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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 - March 31, 2024

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 May 6, 2024—15,727,013 shares

CIVIST A BANCS HARES, INC.

Index

PART I. |  | Financial Information |  |  | 2 |
Item 1. |  | Financial Statements: |  |  | 2 |
|  | Consolidated Balance Sheets (Unaudited) March 31, 2024 and December 31, 2023 |  |  |  |
|  | Consolidated Statements of Operations (Unaudited) Three months ended March 31, 2024 and 2023 |  |  | 2 |
|  | Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three months ended March 31, 2024 and 2023 |  |  | 4 |
|  | Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) Three months ended March 31, 2024 and 2023 |  |  | 5 |
|  | Condensed Consolidated Statements of Cash Flows (Unaudited) Three months ended March 31, 2024 and 2023 |  |  | 6 |
|  | Notes to Interim Consolidated Financial Statements (Unaudited) |  |  | 7-35 |
Item 2. |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  |  | 36-45 |
Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk |  |  | 46-47 |
Item 4. |  | Controls and Procedures |  |  | 48 |
PART II. |  | Other Information |  |  | 49 |
Item 1. |  | Legal Proceedings |  |  | 49 |
Item 1A. |  | Risk Factors |  |  | 49 |
Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds |  |  | 49 |
Item 3. |  | Defaults Upon Senior Securities |  |  | 49 |
Item 4. |  | Mine Safety Disclosures |  |  | 49 |
Item 5. |  | Other Information |  |  | 49 |
Item 6. |  | Exhibits |  |  | 50 |
Signatures |  |  |  |  | 51 |

Part I – Financ ial Information

ITEM 1. Financi al Statements

CIVISTA BANCSHARES, INC.

Consolidated Balance Sheets

(In thousands, except share data)

|  | March 31, 2024 |  |  |  |
|  | (Unaudited) |  |  | December 31, 2023 |
ASSETS |  |  |  |  |  |
Cash and due from financial institutions |  | $ | 50,310 |  |  | $ | 60,406 |
Investments in time deposits |  |  | 1,450 |  |  |  | 1,225 |
Securities available-for-sale |  |  | 606,249 |  |  |  | 618,272 |
Equity securities |  |  | 2,027 |  |  |  | 2,169 |
Loans held for sale |  |  | 3,716 |  |  |  | 1,725 |
Loans, net of allowance for credit losses of $38,849 and $36,170 |  |  | 2,859,290 |  |  |  | 2,824,568 |
Other securities |  |  | 31,360 |  |  |  | 29,998 |
Premises and equipment, net |  |  | 54,280 |  |  |  | 56,769 |
Accrued interest receivable |  |  | 13,513 |  |  |  | 12,819 |
Goodwill |  |  | 125,520 |  |  |  | 125,520 |
Other intangible assets, net |  |  | 9,098 |  |  |  | 9,508 |
Bank owned life insurance |  |  | 61,685 |  |  |  | 61,335 |
Swap assets |  |  | 14,682 |  |  |  | 12,481 |
Deferred taxes |  |  | 20,296 |  |  |  | 18,357 |
Other assets |  |  | 26,782 |  |  |  | 26,266 |
Total assets |  | $ | 3,880,258 |  |  | $ | 3,861,418 |
LIABILITIES |  |  |  |  |  |
Deposits |  |  |  |  |  |
Noninterest-bearing |  | $ | 707,993 |  |  | $ | 771,699 |
Interest-bearing |  |  | 2,272,702 |  |  |  | 2,213,329 |
Total deposits |  |  | 2,980,695 |  |  |  | 2,985,028 |
Short-term Federal Home Loan Bank advances |  |  | 368,500 |  |  |  | 338,000 |
Long-term Federal Home Loan Bank advances |  |  | 2,211 |  |  |  | 2,392 |
Subordinated debentures |  |  | 103,984 |  |  |  | 103,943 |
Other borrowings |  |  | 8,105 |  |  |  | 9,859 |
Swap liabilities |  |  | 14,682 |  |  |  | 12,481 |
Accrued expenses and other liabilities |  |  | 32,422 |  |  |  | 37,713 |
Total liabilities |  |  | 3,510,599 |  |  |  | 3,489,416 |
SHAREHOLDERS’ EQUITY |  |  |  |  |  |
Common shares, no par value, 40,000,000 shares authorized, 19,328,525 shares issued at March 31, 2024 and 19,288,674 shares issued at December 31, 2023, including Treasury shares |  |  | 311,352 |  |  |  | 311,166 |
Retained earnings |  |  | 187,638 |  |  |  | 183,788 |
Treasury shares, 3,601,512 common shares at March 31, 2024 and 3,593,250 common shares at December 31, 2023, at cost |  |  | (75,574 | ) |  |  | (75,422 | )
Accumulated other comprehensive loss |  |  | (53,757 | ) |  |  | (47,530 | )
Total shareholders’ equity |  |  | 369,659 |  |  |  | 372,002 |
Total liabilities and shareholders’ equity |  | $ | 3,880,258 |  |  | $ | 3,861,418 |

See notes to interim unaudited consolidated financial statements

Page 2

CIVISTA BANCSHARES, INC.

Consolidated Statements o f Operations (Unaudited)

(In thousands, except per share data)

|  | Three months ended |  |
|  | March 31, |  |
|  | 2024 |  |  | 2023 |  |
Interest and dividend income |  |  |  |  |  |  |
Loans, including fees |  | $ | 44,484 |  |  | $ | 37,784 |  |
Taxable securities |  |  | 2,934 |  |  |  | 2,834 |  |
Tax-exempt securities |  |  | 2,375 |  |  |  | 2,262 |  |
Deposits in other banks |  |  | 335 |  |  |  | 45 |  |
Total interest and dividend income |  |  | 50,128 |  |  |  | 42,925 |  |
Interest expense |  |  |  |  |  |  |
Deposits |  |  | 15,987 |  |  |  | 3,232 |  |
Federal Home Loan Bank advances |  |  | 4,528 |  |  |  | 4,277 |  |
Subordinated debentures |  |  | 1,241 |  |  |  | 1,169 |  |
Securities sold under agreements to repurchase and other |  |  | - |  |  |  | 1,646 |  |
Total interest expense |  |  | 21,756 |  |  |  | 10,324 |  |
Net interest income |  |  | 28,372 |  |  |  | 32,601 |  |
Provision for credit losses - loans |  |  | 2,042 |  |  |  | 620 |  |
Provision for credit losses - off-balance sheet credit exposures |  |  | (50 | ) |  |  | 201 |  |
Net interest income after provision |  |  | 26,380 |  |  |  | 31,780 |  |
Noninterest income |  |  |  |  |  |  |
Service charges |  |  | 1,440 |  |  |  | 1,773 |  |
Net gain on sale of securities |  |  | — |  |  |  | — |  |
Net gain (loss) on equity securities |  |  | (141 | ) |  |  | (68 | ) |
Net gain on sale of loans and leases |  |  | 863 |  |  |  | 631 |  |
ATM/Interchange fees |  |  | 1,383 |  |  |  | 1,353 |  |
Wealth management fees |  |  | 1,276 |  |  |  | 1,193 |  |
Lease revenue and residual income |  |  | 1,674 |  |  |  | 2,046 |  |
Bank owned life insurance |  |  | 350 |  |  |  | 253 |  |
Tax refund processing fees |  |  | — |  |  |  | 1,900 |  |
Swap fees |  |  | 57 |  |  |  | 61 |  |
Other |  |  | 1,602 |  |  |  | 1,926 |  |
Total noninterest income |  |  | 8,504 |  |  |  | 11,068 |  |
Noninterest expense |  |  |  |  |  |  |
Compensation expense |  |  | 15,457 |  |  |  | 15,105 |  |
Net occupancy expense |  |  | 1,368 |  |  |  | 1,359 |  |
Equipment expense |  |  | 2,535 |  |  |  | 2,761 |  |
Contracted data processing |  |  | 545 |  |  |  | 520 |  |
FDIC assessment |  |  | 484 |  |  |  | 248 |  |
State franchise tax |  |  | 485 |  |  |  | 526 |  |
Professional services |  |  | 1,149 |  |  |  | 1,555 |  |
Amortization of intangible assets |  |  | 391 |  |  |  | 398 |  |
ATM/Interchange expense |  |  | 625 |  |  |  | 580 |  |
Marketing |  |  | 479 |  |  |  | 505 |  |
Software maintenance expense |  |  | 1,189 |  |  |  | 878 |  |
Other operating expenses |  |  | 2,982 |  |  |  | 2,997 |  |
Total noninterest expense |  |  | 27,689 |  |  |  | 27,432 |  |
Income before taxes |  |  | 7,195 |  |  |  | 15,416 |  |
Income tax expense |  |  | 835 |  |  |  | 2,528 |  |
Net Income |  | $ | 6,360 |  |  | $ | 12,888 |  |
Earnings per common share, basic |  | $ | 0.41 |  |  | $ | 0.82 |  |
Earnings per common share, diluted |  | $ | 0.41 |  |  | $ | 0.82 |  |

See notes to interim unaudited consolidated financial statements

Page 3

CIVISTA BANCSHARES, INC.

Consolidated Statements of Com prehensive Income (Loss) (Unaudited)

(In thousands)

|  | Three Months Ended |
|  | March 31, |
|  | 2024 |  |  | 2023 |
Net income |  | $ | 6,360 |  |  | $ | 12,888 |
Other comprehensive income (loss): |  |  |  |  |  |
Unrealized holding (losses) on available-for-sale securities |  |  | (7,899 | ) |  |  | 10,302 |
Tax effect |  |  | 1,672 |  |  |  | (2,167 | )
Reclassification of gains recognized in net income |  |  | — |  |  |  | — |
Tax effect |  |  | — |  |  |  | — |
Pension liability adjustment |  |  | — |  |  |  | — |
Tax effect |  |  | — |  |  |  | — |
Total other comprehensive (loss) |  |  | (6,227 | ) |  |  | 8,135 |
Comprehensive income (loss) |  | $ | 133 |  |  | $ | 21,023 |

See notes to interim unaudited consolidated financial statements

Page 4

CIVISTA BANCSHARES, INC.

Consolidated Statement of Changes i n Shareholders’ Equity (Unaudited)

(In thousands, except share data)

|  | Common Shares |  |  |  |  |  |  |  |  | Accumulated Other |  |  | Total |
|  | Outstanding Shares |  |  | Amount |  |  | Retained Earnings |  |  | Treasury Shares |  |  | Comprehensive Income (Loss) |  |  | Shareholders’ Equity |
Balance, December 31, 2023 |  |  | 15,695,424 |  |  | $ | 311,166 |  |  | $ | 183,788 |  |  | $ | (75,422 | ) |  | $ | (47,530 | ) |  | $ | 372,002 |
Net Income |  |  | — |  |  |  | — |  |  |  | 6,360 |  |  |  | — |  |  |  | — |  |  |  | 6,360 |
Other comprehensive loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (6,227 | ) |  |  | (6,227 | )
Stock-based compensation |  |  | 39,851 |  |  |  | 186 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 186 |
Common stock dividends ($0.15 per share) |  |  | — |  |  |  | — |  |  |  | (2,510 | ) |  |  | — |  |  |  | — |  |  |  | (2,510 | )
Purchase of common stock |  |  | (8,262 | ) |  |  | — |  |  |  | — |  |  |  | (152 | ) |  |  | — |  |  |  | (152 | )
Balance, March 31, 2024 |  |  | 15,727,013 |  |  | $ | 311,352 |  |  | $ | 187,638 |  |  | $ | (75,574 | ) |  | $ | (53,757 | ) |  | $ | 369,659 |
|  | Common Shares |  |  |  |  |  |  |  |  | Accumulated Other |  |  | Total |
|  | Outstanding Shares |  |  | Amount |  |  | Retained Earnings |  |  | Treasury Shares |  |  | Comprehensive Income (Loss) |  |  | Shareholders’ Equity |
Balance, December 31, 2022 |  |  | 15,728,234 |  |  | $ | 310,182 |  |  | $ | 156,492 |  |  | $ | (73,794 | ) |  | $ | (58,045 | ) |  | $ | 334,835 |
Cumulative-effect adjustment for adoption of ASC 326 |  |  | — |  |  |  | — |  |  |  | (6,069 | ) |  |  | — |  |  |  | — |  |  | $ | (6,069 | )
Balance, January 1, 2023 |  |  | 15,728,234 |  |  |  | 310,182 |  |  |  | 150,423 |  |  |  | (73,794 | ) |  |  | (58,045 | ) |  | $ | 328,766 |
Net Income |  |  | — |  |  |  | — |  |  |  | 12,888 |  |  |  | — |  |  |  | — |  |  |  | 12,888 |
Other comprehensive loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 8,135 |  |  |  | 8,135 |
Stock-based compensation |  |  | 45,796 |  |  |  | 230 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 230 |
Common stock dividends ($0.14 per share) |  |  | — |  |  |  | — |  |  |  | (2,201 | ) |  |  | — |  |  |  | — |  |  |  | (2,201 | )
Purchase of common stock |  |  | (5,620 | ) |  |  | — |  |  |  | — |  |  |  | (121 | ) |  |  | — |  |  |  | (121 | )
Balance, March 31, 2023 |  |  | 15,768,410 |  |  | $ | 310,412 |  |  | $ | 161,110 |  |  | $ | (73,915 | ) |  | $ | (49,910 | ) |  | $ | 347,697 |

See notes to interim unaudited consolidated financial statements

Page 5

CIVISTA BANCSHARES, INC.

Condensed Consolidated Stateme nts of Cash Flows (Unaudited)

(In thousands)

|  | Three Months Ended March 31, |
|  | 2024 |  |  | 2023 |
Net cash provided by operating activities |  | $ | 752 |  |  | $ | 19,794 |
Cash flows used for investing activities: |  |  |  |  |  |
Maturities, paydowns and calls of securities, available-for-sale |  |  | 4,873 |  |  |  | 4,980 |
Purchases of securities, available-for-sale |  |  | (1,188 | ) |  |  | (7,179 | )
Purchase of other securities |  |  | (2,785 | ) |  |  | (9,126 | )
Redemption of other securities |  |  | 1,423 |  |  |  | 7,328 |
Net change in loans |  |  | (36,372 | ) |  |  | (34,085 | )
Proceeds from sale of premises and equipment |  |  | — |  |  |  | 692 |
Premises and equipment purchases |  |  | (123 | ) |  |  | (1,245 | )
Net cash used for investing activities |  |  | (34,172 | ) |  |  | (38,635 | )
Cash flows from financing activities: |  |  |  |  |  |
Repayment of long-term FHLB advances |  |  | (181 | ) |  |  | (217 | )
Net change in short-term FHLB advances |  |  | 30,500 |  |  |  | (181,700 | )
Repayment of other borrowings |  |  | — |  |  |  | (1,578 | )
Increase in deposits |  |  | (4,333 | ) |  |  | 223,532 |
Decrease in securities sold under repurchase agreements |  |  | — |  |  |  | (9,512 | )
Purchase of treasury shares |  |  | (152 | ) |  |  | (121 | )
Common dividends paid |  |  | (2,510 | ) |  |  | (2,201 | )
Net cash provided by (used for) financing activities |  |  | 23,324 |  |  |  | 28,203 |
Increase (decrease) in cash and cash equivalents |  |  | (10,096 | ) |  |  | 9,362 |
Cash and cash equivalents at beginning of period |  |  | 60,406 |  |  |  | 43,361 |
Cash and cash equivalents at end of period |  | $ | 50,310 |  |  | $ | 52,723 |
Cash paid during the period for: |  |  |  |  |  |
Interest |  | $ | 6,289 |  |  | $ | 1,628 |
Income taxes |  |  | 4 |  |  |  | 10 |
Supplemental cash flow information: |  |  |  |  |  |
Change in fair value of swap asset |  |  | (2,201 | ) |  |  | 3,229 |
Change in fair value of swap liability |  |  | 2,201 |  |  |  | (3,229 | )

See notes to interim unaudited consolidated financial statements

Page 6

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(1) Cons olidated 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 direct and indirect subsidiaries: Civista Bank (Civista), First Citizens Insurance Agency, Inc. (FCIA), Water Street Properties, Inc. (Water St.), CIVB Risk Management, Inc. (CRMI) and First Citizens Investments, Inc. (FCI).

