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 - June 30, 2026
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 July 31, 2026—20,794,238 shares
CIVISTA BANCSHARES, INC.
Index
PART I.
Financial Information
2
Item 1.
Financial Statements:
Consolidated Balance Sheets (Unaudited) June 30, 2026 and December 31, 2025
Consolidated Statements of Operations (Unaudited) Three and Six months ended June 30, 2026 and 2025
3
Consolidated Statements of Comprehensive Income (Unaudited) Three and Six months ended June 30, 2026 and 2025
4
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) Three and Six months ended June 30, 2026 and 2025
5
Condensed Consolidated Statements of Cash Flows (Unaudited) Six months ended June 30, 2026 and 2025
6
Notes to Interim Consolidated Financial Statements (Unaudited)
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
42
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
56
Item 4.
Controls and Procedures
58
PART II.
Other Information
59
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Item 6.
Exhibits
60
Signatures
61
Part I – Financial Information
ITEM 1. Financial Statements
Consolidated Balance Sheets
(In thousands, except share data)
June 30, 2026
(Unaudited)
December 31, 2025
ASSETS
Cash and due from financial institutions
$
61,743
77,320
Investments in time deposits
4,125
1,165
Securities available-for-sale
667,314
681,908
Equity securities
2,865
2,692
Loans held for sale
8,508
7,180
Loans, net of allowance for credit losses of $41,713 and $42,020
3,213,191
3,228,026
Other securities
28,957
25,942
Premises and equipment, net
37,417
40,611
Accrued interest receivable
14,849
14,436
Goodwill
130,438
Other intangible assets, net
11,579
13,100
Bank owned life insurance
63,942
63,153
Swap assets
2,352
3,494
Deferred taxes
16,049
16,501
Other assets
30,969
30,487
Total assets
4,294,298
4,336,453
LIABILITIES
Deposits
Noninterest-bearing
695,142
702,032
Interest-bearing
2,763,101
2,764,432
Total deposits
3,458,243
3,466,464
Short-term Federal Home Loan Bank advances
123,500
175,000
Long-term Federal Home Loan Bank advances
561
855
Subordinated debentures
104,317
104,234
Other borrowings
3,121
4,090
Swap liabilities
6,584
5,748
Accrued expenses and other liabilities
31,187
36,588
Total liabilities
3,727,513
3,792,979
SHAREHOLDERS’ EQUITY
Common shares, no par value, 40,000,000 shares authorized, 24,669,812 shares issued at June 30, 2026 and 24,607,544 shares issued at December 31, 2025, including Treasury shares
420,922
419,769
Retained earnings
261,615
239,784
Treasury shares, 3,875,574 common shares at June 30, 2026 and 3,861,070 common shares at December 31, 2025, at cost
(76,082
)
(75,764
Accumulated other comprehensive loss
(39,670
(40,315
Total shareholders’ equity
566,785
543,474
Total liabilities and shareholders’ equity
See notes to interim unaudited consolidated financial statements
Page 2
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
Three Months Ended
Six Months Ended
June 30,
2026
2025
Interest and dividend income
Loans, including fees
49,887
49,972
99,117
97,618
Taxable securities
3,908
3,751
7,862
7,306
Tax-exempt securities
2,278
2,338
4,581
4,678
Deposits in other banks
474
210
796
402
Total interest and dividend income
56,547
56,271
112,356
110,004
Interest expense
15,894
15,558
31,347
31,274
Federal Home Loan Bank advances
843
4,611
2,196
8,549
1,120
2,228
2,326
97
123
169
268
Total interest expense
17,954
21,457
35,940
42,417
Net interest income
38,593
34,814
76,416
67,587
Provision for credit losses - loans and leases
1,251
1,171
483
2,419
Provision for (recovery of) credit losses - off-balance sheet credit exposures
519
(146
658
173
Net interest income after provision
36,823
33,789
75,275
64,995
Noninterest income
Service charges
1,889
1,564
3,603
3,088
Net gain (loss) on equity securities
140
(74
(103
Net gain on sale of loans and leases
1,501
841
3,106
1,445
ATM/Interchange fees
1,555
1,418
2,941
2,744
Wealth management fees
1,459
1,325
2,892
2,665
Lease revenue and residual income
1,404
525
3,034
2,421
399
386
789
773
Swap fees
53
125
Other
657
551
1,841
1,291
Total noninterest income
9,007
6,589
18,438
14,449
Noninterest expense
Compensation expense
15,737
15,011
31,966
29,054
Net occupancy expense
1,583
1,419
3,206
3,053
Contracted data processing
582
536
1,312
1,103
FDIC assessment
420
689
1,562
State franchise tax
599
634
1,153
1,160
Professional services
1,221
1,798
2,806
3,888
Equipment expense
1,720
1,764
3,809
3,867
ATM/Interchange expense
743
683
1,475
1,263
Marketing
542
289
1,020
585
Amortization of core deposit intangibles
696
338
1,392
670
Software maintenance expense
1,235
1,294
2,710
2,571
Other operating expenses
3,575
3,027
6,834
5,832
Total noninterest expense
28,653
27,482
58,526
54,608
Income before taxes
17,177
12,896
35,187
24,836
Income tax expense
2,862
1,881
5,883
3,653
Net Income
14,315
11,015
29,304
21,183
Earnings per common share, basic
0.69
0.71
1.41
1.37
Earnings per common share, diluted
Page 3
Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands)
Net income
Other comprehensive income (loss):
Unrealized holding gains (losses) on available-for-sale securities
4,354
(2,629
(1,061
Tax effect
(918
558
(87
186
Unrealized holding gains (losses) on balance sheet swap
124
—
422
(26
(92
Reclassification of gains recognized in net income
Pension liability adjustment
(56
Total other comprehensive income (loss)
3,534
(2,071
645
(663
Comprehensive income
17,849
8,944
29,949
20,520
Page 4
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)
Common Shares
AccumulatedOther
Total
OutstandingShares
Amount
RetainedEarnings
TreasuryShares
ComprehensiveLoss
Shareholders’Equity
Balance, March 31, 2026
20,783,348
420,488
251,041
(43,204
552,243
Other comprehensive income (loss)
Stock-based compensation
10,890
434
Common stock dividends ($0.18 per share)
(3,741
Balance, June 30, 2026
20,794,238
Balance, March 31, 2025
15,519,072
312,192
212,944
(75,753
(51,949
397,434
10,270
397
Common stock dividends ($0.17 per share)
(2,638
Balance, June 30, 2025
15,529,342
312,589
221,321
(54,020
404,137
Balance, December 31, 2025
20,746,474
62,268
Common stock dividends ($0.36 per share)
(7,473
Purchase of common stock
(14,504
(318
Balance, December 31, 2024
15,487,667
312,037
205,408
(75,586
(53,357
388,502
49,857
552
Common stock dividends ($0.34 per share)
(5,270
(8,182
(167
Page 5
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30,
Net cash provided by operating activities
29,286
14,693
Cash flows used for investing activities:
Maturities
245
735
Purchases
(3,205
Securities available for sale
Maturities, prepayments, and calls
61,779
50,133
Sales
(45,952
(46,076
Purchase of other securities
(18,015
(9,767
Redemption of other securities
15,000
3,924
Net change in loans
14,500
(75,559
Proceeds from sale of premises and equipment
913
Disposal of premises and equipment
396
Purchases of premises and equipment
(836
(381
Net cash provided/(used) for investing activities
23,912
(76,078
Cash flows from financing activities:
Repayment of long-term FHLB advances
(294
(398
Net change in short-term FHLB advances
(51,500
94,500
Repayment of other borrowings
(969
(914
Decrease in deposits
(8,221
(15,663
Purchase of treasury shares
Common stock dividends paid
Net cash (used)/provided by financing activities
(68,775
72,088
Increase in cash and cash equivalents
(15,577
10,703
Cash and cash equivalents at beginning of period
63,155
Cash and cash equivalents at end of period
73,858
Cash paid during the period for:
Interest
38,242
43,399
Income taxes
2,620
4,787
Supplemental cash flow information:
Transfer of loans from portfolio to other real estate owned
209
Page 6
Form 10-Q
(Amounts in thousands, except share data)
(1) Consolidated Financial Statements
Nature of Operations and Principles of Consolidation: Civista Bancshares, Inc. ("CBI") is an Ohio corporation and a registered financial holding company. The Consolidated Financial Statements include the accounts of CBI and its wholly-owned direct and indirect subsidiaries: Civista Bank ("Civista"), First Citizens Insurance Agency, Inc. ("FCIA"), Water Street Properties, Inc. ("WSP"), CIVB Risk Management, Inc. ("CRMI") and First Citizens Investments, Inc. ("FCI"). The above companies together are sometimes 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.
