash from operating activities are from proceeds from the sale of loans. The primary use of cash from operating activities is from loans originated for sale. Net cash used by investing activities was $83,948 and $340,281 for the nine months ended September 30, 2021 and 2020, respectively, principally reflecting our loan and investment security activities. Cash provided by and used for deposits, borrowings and purchase of treasury shares comprised most of our financing activities, which resulted in net cash provided by of $163,296 and $461,218 for the nine months ended September 30, 2021 and 2020, respectively.

Future loan demand of Civista may be funded by increases in deposit accounts, proceeds from payments on existing loans, the maturity of securities, and the sale of securities classified as available for sale. Additional sources of funds may also come from borrowing in the Federal Funds market and/or borrowing from the FHLB. Through its correspondent banks, Civista maintains federal funds borrowing lines totaling $50,000. As of September 30, 2020, Civista had total credit availability with the FHLB of $630,339 with standby letters of credit totaling $21,300 and a remaining borrowing capacity of approximately $550,849. In addition, CBI maintains a credit line totaling $10,000.

Page 51

Civista Bancshares, Inc.

Quantitative and Qualitative Disclosures About Market Risk

Form 10-Q

(Amounts in thousands, except share data)

ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk

The Company’s primary market risk exposure is interest-rate risk and, to a lesser extent, liquidity risk. All of the Company’s transactions are denominated in U.S. dollars with no specific foreign exchange exposure.

Interest-rate risk is the exposure of a banking organization’s financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value. However, excessive levels of interest-rate risk can pose a significant threat to the Company’s earnings and capital base. Accordingly, effective risk management that maintains interest-rate risk at prudent levels is essential to the Company’s safety and soundness.

Evaluating a financial institution’s exposure to changes in interest rates includes assessing both the adequacy of the management process used to control interest-rate risk and the organization’s quantitative level of exposure. When assessing the interest-rate risk management process, the Company seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest-rate risk at prudent levels with consistency and continuity. Evaluating the quantitative level of interest rate risk exposure requires the Company to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity and, where appropriate, asset quality.

The Federal Reserve Board, together with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, issue policy statements and guidance on sound practices for managing interest-rate risk, which form the basis for ongoing evaluation of the adequacy of interest-rate risk management at supervised institutions. The guidance also outlines fundamental elements of sound management and discusses the importance of these elements in the context of managing interest-rate risk. The guidance emphasizes the need for active board of director and senior management oversight and a comprehensive risk-management process that effectively identifies, measures, and controls interest-rate risk.

Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institution’s assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institution’s interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution’s profits could decrease on existing assets because the institution will have either lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment.

Several techniques may be used by an institution to minimize interest-rate risk. One approach used by the Company is to periodically analyze its assets and liabilities and make future financing and investment decisions based on payment streams, interest rates, contractual maturities, and estimated sensitivity to actual or potential changes in market interest rates. Such activities fall under the broad definition of asset/liability management. The Company’s primary asset/liability management technique is the measurement of the Company’s asset/liability gap, that is, the difference between the cash flow amounts of interest sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year, or longer period, the institution is in an asset sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. If, alternatively, more liabilities than assets will reprice, the institution is in a liability sensitive position. Accordingly, net interest income would decline when rates rose and increase when rates fell. Also, these examples assume that interest rate changes for assets and liabilities are of the same magnitude, whereas actual interest rate changes generally differ in magnitude for assets and liabilities.

Page 52

Civista Bancshares, Inc.

Quantitative and Qualitative Disclosures About Market Risk

Form 10-Q

(Amounts in thousands, except share data)

Several ways an institution can manage interest-rate risk include selling existing assets or repaying certain liabilities; matching repricing periods for new assets and liabilities, for example, by shortening terms of new loans or securities; and hedging existing assets, liabilities, or anticipated transactions. An institution might also invest in more complex financial instruments intended to hedge or otherwise change interest-rate risk. Interest rate swaps, futures contracts, options on futures, and other such derivative financial instruments often are used for this purpose. Because these instruments are sensitive to interest rate changes, they require management expertise to be effective. The Company has not purchased derivative financial instruments to hedge interest rate risk in the past and does not currently intend to purchase such instruments in the near future. Financial institutions are also subject to prepayment risk in falling rate environments. For example, mortgage loans and other financial assets may be prepaid by a debtor so that the debtor may refinance its obligations at new, lower rates. Prepayments of assets carrying higher rates reduce the Company’s interest income and overall asset yields. A large portion of an institution’s liabilities may be short-term or due on demand, while most of its assets may be invested in long-term loans or securities. Accordingly, the Company seeks to have in place sources of cash to meet short-term demands. These funds can be obtained by increasing deposits, borrowing, or selling assets. FHLB advances and wholesale borrowings may also be used as important sources of liquidity for the Company.