Civista provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Cuyahoga, Franklin, Logan, Summit, Huron, Ottawa, Madison, Montgomery, Henry, Wood, and Richland, 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. There are no significant concentrations of loans to any one industry or customer. However, our customers’ ability to repay their loans is dependent on the real estate and general economic conditions in the area. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions.

Civista Leasing and Finance, formerly known as Vision Financial Group, Inc. ("VFG") was acquired in the fourth quarter of 2022 as a wholly owned subsidiary of Civista. As of August 31, 2023, VFG was merged into Civista and now operates as a full-service equipment leasing and financing division of Civista and has been rebranded as Civista Leasing and Finance ("CLF"). The operations of CLF are headquartered in Pittsburgh, Pennsylvania.

FCIA is wholly-owned by CBI and was formed to allow the Company to participate in commission revenue generated through its third-party insurance agreement. Water St. is wholly-owned by CBI and was formed to hold properties repossessed by CBI subsidiaries. CRMI is a captive insurance company that is wholly-owned by CBI and allows CBI and its subsidiaries to insure against certain risks unique to their operations. The operations of CRMI are located in Wilmington, Delaware. FCI is wholly-owned by Civista and holds and manages its securities portfolio. The operations of FCI are located in Wilmington, Delaware.

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 accompanying Unaudited 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 March 31, 2024 and its results of operations and changes in cash flows for the periods ended March 31, 2024 and 2023 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 March 31, 2024 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 2023 annual report. The Company has consistently followed these policies in preparing this Form 10-Q.

(2) Significant Accounting Policies

Allowance for Credit Losses: On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 introduces a new credit loss methodology, Current Expected Credit Losses ("CECL"), which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. ASU 2016-13 amends guidance on reporting credit losses for financial assets held at amortized cost basis and available for sale debt securities. ASU 2016-13 eliminates the probable initial recognition threshold previously required under GAAP and instead, requires an entity to reflect its current estimate of all expected credit losses based on historical experience, current conditions and reasonable and supportable forecasts. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the reserve for credit losses. In addition, entities need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.

Page 7

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The Company adopted Accounting Standards Codification ("ASC") 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for the periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company adopted ASC 326 using the prospective transition approach for purchased credit deteriorated ("PCD") financial assets that were previously classified as purchased credit impaired ("PCI") and accounted for under ASC 310-30. In accordance with ASC 326, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2023, the amortized cost basis of the PCD assets was adjusted to reflect the addition of $1,668 to the allowance for credit losses. The remaining noncredit discount (based on the adjusted amortized cost basis) will be accreted into interest income at the effective interest rate as of January 1, 2023. The adoption of CECL resulted in an increase to our total allowance for credit losses (“ACL”) on loans held for investment of $4.3 million, an increase in allowance for credit losses on unfunded loan commitments of $3.4 million, a reclassification of PCI discount from loans to the allowance for credit losses of $1.7 million, and an increase in deferred tax asset of $1.6 million. The Company also recorded a net reduction of retained earnings of $6.1 million upon adoption.

The allowance for credit losses is evaluated on a regular basis and established through charges to earnings in the form of a provision for credit losses. When a loan or portion of a loan is determined to be uncollectible, the portion deemed uncollectible is charged against the allowance and subsequent recoveries, if any, are credited to the allowance. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

Portfolio Segmentation (“Pooled Loans”)

Portfolio segmentation is defined as the pooling of loans based upon similar risk characteristics such that quantitative methodologies and qualitative adjustment factors for estimating the allowance for credit losses are constructed for each segment. The Company has identified nine portfolio segments of loans including Commercial & Agriculture, Commercial Real Estate – Owner Occupied, Commercial Real Estate – Non-Owner Occupied, Residential Real Estate, Real Estate Construction, Home Equity Line of Credit, Farm Real Estate, Lease Financing Receivable and Consumer and Other Loans.

The allowance for credit losses for Pooled Loans is estimated based upon periodic review of the collectability of the loans quantitatively correlating historical loan experience with reasonable and supportable forecasts using forward looking information. The Company utilized a discounted cash flow (DCF) method to estimate the quantitative portion of the allowance for credit losses for loans evaluated on a collective pooled basis. For each segment, a loss driver analysis (LDA) was performed in order to identify appropriate loss drivers and create a regression model for use in forecasting cash flows. The LDA utilized the Company’s own Federal Financial Institutions Examination Council’s (“FFIEC”) Call Report data for all segments except indirect auto and all new and unknown values. Peer data was incorporated into the analysis for all segments except indirect auto and all new and unknown values. The Company uses regression analysis to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default for the changes in the economic factors for the loss driver segments. The identified loss drivers for all segments as of December 31, 2023 are national unemployment rate and national gross domestic product growth. Peer data is utilized in our model as more statistically supportable data. The Company uses actual loss data for the lease portfolio due to a lack of appropriate peer leasing data to forecast loss drivers.

Key inputs into the DCF model include loan-level detail, including the amortized cost basis of individual loans, payment structure, loss history, and forecasted loss drivers. The Company uses the central tendency midpoint seasonally adjusted forecasts from the Federal Open Market Committee (FOMC). Other key assumptions include the probability of default (PD), loss given default (LGD), and prepayment/curtailment rates. When possible, the Company utilizes its own PDs for the reasonable and supportable forecast period. When it is not possible to use the Company’s own PDs, the LDA is utilized to determine PDs based on the forecasted economic factors. In all cases, the LDA is then utilized to determine the long-term historical average, which is reached over the reversion period. When possible, the Company utilizes its own LGDs for the reasonable and supportable forecast period. When it is not possible to use the Company’s own LGDs, the LGD is derived using a method referred to as Frye Jacobs. The Frye Jacobs method is a mathematical formula that traces the relationship between LGD and PD over time and projects the LGD based on the level of PD forecasted. In all cases, the Frye Jacobs method is utilized to calculate LGDs during the reversion period and long-term historical average. Prepayment and curtailment rates were calculated based on the Company’s own data utilizing a one-year average. When the discounted cash flow method is used to determine the allowance for credit losses, management incorporates expected prepayments to determine the effective interest rate utilized to discount expected cash flow.

Adjustments to the quantitative evaluation may be made to account for differences in current or expected qualitative risk characteristics such as changes in: (i) lending policies and procedures; (ii) experience and depth of lending and management staff; (iii) quality of credit

Page 8

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

review system; (iv) nature and volume of portfolio; (v) past due, classified and non accrual loans; (vi) economic and business conditions; (vii) competition or legal and regulatory requirements; (viii) concentrations within the portfolio; (ix) underlying collateral for collateral dependent loans.

Purchased Credit Deteriorated (PCD) Loans

The Company has purchased loans, some of which have shown evidence of credit deterioration since origination. Upon adoption of ASC 326, the Company elected to maintain pools of loans that were previously accounted for under ASC 310-30 and will continue to account for these pools as a unit of account. Loans are only removed from the existing pools if they are written off, paid off, or sold. Upon adoption of ASC 326, the allowance for credit losses was determined for each pool and added to the pool's carrying amount to establish a new amortized cost basis. The difference between the unpaid principal balance of the pool and the new amortized cost basis is the noncredit premium or discount which will be amortized into interest income over the remaining life of the pool. Changes to the allowance for credit losses after adoption are recorded through provision expense.

Individually Evaluated Loans

The Company establishes a specific reserve for individually evaluated loans which do not share similar risk characteristics with the loans included in the forecasted allowance for credit losses. These individually evaluated loans are removed from the pooling approach discussed above for the forecasted allowance for credit losses, and include nonaccrual loans, loan and lease modifications experiencing financial difficulty, and other loans deemed appropriate by management.

Available for Sale (“AFS”) Debt Securities

For AFS securities in an unrealized loss position, we first assess whether (i) we intend to sell, or (ii) it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either case is affirmative, any previously recognized allowances are charged-off and the security's amortized cost is written down to fair value through income. If neither case is affirmative, the security is evaluated to determine whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and any adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Adjustments to the allowance are reported in our income statement as a component of credit loss expense. AFS securities are charged-off against the allowance or, in the absence of any allowance, written down through income when deemed uncollectible by management or when either of the aforementioned criteria regarding intent or requirement to sell is met.

Accrued Interest Receivable

Upon adoption of ASU 2016-13 and its related amendments on January 1, 2023, the Company made the following elections regarding accrued interest receivable:

•
Presenting accrued interest receivable balances separately within another line item on the statement of financial condition.
•
Excluding accrued interest receivable that is included in the amortized cost of financing receivables and debt securities from related disclosure requirements.
•
Continuing our policy to write off accrued interest receivable by reversing interest income. For both commercial and consumer loans, the writ e off typically occurs upon becoming 90 days past due. H istorically, the Company has not experienced uncollectible accrued interest receivable on its investment securities. However, the Company would generally write off accrued interest receivable by reversing interest income if the Company does not reasonably expect to receive payments. Due to the timely manner in which accrued interest receivables are written off, the amounts of such write offs are immaterial.
•
Not measuring an allowance for credit losses for accrued interest receivable due to the Company’s policy of writing off uncollectible accrued interest receivable balances in a timely manner, as described above.

Page 9

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Reserve for Unfunded Commitments

The reserve for unfunded commitments (the “Unfunded Reserve”) represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. No allowance is recognized if the Company has the unconditional right to cancel the obligation. The Company is defining unconditionally cancelable in its literal sense, meaning that a commitment may be cancelled by the Company for any, or for no reason whatsoever. However, the Company in its business dealings, has no practical history of unconditionally canceling commitments. Commitments are not typically cancelled until a default or a defined condition occurs. Being that its historical practice has been to not cancel credit commitments unconditionally, the Company has made the decision to reserve for Unfunded Commitments. The Unfunded Reserve is recognized as a liability (included within other liabilities in the Consolidated Balance Sheets), with adjustments to the reserve recognized as hprovision in the Consolidated Statements of Operations. The Unfunded Reserve is determined by estimating expected future fundings, under each segment, and applying the expected loss rates. Expected future fundings over the estimated life of commitments are based on historical averages of funding rates (i.e., the likelihood of draws taken). To estimate future fundings on unfunded balances, current funding rates are compared to historical funding rates. Estimate of credit losses are determined using the same loss rates as funded loans.

Revisions: Int erest income and interest expense increased $1,386 in the Consolidated Statement of Operations as of and for the quarter ended March 31, 2023 for certain loan participations sold that were deemed to not qualify for sales accounting under ASC 860. This revision did not have a significant impact on the consolidated financial statement line items impacted and had no effect on net income.

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America "GAAP", 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 credit 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 June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The ASU introduces a new credit loss methodology, CECL, which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. Since its original issuance in 2016, the FASB has issued several updates to the original ASU.

The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity securities and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The methodology replaces the multiple existing impairment methods under prior GAAP, which generally require that a loss be incurred before it is recognized. For available-for-sale securities where fair value is less than cost, credit-related impairment, if any, is recognized through an allowance for credit losses and adjusted each period for changes in credit risk.

On January 1, 2023, the Company adopted the guidance prospectively with a cumulative adjustment to retained earnings.

Page 10

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

At adoption, the Company recognized an incremental allowance for credit losses on its loans to customers of $4.3 million, a liability for off-balance sheet unfunded commitments of $3.4 million and a reclassification of the discount on PCI loans to the ACL of $1.7 million. Additionally, the Company recorded a $6.1 million after tax decrease in retained earnings associated with the increased estimated credit losses. The “Day 1” impact of CECL adoption is summarized below:

CECL Adoption |
|  |  |  |  |  |  |  | Impact of |  |  |  |
|  |  |  |  | CECL Adoption |  |  | Adopting ASC 326 - |  |  |  |
|  | December 31, 2022 |  |  | Impact |  |  | PCD Loans |  |  | January 1, 2023 |
Allowance for Credit Losses: |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Agriculture |  | $ | 3,011 |  |  | $ | 429 |  |  | $ | 390 |  |  | $ | 3,830 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 4,565 |  |  |  | 1,075 |  |  |  | 179 |  |  |  | 5,819 |
Non-Owner Occupied |  |  | 14,138 |  |  |  | (2,847 | ) |  |  | — |  |  |  | 11,291 |
Residential Real Estate |  |  | 3,145 |  |  |  | 2,762 |  |  |  | 386 |  |  |  | 6,293 |
Real Estate Construction |  |  | 2,293 |  |  |  | 1,502 |  |  |  | — |  |  |  | 3,795 |
Farm Real Estate |  |  | 291 |  |  |  | (28 | ) |  |  | — |  |  |  | 263 |
Lease Financing Receivable |  |  | 429 |  |  |  | 1,743 |  |  |  | 635 |  |  |  | 2,807 |
Consumer and Other |  |  | 98 |  |  |  | 201 |  |  |  | 78 |  |  |  | 377 |
Unallocated |  |  | 541 |  |  |  | (541 | ) |  |  | — |  |  |  | — |
Total Allowance for Credit Losses |  | $ | 28,511 |  |  | $ | 4,296 |  |  | $ | 1,668 |  |  | $ | 34,475 |
Reserve for Unfunded Commitments |  |  | — |  |  |  | 3,386 |  |  |  | — |  |  |  | 3,386 |
Total Reserve for Credit Losses |  | $ | 28,511 |  |  | $ | 7,682 |  |  | $ | 1,668 |  |  | $ | 37,861 |
Retained Earnings |  |  |  |  |  |  |  |  |  |  |  |
Total Pre-tax Impact |  |  |  |  | $ | (7,682 | ) |  |  |  |  |  |
Tax Effect |  |  |  |  |  | 1,613 |  |  |  |  |  |  |
Decrease to Retained Earnings |  |  |  |  | $ | (6,069 | ) |  |  |  |  |  |

The Company did not record an allowance for available-for-sale securities on Day 1 as the investment portfolio consists primarily of debt securities explicitly or implicitly backed by the U.S. Government for which credit risk is deemed minimal. The impact going forward will depend on the composition, characteristics, and credit quality of the securities portfolio as well as the economic conditions at future reporting periods.

On January 1, 2023, the Company adopted 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 SEC filers that were eligible to be smaller reporting companies as of November 15, 2019, such as the Company, to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The adoption of the ASU provisions did no t have a significant impact on the Company's Consolidated Financial Statements.

Page 11

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"). ASU 2022-02 eliminates the recognition and measurement guidance for troubled debt restructurings and requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. This ASU also requires enhanced disclosure for loans that have been charged off. The adoption of ASU 2022-02 provisions did no t have a significant impact on the Company’s Consolidated Financial Statements.

Effect of Newly Issued but Not Yet Effective Accounting Standards:

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; however, a deferral of the implementation of reference rate reform was issued in December of 2022, which extends the implementation to December 31, 2024. The Company has implemented a replacement for the reference rate using SOFR or the Prime Rate and has determined that the changes to the reference rate is not expected to have a material impact on our financial condition, results of operations or cash flows.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." The amendments apply to all public entities that are required to report segment information in accordance with FASB ASC Topic 280, Segment Reporting. The amendments in the ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss. Public entities are required to disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. In addition, public entities must provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting, in interim periods. The amendments clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements. The Amendments require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Finally, the amendments require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in ASC Topic 280. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the potential impacts related to the adoption of the ASU.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." The amendments require that public business entities on an annual basis (a) disclose specific categories in the rate reconciliation and (b) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). The amendments also require that all entities disclose on an annual basis the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes, and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amendments require that all entities disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. The ASU is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company does not intend to adopt early. The Company does not anticipate a significant impact to the consolidated financial statements upon adoption.