Civista provides financial services through its offices in the Ohio counties of Champaign, Crawford, Cuyahoga, Erie, Franklin, Henry, Huron, Logan, Lorain, Madison, Medina, Montgomery, Ottawa, Richland, Summit, and Wood, 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 ("CLF"), 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. The operations of CLF are headquartered in Pittsburgh, Pennsylvania.
FCIA was formed to allow the Company to participate in commission revenue generated through its third party insurance agreement. Insurance commission revenue was less than 1% of total revenue for the quarters ended June 30, 2026 and 2025. WSP was formed to hold repossessed assets of CBI’s subsidiaries. WSP revenue was less than 1% of total revenue for the quarters ended June 30, 2026 and 2025. CRMI was formed in 2017 to provide property and casualty insurance coverage to CBI and its subsidiaries for which insurance may not be currently available or economically feasible in the insurance marketplace. CRMI revenue was less than 1% of total revenue for the quarters ended June 30, 2026 and 2025. FCI is wholly-owned by Civista and holds and manages its securities portfolio. The operations of FCI are located in Wilmington, Delaware.
Acquisition of The Farmers Savings Bank ("FSB")
At the close of business on November 6, 2025, Civista closed its previously announced acquisition of FSB. The acquisition added approximately $268.1 million of total assets, $106.2 million of total loans and leases, $236.1 million of total deposits, and two branches. The 2025 results reflect inclusion of FSB since November 7, 2025.
Upon the closing of the acquisition, FSB was merged with and into Civista Bank. In addition, the management and organization structure was updated to reflect the combined organization. On-boarding of former FSB colleagues and their initial training was completed in the first quarter of 2026. Certain of Civista's products and services have been introduced across the legacy FSB customer base, and customer-facing colleagues are focused on both growing and retaining customers. Technology conversions were completed in mid-February 2026, as scheduled.
Offering of Common Shares
On July 10, 2025, CBI announced an underwritten public offering of up to a maximum of 3,788,238 of its common shares. CBI subsequently closed on the sale of 3,294,120 common shares on July 14, 2025, and the sale of an additional 494,118 common shares on July 16, 2025 pursuant to the underwriters' exercise of their overallotment option, at the public offering price of $21.25 per share. The aggregate net proceeds from the offering were approximately $75.7 million, after deducting $608 of direct expenses and the underwriting discount of $4.2 million. The net proceeds from the offering were initially used to pay-down short-term FHLB advances, but the long-term strategic plan is to use the net proceeds for general corporate purposes, which may include supporting organic growth opportunities and future strategic transactions.
Page 7
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 June 30, 2026 and its results of operations and changes in cash flows for the periods ended June 30, 2026 and 2025 have been made. The results of operations for the three and six months ended June 30, 2026 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 Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The Company has consistently followed these policies in preparing this Quarterly Report on Form 10-Q.
(2) Significant Accounting Policies
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 the financial statements and the disclosures provided, and future results could differ. The allowance for credit losses, determination of goodwill impairment, and fair value measurements of financial instruments are considered material estimates that are particularly susceptible to significant change in the near term.
Recently Adopted and Newly Issued but Not Yet Effective Accounting Standards:
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU 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 in this ASU 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 Company adopted ASU 2023-09 on a prospective basis effective January 1, 2025, and the adoption of the ASU did not have a material impact on the Company's Consolidated Financial Statements.
In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. The amendments clarify how an entity determines whether a profits interest or similar award is (i) within scope of Compensation - Stock Compensation (Topic 718) or (ii) not a share-based payment arrangement and therefore within the scope of other guidance. The Company adopted ASU 2024-01 effective January 1, 2025. The adoption of ASU 2024-01 did not have a material impact on the Company's Consolidated Financial Statements.
In November 2024, the FASB issued ASU 2024-03: Income Statement-Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This ASU does not change the expense captions an entity presents on the face of its income statement. ASU 2024-03 can be applied prospectively, and it is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption and retrospective applications are permitted. The Company is currently evaluating the impact of ASU 2024-03 on its Consolidated Financial Statements.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity ("VIE"). The ASU revises the guidance in ASC 805 to clarify that, in determining the accounting acquirer in "a business combination that is effected primarily by exchanging equity interests in which a VIE is acquired," an entity would be required to consider the factors in ASC paragraphs 805-10-55-12 through 55-15. Previously, the accounting acquirer in such transactions was always the primary beneficiary. The amendments in this ASU are effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal reporting periods. Early adoption is permitted as of the beginning of an interim or fiscal reporting period. The Company is currently evaluating the impact of ASU 2025-03, but it is not expected to have a material impact on its Consolidated Financial Statements.
Page 8
In November 2025, the FASB issued ASU 2025-09: Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. ASU 2025-09 amends ASC 815 to align hedge accounting more closely with an entity's economic risk management practices. Key amendments include (i) to allow designating a variable price component of a nonfinancial forecasted purchase or sale as the hedged risk, (ii) to allow grouping individual forecasted transactions with similar (not identical) risk exposures, (iii) a new model for hedging forecasted interest on variable-rate debt, enabling changes in index or tenor without redesignation, subject to simplifying assumptions, and (iv) additional clarifications related to hedge accounting of nonfinancial components, net written options, and dual-hedge strategies. ASU 2025-09 will be effective for annual periods after December 15, 2026, though early adoption is permitted. ASU 2025-09 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In December 2025, the FASB issued ASU 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased Loans, which updates the accounting for Purchased Financial Assets ("PFA") under the current expected credit loss ("CECL") framework. The ASU expands the PFA model to include both Purchased Credit Deteriorated ("PCD") assets and certain non-PCD loan receivables, including purchased seasoned loans, applying the gross-up method to a broader group of acquired loans. This ASU addresses the long-standing concerns regarding double counting of credit losses and operational complexity under the prior CECL acquisition model. The ASU is effective for fiscal years beginning after December 15, 2026, but early adoption is permitted. The Company early adopted ASU 2025-08 on a prospective basis in the fourth quarter of 2025 in connection with the Company's acquisition of FSB that closed in November 2025.