The following table provides information about the Company’s financial instruments that were sensitive to changes in interest rates as of December 31, 2020 and September 30, 2021, based on certain prepayment and account decay assumptions that management believes are reasonable. The table shows the changes in the Company’s net portfolio value (in amount and percent) that would result from hypothetical interest rate increases of 200 basis points and 100 basis points and interest rate decreases of 100 basis points and 200 basis points at September 30, 2021 and December 31, 2020.

The Company had derivative financial instruments as of December 31, 2020 and September 30, 2021. The changes in fair value of the assets and liabilities of the underlying contracts offset each other. Expected maturity date values for interest-bearing core deposits were calculated based on estimates of the period over which the deposits would be outstanding. The Company’s borrowings were tabulated by contractual maturity dates and without regard to any conversion or repricing dates.

Net Portfolio Value |
|  | September 30, 2021 |  |  | December 31, 2020 |
Change in Rates |  | Dollar Amount |  |  | Dollar Change |  |  | Percent Change |  |  | Dollar Amount |  |  | Dollar Change |  |  | Percent Change |
+200bp |  |  | 480,898 |  |  |  | 34,618 |  |  |  | 8 | % |  |  | 515,754 |  |  |  | 44,930 |  |  |  | 10 | %
+100bp |  |  | 463,817 |  |  |  | 17,537 |  |  |  | 4 | % |  |  | 503,010 |  |  |  | 32,186 |  |  |  | 7 | %
Base |  |  | 446,820 |  |  |  | — |  |  |  | — |  |  |  | 470,824 |  |  |  | — |  |  |  | — |
-100bp |  |  | 496,401 |  |  |  | 50,121 |  |  |  | 11 | % |  |  | 501,686 |  |  |  | 30,862 |  |  |  | 7 | %
-200bp |  |  | 438,655 |  |  |  | 92,375 |  |  |  | 21 | % |  |  | 527,360 |  |  |  | 56,536 |  |  |  | 12 | %

The change in net portfolio value from December 31, 2020 to September 30, 2021, can be attributed to a couple of factors. The yield curve has shifted up and steepened on the short end from the end of the year, and both the volume and mix of assets and funding sources has changed. The volume of loans has decreased and the mix has shifted toward cash and investment securities. The decrease in loans is result of PPP loan forgiveness. Cash increased as a result of the increase in deposits. Some of our excess liquidity has been redeployed into our investment portfolio. The volume and mix of liabilities has shifted toward deposits and away from certificates of deposit and other borrowings. Deposits increased as a result of personal, business and public fund account increases. The mix shifts from the end of the year, particularly to deposits, led to a small decrease in the base net portfolio value. Beyond the change in the base level of net portfolio value, projected movements in rates, up or down, would also lead to changes in market values. The change in the rates up scenarios for both the 100 and 200 basis point movements would lead to a larger decrease in the market value of liabilities than assets. Accordingly, we see an increase in the net portfolio value. For 100 and 200 basis point downward changes in rates, the market value of assets would increase faster than the market value of liabilities, leading to an increase in the net portfolio value.

Page 53

Civista Bancshares, Inc.

Controls and Procedures

Form 10-Q

(Amounts in thousands, except share data)

ITEM 4. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive and our principal financial officers, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our principal executive and our principal financial officers concluded that our disclosure controls and procedures as of September 30, 2021, were effective.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Page 54

Civista Bancshares, Inc.

Other Information

Form 10-Q

Part II—Other Information

Item 1. | Legal Proceedings

In the ordinary course of their respective businesses, CBI or Civista or their respective properties may be named or otherwise subject as a plaintiff, defendant or other party to various pending and threatened legal proceedings and various actual and potential claims. In view of the inherent difficulty of predicting the outcome of such matters, CBI cannot state what the eventual outcome of any such matters will be. However, based on current knowledge and after consultation with legal counsel, management believes these proceedings will not have a material adverse effect on the consolidated financial position, results of operations or liquidity of CBI or Civista.