Page 12

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(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:

March 31, 2024 |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury securities and obligations of U.S. government agencies |  | $ | 72,013 |  |  | $ | 467 |  |  | $ | (4,438 | ) |  | $ | 68,042 |
Obligations of states and political subdivisions |  |  | 358,809 |  |  |  | 1,294 |  |  |  | (26,652 | ) |  |  | 333,451 |
Mortgage-backed securities in government sponsored entities |  |  | 237,942 |  |  |  | 14 |  |  |  | (33,200 | ) |  |  | 204,756 |
Total debt securities |  | $ | 668,764 |  |  | $ | 1,775 |  |  | $ | (64,290 | ) |  | $ | 606,249 |

December 31, 2023 |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury securities and obligations of U.S. government agencies |  | $ | 71,418 |  |  | $ | 315 |  |  | $ | (4,075 | ) |  | $ | 67,658 |
Obligations of states and political subdivisions |  |  | 359,452 |  |  |  | 2,725 |  |  |  | (23,578 | ) |  |  | 338,599 |
Mortgage-backed securities in government sponsored entities |  |  | 242,022 |  |  |  | 19 |  |  |  | (30,026 | ) |  |  | 212,015 |
Total debt securities |  | $ | 672,892 |  |  | $ | 3,059 |  |  | $ | (57,679 | ) |  | $ | 618,272 |

The amortized cost and fair value of securities at March 31, 2024, 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 |  | $ | 5,279 |  |  | $ | 5,246 |
Due after one year through five years |  |  | 82,371 |  |  |  | 76,227 |
Due after five years through ten years |  |  | 44,592 |  |  |  | 43,602 |
Due after ten years |  |  | 298,580 |  |  |  | 276,418 |
Mortgage-backed securities |  |  | 237,942 |  |  |  | 204,756 |
Total securities available-for-sale |  | $ | 668,764 |  |  | $ | 606,249 |

There were no proceeds from sales of securities available-for-sale, gross unrealized gains or gross realized losses as of March 31, 2024 or March 31, 2023.

Securities are pledged by the Company from time to time to secure public deposits, other deposits and liabilities as required by law. The carrying value of pledged securities was approximately $203,714 and $211,616 as of March 31, 2024 and December 31, 2023, respectively.

Page 13

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2024 and December 31, 2023:

March 31, 2024 |  | 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 |  | $ | 2,102 |  |  | $ | (5 | ) |  | $ | 56,010 |  |  | $ | (4,433 | ) |  | $ | 58,112 |  |  | $ | (4,438 | )
Obligations of states and political subdivisions |  |  | 48,073 |  |  |  | (323 | ) |  |  | 171,551 |  |  |  | (26,329 | ) |  |  | 219,624 |  |  |  | (26,652 | )
Mortgage-backed securities in gov’t sponsored entities |  |  | 746 |  |  |  | (12 | ) |  |  | 201,675 |  |  |  | (33,188 | ) |  |  | 202,421 |  |  |  | (33,200 | )
Total temporarily impaired |  | $ | 50,921 |  |  | $ | (340 | ) |  | $ | 429,236 |  |  | $ | (63,950 | ) |  | $ | 480,157 |  |  | $ | (64,290 | )

December 31, 2023 |  | 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 |  | $ | 224 |  |  | $ | (1 | ) |  | $ | 56,760 |  |  | $ | (4,074 | ) |  | $ | 56,984 |  |  | $ | (4,075 | )
Obligations of states and political subdivisions |  |  | 19,168 |  |  |  | (78 | ) |  |  | 162,291 |  |  |  | (23,500 | ) |  |  | 181,459 |  |  |  | (23,578 | )
Mortgage-backed securities in gov’t sponsored entities |  |  | 20,112 |  |  |  | (522 | ) |  |  | 189,319 |  |  |  | (29,504 | ) |  |  | 209,431 |  |  |  | (30,026 | )
Total temporarily impaired |  | $ | 39,504 |  |  | $ | (601 | ) |  | $ | 408,370 |  |  | $ | (57,078 | ) |  | $ | 447,874 |  |  | $ | (57,679 | )

At March 31, 2024, there were a tot al of 446 securities in t he 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.

The following table presents the net gains and losses on equity investments recognized in earnings for the three months ended March 31, 2024 and the portion of unrealized gains and losses for the period that relates to equity investments held at March 31, 2024 and 2023:

|  | Three Months Ended March 31, |
|  | 2024 |  |  | 2023 |
Net losses recognized on equity securities during the period |  | $ | (141 | ) |  | $ | (68 | )
Less: Net losses realized on the sale of equity securities during the period |  |  | — |  |  |  | — |
Unrealized losses recognized on equity securities held at reporting date |  | $ | (141 | ) |  | $ | (68 | )

Page 14

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(4) Loans

Loan balances were as follows:

|  | March 31, 2024 |  |  | December 31, 2023 |
Commercial & Agriculture |  | $ | 302,663 |  |  | $ | 304,793 |
Commercial Real Estate- Owner Occupied |  |  | 367,419 |  |  |  | 377,321 |
Commercial Real Estate- Non-Owner Occupied |  |  | 1,185,688 |  |  |  | 1,161,894 |
Residential Real Estate |  |  | 676,802 |  |  |  | 659,841 |
Real Estate Construction |  |  | 267,737 |  |  |  | 260,409 |
Farm Real Estate |  |  | 24,908 |  |  |  | 24,771 |
Lease Financing Receivable |  |  | 56,680 |  |  |  | 54,642 |
Consumer and Other |  |  | 16,242 |  |  |  | 18,056 |
Total loans |  |  | 2,898,139 |  |  |  | 2,861,727 |
Allowance for credit losses |  |  | (38,849 | ) |  |  | (37,160 | )
Net loans |  | $ | 2,859,290 |  |  | $ | 2,824,567 |

Included in Commercial & Agriculture loans above are $289 and $326 of Paycheck Protection Program (“PPP”) loans as of March 31, 2024 and December 31, 2023, respectively.

Included in total loans above are net deferred loan fees of $2,664 and $2,743 at March 31, 2024 and December 31, 2023, respectively.

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this Note 4 and Note 5 (Allowance for Credit Losses). As of March 31, 2024 and December 31, 2023, accrued interest receivable totaled $13,513 and $12,819, respectively, and is included in the accrued interest receivable line item on the Company's Consolidated Balance Sheet.

(5) Allowance for Credit Losses

The following table presents, by portfolio segment, the changes in the ACL for the three months ended March 31, 2024.

Allowance for credit losses:

For the three months ended March 31, 2024 |  | Beginning balance |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Ending Balance |
Commercial & Agriculture |  | $ | 7,587 |  |  | $ | (212 | ) |  | $ | 152 |  |  | $ | 210 |  |  | $ | 7,737 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 4,723 |  |  |  | — |  |  |  | 3 |  |  |  | (74 | ) |  |  | 4,652 |
Non-Owner Occupied |  |  | 12,056 |  |  |  | (174 | ) |  |  | 5 |  |  |  | 1,081 |  |  |  | 12,968 |
Residential Real Estate |  |  | 8,489 |  |  |  | (13 | ) |  |  | 120 |  |  |  | 478 |  |  |  | 9,074 |
Real Estate Construction |  |  | 3,388 |  |  |  | — |  |  |  | 4 |  |  |  | 41 |  |  |  | 3,433 |
Farm Real Estate |  |  | 260 |  |  |  | — |  |  |  | — |  |  |  | 60 |  |  |  | 320 |
Lease Financing Receivables |  |  | 297 |  |  |  | (226 | ) |  |  | — |  |  |  | 288 |  |  |  | 359 |
Consumer and Other |  |  | 341 |  |  |  | (26 | ) |  |  | 14 |  |  |  | (23 | ) |  |  | 306 |
Unallocated |  |  | 19 |  |  |  | — |  |  |  | — |  |  |  | (19 | ) |  |  | 0 |
Total |  | $ | 37,160 |  |  | $ | (651 | ) |  | $ | 298 |  |  | $ | 2,042 |  |  | $ | 38,849 |

Page 15

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

For the three months ended March 31, 2024, the Company provided $2,042 to the allowance for credit losses, as compared to a provision of $620 for the three months ended March 31, 2023. The company experienced an increase in the allowance for credit losses as our CECL model required higher reserves, primarily attributable to three credits, based on the individually analyzed loan and lease portfolio.

For the three months ended March 31, 2023 |  | Beginning balance |  |  | CECL Adoption Day 1 Impact |  |  | Impact of Adopting ASC 326 - PCD Loans 1 |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Ending Balance |  |
Commercial & Agriculture |  | $ | 3,011 |  |  | $ | 429 |  |  | $ | — |  | $ | (140 | ) |  | $ | 6 |  |  | $ | 10 |  |  | $ | 3,316 |  |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 4,565 |  |  |  | 1,075 |  |  |  | 19 |  |  | — |  |  |  | — |  |  |  | 74 |  |  |  | 5,733 |  |
Non-Owner Occupied |  |  | 14,138 |  |  |  | (2,847 | ) |  |  | — |  |  | — |  |  |  | 7 |  |  |  | 462 |  |  |  | 11,760 |  |
Residential Real Estate |  |  | 3,145 |  |  |  | 2,762 |  |  |  | 166 |  |  | (10 | ) |  |  | 22 |  |  |  | (151 | ) |  |  | 5,934 |  |
Real Estate Construction |  |  | 2,293 |  |  |  | 1,502 |  |  |  | — |  |  | — |  |  |  | 4 |  |  |  | 121 |  |  |  | 3,920 |  |
Farm Real Estate |  |  | 291 |  |  |  | (28 | ) |  |  | — |  |  | — |  |  |  | — |  |  |  | 6 |  |  |  | 269 |  |
Lease Financing Receivables |  |  | 429 |  |  |  | 1,743 |  |  |  | 635 |  |  | — |  |  |  | — |  |  |  | 100 |  |  |  | 2,907 |  |
Consumer and Other |  |  | 98 |  |  |  | 201 |  |  |  | 77 |  |  | (25 | ) |  |  | 8 |  |  |  | (5 | ) |  |  | 354 |  |
Unallocated |  |  | 541 |  |  |  | (541 | ) |  |  | — |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 3 |  |
Total |  | $ | 28,511 |  |  | $ | 4,296 |  |  | $ | 897 |  | $ | (175 | ) |  | $ | 47 |  |  | $ | 620 |  |  | $ | 34,196 |  |
1 Day 1 impact of $1,668, of adopting ASC 326-PCD loans was netted by changes in estimates of $771.

For the three months ended March 31, 2023, the Company provided $620 to the allowance for credit losses. Upon adoption of CECL we recorded an increase in the allowance for credit losses of $5,193. The increase in the reserves was principally related to loan growth during the quarter.

Allowance for credit losses:

The following tables present credit exposures by internally assigned risk grades as of March 31, 2024 and December 31, 2023. 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.

Page 16

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Based on the most recent analysis performed, the risk category of loans, by type and year of originations, at March 31, 2024, is as follows:

|  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Revolving |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Loans |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Revolving |  |  | Converted |  |  |  |
March 31, 2024 |  | 2024 |  |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | Prior |  |  | Loans |  |  | to Term |  |  | Total |
Commercial & Agriculture |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 12,961 |  |  | $ | 57,193 |  |  | $ | 59,599 |  |  | $ | 49,031 |  |  | $ | 15,668 |  |  | $ | 21,053 |  |  | $ | 80,266 |  |  | $ | — |  |  | $ | 295,771 |
Special Mention |  |  | — |  |  |  | 949 |  |  |  | 162 |  |  |  | 267 |  |  |  | 1,581 |  |  |  | 106 |  |  |  | 383 |  |  |  | — |  |  |  | 3,448 |
Substandard |  |  | — |  |  |  | 307 |  |  |  | 192 |  |  |  | 57 |  |  |  | 128 |  |  |  | 396 |  |  |  | 2,345 |  |  |  | — |  |  |  | 3,425 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11 |  |  |  | 8 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 19 |
Total Commercial & Agriculture |  | $ | 12,961 |  |  | $ | 58,449 |  |  | $ | 59,953 |  |  | $ | 49,366 |  |  | $ | 17,385 |  |  | $ | 21,555 |  |  | $ | 82,994 |  |  | $ | — |  |  | $ | 302,663 |
Commercial & Agriculture: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period gross charge-offs |  | $ | — |  |  | $ | 139 |  |  | $ | — |  |  | $ | 40 |  |  | $ | — |  |  | $ | 33 |  |  | $ | — |  |  | $ | — |  |  | $ | 212 |
Commercial Real Estate - Owner Occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 8,466 |  |  | $ | 37,270 |  |  | $ | 81,350 |  |  | $ | 66,298 |  |  | $ | 53,393 |  |  | $ | 108,338 |  |  | $ | 6,251 |  |  | $ | — |  |  | $ | 361,366 |
Special Mention |  |  | — |  |  |  | 523 |  |  |  | 215 |  |  |  | 733 |  |  |  | 512 |  |  |  | 456 |  |  |  | — |  |  |  | — |  |  |  | 2,439 |
Substandard |  |  | — |  |  |  | — |  |  |  | 227 |  |  |  | — |  |  |  | — |  |  |  | 3,387 |  |  |  | — |  |  |  | — |  |  |  | 3,614 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Commercial Real Estate - Owner Occupied |  | $ | 8,466 |  |  | $ | 37,793 |  |  | $ | 81,792 |  |  | $ | 67,031 |  |  | $ | 53,905 |  |  | $ | 112,181 |  |  | $ | 6,251 |  |  | $ | — |  |  | $ | 367,419 |
Commercial Real Estate - Owner Occupied: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period gross charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Commercial Real Estate - Non-Owner Occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 3,399 |  |  | $ | 189,130 |  |  | $ | 285,936 |  |  | $ | 195,569 |  |  | $ | 135,004 |  |  | $ | 325,610 |  |  | $ | 25,275 |  |  | $ | — |  |  | $ | 1,159,923 |
Special Mention |  |  | — |  |  |  | 584 |  |  |  | 5,731 |  |  |  | 6,114 |  |  |  | - |  |  |  | 8,636 |  |  |  | 277 |  |  |  | — |  |  |  | 21,342 |
Substandard |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | - |  |  |  | 4,423 |  |  |  | — |  |  |  | — |  |  |  | 4,423 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Commercial Real Estate - Non-Owner Occupied |  | $ | 3,399 |  |  | $ | 189,714 |  |  | $ | 291,667 |  |  | $ | 201,683 |  |  | $ | 135,004 |  |  | $ | 338,669 |  |  | $ | 25,552 |  |  | $ | — |  |  | $ | 1,185,688 |
Commercial Real Estate - Non-Owner Occupied: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period gross charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 174 |  |  | $ | — |  |  | $ | — |  |  | $ | 174 |
Residential Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 16,859 |  |  | $ | 99,311 |  |  | $ | 124,004 |  |  | $ | 94,750 |  |  | $ | 69,778 |  |  | $ | 107,071 |  |  | $ | 157,772 |  |  | $ | — |  |  | $ | 669,545 |
Special Mention |  |  | — |  |  |  | 286 |  |  |  | — |  |  |  | 218 |  |  |  | 95 |  |  |  | 213 |  |  |  | — |  |  |  | — |  |  |  | 812 |
Substandard |  |  | 1,200 |  |  |  | 180 |  |  |  | 579 |  |  |  | 768 |  |  |  | 80 |  |  |  | 2,484 |  |  |  | 1,154 |  |  |  | — |  |  |  | 6,445 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Residential Real Estate |  | $ | 18,059 |  |  | $ | 99,777 |  |  | $ | 124,583 |  |  | $ | 95,736 |  |  | $ | 69,953 |  |  | $ | 109,768 |  |  | $ | 158,926 |  |  | $ | — |  |  | $ | 676,802 |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period gross charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 3 |  |  | $ | — |  |  | $ | 10 |  |  | $ | — |  |  | $ | — |  |  | $ | 13 |