(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:
AmortizedCost
GrossUnrealizedGains
GrossUnrealizedLosses
Fair Value
U.S. Treasury securities and obligations of U.S. government agencies
37,615
199
(1,205
36,610
Obligations of states and political subdivisions
336,632
1,199
(20,352
317,479
Mortgage-backed securities in government sponsored entities
337,698
540
(25,012
313,226
Total debt securities (1)
711,945
1,938
(46,569
61,935
262
(1,180
61,017
345,214
1,319
(21,735
324,798
319,792
(24,224
296,093
726,941
2,106
(47,139
(1) Excludes accrued interest receivable on securities of $4,288 and $4,371 at June 30, 2026 and December 31, 2025, respectively, that is recorded in Accrued interest receivable on the Consolidated Balance Sheets.
Page 9
The amortized cost and fair value of debt securities at June 30, 2026, 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
FairValue
Due in one year or less
5,900
5,822
Due after one year through five years
61,740
59,511
Due after five years through ten years
62,154
61,879
Due after ten years
244,453
226,876
Mortgage-backed securities
Total securities available-for-sale
There were no proceeds from sales of debt securities available-for-sale, gross realized gains or gross realized losses for the three and six months ended June 30, 2026 or June 30, 2025.
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 $250,182 and $239,649 as of June 30, 2026 and December 31, 2025, respectively.
The following tables show the fair value and gross unrealized losses, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2026 and December 31, 2025:
12 Months or less
More than 12 months
Description of Securities
UnrealizedLoss
7,022
23,903
(1,118
30,925
50,777
(201
154,103
(20,151
204,880
Mortgage-backed securities in gov’t sponsored entities
37,927
(458
166,920
(24,554
204,847
95,726
(746
344,926
(45,823
440,652
1,168
(2
47,644
(1,178
48,812
12,606
(45
181,703
(21,690
194,309
58,246
(490
172,015
(23,734
230,261
72,020
(537
401,362
(46,602
473,382
At June 30, 2026, there were a total of 391 securities in the portfolio with unrealized losses mainly due to higher current market rates when compared to the time of purchase. At December 31, 2025, the Company owned 372 securities that were in an unrealized loss position. The 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.
Each quarter, we perform an analysis to determine if any of the unrealized losses on securities available-for-sale are comprised of credit losses as compared to unrealized losses due to market interest rate adjustments. Our assessment includes a review of the unrealized loss for each security issuance held; the financial condition and near-term prospects of the issuer, including external credit ratings and recent downgrades; and our ability and intent to hold the security for a period of time sufficient for a recovery in value. We also consider the
Page 10
extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies. The portfolio continues to consist of a mix of fixed and floating-rate, high quality securities, largely rated AA (or better), displaying an overall effective duration of approximately 4.7 years. No credit losses were determined to be present as of the three and six months ended June 30, 2026, as there was no credit quality deterioration noted. Therefore, no provision for credit losses on securities was recognized for the three and six months ended June 30, 2026.
The following table presents the net gains and losses on equity investments recognized in earnings for the three and six months ended June 30, 2026 and 2025, and the portion of unrealized gains and losses for the period that relates to equity investments held at June 30, 2026 and 2025:
Net gains (losses) recognized on equity securities during the period
Less: Net gains (losses) realized on the sale of equity securities during the period
Unrealized gains (losses) recognized on equity securities held at reporting date
Equity securities consisting of investments in other financial institutions totaled $2.9 million and $2.7 million as of June 30, 2026 and December 31, 2025, respectively.
Stock of the Federal Home Loan Bank of Chicago (“FHLBC”), the Federal Reserve Bank of Cleveland (“FRBC”), United Bankers' Bancorp, Farmer Mac and Norwalk Community Development Corp are included as Other securities on the Company's Consolidated Balance Sheets. FHLBC stock was recorded at $12,641 at June 30, 2026 and $11,645 at December 31, 2025. FRBC stock was recorded at $16,027 at June 30, 2026 and $14,023 at December 31, 2025. United Bankers' Bancorp stock was recorded at $245 at June 30, 2026 and $230 at December 31, 2025. Farmer Mac stock was recorded at $42 at both June 30, 2026 and December 31, 2025. Norwalk Community Development Corp stock was recorded at $2 at both June 30, 2026 and December 31, 2025. Other securities are carried at cost, classified as restricted securities, and periodically evaluated for impairment based on ultimate recovery of par value.
(4) Loans
Loan balances were as follows:
Commercial & Agriculture
315,479
308,692
Commercial Real Estate- Owner Occupied
389,434
385,547
Commercial Real Estate- Non-Owner Occupied
1,229,731
1,239,017
Residential Real Estate
957,960
944,328
Real Estate Construction
265,488
285,137
Farm Real Estate
32,440
37,775
Lease Financing Receivables
32,665
35,103
Consumer and Other
31,707
34,447
Total loans
3,254,904
3,270,046
Allowance for credit losses
(41,713
(42,020
Net loans
The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed in this Note 4 and in Note 5 (Allowance for Credit Losses). As of June 30, 2026 and December 31, 2025, accrued interest receivable on loans totaled $10,496 and $10,031, respectively, and is included in the Accrued interest receivable line item on the Company's Consolidated Balance Sheet.
Page 11
Lease financing receivables consist of sales-type and direct financing leases for equipment, with terms typically ranging from two to six years. On direct financing leases, the Company obtains third-party residual value guarantees to reduce its residual asset risk. The net investment in direct financing and sales-type leases was comprised of the following as of June 30, 2026 and December 31, 2025:
Minimum lease payments receivable
35,621
39,332
Unguaranteed residual assets
2,224
1,558
Unamortized direct costs
57
14
Unearned income
(5,237
(5,801
Total net investment in direct financing and sales-type leases
The components of total lease income were as follows for the three and six months ended June 30, 2026 and 2025.
Interest and dividend income - Loans and leases, including fees:
Interest income on net investments in direct financing and sales-type leases
606
2,221
1,232
3,628
Noninterest income - Lease revenue & residual income:
Lease income from operating lease payments
1,207
824
2,670
2,420
Other(1)
197
(299
364
1
(1) Other consists of lease-related fees and commissions and gains (losses) on sale or disposition of leased assets
The 2025 amounts disclosed in the tables above include a nonrecurring item identified in conjunction with the conversion of the core leasing system in the second quarter of 2025. An entry was recorded to increase lease interest income by approximately $1,260, reduce lease income from operating lease payments by approximately $550, and reduce other noninterest lease revenue & residual income by approximately $495. This entry is not representative of recurring lease activity and should be considered as such when compared to current year amounts.
Page 12
(5) Allowance for Credit Losses
The following tables present, by portfolio segment, the changes in the allowance for credit losses ("ACL") for the three and six months ended June 30, 2026.