Item 1A. | Risk Factors

There were no material changes during the current period to the risk factors disclosed in “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as supplemented by the risk factors disclosed in “Item 1A. Risk Factors” of the Company’s Quarterly Report on Form 10Q for the quarterly period ended June 30, 2021.

Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds

During the third quarter of 2021, the Company purchased common shares as follows:

Period |  | Total Number of Shares Purchased |  |  | Average Price Paid per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  |  | Maximum Number (or Approximate Dollar Value) of Shares (Units) that May Yet Be Purchased Under the Plans or Programs |
July 1, 2021 - July 31, 2021 |  |  | 270,496 |  |  | $ | 22.77 |  |  |  | 270,496 |  |  | $ | 680,660 |
August 1, 2021 - August 31, 2021 |  |  | 42,934 |  |  | $ | 22.96 |  |  |  | 42,934 |  |  | $ | 13,117,881 |
September 1, 2021 - September 30, 2021 |  |  | 91,190 |  |  | $ | 22.56 |  |  |  | 91,190 |  |  | $ | 11,060,834 |
Total |  |  | 404,620 |  |  | $ | 22.74 |  |  |  | 404,620 |  |  | $ | 11,060,834 |

On April 20, 2021, the Company publicly announced a common share repurchase program which authorized the Company to repurchase a maximum aggregate value of $13,500,000 of its outstanding common shares. Civista repurchased a total of 562,489 common shares for an aggregate purchase price of $12,819,340 under the repurchase program. On August 12, 2021, the Company publicly announced a new common share repurchase program, which replaced the repurchase program which replaced the April 20, 2020 repurchase program and authorizes the Company to repurchase a maximum aggregate value of $13,500,000 of its outstanding common shares. The expiration date of the common share repurchase program is August 10, 2022. A total of 107,834 common shares had been repurchased for an aggregate purchase price of $2,439,166 as of September 30, 2021 under this repurchase program.

Item 3. | Defaults Upon Senior Securities

None

Item 4.Mine Safety Disclosures

Not applicable

Item 5. | Other Information

None

Page 55

Civista Bancshares, Inc.

Other Information

Form 10-Q

Item 6. | Exhibits

Exhibit |  | Description |  | Location
3.1 |  | Second Amended and Restated Articles of Incorporation of Civista Bancshares, Inc., as filed with the Ohio Secretary of State on November 15, 2018. |  | Filed as Exhibit 3.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K, filed on November 16, 2018 and incorporated herein by reference. (File No. 001-36192)
3.2 |  | Amended and Restated Code of Regulations of Civista Bancshares, Inc. (adopted April 15, 2008) |  | Filed as Exhibit 3.2 to Civista Bancshares, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed on November 8, 2017 and incorporated herein by reference. (File No. 001-36192)
31.1 |  | Rule 13a-14(a)/15-d-14(a) Certification of Chief Executive Officer. |  | Included herewith
31.2 |  | Rule 13a-14(a)/15-d-14(a) Certification of Principal Accounting Officer. |  | Included herewith
32.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | Included herewith
32.2 |  | Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | Included herewith
101 |  | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, formatted in Inline Extensible Business Reporting Language: (i) Consolidated Balance Sheets (Unaudited) as of September 30, 2021 and December 31, 2020; (ii) Consolidated Statements of Income (Unaudited) for the three- and nine-months ended September 30, 2021 and 2020; (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three- and nine-months ended September 30, 2021 and 2020; (iv) Consolidated Statement of Shareholders’ Equity (Unaudited) for the three-and nine-months ended September 30, 2021 and 2020; (v) Condensed Consolidated Statement of Cash Flows (Unaudited) for the nine months ended September 30, 2021 and 2020; and (vi) Notes to Interim Consolidated Financial Statements (Unaudited). |  | Included herewith
104 |  | Cover page formatted in Inline Extensible Business Reporting Language. |  | Included herewith

Page 56

Civista Bancshares, Inc.

Signatures

Form 10-Q

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Civista Bancshares, Inc.

/s/ Dennis G. Shaffer |  | November 9, 2021
Dennis G. Shaffer |  | Date
Chief Executive Officer and President |  |

/s/ Todd A. Michel |  | November 9, 2021
Todd A. Michel |  | Date
Senior Vice President, Controller |  |

Page 57