Real Estate Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 8,265 |  |  | $ | 127,222 |  |  | $ | 88,148 |  |  | $ | 21,687 |  |  | $ | 8,488 |  |  | $ | 4,760 |  |  | $ | 7,140 |  |  | $ | — |  |  | $ | 265,710 |
Special Mention |  |  | — |  |  |  | 385 |  |  |  | 1,487 |  |  |  | 155 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,027 |
Substandard |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Real Estate Construction |  | $ | 8,265 |  |  | $ | 127,607 |  |  | $ | 89,635 |  |  | $ | 21,842 |  |  | $ | 8,488 |  |  | $ | 4,760 |  |  | $ | 7,140 |  |  | $ | — |  |  | $ | 267,737 |
Real Estate Construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

Page 17

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Current-period gross charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Farm Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 627 |  |  | $ | 2,329 |  |  | $ | 947 |  |  | $ | 2,237 |  |  | $ | 4,392 |  |  | $ | 12,875 |  |  | $ | 1,501 |  |  | $ | — |  |  | $ | 24,908 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Substandard |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Farm Real Estate |  | $ | 627 |  |  | $ | 2,329 |  |  | $ | 947 |  |  | $ | 2,237 |  |  | $ | 4,392 |  |  | $ | 12,875 |  |  | $ | 1,501 |  |  | $ | — |  |  | $ | 24,908 |
Farm Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Lease Financing Receivables |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 3,087 |  |  | $ | 10,764 |  |  | $ | 12,248 |  |  | $ | 11,891 |  |  | $ | 5,068 |  |  | $ | 11,976 |  |  | $ | — |  |  | $ | — |  |  |  | 55,034 |
Special Mention |  |  | — |  |  |  | 254 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 254 |
Substandard |  |  | — |  |  |  | 444 |  |  |  | 114 |  |  |  | 30 |  |  |  | 44 |  |  |  | 108 |  |  |  | — |  |  |  | — |  |  |  | 740 |
Doubtful |  |  | — |  |  |  | 193 |  |  |  | 351 |  |  |  | 24 |  |  |  | 15 |  |  |  | 69 |  |  |  | — |  |  |  | — |  |  |  | 652 |
Total Lease Financing Receivables |  | $ | 3,087 |  |  | $ | 11,655 |  |  | $ | 12,713 |  |  | $ | 11,945 |  |  | $ | 5,127 |  |  | $ | 12,153 |  |  | $ | — |  |  | $ | — |  |  | $ | 56,680 |
Lease Financing Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period charge-offs |  | $ | — |  |  | $ | — |  |  | $ | 151 |  |  | $ | 12 |  |  | $ | 63 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 226 |
Consumer and Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 1,117 |  |  | $ | 4,994 |  |  | $ | 3,629 |  |  | $ | 3,155 |  |  | $ | 1,293 |  |  | $ | 530 |  |  | $ | 1,484 |  |  | $ | — |  |  | $ | 16,202 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Substandard |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 17 |  |  |  | 13 |  |  |  | 6 |  |  |  | — |  |  |  | — |  |  |  | 40 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Consumer and Other |  | $ | 1,117 |  |  | $ | 4,994 |  |  | $ | 3,633 |  |  | $ | 3,172 |  |  | $ | 1,306 |  |  | $ | 536 |  |  | $ | 1,484 |  |  | $ | — |  |  | $ | 16,242 |
Consumer and Other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period charge-offs |  | $ | — |  |  | $ | 2 |  |  | $ | 2 |  |  | $ | 5 |  |  | $ | 4 |  |  | $ | 13 |  |  | $ | — |  |  | $ | — |  |  | $ | 26 |
Total Loans |  | $ | 55,981 |  |  | $ | 532,318 |  |  | $ | 664,923 |  |  | $ | 453,012 |  |  | $ | 295,560 |  |  | $ | 612,497 |  |  | $ | 283,848 |  |  | $ | — |  |  | $ | 2,898,139 |
Total Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period charge-offs |  | $ | — |  |  | $ | 141 |  |  | $ | 153 |  |  | $ | 60 |  |  | $ | 67 |  |  | $ | 230 |  |  | $ | — |  |  | $ | — |  |  | $ | 651 |

Page 18

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Risk category of loans, by type and year of originations, at December 31, 2023 is as follows:

|  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Revolving |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Loans |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Revolving |  |  | Converted |  |  |  |
December 31, 2023 |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Loans |  |  | to Term |  |  | Total |
Commercial & Agriculture |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 56,359 |  |  | $ | 64,250 |  |  | $ | 52,258 |  |  | $ | 17,622 |  |  | $ | 9,516 |  |  | $ | 14,088 |  |  | $ | 82,982 |  |  | $ | — |  |  | $ | 297,075 |
Special Mention |  |  | 774 |  |  |  | — |  |  |  | 287 |  |  |  | 1,690 |  |  |  | — |  |  |  | 106 |  |  |  | 169 |  |  |  | — |  |  |  | 3,026 |
Substandard |  |  | 396 |  |  |  | 86 |  |  |  | 67 |  |  |  | 131 |  |  |  | 271 |  |  |  | 73 |  |  |  | 3,668 |  |  |  | — |  |  |  | 4,692 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Commercial & Agriculture |  | $ | 57,529 |  |  | $ | 64,336 |  |  | $ | 52,612 |  |  | $ | 19,443 |  |  | $ | 9,787 |  |  | $ | 14,267 |  |  | $ | 86,819 |  |  | $ | — |  |  | $ | 304,793 |
Commercial & Agriculture: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period gross charge-offs |  | $ | — |  |  | $ | 673 |  |  | $ | 532 |  |  | $ | — |  |  | $ | — |  |  | $ | 95 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,300 |
Commercial Real Estate - Owner Occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 36,030 |  |  | $ | 82,502 |  |  | $ | 67,904 |  |  | $ | 56,069 |  |  | $ | 29,784 |  |  | $ | 92,750 |  |  | $ | 5,844 |  |  | $ | — |  |  | $ | 370,883 |
Special Mention |  |  | 526 |  |  |  | 217 |  |  |  | 739 |  |  |  | 517 |  |  |  | - |  |  |  | 188 |  |  |  | — |  |  |  | — |  |  |  | 2,187 |
Substandard |  |  | — |  |  |  | 231 |  |  |  | — |  |  |  | — |  |  |  | 3,098 |  |  |  | 922 |  |  |  | — |  |  |  | — |  |  |  | 4,251 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Commercial Real Estate - Owner Occupied |  | $ | 36,556 |  |  | $ | 82,950 |  |  | $ | 68,643 |  |  | $ | 56,586 |  |  | $ | 32,882 |  |  | $ | 93,860 |  |  | $ | 5,844 |  |  | $ | — |  |  | $ | 377,321 |
Commercial Real Estate - Owner Occupied: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period gross charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Commercial Real Estate - Non-Owner Occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 183,439 |  |  | $ | 269,334 |  |  | $ | 198,832 |  |  | $ | 136,031 |  |  | $ | 120,659 |  |  | $ | 206,267 |  |  | $ | 23,016 |  |  | $ | — |  |  | $ | 1,137,578 |
Special Mention |  |  | — |  |  |  | 5,774 |  |  |  | 6,171 |  |  |  | — |  |  |  | - |  |  |  | 8,688 |  |  |  | 277 |  |  |  | — |  |  |  | 20,910 |
Substandard |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 122 |  |  |  | 3,284 |  |  |  | — |  |  |  | — |  |  |  | 3,406 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Commercial Real Estate - Non-Owner Occupied |  | $ | 183,439 |  |  | $ | 275,108 |  |  | $ | 205,003 |  |  | $ | 136,031 |  |  | $ | 120,781 |  |  | $ | 218,239 |  |  | $ | 23,293 |  |  | $ | — |  |  | $ | 1,161,894 |
Commercial Real Estate - Non-Owner Occupied: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period gross charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Residential Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 90,770 |  |  | $ | 124,695 |  |  | $ | 97,661 |  |  | $ | 71,379 |  |  | $ | 33,534 |  |  | $ | 78,894 |  |  | $ | 157,083 |  |  | $ | — |  |  | $ | 654,016 |
Special Mention |  |  | — |  |  |  | — |  |  |  | 221 |  |  |  | 97 |  |  |  | — |  |  |  | 245 |  |  |  | — |  |  |  | — |  |  |  | 563 |
Substandard |  |  | 186 |  |  |  | 342 |  |  |  | 684 |  |  |  | 82 |  |  |  | 582 |  |  |  | 2,063 |  |  |  | 1,323 |  |  |  | — |  |  |  | 5,262 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Residential Real Estate |  | $ | 90,956 |  |  | $ | 125,037 |  |  | $ | 98,566 |  |  | $ | 71,558 |  |  | $ | 34,116 |  |  | $ | 81,202 |  |  | $ | 158,406 |  |  | $ | — |  |  | $ | 659,841 |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period gross charge-offs |  | $ | — |  |  | $ | 6 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 11 |  |  | $ | — |  |  | $ | — |  |  | $ | 17 |

Page 19

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Real Estate Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 108,606 |  |  | $ | 105,222 |  |  | $ | 20,960 |  |  | $ | 6,739 |  |  | $ | 2,699 |  |  | $ | 2,635 |  |  | $ | 9,335 |  |  | $ | — |  |  | $ | 256,196 |
Special Mention |  |  | — |  |  |  | 1,226 |  |  |  | 926 |  |  |  | 2,019 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,171 |
Substandard |  |  | — |  |  |  | — |  |  |  | 42 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 42 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Real Estate Construction |  | $ | 108,606 |  |  | $ | 106,448 |  |  | $ | 21,928 |  |  | $ | 8,758 |  |  | $ | 2,699 |  |  | $ | 2,635 |  |  | $ | 9,335 |  |  | $ | — |  |  | $ | 260,409 |
Real Estate Construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period gross charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Farm Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 2,207 |  |  | $ | 967 |  |  | $ | 2,256 |  |  | $ | 4,462 |  |  | $ | 789 |  |  | $ | 12,528 |  |  | $ | 1,292 |  |  | $ | — |  |  | $ | 24,501 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 20 |  |  |  | — |  |  |  | — |  |  |  | 20 |
Substandard |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 250 |  |  |  | — |  |  |  | — |  |  |  | 250 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Farm Real Estate |  | $ | 2,207 |  |  | $ | 967 |  |  | $ | 2,256 |  |  | $ | 4,462 |  |  | $ | 789 |  |  | $ | 12,798 |  |  | $ | 1,292 |  |  | $ | — |  |  | $ | 24,771 |
Farm Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Lease Financing Receivables |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 28,177 |  |  | $ | 13,924 |  |  | $ | 6,620 |  |  | $ | 3,678 |  |  | $ | 1,725 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 54,125 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Substandard |  |  | — |  |  |  | 8 |  |  |  | 38 |  |  |  | 61 |  |  |  | 231 |  |  |  | 17 |  |  |  | — |  |  |  | — |  |  |  | 355 |
Doubtful |  |  | — |  |  |  | 139 |  |  |  | — |  |  |  | 15 |  |  |  | 8 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 162 |
Total Lease Financing Receivables |  | $ | 28,177 |  |  | $ | 14,071 |  |  | $ | 6,658 |  |  | $ | 3,754 |  |  | $ | 1,964 |  |  | $ | 18 |  |  | $ | — |  |  | $ | — |  |  | $ | 54,642 |
Lease Financing Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Consumer and Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 6,510 |  |  | $ | 4,135 |  |  | $ | 3,615 |  |  | $ | 1,578 |  |  | $ | 509 |  |  | $ | 248 |  |  | $ | 1,424 |  |  | $ | — |  |  | $ | 18,019 |
Special Mention |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Substandard |  |  | — |  |  |  | 2 |  |  |  | 14 |  |  |  | 15 |  |  |  | — |  |  |  | 6 |  |  |  | — |  |  |  | — |  |  |  | 37 |
Doubtful |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Consumer and Other |  | $ | 6,510 |  |  | $ | 4,137 |  |  | $ | 3,629 |  |  | $ | 1,593 |  |  | $ | 509 |  |  | $ | 254 |  |  | $ | 1,424 |  |  | $ | — |  |  | $ | 18,056 |
Consumer and Other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period charge-offs |  | $ | 6 |  |  | $ | 40 |  |  | $ | 40 |  |  | $ | 7 |  |  | $ | 13 |  |  | $ | 3 |  |  | $ | 5 |  |  | $ | — |  |  | $ | 114 |
Total Loans |  | $ | 513,980 |  |  | $ | 673,054 |  |  | $ | 459,295 |  |  | $ | 302,185 |  |  | $ | 203,527 |  |  | $ | 423,273 |  |  | $ | 286,413 |  |  | $ | — |  |  | $ | 2,861,727 |
Total Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current-period charge-offs |  | $ | 6 |  |  | $ | 719 |  |  | $ | 572 |  |  | $ | 7 |  |  | $ | 13 |  |  | $ | 109 |  |  | $ | 5 |  |  | $ | — |  |  | $ | 1,431 |

Page 20

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following tables include an aging analysis of the recorded investment of past due loans outstanding as of March 31, 2024 and December 31, 2023.

March 31, 2024 |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90 Days or Greater Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans |  |  | Past Due 90 Days and Accruing |
Commercial & Agriculture |  | $ | 495 |  |  | $ | 133 |  |  | $ | 1,742 |  |  | $ | 2,370 |  |  | $ | 300,293 |  |  | $ | 302,663 |  |  | $ | 314 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 365 |  |  |  | — |  |  |  | 14 |  |  |  | 379 |  |  |  | 367,040 |  |  |  | 367,419 |  |  |  | — |
Non-Owner Occupied |  |  | 1,034 |  |  |  | — |  |  |  | 1,863 |  |  |  | 2,897 |  |  |  | 1,182,791 |  |  |  | 1,185,688 |  |  |  | — |
Residential Real Estate |  |  | 4,592 |  |  |  | 116 |  |  |  | 1,209 |  |  |  | 5,917 |  |  |  | 670,885 |  |  |  | 676,802 |  |  |  | — |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 267,737 |  |  |  | 267,737 |  |  |  | — |
Farm Real Estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 24,908 |  |  |  | 24,908 |  |  |  | — |
Lease Financing Receivables |  |  | 1,160 |  |  |  | — |  |  |  | 3,190 |  |  |  | 4,350 |  |  |  | 52,330 |  |  |  | 56,680 |  |  |  | 2,189 |
Consumer and Other |  |  | 119 |  |  |  | 2 |  |  |  | 16 |  |  |  | 137 |  |  |  | 16,105 |  |  |  | 16,242 |  |  |  | — |
Total |  | $ | 7,765 |  |  | $ | 251 |  |  | $ | 8,034 |  |  | $ | 16,050 |  |  | $ | 2,882,089 |  |  | $ | 2,898,139 |  |  | $ | 2,503 |

Page 21

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

December 31, 2023 |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90 Days or Greater Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans |  |  | Past Due 90 Days and Accruing |
Commercial & Agriculture |  | $ | 1,228 |  |  | $ | 471 |  |  | $ | 1,999 |  |  | $ | 3,698 |  |  | $ | 301,095 |  |  | $ | 304,793 |  |  | $ | 73 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 4 |  |  |  | — |  |  |  | 123 |  |  |  | 127 |  |  |  | 377,194 |  |  |  | 377,321 |  |  |  | — |
Non-Owner Occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 0 |  |  |  | 1,161,894 |  |  |  | 1,161,894 |  |  |  | — |
Residential Real Estate |  |  | 4,581 |  |  |  | 1,180 |  |  |  | 1,642 |  |  |  | 7,403 |  |  |  | 652,438 |  |  |  | 659,841 |  |  |  | — |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 260,409 |  |  |  | 260,409 |  |  |  | — |
Farm Real Estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 24,771 |  |  |  | 24,771 |  |  |  | — |
Lease Financing Receivables |  |  | 950 |  |  |  | 410 |  |  |  | 373 |  |  |  | 1,733 |  |  |  | 52,909 |  |  |  | 54,642 |  |  |  | — |
Consumer and Other |  |  | 172 |  |  |  | 23 |  |  |  | 2 |  |  |  | 197 |  |  |  | 17,859 |  |  |  | 18,056 |  |  |  | — |
Total |  | $ | 6,935 |  |  | $ | 2,084 |  |  | $ | 4,139 |  |  | $ | 13,158 |  |  | $ | 2,848,569 |  |  | $ | 2,861,727 |  |  | $ | 73 |

The following table presents loans on nonaccrual status as of March 31, 2024.