Allowance for credit losses:
For the three months ended June 30, 2026
Beginning balance
Charge-offs
Recoveries
Provision
Ending Balance
4,996
34
2,296
7,324
Commercial Real Estate:
Owner Occupied
4,280
79
4,361
Non-Owner Occupied
11,789
(1,125
10,665
14,486
(27
21
(378
14,102
3,502
3,840
225
226
1,008
(138
40
49
959
250
(7
(9
236
40,536
(174
100
41,713
For the six months ended June 30, 2026
5,153
(98
96
2,173
4,420
(62
12,118
(484
(971
14,718
(30
(620
3,842
279
(53
1,169
(348
44
94
321
(20
11
(76
42,020
(980
190
For the three and six months ended June 30, 2026, the Company provided $1,251 and $483, respectively, to the allowance for credit losses. The Company experienced an increase in the allowance for credit losses as required by our CECL model due to quantitative factors representing an increase due to geopolitical uncertainties in addition to less charge-offs experienced in the respective periods. The provision recorded in the three months ended June 30, 2026, was elevated due to an increase in the quantitative factors affecting the Commercial & Agriculture portfolio, requiring an additional expense.
The following tables present, by portfolio segment, the changes in the allowance for credit losses for the three and six months ended June 30, 2025.
For the three months ended June 30, 2025
6,194
(363
182
6,057
4,466
146
4,612
11,412
(550
456
11,321
12,455
(115
23
712
13,075
4,017
(322
3,695
264
41
305
1,277
17
(18
1,214
176
40,284
(1,092
92
40,455
Page 13
For the six months ended June 30, 2025
6,586
(435
335
(429
4,327
285
11,404
(1,350
1,264
11,866
1,282
3,708
(13
1,361
(152
(37
191
(16
13
(12
39,669
(2,068
435
For the three and six months ended June 30, 2025, the Company provided $1,171 and $2,419, respectively, to the allowance for credit losses. The Company experienced an increase in the allowance for credit losses as required by our CECL model due to quantitative factors representing an increase in the forecasted unemployment rate, and an increase in forecasted probability of default and lower prepayment speeds as well as loan growth during the period.
The Company’s internally assigned risk grades are as follows:
Homogeneous loans, generally Residential Real Estate, Real Estate Construction, and Consumer and Other loans, are not risk-graded, except when collateral is used for a business purpose. These loans are monitored based on performance, with performing loans included as Pass and nonperforming loans included as Substandard.
Page 14
Based on the most recent analysis performed, the risk category of loans at June 30, 2026, and year-to-date gross charge-offs as of June 30, 2026, by type and year of originations, was as follows:
Term Loans Amortized Cost Basis by Origination Year
Revolving
2024
2023
2022
Prior
Loans
Pass
39,432
43,532
41,263
30,800
17,255
16,930
100,567
289,779
Special Mention
1,161
252
177
965
1,978
6,941
11,476
Substandard
517
4,705
1,021
520
67
5,999
12,886
Doubtful
1,338
Total Commercial & Agriculture
39,488
45,210
46,220
31,999
18,740
18,976
114,846
Commercial & Agriculture:
Current-period gross charge-offs
76
22
98
Commercial Real Estate - Owner Occupied
19,790
52,767
31,012
34,756
52,135
157,934
10,985
359,379
9,045
4,216
13,261
543
942
1,156
6,442
6,260
1,451
16,793
Total Commercial Real Estate - Owner Occupied
53,310
31,954
35,912
67,622
168,409
12,436
Commercial Real Estate - Owner Occupied:
Commercial Real Estate - Non-Owner Occupied
65,234
78,375
76,166
254,114
257,392
422,980
30,847
1,185,108
3,057
12,752
15,808
1,434
377
27,004
28,815
Total Commercial Real Estate - Non-Owner Occupied
77,600
260,826
462,736
Commercial Real Estate - Non-Owner Occupied:
484
57,172
99,933
121,131
115,759
110,629
240,308
204,493
949,425
195
325
1,631
1,626
3,923
1,030
8,210
Total Residential Real Estate
121,137
117,390
112,379
244,425
205,523
Residential Real Estate:
9
30
Page 15
65,300
104,044
12,304
34,400
16,804
9,240
15,184
257,275
7,528
684
Total Real Estate Construction
19,832
35,084
Real Estate Construction:
2,364
1,050
856
2,329
482
18,783
3,127
28,992
439
808
1,695
2,942
507
Total Farm Real Estate
920
20,098
4,822
Farm Real Estate:
Current-period charge-offs
6,176
4,414
6,410
5,362
1,608
194
24,165
1,690
2,578
1,067
349
5,684
1,296
1,257
2,816
-
Total Lease Financing Receivables
6,104
10,283
7,687
Lease Financing Receivables:
115
164
69
348
880
23,172
1,098
1,837
1,014
651
3,007
31,657
10
16
51
Total Consumer and Other
23,182
1,099
1,847
663
Consumer and Other:
20
Total Loans
256,404
411,208
308,982
486,362
480,542
924,741
386,666
Total Loans:
90
502
980
Page 16
The risk category of loans at December 31, 2025, and year-to-date gross charge-offs as of June 30, 2025, by type and year of originations, was as follows:
2021
55,108
49,767
32,413
21,623
15,222
8,323
100,299
282,755
686
331
1,142
2,426
7,381
12,027
506
4,677
1,267
619
8
5,325
12,402
1,508
56,300
54,444
34,011
23,384
17,656
8,384
114,513
383
41,259
32,982
41,997
55,380
54,209
120,299
6,347
352,473
330
1,010
14,290
5,275
1,539
75
22,519
1,514
2,930
4,617
1,494
10,555
41,589
44,521
72,600
59,484
126,455
7,916
64,507
77,375
259,428
295,520
143,207
329,652
31,946
1,201,635
950
1,520
7,036
9,506
14,593
12,799
27,392
78,325
297,040
157,800
349,971
800
550
1,350
98,026
145,132
126,021
114,905
91,029
160,969
198,707
934,789
139
55
270
350
1,365
433
1,513
534
3,024
1,134
6,638
516
1,536
98,165
146,207
126,454
116,418
92,114
164,263
200,707
39
36
Page 17
116,268
39,988
75,744
23,121
4,041
7,282
11,304
277,748
6,678
711
46,666
76,455
2,220
1,606
1,709
2,600
20,683
3,133
34,661
450
461
679
1,027
2,617
475
497
3,160
2,170
2,622
21,837
4,160
7,631
7,361
7,292
3,193
486
25,984
1,799
3,035
2,340
7,213
43
1,363
235
265
1,906
9,473
11,759
9,867
3,497
152
24,261
3,717
2,428
1,416
662
404
1,504
34,392
52
3,726
2,441
1,432
676
1,507
412,783
375,715
556,337
539,662
334,879
678,617
372,053
388
239
854
587
2,068
Page 18
The following tables include an aging analysis of the recorded investment in past due loans outstanding as of June 30, 2026 and December 31, 2025.
30-59DaysPast Due
60-89DaysPast Due
90 Daysor GreaterPast Due
Total PastDue
Current
Past Due90 DaysandAccruing
151
477
703
314,776
389,427
472
9,900
10,372
1,219,359
1,149
1,741
3,339
6,229
951,731
211
464
103
778
31,887
27
89
31,618
2,040
2,285
13,853
18,178
3,236,726
382
141
762
307,930
179
185
385,362
8,332
1,130
9,462
1,229,555
5,954
1,629
2,331
9,914
934,414
104
1,301
1,240
454
2,995
32,108
37
47
34,248
16,263
3,145
4,109
23,517
3,246,529
462
The following table presents loans on nonaccrual status as of June 30, 2026.