March 31, 2024 |  | Nonaccrual loans with a related ACL |  |  | Nonaccrual loans without a related ACL |  |  | Total Nonaccrual loans |  |  | Interest Income Recognized |
Commercial & Agriculture |  | $ | 982 |  |  | $ | 2,843 |  |  | $ | 3,825 |  |  | $ | 6 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 32 |  |  |  | 447 |  |  |  | 479 |  |  |  | 21 |
Non-Owner Occupied |  |  | 1,059 |  |  |  | 1,954 |  |  |  | 3,013 |  |  |  | — |
Residential Real Estate |  |  | — |  |  |  | 4,646 |  |  |  | 4,646 |  |  |  | 24 |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 |
Farm Real Estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Lease Financing Receivables |  |  | 585 |  |  |  | 643 |  |  |  | 1,228 |  |  |  | — |
Consumer and Other |  |  | — |  |  |  | 44 |  |  |  | 44 |  |  |  | 1 |
Total |  | $ | 2,658 |  |  | $ | 10,577 |  |  | $ | 13,235 |  |  | $ | 54 |

The following table presents loans on nonaccrual status as of December 31, 2023.

December 31, 2023 |  | Nonaccrual loans with a related ACL |  |  | Nonaccrual loans without a related ACL |  |  | Total Nonaccrual loans |  |  | Interest Income Recognized |
Commercial & Agriculture |  | $ | 914 |  |  | $ | 4,891 |  |  | $ | 5,805 |  |  | $ | 9 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 269 |  |  |  | 3 |  |  |  | 272 |  |  |  | 7 |
Non-Owner Occupied |  |  | — |  |  |  | 1,167 |  |  |  | 1,167 |  |  |  | — |
Residential Real Estate |  |  | — |  |  |  | 4,633 |  |  |  | 4,633 |  |  |  | 26 |
Real Estate Construction |  |  | — |  |  |  | 41 |  |  |  | 41 |  |  |  | — |
Farm Real Estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Lease Financing Receivables |  |  | 15 |  |  |  | 492 |  |  |  | 507 |  |  |  | — |
Consumer and Other |  |  | — |  |  |  | 42 |  |  |  | 42 |  |  |  | 4 |
Total |  | $ | 1,198 |  |  | $ | 11,269 |  |  | $ | 12,467 |  |  | $ | 46 |

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 two 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 or the principal and interest payments are reasonably assured and a sustained period of performance has occurred, generally six months.

Page 22

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Modifications to Borrowers Experiencing Financial Difficulty: From time to time, the Company may modify certain loans to borrowers who are experiencing financial difficulty. In some cases, these modifications result in new loans. Loan modifications to borrowers experiencing financial difficulty may be in the form of principal forgiveness, interest rate reduction, term extension, other-than-significant payment delay or a combination thereof, among other things. During the three months ended March 31, 2024, there were no modifications of loans to borrowers experiencing financial difficulty.

Individually Evaluated Loans: Larger (greater than $350) Commercial & Agricultural and Commercial Real Estate loan relationships, 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.

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related allowance for credit losses allocated to these loans as of March 31, 2024 and December 31, 2023.

March 31, 2024 |  | Real Estate |  |  | Other |  |  | Allowance for Credit Losses |
Commercial & Agriculture |  | $ | — |  |  | $ | 3,899 |  |  | $ | 982 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | 299 |  |  |  | 32 |
Non-Owner Occupied |  |  | — |  |  |  | 3,013 |  |  |  | 1,059 |
Residential Real Estate |  |  | 1,349 |  |  |  | — |  |  |  | — |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | — |
Farm Real Estate |  |  | — |  |  |  | — |  |  |  | — |
Lease Financing Receivables |  |  | — |  |  |  | 2,142 |  |  |  | 585 |
Consumer and Other |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 1,349 |  |  | $ | 9,353 |  |  | $ | 2,658 |

December 31, 2023 |  | Real Estate |  |  | Other |  |  | Allowance for Credit Losses |
Commercial & Agriculture |  | $ | — |  |  | $ | 4,674 |  |  | $ | 945 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 308 |  |  |  | — |  |  |  | 37 |
Non-Owner Occupied |  |  | 1,167 |  |  |  | — |  |  |  | 268 |
Residential Real Estate |  |  | 149 |  |  |  | — |  |  |  | — |
Real Estate Construction |  |  | — |  |  |  | — |  |  |  | — |
Farm Real Estate |  |  | — |  |  |  | — |  |  |  | — |
Lease Financing Receivables |  |  | — |  |  |  | 61 |  |  |  | 15 |
Consumer and Other |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 1,624 |  |  | $ | 4,735 |  |  | $ | 1,265 |

Collateral-dependent loans consist primarily of Residential Real Estate, Commercial Real Estate and Commercial & Agricultural loans. These loans are individually evaluated when foreclosure is probable or when the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral. In the case of Commercial & Agricultural loans secured by equipment, the fair value of the collateral is estimated by third-party valuation experts. Loan balances are charged down to the underlying collateral value when they are deemed uncollectible. Note that the Company did not elect to use the collateral maintenance agreement practical expedient available under CECL.

Page 23

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

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 March 31, 2024 and December 31, 2023 there were no foreclosed assets included in Other assets.

Allowance for Credit Losses on Off-Balance-Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk from a contractual obligation to extend credit. The allowance for credit losses on off-balance-sheet credit exposures is adjusted as a provision for credit loss expense recognized within provision for credit losses on the Consolidated Statements of Operations. The estimated credit loss includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The estimate of expected credit loss is based on the historical loss rate for the loan class in which the loan commitments would be classified as if funded.

The following table lists the allowance for credit losses on off-balance sheet credit exposures as of March 31, 2024:

|  | Three Months Ended |
|  | March 31, |
|  | 2024 |  | 2023 |
Beginning of Period |  | $ | 3,901 |  |  | — |
CECL adoption adjustments |  |  | — |  |  | 3,386 |
Charge-offs |  |  | — |  |  | — |
Recoveries |  |  | — |  |  | — |
Provision |  |  | (50 | ) |  | 201 |
End of Period |  | $ | 3,851 |  | $ | 3,587 |

(6) Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax for the three-month periods ended March 31, 2024 and March 31, 2023.

|  | For the Three-Month Period Ended |  |  | For the Three-Month Period Ended |
|  | March 31, 2024(a) |  |  | March 31, 2023(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 |  | $ | (43,024 | ) |  | $ | (4,506 | ) |  | $ | (47,530 | ) |  | $ | (52,771 | ) |  | $ | (5,274 | ) |  | $ | (58,045 | )
Other comprehensive loss before reclassifications |  |  | (6,227 | ) |  |  | — |  |  |  | (6,227 | ) |  |  | 8,135 |  |  |  | — |  |  |  | 8,135 |
Amounts reclassified from accumulated other comprehensive income (loss) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Net current-period other comprehensive income (loss) |  |  | (6,227 | ) |  |  | — |  |  |  | (6,227 | ) |  |  | 8,135 |  |  |  | — |  |  |  | 8,135 |
Ending balance |  | $ | (49,251 | ) |  | $ | (4,506 | ) |  | $ | (53,757 | ) |  | $ | (44,636 | ) |  | $ | (5,274 | ) |  | $ | (49,910 | )

(a)
Amounts in parentheses indicate debits on the Consolidated Balance Sheets.The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three-month periods ended March 31, 2024 and March 31, 2023.

(7) Goodwill and Intangible Assets

The carrying amount of goodwill was $125,520 at March 31, 2024 and December 31, 2023.

Page 24

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Acquired intangible assets, other than goodwill, as of March 31, 2024 and December 31, 2023 were as follows:

|  | March 31, 2024 |  |  | December 31, 2023 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |  |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |
Amortized intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Core deposit intangibles |  | $ | 12,668 |  |  | $ | 6,569 |  |  | $ | 6,099 |  |  |  | 12,668 |  |  |  | 6,178 |  |  | $ | 6,490 |
Total amortized intangible assets |  | $ | 12,668 |  |  | $ | 6,569 |  |  | $ | 6,099 |  |  | $ | 12,668 |  |  | $ | 6,178 |  |  | $ | 6,490 |

Aggregate core deposit intangible amortization expense was $391 and $398, for the three-months ended March 31, 2024 and 2023, respectively.

Activity for mortgage servicing rights (MSRs) and the related valuation allowance for the three months ended March 31, 2024 were as follows:

|  | Three Months Ended March 31, |
|  | 2024 |  |  | 2023 |
Loan Servicing Rights: |  |  |  |  |  |
Balance at Beginning of Period |  | $ | 3,018 |  |  | $ | 2,689 |
Additions |  |  | 50 |  |  |  | 436 |
Additions from acquisition |  |  | — |  |  |  | — |
Disposals |  |  | — |  |  |  | — |
Amortized to expense |  |  | (69 | ) |  |  | (66 | )
Other charges |  |  | — |  |  |  | — |
Change in valuation allowance |  |  | — |  |  |  | — |
Balance at End of Period |  | $ | 2,999 |  |  | $ | 3,059 |
Valuation allowance: |  |  |  |  |  |
Balance at Beginning of Period |  | $ | — |  |  | $ | — |
Additions expensed |  |  | — |  |  |  | — |
Reductions credited to operations |  |  | — |  |  |  | — |
Direct write-offs |  |  | — |  |  |  | — |
Balance at End of Period |  | $ | — |  |  | $ | — |

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

|  | MSRs |  |  | Core deposit intangibles |  |  | Total |
2024 |  | $ | 127 |  |  | $ | 1,097 |  |  | $ | 1,224 |
2025 |  |  | 169 |  |  |  | 1,312 |  |  |  | 1,481 |
2026 |  |  | 166 |  |  |  | 1,193 |  |  |  | 1,359 |
2027 |  |  | 162 |  |  |  | 1,071 |  |  |  | 1,233 |
2028 |  |  | 155 |  |  |  | 782 |  |  |  | 937 |
Thereafter |  |  | 2,220 |  |  |  | 644 |  |  |  | 2,864 |
|  | $ | 2,999 |  |  | $ | 6,099 |  |  | $ | 9,098 |

(8) Short-Term and Other Borrowings

Page 25

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

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:

|  | March 31, 2024 |  |  | December 31, 2023 |
|  | Federal Funds Purchased |  |  | Short-term Borrowings |  |  | Federal Funds Purchased |  |  | Short-term Borrowings |
Outstanding balance |  | $ | — |  |  | $ | 368,500 |  |  | $ | — |  |  | $ | 338,000 |
Interest rate on balance |  |  | — |  |  |  | 5.42 | % |  |  | — |  |  |  | 5.41 | %

|  | Three Months Ended March 31, |
|  | 2024 |  |  | 2024 |  |  | 2023 |  |  | 2023 |
|  | Federal Funds Purchased |  |  | Short-term Borrowings |  |  | Federal Funds Purchased |  |  | Short-term Borrowings |
Maximum indebtedness |  | $ | — |  |  | $ | 394,000 |  |  | $ | 30,000 |  |  | $ | 540,000 |
Average balance |  |  | — |  |  |  | 329,120 |  |  |  | 333 |  |  |  | 372,226 |
Average rate paid |  |  | — |  |  |  | 5.44 | % |  |  | 5.96 | % |  |  | 4.64 | %

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

(9) Earnings per Common Share

The Company has granted restricted stock awards with non-forfeitable rights (with respect to dividends), which are considered participating securities. Accordingly, earnings per common 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-months ended March 31, 2024 and 2023.

Page 26

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

|  | Three Months Ended |
|  | March 31, |
|  | 2024 |  |  | 2023 |
Basic |  |  |  |  |  |
Net income |  | $ | 6,360 |  |  | $ | 12,888 |
Less allocation of earnings and dividends to participating securities |  |  | 227 |  |  |  | 452 |
Net income available to common shareholders—basic |  | $ | 6,133 |  |  | $ | 12,436 |
Weighted average common shares outstanding |  |  | 15,695,963 |  |  |  | 15,732,092 |
Less average participating securities |  |  | 561,344 |  |  |  | 552,882 |
Weighted average number of shares outstanding used in the calculation of basic earnings per common share |  |  | 15,134,619 |  |  |  | 15,179,210 |
Earnings per common share: |  |  |  |  |  |
Basic |  | $ | 0.41 |  |  | $ | 0.82 |
Diluted |  |  | 0.41 |  |  |  | 0.82 |

(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 March 31, 2024 and December 31, 2023:

|  | Contract Amount |
|  | March 31, 2024 |  |  | December 31, 2023 |
|  | Fixed Rate |  |  | Variable Rate |  |  | Fixed Rate |  |  | Variable Rate |
Commitment to extend credit: |  |  |  |  |  |  |  |  |  |  |  |
Lines of credit and construction loans |  | $ | 50,548 |  |  | $ | 690,788 |  |  | $ | 58,318 |  |  | $ | 668,893 |
Overdraft protection |  |  | 10 |  |  |  | 58,934 |  |  |  | 10 |  |  |  | 59,489 |
Letters of credit |  |  | 806 |  |  |  | 223 |  |  |  | 821 |  |  |  | 273 |
|  | $ | 51,364 |  |  | $ | 749,945 |  |  | $ | 59,149 |  |  | $ | 728,655 |

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 8.50% at March 31, 2024 and from 3.50% to 8.50% at December 31, 2023. Maturities extend up to 30 years.

Civista is required to maintain certain reserve balances on hand in accordance with the Federal Reserve Board requirements. No reserve balance was maintained, or required to be maintained, in accordance with such requirements at March 31, 2024 and December 31, 2023.

Page 27

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(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 |
|  | March 31, |
|  | 2024 |  |  | 2023 |
Service cost |  | $ | — |  |  | $ | — |
Interest cost |  |  | 95 |  |  |  | 125 |
Expected return on plan assets |  |  | (137 | ) |  |  | (132 | )
Other components |  |  | — |  |  |  | — |
Net periodic pension cost |  | $ | (42 | ) |  | $ | (7 | )

The Company does no t expect to make any contribution to its pension plan in 2024. The Company made no contribution to its pension plan in 2023.

(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 20,198 common shares available for future grants under this plan at March 31, 2024. The 2014 Incentive Plan expired in accordance with its terms on April 16, 2024, and no further awards may be granted under the 2014 Incentive Plan after April 16, 2024. On February 20, 2024, the Company's Board of Director's adopted the Civista Bancshares, Inc. 2024 Incentive Plan (the "2024 Incentive Plan"), which was subsequently approved by the shareholders of the Company at the Annual Meeting of Shareholders held on April 16, 2024. The 2024 Incentive Plan authorizes the Company to grant options, stock awards, stock units and other awards for up to 450,000 common shares of the Company.

No options were granted under the 2014 Incentive Plan during the three months ended March 31, 2024 and 2023.

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.

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 common shares and changes therein for the three month period ended March 31, 2024:

|  | Three months ended |
|  | March 31, 2024 |
|  | Number of Restricted Shares |  |  | Weighted Average Grant Date Fair Value |
Nonvested at beginning of period |  |  | 85,670 |  |  | $ | 21.88 |
Granted |  |  | 40,952 |  |  |  | 15.51 |
Vested |  |  | (34,102 | ) |  |  | 18.34 |
Forfeited |  |  | (1,101 | ) |  |  | 14.80 |
Nonvested at end of period |  |  | 91,419 |  |  | $ | 21.98 |

Page 28

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following is a summary of the status of the Company’s outstanding restricted common shares as of March 31, 2024:

At March 31, 2024 |
Date of Award |  | Shares |  |  | Remaining Expense |  |  | Remaining Vesting Period (Years) |
March 14, 2020 |  |  | 2,027 |  |  |  | 29 |  |  |  | 0.75 |
March 3, 2021 |  |  | 4,944 |  |  |  | 76 |  |  |  | 1.75 |
March 3, 2022 |  |  | 6,880 |  |  |  | 143 |  |  |  | 2.75 |
March 3, 2022 |  |  | 5,139 |  |  |  | 94 |  |  |  | 0.75 |
March 14, 2023 |  |  | 13,252 |  |  |  | 249 |  |  |  | 3.75 |
March 14, 2023 |  |  | 18,371 |  |  |  | 351 |  |  |  | 1.75 |
March 12, 2024 |  |  | 26,384 |  |  |  | 372 |  |  |  | 4.75 |
March 12, 2024 |  |  | 14,422 |  |  |  | 216 |  |  |  | 2.75 |
|  |  | 91,419 |  |  | $ | 1,530 |  |  |  | 3.06 |

The Company recorded $186 and $230 of share-based compensation expense during the three months ended March 31, 2024 and 2023, respectively. At March 31, 2024, the total compensation cost related to unvested awards not yet recognized was $1,530, which was expected to be recognized over the weighted average remaining life of the grants of 3.06 years.