Nonaccrual loans with a related ACL
Nonaccrual loans without a related ACL
Total Nonaccrual loans
6,363
3,943
10,306
1,377
1,517
9,713
564
10,277
6,871
471
7,342
343
28
23,167
6,698
29,865
Page 19
The following table presents loans on nonaccrual status as of December 31, 2025.
6,312
4,042
10,354
2,778
2,831
8,469
624
9,093
6,202
1,535
7,737
291
21,478
9,356
30,834
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: (1) the loan is well-secured and none of the principal and interest has been past due for a minimum of 90 days or (2) the principal and interest payments are reasonably assured and a sustained period of performance has occurred, generally six months.
Modifications to Borrowers Experiencing Financial Difficulty: Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized cost basis of the loan is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of amortized cost basis and a corresponding adjustments to the allowance for credit losses. In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, reduction of rate or payment deferral, may be granted. The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each loan upon loan origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of loans to borrowers experiencing financial difficulty. The Company uses probability of default/loss given default, discounted cash flows or remaining life method to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification.
Page 20
The following table shows the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty, disaggregated by loan category and type of modification granted during the six months ended June 30, 2026. There were no loans modified to a borrower experiencing financial difficulty during the three months ended June 30, 2026. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of loan category is presented below:
Loans Modifications Made to Borrowers Experiencing Financial Difficulty
(Dollars in Thousands)
Term Extension
Loan Type
Amortized Cost Basis
Percent of total loans bycategory
514
1.61
%
Total Loan Modifications
The following tables show the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty, disaggregated by loan category and type of modification granted during the three and six months ended June 30, 2025. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of loan category is presented below:
0.00
Leasing Financing Receivables
Page 21
The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty as of June 30, 2026 and June 30, 2025.
Financial Effect
- 24 month term extension
June 30, 2025
- 5 month term extension
Upon the Company's determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. The Company closely monitors the performance of the loans that were modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. There were no
Page 22
modified loans that had a payment default during the three and six months ended June 30, 2026 and June 30, 2025, and were modified during the twelve months prior to that default to borrowers experiencing financial difficulty.
The following tables present the payment status of the loans that were modified to borrowers experiencing financial difficulties in the last twelve months ended June 30, 2026 and June 30, 2025.
Non-Accrual
5,574
5,539
6,088
7,559
7,566
491
8,050
Individually Evaluated Loans: Larger (greater than $350) Commercial & Agricultural and Commercial Real Estate loan relationships, as well as Residential Real Estate and Consumer loans and Lease Financing Receivables that are part of a larger relationship are individually evaluated on a quarterly basis, when they do not share similar risk characteristics with the collectively evaluated pools. 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 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 individually evaluated loans does not differ from its overall policy for interest recognition.
Page 23
The following tables present 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 June 30, 2026 and December 31, 2025.
Real Estate
Allowance for Credit Losses
2,418
1,339
8,466
2,000
10,657
2,687
248
9,010
3,000
119
13,701
3,367
Collateral-dependent loans consist primarily of Residential Real Estate, Commercial Real Estate and Commercial & Agricultural loans. Individually evaluated loans are collateral-dependent 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. When a loan is deemed collateral-dependent, the level of credit loss is measured by the difference between amortized cost of the loan and the fair value of collateral adjusted for estimated cost to sell. 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.
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 Sheets. As of June 30, 2026 and December 31, 2025, there were no foreclosed assets included in other assets. As of June 30, 2026 and December 31, 2025, the Company had initiated formal foreclosure procedures on $3,142 and $1,228, respectively, of Residential Real Estate loans.
Page 24
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, such as a loan commitment, credit line, letter of credit, or overdraft protection. The allowance for credit losses on off-balance sheet credit exposures is recorded within Accrued expenses and other liabilities on the Consolidated Balance Sheets with adjustments recorded in 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 if funded.
The following tables list the allowance for credit losses on off-balance sheet credit exposures as of the three months and six months ended June 30, 2026 and June 30, 2025:
Beginning of Period
3,375
3,699
Provision for (recovery of)
End of Period
3,894
3,553
3,236
3,380
Provision for
(6) Accumulated Other Comprehensive Income (Loss)
The following tables present the changes in each component of accumulated other comprehensive income (loss), net of tax for the three and six month periods ended June 30, 2026 and June 30, 2025.
For the Three-Month Period Ended
June 30, 2026(a)
June 30, 2025(a)
UnrealizedGains (Losses) onAvailable-for-SaleSecurities (a)
DefinedBenefitPensionItems (a)
Cashflow Hedge (a)
Total (a)
(38,643
(4,735
174
(47,655
(4,294
Other comprehensive gain (loss) before reclassifications
3,436
Ending balance
(35,207
272
(49,726
(a) Amounts in parentheses indicate debits on the Consolidated Balance Sheets.
Page 25
For the Six-Month Period Ended
UnrealizedGains and(Losses) onAvailable-for-SaleSecurities (a)
(35,522
(58
(48,851
(4,506
Other comprehensive income (loss) before reclassifications
315
(875
212
There were no amounts reclassified out of any component of accumulated other comprehensive income (loss) for the three and six month periods ended June 30, 2026 and June 30, 2025.
(7) Goodwill and Intangible Assets
The carrying amount of goodwill was $130,438 at both June 30, 2026 and December 31, 2025.
Acquired intangible assets, other than goodwill, as of June 30, 2026 and December 31, 2025 were as follows:
GrossCarryingAmount
AccumulatedAmortization
NetCarryingAmount
Core deposit intangible assets:
Core deposit intangibles
19,643
10,618
9,025
9,226
10,417
Total core deposit intangible assets
Aggregate core deposit intangible amortization expense was $696 and $338 for the three months ended June 30, 2026 and 2025, respectively. Aggregate core deposit intangible amortization expense was $1,392 and $670 for the six months ended June 30, 2026 and 2025, respectively.
Activity for mortgage servicing rights ("MSRs") for the three and six months ended June 30, 2026 and June 30, 2025 was as follows:
Three Months Ended June 30,
Mortgage Servicing Rights:
Balance at Beginning of Period
2,615
2,832
2,683
2,877
Additions
24
54
48
Additions from acquisition
Disposals
Amortized to expense
(102
(81
(183
(150
Other charges
Change in valuation allowance
Balance at End of Period
2,554
2,775
Page 26
There was no valuation allowance for the three and- six months ended June 30, 2026 and June 30, 2025.
Estimated amortization expense for each of the next five years and thereafter is as follows:
MSRs
Core depositintangibles
2026(1)
1,395
2027
150
2,395
2,545
2028
145
1,923
2029
144
1,218
1,362
2030
142
944
1,086
Thereafter
1,897
1,226
3,123
(1) 2026 includes six months of amortization expense for the period from July 1, 2026 through December 31, 2026.
(8) Short-Term and Other Borrowings
Short-term borrowings, which consist of federal funds purchased and short-term FHLB advances, are summarized as follows:
Short-termBorrowings
Fed Funds Purchased
FHLB Advances:
Single maturity fixed rate advances
100,000
Interest rate on balance
3.78
3.81
Overnight advances
23,500
75,000
3.77
Total Short-term FHLB Advances
The single maturity fixed rate advances consisted of one advance that matures on July 17, 2026.