(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 securities 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.

Page 29

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 tables below.

|  | Fair Value Measurements at March 31, 2024 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 |  | $ | — |  |  | $ | 68,042 |  |  | $ | — |
Obligations of states and political subdivisions |  |  | — |  |  |  | 333,451 |  |  |  | — |
Mortgage-backed securities in government sponsored entities |  |  | — |  |  |  | 204,756 |  |  |  | — |
Total securities available-for-sale |  |  | — |  |  |  | 606,249 |  |  |  | — |
Equity securities |  |  | — |  |  |  | 2,027 |  |  |  | — |
Swap asset |  |  | — |  |  |  | 14,682 |  |  |  | — |
Liabilities measured at fair value on a recurring basis: |  |  |  |  |  |  |  |  |
Swap liability |  | $ | — |  |  | $ | 14,682 |  |  | $ | — |
Assets measured at fair value on a nonrecurring basis: |  |  |  |  |  |  |  |  |
Mortgage servicing rights |  | $ | — |  |  | $ | — |  |  | $ | 2,999 |

|  | Fair Value Measurements at December 31, 2023 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 |  | $ | — |  |  | $ | 67,658 |  |  | $ | — |
Obligations of states and political subdivisions |  |  | — |  |  |  | 338,599 |  |  |  | — |
Mortgage-backed securities in government sponsored entities |  |  | — |  |  |  | 212,015 |  |  |  | — |
Total securities available-for-sale |  |  | — |  |  |  | 618,272 |  |  |  | — |
Equity securities |  |  | — |  |  |  | 2,169 |  |  |  | — |
Swap asset |  |  | — |  |  |  | 12,481 |  |  |  | — |
Liabilities measured at fair value on a recurring basis: |  |  |  |  |  |  |  |  |
Swap liability |  |  | — |  |  |  | 12,481 |  |  |  | — |
Assets measured at fair value on a nonrecurring basis: |  |  |  |  |  |  |  |  |
Mortgage servicing rights |  | $ | — |  |  | $ | — |  |  | $ | 3,018 |

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 March 31, 2024 and December 31, 2023.

|  | Quantitative Information about Level 3 Fair Value Measurements
March 31, 2024 |  | Fair Value |  |  | Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average
Mortgage Servicing Rights |  | $ | 2,999 |  |  | Discounted Cash Flow |  | Constant Prepayment Rate |  | 4.4% - 11.1% |  | 6%
|  |  |  |  |  |  | Discount Rate |  | 12% |  | 12%

Page 30

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, 2023 |  | Fair Value |  |  | Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average
Mortgage Servicing Rights |  | $ | 3,018 |  |  | Discounted Cash Flow |  | Constant Prepayment Rate |  | 4.6% - 11% |  | 6%
|  |  |  |  |  |  | Discount Rate |  | 12% |  | 12%

Page 31

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at March 31, 2024 were as follows:

March 31, 2024 |  | Carrying Amount |  |  | Total Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from financial institutions |  | $ | 50,310 |  |  | $ | 50,310 |  |  | $ | 50,310 |  |  | $ | — |  |  | $ | — |
Other securities |  |  | 31,360 |  |  |  | 31,360 |  |  |  | 31,360 |  |  |  | — |  |  |  | — |
Loans, held for sale |  |  | 3,716 |  |  |  | 3,716 |  |  |  | 3,716 |  |  |  | — |  |  |  | — |
Loans, net of allowance |  |  | 2,859,290 |  |  |  | 2,735,265 |  |  |  | — |  |  |  | — |  |  |  | 2,735,265 |
Bank owned life insurance |  |  | 61,685 |  |  |  | 61,685 |  |  |  | 61,685 |  |  |  | — |  |  |  | — |
Accrued interest receivable |  |  | 13,513 |  |  |  | 13,513 |  |  |  | 13,513 |  |  |  | — |  |  |  | — |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonmaturing deposits |  |  | 2,071,809 |  |  |  | 2,071,684 |  |  |  | 2,071,684 |  |  |  | — |  |  |  | — |
Time deposits |  |  | 908,886 |  |  |  | 907,775 |  |  |  | — |  |  |  | — |  |  |  | 907,775 |
Short-term FHLB advances |  |  | 368,500 |  |  |  | 367,698 |  |  |  | 367,698 |  |  |  | — |  |  |  | — |
Long-term FHLB advances |  |  | 2,211 |  |  |  | 2,098 |  |  |  | — |  |  |  | — |  |  |  | 2,098 |
Other borrowings |  |  | 8,105 |  |  |  | 8,105 |  |  |  | — |  |  |  | — |  |  |  | 8,105 |
Subordinated debentures |  |  | 103,984 |  |  |  | 103,287 |  |  |  | — |  |  |  | — |  |  |  | 103,287 |
Accrued interest payable |  |  | 6,289 |  |  |  | 6,289 |  |  |  | 6,289 |  |  |  | — |  |  |  | — |

The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at December 31, 2023 were as follows:

December 31, 2023 |  | Carrying Amount |  |  | Total Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from financial institutions |  | $ | 60,406 |  |  | $ | 60,406 |  |  | $ | 60,406 |  |  | $ | — |  |  | $ | — |
Other securities |  |  | 29,998 |  |  |  | 29,998 |  |  |  | 29,998 |  |  |  | — |  |  |  | — |
Loans, held for sale |  |  | 1,725 |  |  |  | 1,725 |  |  |  | 1,725 |  |  |  | — |  |  |  | — |
Loans, net of allowance |  |  | 2,824,568 |  |  |  | 2,679,988 |  |  |  | — |  |  |  | — |  |  |  | 2,679,988 |
Bank owned life insurance |  |  | 61,335 |  |  |  | 61,335 |  |  |  | 61,335 |  |  |  | — |  |  |  | — |
Accrued interest receivable |  |  | 12,819 |  |  |  | 12,819 |  |  |  | 12,819 |  |  |  | — |  |  |  | — |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonmaturing deposits |  |  | 2,084,216 |  |  |  | 2,084,216 |  |  |  | 2,084,216 |  |  |  | — |  |  |  | — |
Time deposits |  |  | 900,812 |  |  |  | 899,443 |  |  |  | — |  |  |  | — |  |  |  | 899,443 |
Short-term FHLB advances |  |  | 338,000 |  |  |  | 337,267 |  |  |  | 337,267 |  |  |  | — |  |  |  | — |
Long-term FHLB advances |  |  | 2,392 |  |  |  | 2,419 |  |  |  | — |  |  |  | — |  |  |  | 2,419 |
Subordinated debentures |  |  | 103,943 |  |  |  | 101,563 |  |  |  | — |  |  |  | — |  |  |  | 101,563 |
Other borrowings |  |  | 9,859 |  |  |  | 9,859 |  |  |  | — |  |  |  | — |  |  |  | 15,806 |
Accrued interest payable |  |  | 9,525 |  |  |  | 9,525 |  |  |  | 9,525 |  |  |  | — |  |  |  | — |

Page 32

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 Company presents derivative positions net on the balance sheet for customers and financial institution counterparty positions subject to master netting arrangements. The following table reflects the derivatives recorded on the balance sheet:

|  | March 31, 2024 |  |  | December 31, 2023 |
|  | Notional Amount |  |  | Fair Value |  |  | Notional Amount |  |  | Fair Value |
Included in other assets: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps with loan customers in an asset position |  | $ | 32,877 |  |  | $ | 1,213 |  |  | $ | 44,773 |  |  | $ | 2,114 |
Counterparty positions with financial institutions in an asset position |  |  | 225,104 |  |  |  | 13,469 |  |  |  | 228,873 |  |  |  | 10,367 |
Total included in other assets |  |  |  |  | $ | 14,682 |  |  |  |  |  | $ | 12,481 |
Included in accrued expenses and other liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps with loan customers in a liability position |  | $ | 192,227 |  |  | $ | 14,682 |  |  | $ | 184,100 |  |  | $ | 12,481 |
Counterparty positions with financial institutions in a liability position |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total included in accrued expenses and other liabilities |  |  |  |  | $ | 14,682 |  |  |  |  |  | $ | 12,481 |
Gross notional positions with customers |  | $ | 225,104 |  |  |  |  |  | $ | 228,873 |  |  |  |
Gross notional positions with financial institution counterparties |  | $ | 225,104 |  |  |  |  |  | $ | 228,873 |  |  |  |

The presentation for derivatives for the current and prior periods was revised to present derivative positions net for customer positions. Fair value of swap assets and liabilities for the prior period was not impacted.

The effect of swap fair value changes on the Consolidated Statement of Operations are as follows:

|  | Location of |  | Amount of Gain or (Loss) |
Derivatives |  | Gain or (Loss) |  | Recognized in |
Not Designated |  | Recognized in |  | Income on Derivatives |
as Hedging Instruments |  | Income on Derivative |  | March 31, 2024 |  |  | March 31, 2023 |
Interest rate swaps related to customer loans |  | Other income |  | $ | — |  |  | $ | — |
Total |  |  |  | $ | — |  |  | $ | — |

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 in Other noninterest income in the Consolidated Statements of Operation.

At March 31, 2024 and December 31, 2023, the Company did no t have any cash or securities pledged for collateral on its interest rate swaps with third party financial institutions. Cash pledged for collateral on interest rate swaps is classified as restricted cash on the Consolidated Balance Sheet.

Page 33

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(15) Qualified Affordable Housing Project Investments

The Company invests in certain qualified affordable housing projects. At March 31, 2024 and December 31, 2023, the balance of the Company's investments in qualified affordable housing projects was $14,819 and $15,122, 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 $5,229 and $5,722 at March 31, 2024 and December 31, 2023, respectively. These balances are reflected in the Accrued expenses and other liabilities line on the Consolidated Balance Sheet.

During the three months ended March 31, 2024 and 2023, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $304 and $243, respectively, offset by tax credits and other benefits from its investments in affordable housing tax credits of $390 and $364, respectively. During the three months ended March 31, 2024, the Company did no t incur any impairment losses related to its investments in qualified affordable housing projects.

(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 ASC 606 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 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.

Page 34

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Tax Refund Processing Fees

The Company facilitated the payment of federal and state income tax refunds with a third-party payment processor. Refund Transfers (“RTs”) were fee-based products whereby a tax refund was issued to the taxpayer after the Company received the refund from the federal or state government. As part of this agreement the Company earned fee income, the majority of which was received in the first quarter of the year. The Company’s fee income revenue was recognized based on the estimated percent of business completed by each date. Beginning in 2024, the Company discontinued participation in the tax refund processing program.

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.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three months ended March 31, 2024 and 2023.

|  | Three Months Ended |
|  | March 31, |
|  | 2024 |  |  | 2023 |
Noninterest Income |  |  |  |  |  |
In-scope of Topic 606: |  |  |  |  |  |
Service charges |  | $ | 1,440 |  |  | $ | 1,773 |
ATM/Interchange fees |  |  | 1,383 |  |  |  | 1,353 |
Wealth management fees |  |  | 1,276 |  |  |  | 1,193 |
Tax refund processing fees |  |  | — |  |  |  | 1,900 |
Other |  |  | 1,572 |  |  |  | 4,136 |
Noninterest Income (in-scope of Topic 606) |  |  | 5,671 |  |  |  | 10,355 |
Noninterest Income (out-of-scope of Topic 606) |  |  | 2,833 |  |  |  | 713 |
Total Noninterest Income |  | $ | 8,504 |  |  | $ | 11,068 |

Page 35

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 March 31, 2024 compared to December 31, 2023, and the consolidated results of operations for the three- and nine-month periods ended March 31, 2024, compared to the same periods in 2023. 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:

•
current and future economic and financial market conditions, including the effects of inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy, an increasing federal government budget deficit, the failure of the federal government to raise the federal debt ceiling and/or possible future U.S. government shutdowns over budget disagreements, slowing gross domestic product, tariffs, a U.S. withdrawal from or renegotiation of trade agreements, trade wars, and other factors beyond our control, any of which may result in adverse impacts on our deposit levels and composition, the quality of investment securities available for purchase, demand for loans, the ability of our borrowers to repay their loans, and the value of the collateral securing loans made by Civista;
•
recent and future bank failures may reduce customer confidence, affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets and/or have a negative reputational impact on the banking industry as a whole, and of which could adversely affect the Company’s business, financial condition and results of operations;
•
adverse changes in the real estate market, which could cause increases in delinquencies and non-performing assets, including additional loan charge-offs, and could depress our income, earnings and capital;
•
changes in interest rates resulting from national and local economic conditions and the policies of regulatory authorities, including monetary policies of the Board of Governors of the Federal Reserve System, which may adversely affect interest rates, interest margins, loan demand and interest rate sensitivity;
•
operational risks, reputational risks, legal and compliance risks, and other risks related to potential fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, or failures, disruptions or breaches in security of our systems, including those resulting from computer viruses or cyber-attacks;
•
our ability to secure sensitive or confidential client information against unauthorized disclosure or access through computer systems and telecommunication networks, including those of our third-party vendors and other service providers, which may prove inadequate;
•
a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber-attacks;
•
competitive pressures and factors among financial services organizations could increase significantly, including product and pricing pressures, changes to third-party relationships and our ability to recruit and retain qualified management and banking personnel;
•
unexpected losses of services of our key management personnel, or the inability to recruit and retain qualified personnel in the future;
•
risks inherent in pursuing strategic growth initiatives, including integration and other risks involved in past, pending and possible future acquisitions;
•
uncertainty regarding the nature, timing, cost and effect of legislative or regulatory changes in the banking industry or otherwise affecting the Company, including major reform of the regulatory oversight structure of the financial services industry and changes in laws and regulations concerning taxes, FDIC insurance premium levels, pensions, bankruptcy, consumer protection,

Page 36

Civista Bancshares, Inc.

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

Form 10-Q

(Amounts in thousands, except share data)

rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank and bank holding company capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry;
•
changes in federal, state and/or local tax laws;
•
the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board (FASB), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, may adversely affect our reported financial condition or results of operations;
•
litigation and regulatory compliance exposure, including the costs and effects of any adverse developments in legal proceedings or other claims and the costs and effects of unfavorable resolution of regulatory and other governmental examinations or inquiries;
•
continued availability of earnings and dividends from Civista and excess capital sufficient for us to service our debt and pay dividends to our shareholders in compliance with applicable legal and regulatory requirements;
•
our ability to raise additional capital in the future if and when needed and/or on terms acceptable to us;
•
our ability to conform and comply with regulatory requirements and increasing scrutiny and evolving expectations from customers, regulatory authorities, shareholders, investors and other stakeholders with regard to our environmental, social and governance (ESG) policies and practices, which could affect our reputation and business and operating results;
•
our ability to anticipate and successfully keep pace with technological changes affecting the financial services industry; 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, 2023

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 March 31, 2024 were $3,880,258 compared to $3,861,418 at December 31, 2023, an increase of $18,840, or 0.5%. The increase in total assets was due to increases in other securities and bank stocks of $1,220, loans held for sale of $1,991, loans of $34,722 and swap assets of $2,201. Increases in assets were partially offset by decreases in cash and cash equivalents of $9,871, accompanied by decreases in securities available for sale of $12,023 and office premises and equipment of $2,489. Total liabilities at March 31, 2024 were $3,510,599 compared to $3,489,416 at December 31, 2023, an increase of $21,183, or 0.6%. The increase in total liabilities was primarily attributable to an increase short term FHLB borrowings of $30,500 and swap liabilities of $2,201 partially offset by decreases in deposits of $4,333 and other borrowings of $1,754.