Maximum indebtedness
465,000
270,500
Rate
3.74
4.44
3.70
End of period balance
433,500
4.13
4.42
Average balance
107,823
412,545
128,127
384,224
3.12
3.44
Average balance during the period represents daily averages. Average rate paid represents interest expense divided by the related average balances.
Page 27
The following table summarizes the Company's subordinated debentures at June 30, 2026 and December 31, 2025.
SubordinatedDebentures
Subordinated Debentures:
First Citizens Statutory Trust II
7,732
First Citizens Statutory Trust III
12,887
First Citizens Statutory Trust IV
5,155
Futura TPF Trust I
Futura TPF Trust II
1,997
Long-Term Subordinated Debentures, net of unamortized debt issuance costs
73,968
73,885
Total Subordinated Debentures
Other borrowings, which consist of secured borrowings from other institutions for the right to participate in the future payments of specific leases originated by the CLF division of Civista, totaled $3,121 and $4,090 at June 30, 2026 and December 31, 2025, respectively. The weighted average rate on these borrowings was 8.45% and 8.22% at June 30, 2026 and December 31, 2025, respectively. The weighted average life was 19 months and 23 months at June 30, 2026 and December 31, 2025, respectively.
(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 are computed using the two-class method as required by ASC 260-10-45. Basic earnings per common share are computed as net income available to common shareholders divided by the weighted average number of common shares outstanding during the period, which excludes the participating securities. Diluted earnings per common share include the dilutive effect, if any, of additional potential common shares issuable under the Company’s equity incentive plan, computed using the treasury stock method. The Company had no dilutive securities for the three and six months ended June 30, 2026 and June 30, 2025.
Basic
Less allocation of earnings and dividends to participating securities
45
84
72
Net income available to common shareholders—basic
14,261
10,970
29,220
21,111
Weighted average common shares outstanding
20,786,101
15,524,490
20,765,913
15,506,750
Less average participating securities
79,006
96,692
59,198
81,784
Weighted average number of shares outstanding used in the calculation of basic earnings per common share
20,707,095
15,427,798
20,706,715
15,424,966
Earnings per common share:
Diluted
Page 28
(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 June 30, 2026 and December 31, 2025:
Contract Amount
Fixed Rate
VariableRate
Commitment to extend credit:
Lines of credit and construction loans
49,720
712,891
34,580
652,725
Overdraft protection
45,831
51,961
Letters of credit
77
82
49,746
758,799
34,606
704,768
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 3.1% to 7.0% at June 30, 2026 and from 3.1% to 8.0% at December 31, 2025. Maturities extend up to 30 years.
(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:
Service cost
Interest cost
187
192
Expected return on plan assets
(108
(116
(217
(232
Other components
Net periodic pension benefit
(14
(40
The Company does not expect to make any contribution to its pension plan in 2026. The Company made no contribution to its pension plan in 2025.
(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 authorized the Company to grant options, stock awards, stock units and other awards for up to 375,000 common shares of the Company. 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 Directors 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. There were 329,487 shares available for grants under the 2024 Incentive Plan at June 30, 2026.
Page 29
No options were granted under the 2024 Incentive Plan during the three and six months ended June 30, 2026 and June 30, 2025.
In each of the past several years, 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. Once an employee attains the stated retirement age of 62, any granted and/or unvested restricted shares becomes immediately vested per the plan. 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 incentive plans. 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 and six months ended June 30, 2026:
Number ofRestrictedShares
WeightedAverage GrantDate Fair Value
Nonvested at beginning of period
22.12
90,155
19.72
Granted
51,378
24.87
Vested
(62,527
20.92
Forfeited
Nonvested at end of period
The following is a summary of the status of the Company’s outstanding restricted common shares as of June 30, 2026:
At June 30, 2026
Date of Award
Shares
Remaining Expense
Remaining VestingPeriod (Years)
March 3, 2022
1,467
18
0.50
March 14, 2023
4,373
74
1.50
March 12, 2024
10,931
2.50
2,586
September 9, 2024
858
1.25
March 11, 2025
13,002
241
3.50
7,269
March 13, 2026
15,317
4.75
23,203
500
2.75
1,468
2.91
The Company recorded $164 and $197 of share-based compensation expense during the three months ended June 30, 2026 and 2025, respectively, for restricted shares granted to employees under the Company's incentive plans. The Company recorded $883 and $352 of share-based compensation expense during the six months ended June 30, 2026 and 2025, respectively, for restricted shares granted to employees under the Company's incentive plans. At June 30, 2026, the total compensation cost related to unvested awards not yet recognized was $1,468, which was expected to be recognized over the weighted average remaining life of the grants of 2.91 years.
During the second quarter of each year, directors of the Company's banking subsidiary, Civista, are paid a retainer in the form of non-restricted common shares of the Company. A total of 10,890 and 10,270 common shares were issued to Civista directors during the three months ended June 30, 2026 and 2025, respectively, as payment of their service on the Civista Board of Directors. The issuances were expensed in their entirety when the shares were issued in the amounts of $270 and $200, respectively.
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(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.
Securities available for sale: The fair values of securities available for sale are based on quoted prices, if available. If quoted prices are not available, fair values 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 not actively traded in an open market is determined by using market data inputs for similar securities that are observable (Level 2 inputs).
Swap assets/liabilities: The fair values of interest rate swap positions, both assets and liabilities, are based on valuation pricing models using an income approach reflecting readily observable market parameters such as interest rate yield curves (Level 2).
Collateral Dependent Loans: The Company generally measures the fair value of collateral dependent loans based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property which are also included in the net realizable value. If the fair value of the collateral dependent loan is less than the carrying amount of the loan, a specific reserve for the loan is made in the allowance for credit losses or a charge-off is taken to reduce the loan to the fair value of the collateral (less estimated selling costs) and the loan is included in the table below as a Level 3 measurement.
Appraisals for individually analyzed collateral-dependent loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the Company’s asset quality or collections department reviews the assumptions and approaches utilized in the appraisal. Appraisal values are discounted from 0% to 70% to account for other factors that may impact the value of collateral.
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Assets and liabilities measured at fair value are summarized in the tables below.
Fair Value Measurements at June 30, 2026 Using:
(Level 1)
(Level 2)
(Level 3)
Assets measured at fair value on a recurring basis:
U.S. Treasury securities
17,547
Obligations of U.S. Government agencies
19,062
649,767
Swap asset
Liabilities measured at fair value on a recurring basis:
Swap liability
Assets measured at fair value on a nonrecurring basis:
Collateral-dependent loans
9,736
Fair Value Measurements at December 31, 2025 Using:
33,902
27,115
648,006
13,140
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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 at June 30, 2026 and December 31, 2025.
Quantitative Information about Level 3 Fair Value Measurements
Valuation Technique
Unobservable Input
Range
Weighted Average
Appraisals which utilize sales comparison, net income and cost approach
Discounts for collection issues and changes in market conditions
20 - 61%
44%
10 - 61%
42%
Fair Value of Financial Instruments
Much of the information used to arrive at “fair value” is highly subjective and judgmental in nature and therefore the results may not be precise. Subjective factors include, among other things, estimated cash flows, risk characteristics and interest rates, all of which are subject to change. With the exception of investment securities, the Company’s financial instruments are not readily marketable and market prices do not exist. Since negotiated prices for the instruments, which are not readily marketable, depend greatly on the motivation of the buyer and seller, the amounts that will actually be realized or paid per settlement or maturity of these instruments could be significantly different.