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)

Loans outstanding as of March 31, 2024 and December 31, 2023 were as follows:

|  | March 31, 2024 |  |  | December 31, 2023 |  |  | $ Change |  |  | % Change |
Commercial & Agriculture |  | $ | 302,663 |  |  | $ | 304,793 |  |  | $ | (2,130 | ) |  |  | -0.7 | %
Commercial Real Estate—Owner Occupied |  |  | 367,419 |  |  |  | 377,321 |  |  |  | (9,902 | ) |  |  | -2.6 | %
Commercial Real Estate—Non-Owner Occupied |  |  | 1,185,688 |  |  |  | 1,161,894 |  |  |  | 23,794 |  |  |  | 2.0 | %
Residential Real Estate |  |  | 676,802 |  |  |  | 659,841 |  |  |  | 16,961 |  |  |  | 2.6 | %
Real Estate Construction |  |  | 267,737 |  |  |  | 260,409 |  |  |  | 7,328 |  |  |  | 2.8 | %
Farm Real Estate |  |  | 24,908 |  |  |  | 24,771 |  |  |  | 137 |  |  |  | 0.6 | %
Lease Financing Receivables |  |  | 56,680 |  |  |  | 36,797 |  |  |  | 19,883 |  |  |  | 54.0 | %
Consumer and Other |  |  | 16,242 |  |  |  | 18,056 |  |  |  | (1,814 | ) |  |  | -10.0 | %
Total loans |  |  | 2,898,139 |  |  |  | 2,843,882 |  |  |  | 54,257 |  |  |  | 1.9 | %
Allowance for credit losses |  |  | (38,849 | ) |  |  | (37,160 | ) |  |  | (1,689 | ) |  |  | 4.5 | %
Net loans |  | $ | 2,859,290 |  |  | $ | 2,806,722 |  |  | $ | 52,568 |  |  |  | 1.9 | %

Included in Commercial & Agriculture loans above were $289 of PPP loans as of March 31, 2024 and $326 of PPP loans as of December 31, 2023.

Loans held for sale increased $1,991, or 115.4%, since December 31, 2023. The increase was due to increases in both the number of loans and average loan balances held for sale. At March 31, 2024, 18 loans totaling $3,716 were held for sale as compared to 9 loans totaling $1,725 at December 31, 2023.

Net loans have increased $34,722, or 1.2%, since December 31, 2023. The increase at March 31, 2024 can be attributed to increases in many categories, primarily Commercial Real Estate Non-Owner Occupied, Residential Real Estate, Construction, and Lease Financing Receivables offset by decreases in Commercial Real Estate – Owner Occupied, Commercial & Agriculture and Consumer and Other. At March 31, 2024, the net loan to deposit ratio was 95.9% compared to 94.6% at December 31, 2023. The increase in the net loan to deposit ratio is primarily the result of an increase in loans.

During the first three months of 2024, provisions made to the allowances for credit losses and off-balance sheet credit exposures totaled $1,992, compared to a provision of $821 during the same period in 2023. The increase in the reserves was principally related to loan growth during the quarter and downgrading of three credits. As time progresses the results of economic conditions will require CECL model assumption inputs to change and further refinements to the estimation process may also be identified.

Net charge-offs for the first three months of 2024 totaled $353, compared to net charge-offs of $128 in the first three months of 2023. For the first three months of 2024, the Company charged off a total of 16 loans. Four Commercial and Agriculture loan totaling $212, Four Lease Financing Receivables totaling $226, two Residential Real Estate loan totaling $13, one Commercial Real Estate Non-Owner Occupied loan for $174, and five Consumer and Other loans totaling $26 were charged off in the first three months of the year. In addition, during the first three months of 2024, the Company had recoveries on previously charged-off Commercial & Agriculture loans of $152, Commercial Real Estate – Non-Owner Occupied loans of $5, Residential Real Estate loans of $119, Real Estate Construction loans of $4, Commercial Real Estate – Owner Occupied loans of $3 and Consumer and Other loans of $14. For each loan category, as well as in total, the percentage of net charge-offs to loans was less than one percent. 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 do not share common risk characteristics for estimates of loss. To evaluate the adequacy of the allowance for credit losses to cover probable losses in the loan 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 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.

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)

Management analyzes each individually evaluated Commercial & Agriculture and Commercial Real Estate loan relationship with a balance of $350 or larger, on an individual basis and designates a loan as individually evaluated 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. Loans, or portions thereof, are charged-off when deemed uncollectible. The allowance for credit losses as a percent of total loans was 1.34% at March 31, 2024 and 1.30% at December 31, 2023.

The available-for-sale security portfolio decreased by $12,023, from $618,272 at December 31, 2023 to $606,249 at March 31, 2024. 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 March 31, 2024, the Company was in compliance with all pledging requirements.

Premises and equipment, net, decreased $2,489 from December 31, 2023 to March 31, 2024. The decrease is the result of depreciation of $2,114 and disposals of $498, partially offset by new purchases $123.

Bank owned life insurance (BOLI) increased $350 from December 31, 2023 to March 31, 2024. The increase is the result of increases in the cash surrender value of the underlying insurance policies.

Swap assets increased $2,201 from December 31, 2023 to March 31, 2024. The increase is primarily the result of an increase in market value.

Total deposits as of March 31, 2024 and December 31, 2023 were as follows:

|  | March 31, 2024 |  |  | December 31, 2023 |  |  | $ Change |  |  | % Change |
Noninterest-bearing demand |  | $ | 707,993 |  |  | $ | 771,699 |  |  | $ | (63,706 | ) |  |  | -8.3 | %
Interest-bearing demand |  |  | 434,692 |  |  |  | 449,449 |  |  |  | (14,757 | ) |  |  | -3.3 | %
Savings and money market |  |  | 929,126 |  |  |  | 863,067 |  |  |  | 66,059 |  |  |  | 7.7 | %
Time deposits |  |  | 908,884 |  |  |  | 900,813 |  |  |  | 8,071 |  |  |  | 0.9 | %
Total Deposits |  | $ | 2,980,695 |  |  | $ | 2,985,028 |  |  | $ | (4,333 | ) |  |  | -0.1 | %

The Company had approximately $446,955 and $499,429 of uninsured deposits as of March 31, 2024 and December 31, 2023, respectively. Uninsured deposit amounts are estimated based on the portions of customer account balances that exceed the FDIC insurance limit of $250,000.

Total deposits at March 31, 2024 increased $4,333 from year-end 2023. Noninterest-bearing deposits decreased $63,706 from year-end 2023, while interest-bearing deposits, including savings and time deposits, increased $59,373 from December 31, 2023. The decrease in noninterest-bearing deposits was primarily due to a $51,700 decrease in noninterest-bearing business accounts and a $19,500 decrease in noninterest-bearing accounts related to the former tax refund processing program. The decrease in interest-bearing demand deposits was primarily due to a decrease of $11,600 in interest-bearing personal accounts, a $7,500 decrease in Jumbo NOW accounts, and a $5,200 decrease in interest-bearing business accounts, which were offset by a $13,600 increase in interest-bearing pubic fund accounts. The $66,100 increase in savings and money market accounts was primarily due to a $65,900 increase in brokered money market accounts and a $9,500 increase in business money market accounts, which increases were partially offset by a $6,400 decrease in statement savings and a $3,100 decrease in business savings accounts. Jumbo time certificates and retail time certificates increased $16,700 and $14,000, respectively; partially offset by a $21,800 decrease in brokered time deposits from year-end 2023. The year-to-date average balance of total deposits increased $146,113, compared to the average balance for the same period in 2023, mainly due to a $324,199 increase in the average balance of time deposits.

Short-term FHLB advances increased $30,500 from December 31, 2023 to March 31, 2024. The increase was due to funding needs to support loan growth.

Swap liabilities increased $2,201 from December 31, 2023 to March 31, 2024. The increase was the result of an increase in fair value of swap liabilities.

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)

Accrued expenses and other liabilities decreased $6,574 from December 31, 2023 to March 31, 2024. The decrease is primarily the decrease in accrued interest for Brokered CD’s by $3,620 and decrease in accrued commissions & incentives of $1,846.

Shareholders’ equity at March 31, 2024 was $369,659, or 9.5% of total assets, compared to $372,002, or 9.6% of total assets, at December 31, 2023. The decrease was the result of a decrease in the fair value of securities available-for-sale, net of tax, of $6,227. Net income of $6,360, partially offset by dividends on common shares of $2,510 and the purchase of treasury shares of $152

Total outstanding common shares at March 31, 2024 were 15,727,013, which increased from 15,695,424 common shares outstanding at December 31, 2023. Common shares outstanding increased due to the grant of 40,952 restricted common shares to certain officers under the Company’s 2014 Incentive Plan, offset by 8,262 common shares surrendered by officers to the Company to pay taxes upon vesting of restricted shares and 1,101 restricted common shares forfeited.

Results of Operations

Three Months Ended March 31, 2024 and 2023

The Company had net income of $6,360 for the three months ended March 31, 2024, a decrease of $6,528 from net income of $12,888 for the same three months of 2023. Basic earnings per common share were $0.41 for the quarter ended March 31, 2024, compared to $0.82 for the same period in 2023. Diluted earnings per common share were $0.41 for the quarter ended March 31, 2024, compared to $0.82 for the same period in 2023. The primary reasons for the changes in net income are explained below.

Net interest income for the three months ended March 31, 2024 was $28,372, a decrease of $4,229 from $32,601 for the same three months of 2023. This decrease of an increase of $12,818 in interest expense, partially offset by an increase of $7,203 in total interest income. Interest-earning assets averaged $3,552,552 during the three months ended March 31, 2024, an increase of $239,267 from $3,313,285 for the same period of 2023. The Company’s average interest-bearing liabilities increased from $2,308,975 during the three months ended March 31, 2023 to $2,720,586 during the three months ended March 31, 2024. The Company’s fully tax equivalent net interest margin for the three months ended March 31, 2024 and 2023 was 3.22% and 3.99%, respectively.

Total interest and dividend income was $50,128 for the three months ended March 31, 2024, an increase of $7,203 from $42,925 of total interest and dividend income for the same period in 2023. The increase in interest and dividend income is attributable to an $6,701 increase in interest and fees on loans, a $100 increase in interest income on taxable securities and a $113 increase in tax-exempt securities. The $8,086 increase in interest and fees on loans is attributable to average balances as well as loan yield. The average balance of loans increased by $230,130, or 8.0%, to $2,880,031 for the three months ended March 31, 2024 as compared to $2,649,901 for the same period in 2023. The loan yield increased to 6.20% for the three months ended March 31, 2024, from 5.78% for the same period in 2023.

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)

Interest on taxable securities increased $100 to $2,934 for the three months ended March 31, 2024, compared to $2,834 for the same period in 2023. The average balance of taxable securities decreased $24,036 to $350,815 for the three months ended March 31, 2024, as compared to $374,851 for the same period in 2023. The yield on taxable securities increased 23 basis points to 3.0% for 2024, compared to 2.77% for 2023. Interest on tax-exempt securities increased $113 to $2,375 for the three months ended March 31, 2024, compared to $2,262 for the same period in 2023. The average balance of tax-exempt securities increased $14,252 to $295,388 for the three months ended March 31, 2024, as compared to $281,136 for the same period in 2023. The yield on tax-exempt securities increased 4 basis points to 3.85% for 2024, compared to 3.81% for 2023.

Interest expense increased $11,432, or 110.7%, to $21,756 for the three months ended March 31, 2024, compared with $10,324 for the same period in 2023. The change in interest expense can be attributed to an increase in the average balance of interest-bearing liabilities, accompanied by increases in rates. For the three months ended March 31, 2024, the average balance of interest-bearing liabilities increased $411,611 to $2,720,586, as compared to $2,308,975 for the same period in 2023. Interest incurred on deposits increased by 12,755 to $15,987 for the three months ended March 31, 2024, compared to $3,232 for the same period in 2023. The average balance of interest-bearing deposits increased by $593,197 to $2,272,702 for the three months ended March 31, 2024, as compared to the same period in 2023, accompanied by an increase in the rate paid on time deposits from 2.82% in 2023 to 5.33% in 2024. Interest expense incurred on short-term FHLB advances increased as a result of higher average rates on short-term FHLB advances of 5.51% for the three months ended March 31, 2024, as compared to 4.64% to the same period in 2023. Interest expense incurred on subordinated debentures increased $72, to $1,241 for the three months ended March 31, 2024, compared to $1,169 for the same period in 2023. The rate paid on subordinated debentures increased from 4.57% in 2023 to 4.79% in 2024.

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)

The following table presents the condensed average balance sheets for the three months ended March 31, 2024 and 2023. 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 March 31, |
|  | 2024 |  |  | 2023 |
Assets: |  | Average balance |  |  | Interest |  |  | Yield/ rate* |  |  | Average balance |  |  | Interest |  |  | Yield/ rate* |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans, including fees** |  | $ | 2,880,031 |  |  | $ | 44,485 |  |  |  | 6.20 | % |  | $ | 2,649,901 |  |  | $ | 37,784 |  |  |  | 5.78 | %
Taxable securities |  |  | 350,815 |  |  |  | 2,934 |  |  |  | 3.00 | % |  |  | 374,851 |  |  |  | 2,834 |  |  |  | 2.77 | %
Tax-exempt securities |  |  | 295,388 |  |  |  | 2,375 |  |  |  | 3.85 | % |  |  | 281,136 |  |  |  | 2,262 |  |  |  | 3.81 | %
Interest-bearing deposits in other banks |  |  | 26,318 |  |  |  | 334 |  |  |  | 5.09 | % |  |  | 7,397 |  |  |  | 45 |  |  |  | 2.47 | %
Total interest-earning assets |  | $ | 3,552,552 |  |  | $ | 50,128 |  |  |  | 5.64 | % |  | $ | 3,313,285 |  |  | $ | 42,925 |  |  |  | 5.23 | %
Noninterest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from financial institutions |  |  | 29,599 |  |  |  |  |  |  |  |  |  | 54,136 |  |  |  |  |  |  |
Premises and equipment, net |  |  | 54,980 |  |  |  |  |  |  |  |  |  | 62,776 |  |  |  |  |  |  |
Accrued interest receivable |  |  | 12,724 |  |  |  |  |  |  |  |  |  | 10,655 |  |  |  |  |  |  |
Intangible assets |  |  | 134,872 |  |  |  |  |  |  |  |  |  | 135,554 |  |  |  |  |  |  |
Other assets |  |  | 61,456 |  |  |  |  |  |  |  |  |  | 53,630 |  |  |  |  |  |  |
Bank owned life insurance |  |  | 58,472 |  |  |  |  |  |  |  |  |  | 61,292 |  |  |  |  |  |  |
Less allowance for loan losses |  |  | (37,356 | ) |  |  |  |  |  |  |  |  | (30,454 | ) |  |  |  |  |  |
Total Assets |  | $ | 3,867,299 |  |  |  |  |  |  |  |  | $ | 3,660,874 |  |  |  |  |  |  |
Liabilities and Shareholders Equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand and savings |  | $ | 1,383,225 |  |  | $ | 3,986 |  |  |  | 1.16 | % |  | $ | 1,384,070 |  |  | $ | 1,084 |  |  |  | 0.33 | %
Time |  |  | 902,442 |  |  |  | 12,001 |  |  |  | 5.33 | % |  |  | 308,400 |  |  |  | 2,148 |  |  |  | 2.82 | %
Short-term FHLB advances |  |  | 328,687 |  |  |  | 4,515 |  |  |  | 5.51 | % |  |  | 372,226 |  |  |  | 4,258 |  |  |  | 4.64 | %
Long-term FHLB advances |  |  | 2,275 |  |  |  | 13 |  |  |  | 2.29 | % |  |  | 3,442 |  |  |  | 19 |  |  |  | 2.24 | %
Other borrowings |  |  | — |  |  |  | — |  |  |  | 0.00 | % |  |  | 116,200 |  |  |  | 1,643 |  |  |  | 5.73 | %
Subordinated debentures |  |  | 103,957 |  |  |  | 1,241 |  |  |  | 4.79 | % |  |  | 103,814 |  |  |  | 1,169 |  |  |  | 4.57 | %
Repurchase Agreements |  |  | — |  |  |  | — |  |  |  | 0.00 | % |  |  | 20,823 |  |  |  | 3 |  |  |  | 0.06 | %
Total interest-bearing liabilities |  | $ | 2,720,586 |  |  | $ | 21,756 |  |  |  | 3.21 | % |  | $ | 2,308,975 |  |  | $ | 10,324 |  |  |  | 1.81 | %
Noninterest-bearing deposits |  |  | 712,483 |  |  |  |  |  |  |  |  |  | 961,886 |  |  |  |  |  |  |
Other liabilities |  |  | 63,778 |  |  |  |  |  |  |  |  |  | 48,854 |  |  |  |  |  |  |
Shareholders’ Equity |  |  | 370,452 |  |  |  |  |  |  |  |  |  | 341,159 |  |  |  |  |  |  |
Total Liabilities and Shareholders’ Equity |  | $ | 3,867,299 |  |  |  |  |  |  |  |  | $ | 3,660,874 |  |  |  |  |  |  |
Net interest income and interest rate spread |  |  |  |  | $ | 28,372 |  |  |  | 2.43 | % |  |  |  |  | $ | 32,601 |  |  |  | 3.42 | %
Net interest margin |  |  |  |  |  |  |  |  | 3.22 | % |  |  |  |  |  |  |  |  | 3.99 | %

*—Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $632 and $601 for the periods ended March 31, 2024 and 2023, respectively.

**—Average balance includes nonaccrual loans.

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)

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 March 31, 2024 and 2023.

|  | Increase (decrease) due to: |
|  | Volume (1) |  |  | Rate (1) |  |  | Net |
|  | (Dollars in thousands) |
Interest income: |  |  |  |  |  |  |  |  |
Loans, including fees |  | $ | 3,421 |  |  | $ | 3,280 |  |  | $ | 6,701 |
Taxable securities |  |  | (156 | ) |  |  | 256 |  |  |  | 100 |
Tax-exempt securities |  |  | 62 |  |  |  | 51 |  |  |  | 113 |
Interest-bearing deposits in other banks |  |  | 203 |  |  |  | 86 |  |  |  | 289 |
Total interest income |  | $ | 3,530 |  |  | $ | 3,673 |  |  | $ | 7,203 |
Interest expense: |  |  |  |  |  |  |  |  |
Demand and savings |  | $ | (1 | ) |  | $ | 2,903 |  |  | $ | 2,902 |
Time |  |  | 6,693 |  |  |  | 3,160 |  |  |  | 9,853 |
Short-term FHLB advances |  |  | (535 | ) |  |  | 792 |  |  |  | 257 |
Long-term FHLB advances |  |  | (7 | ) |  |  | 1 |  |  |  | (6 | )
Other borrowings |  |  | (1,638 | ) |  |  | — |  |  |  | (1,638 | )
Federal funds purchased |  |  | (5 | ) |  |  | — |  |  |  | (5 | )
Subordinated debentures |  |  | 2 |  |  |  | 70 |  |  |  | 72 |
Repurchase agreements |  |  | (3 | ) |  |  | — |  |  |  | (3 | )
Total interest expense |  | $ | 4,506 |  |  | $ | 6,926 |  |  | $ | 11,432 |
Net interest income |  | $ | (976 | ) |  | $ | (3,253 | ) |  | $ | (4,229 | )

(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. During the first quarter of 2024 we recorded a provision for credit losses of $2,042, an increase of $1,422, from $620 during the three months ended March 31, 2023. The increase in the reserves was related to a downgrade in three credits as well as loan growth during the quarter .

Noninterest income for the three-month periods ended March 31, 2024 and 2023 was as follows:

|  | Three months ended March 31, |
|  | 2024 |  |  | 2023 |  |  | $ Change |  |  | % Change |
Service charges |  | $ | 1,440 |  |  | $ | 1,773 |  |  | $ | (333 | ) |  |  | -18.8 | %
Net gain on sale of securities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 0.0 | %
Net gain (loss) on equity securities |  |  | (141 | ) |  |  | (68 | ) |  |  | (73 | ) |  |  | 107.4 | %
Net gain on sale of loans and leases |  |  | 863 |  |  |  | 631 |  |  |  | 232 |  |  |  | 36.8 | %
ATM/Interchange fees |  |  | 1,383 |  |  |  | 1,353 |  |  |  | 30 |  |  |  | 2.2 | %
Wealth management fees |  |  | 1,276 |  |  |  | 1,193 |  |  |  | 83 |  |  |  | 7.0 | %
Lease revenue and residual income |  |  | 1,674 |  |  |  | 2,046 |  |  |  | (372 | ) |  |  | 0.0 | %
Bank owned life insurance |  |  | 350 |  |  |  | 253 |  |  |  | 97 |  |  |  | 38.3 | %
Tax refund processing fees |  |  | — |  |  |  | 1,900 |  |  |  | (1,900 | ) |  |  | -100.0 | %
Swap fees |  |  | 57 |  |  |  | 61 |  |  |  | (4 | ) |  |  | -6.6 | %
Other |  |  | 1,602 |  |  |  | 1,926 |  |  |  | (324 | ) |  |  | -16.8 | %
Total noninterest income |  | $ | 8,504 |  |  | $ | 11,068 |  |  | $ | (2,564 | ) |  |  | -23.2 | %

Noninterest income for the three months ended March 31, 2024 was $8,504, a decrease of $2,564, or 23.2%, from $11,068 for the same period of 2023. The decrease was primarily due to the elimination of $1,900 in tax refund processing income, as we have exited this line of business. Service charges decreased due to the decrease in overdraft fees of $375. Other income decreased as result of a $1,500 nonrecurring fee which was collected in 2023 associated with the renewal of the Civista's contract with MasterCard. Net gain (loss) on equity securities decreased as a result of market value decreases. Net gain on sale of loans increased primarily as a result of an increase

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)

in average loan balance. During the three-months ended March 31, 2024, 53 loans were sold, totaling $11,438. During the three-months ended March 31, 2023, 63 loans were sold, totaling $9,739.

Noninterest expense for the three-month periods ended March 31, 2024 and 2023 was as follows:

|  | Three months ended March 31, |
|  | 2024 |  |  | 2023 |  |  | $ Change |  |  | % Change |
Compensation expense |  | $ | 15,457 |  |  | $ | 15,105 |  |  | $ | 352 |  |  |  | 2.3 | %
Net occupancy expense |  |  | 1,368 |  |  |  | 1,359 |  |  |  | 9 |  |  |  | 0.7 | %
Equipment expense |  |  | 2,535 |  |  |  | 2,761 |  |  |  | (226 | ) |  |  | -8.2 | %
Contracted data processing |  |  | 545 |  |  |  | 520 |  |  |  | 25 |  |  |  | 4.8 | %
FDIC assessment |  |  | 484 |  |  |  | 248 |  |  |  | 236 |  |  |  | 95.2 | %
State franchise tax |  |  | 485 |  |  |  | 526 |  |  |  | (41 | ) |  |  | -7.8 | %
Professional services |  |  | 1,149 |  |  |  | 1,555 |  |  |  | (406 | ) |  |  | -26.1 | %
Amortization of intangible assets |  |  | 391 |  |  |  | 398 |  |  |  | (7 | ) |  |  | -1.8 | %
ATM/Interchange expense |  |  | 625 |  |  |  | 580 |  |  |  | 45 |  |  |  | 7.8 | %
Marketing |  |  | 479 |  |  |  | 505 |  |  |  | (26 | ) |  |  | -5.1 | %
Software maintenance expense |  |  | 1,189 |  |  |  | 878 |  |  |  | 311 |  |  |  | 35.4 | %
Other |  |  | 2,982 |  |  |  | 2,997 |  |  |  | (15 | ) |  |  | -0.5 | %
Total noninterest expense |  | $ | 27,689 |  |  | $ | 27,432 |  |  | $ | 257 |  |  |  | 0.9 | %

Noninterest expense for the three months ended March 31, 2024 was $27,689, an increase of $257, or 0.9%, from $27,432 reported for the same period of 2023. The primary reasons for the increase were increases in compensation expense, net occupancy, contracted data processing expense, FDIC assessment, ATM/Interchange expense, and software maintenance expense, offset by decreases in equipment expense, state franchise tax, professional services, amortization expense, marketing, and other operating expenses. The increase in compensation expense was due to increased salaries, payroll taxes and employee insurance. The average full time equivalent (FTE) employees were 539 at March 31, 2024, an increase of seven FTEs over the same period of 2023. Equipment expenses decreased due to a decrease in equipment depreciation. The quarter-over-quarter increase in FDIC assessments was attributable to higher average consolidated assets and average tangible equity. The decrease in state franchise tax expense was attributable to lower estimated tax payments during the first quarter of 2024 as compared to the same period in 2023. Professional services decreased $400 due to advisory fees for the renegotiation of Civista's MasterCard contract which was paid in 2023. The increase in software maintenance expense is primarily due of our digital banking platform.

Income tax expense for the three months ended March 31, 2024 totaled $835, down $1,694 compared to the same period in 2023. The effective tax rates for the three-month periods ended March 31, 2024 and 2023 were 11.8% and 16.4%, 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, tax-deductible captive insurance premiums and bank owned life insurance income.

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)

Capital Resources

Shareholders’ equity totaled $369,659 at March 31, 2024, compared to $372,002 at December 31, 2023. Shareholders’ equity decreased during the first three months of 2024 as a result of a decrease in the fair value of securities available-for-sale, net of tax, of $12,023, dividends on common shares of $2,510, partially offset by net income of $6,528.

All of the Company’s capital ratios exceeded the regulatory minimum guidelines as of March 31, 2024 and December 31, 2023 as identified in the following table:

|  | Total Risk Based Capital |  |  | Tier I Risk Based Capital |  |  | CET1 Risk Based Capital |  |  | Leverage Ratio |
Company Ratios—March 31, 2024 |  |  | 14.5 | % |  |  | 10.8 | % |  |  | 9.8 | % |  |  | 8.6 | %
Company Ratios—December 31, 2023 |  |  | 14.4 | % |  |  | 10.7 | % |  |  | 9.7 | % |  |  | 8.8 | %
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 | %

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 $5,246, or 0.87% of the total security portfolio at March 31, 2024. 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 $254 and $19,794 for the three months ended March 31, 2024 and 2023, 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 $33,674 and $38,635 for the three months ended March 31, 2024 and 2023, respectively, principally reflecting our loan and investment security activities. Cash provided by and used for deposits and purchase of treasury shares comprised most of our financing activities, which resulted in net cash provided by of $23,324 and $28,203 for the three months ended March 31, 2024 and 2023, 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 March 31, 2024, Civista had total credit availability with the FHLB of $840,582 with standby letters of credit totaling $24,400 and a remaining borrowing capacity of approximately $445,471. In addition, CBI maintains a credit line with a third party lender totaling $15,000. No borrowings were outstanding by CBI under this credit line as of March 31, 2024.

Page 45

Civista Bancshares, Inc.

Quantitative and Qualitative Disclosures About Market Risk

Form 10-Q

(Amounts in thousands, except share data)

ITEM 3. Quantitative and Qualitat ive 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 46

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, 2023 and March 31, 2024, 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 March 31, 2024 and December 31, 2023.

Net Portfolio Value |
|  | March 31, 2024 |  |  | December 31, 2023 |
Change in Rates |  | Dollar Amount |  |  | Dollar Change |  |  | Percent Change |  |  | Dollar Amount |  |  | Dollar Change |  |  | Percent Change |
+200bp |  |  | 565,611 |  |  |  | 10,377 |  |  |  | 2 | % |  |  | 603,656 |  |  |  | (4,077 | ) |  |  | (1 | )%
+100bp |  |  | 563,089 |  |  |  | 7,855 |  |  |  | 1 | % |  |  | 608,399 |  |  |  | 666 |  |  |  | 0 | %
Base |  |  | 555,234 |  |  |  | — |  |  |  | — |  |  |  | 607,733 |  |  |  | — |  |  |  | — |
-100bp |  |  | 545,886 |  |  |  | (9,348 | ) |  |  | (2 | )% |  |  | 605,047 |  |  |  | (2,686 | ) |  |  | (0 | )%
-200bp |  |  | 524,525 |  |  |  | (30,709 | ) |  |  | (6 | )% |  |  | 591,305 |  |  |  | (16,428 | ) |  |  | (3 | )%

The change in net portfolio value from December 31, 2023 to March 31, 2024, can be attributed to a couple of factors. The yield remains inverted and is lower than at the end of the year. Additionally, both the volume and mix of assets and funding sources has changed. The volume of loans has increased, and the asset mix remains centered on loans. The volume of other borrowings has increased and non-maturing deposits have decreased. The volume and mix shifts from the end of the year contributed to a 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. A 200 basis point change in the rates up scenario would lead to a slightly larger decrease in the market value of liabilities than assets. Accordingly, we see an increase in the net portfolio value. A 200 basis points change in the rates down scenario would lead to a larger increase in the market value of liabilities than in assets, leading to a decrease in the net portfolio value.

Page 47

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 officer and our principal financial officer concluded that our disclosure controls and procedures as of March 31, 2024, 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 48

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, the Company 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. Ri sk Factors

There were no material changes during the current period to the risk factors disclosed in "Item 1A. Risk Factors" of Part 1 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Item 2. Unregistered Sales of Equi ty Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

The following table details repurchases by the Company and purchases by "affiliated purchasers" as defined in Rule 10b-18(a)(3) under the Exchange Act of the Company's common shares during the first quarter of 2024.

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 that May Yet Be Purchased Under the Plans or Programs |
January 1, 2024 - January 31, 2024 |  |  | 8,262 |  |  | $ | 18.38 |  |  |  | - |  |  | $ | 12,003,223 |
February 1, 2024 - February 29, 2024 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
March 1, 2024 - March 31, 2024 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  |  | 8,262 |  |  | $ | - |  |  |  | - |  |  | $ | 12,003,223 |

On May 8, 2023, the Company announced a new common share repurchase program pursuant to which the Company was authorized to repurchase a maximum aggregate value of $13,500,000 of its outstanding common shares through May 2, 2024. As of March 31, 2024, no common shares had been repurchased under this repurchase program.

Item 3. Defaults Upo n Senior Securities

None

Item 4. Mine Saf ety Disclosures

Not applicable

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the quarter ended March 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Civista Bancshares, Inc.

Other Information

Form 10-Q

Item 6. E xhibits

Exhibit |  | Description |  | Location
2.1 |  | Agreement and Plan of Merger, dated January 10, 2022 by and between Civista Bancshares, Inc. and Comunibanc Corp. |  | Filed as Exhibit 2.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on January 10, 2022 and incorporated herein by reference. (File No. 001-36192)
2.2 |  | Stock Purchase Agreement, dated as of September 29, 2022, by and among Civista Bancshares, Inc., Civista Bank, Vision Financial Group, Inc. and Frederick Summers |  | Filed as Exhibit 2.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K filed on September 30, 2022 and incorporated herein by reference. (File No. 001-36192)
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.INS |  | Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |  | Included herewith
101.SCH |  | Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents |  | Included herewith
104 |  | Cover page formatted in Inline Extensible Business Reporting Language. |  | Included herewith

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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 |  | May 9, 2024
Dennis G. Shaffer |  | Date
Chief Executive Officer and President |  |

/s/ Todd A. Michel |  | May 9, 2024
Todd A. Michel |  | Date
Senior Vice President, Controller |  |

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