The carrying amounts of cash and cash equivalents, accrued interest receivable, short-term FHLB advances and accrued interest payable, as a result of their short-term nature, are considered to be equal to fair value and are classified as Level 1.
The carrying amounts of investments in time deposits are based on commitments per the contractual agreement and are classified as Level 2.
The carrying amount of other securities, which consist of FHLB and other bank stock, approximates fair value as the stock is nonmarketable and has restrictions placed on its transferability and are classified as Level 2.
The fair value of loans held for sale is based on commitments on hand from investors or prevailing market prices and are classified as Level 2.
The Company uses an exit price income approach to determine the fair value of the loan and lease portfolio. The model utilizes a discounted cash flow approach to estimate the fair value of the loans using assumptions for the coupon rates, remaining maturities, prepayment speeds, projected default probabilities, losses given defaults, and estimates of prevailing discount rates. The discounted cash flow approach models the credit losses directly in the projected cash flows. The model applies various assumptions regarding credit, interest, and prepayment risks for the loans based on loan types, payment types and fixed or variable classifications. For all periods presented, the estimated fair value of individually analyzed loans is based on the fair value of the collateral, less estimated cost to sell, or the present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate). All loans and leases are classified as Level 3 within the valuation hierarchy.
The fair values of nonmaturing deposits, which consist of non-interest bearing deposits, savings, NOW, and money market accounts, are considered equal to the amount payable on demand at the reporting date (i.e., carrying value) and are classified as Level 1. Fair values of time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 3 classification.
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The fair values of subordinated debentures are estimated using a discounted cash flow calculation that applies interest rates currently being offered on subordinated debentures to the schedule of maturities on the subordinated debt tranches resulting in a Level 3 classification.
FHLB advances with maturities greater than 90 days and other borrowings are valued based on a discounted cash flow analysis, using interest rates currently being quoted for instruments of similar characteristics and maturities resulting in a Level 3 classification.
The carrying amount and fair value of financial instruments carried at amortized cost were as follows:
CarryingAmount
TotalFair Value
Level 1
Level 2
Level 3
Financial Assets:
Loans, held for sale
Loans and leases, net of allowance
3,114,806
Financial Liabilities:
Nonmaturing deposits
2,347,126
Time deposits
1,111,117
1,113,339
Short-term FHLB advances
Long-term FHLB advances
548
103,133
Accrued interest payable
3,091
3,134,413
2,339,170
1,127,294
1,129,549
838
102,843
5,393
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(14) Derivatives
Risk Management Objective Using Derivatives
The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments.
Interest Rate Swaps Designated as Cash Flow Hedges
The Company’s objectives in using interest rate derivatives are to add stability to interest income and expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. In September 2025, the Company entered into a derivative instrument designated as a cash flow hedge. For a derivative instrument that is designated as a cash flow hedge, the aggregate fair value of the swaps is recorded in swap assets or swap liabilities with changes in fair value recorded in other comprehensive income (loss), net of tax. The amount included in other comprehensive income would be reclassified to current earnings should all or a portion of the hedge no longer be considered effective. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (loss) and subsequently reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
An interest rate swap with a notional amount totaling $100.0 million as of June 30, 2026 was designated as a cash flow hedge to manage the risk of variability in cash flows (future interest payments) attributable to changes in the contractually specified benchmark interest rate on the Company's short-term fixed rate FHLB advances. The gross aggregate fair value of the swap was $348 and is recorded in Swap assets in the Consolidated Balance Sheets at June 30, 2026, with changes recorded in Other comprehensive income (loss). Amounts reported in Accumulated other comprehensive income related to this derivative will be reclassified to interest expense as interest payments are paid on the Company's short-term fixed rate FHLB advances. The hedge was executed to pay fixed and receive variable rate cash flows. The hedge was determined to be effective during the period and the Company expects the hedge to remain effective during the remaining term of the swap. A summary of the interest rate swap designated as a cash flow hedge is presented below (dollars in thousands):
December 31 2025
Notational amount Cash Flow Hedge
Weighted average fixed pay rates
3.408
Weighted average variable SOFR receive rates
3.65
3.69
Weighted average remaining maturity (in years)
0.6
1.2
Non-designated Hedges
Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. To accommodate customer need and to support the Company’s asset/liability positioning, on occasion the Company enters 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. These derivatives are not designated as hedging instruments and changes in fair value are recognized directly in earnings.
The Company presents non-designated derivative positions gross on the Consolidated Balance Sheets for customers and net for financial institution counterparty positions subject to master netting arrangements. The fair value on the asset side was reduced by the margin call adjustment per the Company's netting arrangement in the amounts of $4,580 and $2,180 as of June 30, 2026 and December 31, 2025, respectively.
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The following table reflects the derivative instruments not designated as hedging instruments recorded on the Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025:
NotionalAmount
Included in Swap assets:
Interest rate swaps with loan customers in an asset position
91,688
1,193
114,463
2,792
Counterparty positions with financial institutions in an asset position
228,976
5,391
244,495
2,882
Total before netting adjustments
5,674
Netting adjustments - cash collateral posted by counterparties*
(4,580
(2,180
Total Swap assets
2,004
Included in Swap liabilities:
Interest rate swaps with loan customers in a liability position
137,288
130,032
Counterparty positions with financial institutions in a liability position
Netting adjustments - cash collateral posted to counterparties**
Total Swap liabilities
*Cash collateral posted by counterparties represents the obligation to return cash collateral received from counterparties.
**Cash collateral posted to counterparties represents the right to reclaim cash collateral that was paid to counterparties.
Gross notional positions with customers
Gross notional positions with financial institution counterparties
The Company monitors and controls these derivative products with a comprehensive Board of Director approved commercial loan swap policy. Transactions must be approved in advance by the Lenders Loan Committee or the Board of Directors. The Company classifies changes in fair value of derivative instruments not designated as hedging instruments in Other noninterest income in the Consolidated Statements of Operation. There was no gain or loss recognized on derivative instruments not designated as hedging instruments for the period ended June 30, 2026 or the period ended June 30, 2025.
At June 30, 2026 and December 31, 2025, the Company did not 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 Sheets.
(15) Qualified Affordable Housing Project Investments
The Company invests in certain qualified affordable housing projects. At June 30, 2026 and December 31, 2025, the balance of the Company's investments in qualified affordable housing projects was $17,643 and $16,386, respectively. These balances are reflected in the Other assets line on the Consolidated Balance Sheets. The unfunded commitments related to the investments in qualified affordable housing projects totaled $5,981 and $5,113 at June 30, 2026 and December 31, 2025, respectively. These balances are reflected in the Accrued expenses and other liabilities line on the Consolidated Balance Sheets.
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During the three months ended June 30, 2026 and 2025, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $371 and $366, respectively, offset by tax credits and other benefits from its investments in affordable housing tax credits of $456 and $416, respectively. During the six months ended June 30, 2026 and 2025, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $743 and $716, respectively, offset by tax credits and other benefits from its investments in affordable housing tax credits of $913 and $832, respectively. During the three and six months ended June 30, 2026 and 2025, the Company did not 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
ATM and Interchange Fees 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 ATM and Interchange Fees 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.
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.
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The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30, 2026 and 2025.
Noninterest Income
In-scope of Topic 606:
757
1,040
1,376
Noninterest Income (in-scope of Topic 606)
5,660
5,107
10,476
9,873
Noninterest Income (out-of-scope of Topic 606)
3,347
1,482
7,962
4,576
Total Noninterest Income
(17) Leases
We have operating leases for several branch locations and office space. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. We also lease certain office equipment under operating leases. Many of our leases include both lease (e.g., minimum rent payments) and non-lease (e.g., common-area or other maintenance costs) components. The Company accounts for each component separately based on the standalone price of each component. In addition, we have several operating leases with lease terms of less than one year and therefore, we have elected the practical expedient to exclude these short-term leases from our right-of-use ("ROU") assets and lease liabilities.
Most leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion. Renewals to extend the lease terms are only included in our ROU assets and lease liabilities when it is reasonably certain they will be exercised.
As most of our leases do not provide an implicit rate, we use the fully collateralized FHLB borrowing rate, commensurate with the lease terms based on the information available at the lease commencement date in determining the present value of the lease payments.
The balance sheet information related to our operating leases were as follows as of June 30, 2026 and December 31, 2025:
Classification on the Consolidated Balance Sheet
Assets:
Operating lease
2,520
2,387
Liabilities:
The cost components of our operating leases were as follows for the three and six months ended June 30, 2026 and June 30, 2025:
Lease cost
Operating lease cost
201
Short-term lease cost
12
Sublease income
(5
Total lease cost
208
214
Page 38
408
417
19
(10
426
Maturities of our lease liabilities for all operating leases for each of the next five years and thereafter is as follows:
2026 (1)
406
798
642
455
322
Total lease payments
2,762
Less: Imputed Interest
242
Present value of lease liabilities
(1) 2026 includes lease payments from July 1, 2026 through December 31, 2026.
The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of June 30, 2026:
Weighted-average remaining lease term-operating leases (years)
3.26
Weighted-average discount rate-operating leases
3.88
The Company is the lessor of equipment under operating leases to a wide variety of customers, from commercial and industrial to government and healthcare. The operating lease assets are presented on the Consolidated Balance Sheets as Premises and equipment. The Company records lease revenue over the term of the lease and retains ownership of the related assets which are depreciated over the estimated useful life, normally two to six years.
The Company also leases equipment to customers under direct financing leases. At the inception of each lease, the lease receivables, together with the present value of the estimated unguaranteed residual values, are presented on the Consolidated Balance Sheets as Loans. The excess of the lease receivables and residual values over the cost of the equipment is recorded as unearned lease income and will be recognized over the lease term, normally two to six years as well.
(18) Segment Reporting
The Company conducts its operations through one single business segment, which is determined by the Chief Financial Officer, who is the designated chief operating decision maker ("CODM").
This decision is based upon information provided about the Company's products and services offered. The segment is also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. The CODM evaluates revenue streams, significant expenses, and budget to actual results in assessing the Company's segment and in the determination of allocating resources. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The CODM uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation. Loans and investments provide the majority of revenues in the banking operation. Interest expense, provision for credit losses, and compensation expense provide the significant expenses in the banking operation.
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The Company's segment assets represent its total assets as presented in the Consolidated Balance Sheets.
All of the Company's earnings relate to its operations within the United States.
NOTE 19 - ACQUISITIONS
At the close of business on November 6, 2025 ("Acquisition Date"), the Company completed its acquisition of FSB for aggregate stock and cash consideration of approximately $66,758, through a merger transaction accounted for as a business combination under ASC 805, Business Combinations. As a result of the FSB acquisition, CBI issued 1,434,473 common shares and paid approximately $35,544 in cash to the former shareholders of FSB. The Company and FSB had first announced that they had entered into an agreement to merge in July of 2025. Upon the closing of the merger, FSB was merged with and into Civista.
The acquisition of FSB was not material for purposes of requiring pro forma financial information under Article 11 of Regulation S-X, based on quantitative and qualitative factors. Accordingly, certain disclosures typically required for material business combinations have been omitted.
The results of FSB's operations have been included in the Company's Consolidated Financial Statements from the Acquisition Date. Given the immaterial nature of the acquisition, pro forma financial information for the combined entity has not been presented, as such information would not be meaningful to users of the financial statements.
The acquisition resulted in the recognition of goodwill, which represents the excess of the purchase consideration over the fair value of net assets acquired. Goodwill arising from the transaction is primarily attributable to expected costs synergies, enhanced market presence, and future growth opportunities. The goodwill recognized is not deductible for federal income tax purposes but is evaluated for impairment, at least annually.
Loans acquired in the FSB acquisition were recorded at their fair value as of November 6, 2025, in accordance with ASC 805 and the Company's accounting policies.
The unpaid principal balance of loans acquired from FSB was $110.2 million at the Acquisition Date. Based on a third-party valuation, the loans were recorded at an estimated fair value of $104.2 million, which reflects credit, interest rate, liquidity, and other market-based valuation factors. The difference between the unpaid principal balance and fair value of approximately $6.0 million is primarily the non-credit purchase discount of $4.0 million that will be accreted into interest income over the average life of the portfolio using the level yield method and the $2.0 million addition to the ACL related to the acquired FSB loan portfolio. The amount of accretion recognized from the FSB acquisition life-to-date was $1,257 as of June 30, 2026, representing $444 in the second quarter of 2026, $477 in the first quarter of 2026, and $336 in the fourth quarter of 2025.
The Company early adopted the amended Purchased Financial Assets ("PFA") guidance under ASC 326, under which all acquired loans are accounted for under a single credit loss model. Accordingly, at the Acquisition Date, the Company recorded an ACL of $2.0 million related to the acquired FSB loan portfolio, with a corresponding gross-up of loan balances, to reflect expected lifetime credit losses inherent in the loans. The ACL recognized at acquisition did not impact earnings, as it was recorded as part of the purchase accounting.
Subsequent changes in expected credit losses for the acquired loans are estimated as part of the total loan portfolio and will be recognized through the provision for credit losses in the Company's Consolidated Statements of Operations.
Core deposit intangibles are amortized over the expected useful lives, which was determined to be eight years using the sum-of-years-digits method. The net carrying amount of the core deposit intangible at June 30, 2026 was $5,942. The amount of amortization expense recognized on the FSB core deposit intangibles life-to-date was $1,034 as of June 30, 2026, representing $388 in the second quarter of 2026, $388 in the first quarter of 2026, and $258 in the fourth quarter of 2025.
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As of June 30, 2026, the estimated future amortization expense for the core deposit intangible was as follows:
1,324
936
1,066
5,942
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the Acquisition Date for FSB.
Cash paid
35,544
Common shares issued (1,434,473 shares)
31,214
66,758
Net assets acquired:
185,018
Loans, net
104,200
259
Premises and equipment
1,993
440
Core deposit intangible
6,975
(514
392
(112,174
Noninterest-bearing deposits
(33,846
Interest-bearing deposits
(90,076
Other liabilities
(827
61,840
Goodwill resulting from the FSB acquisition
4,918
The FSB acquisition did not have a material impact on the Company's capital ratios. Integration activities, including the core conversion of FSB into CBI, were completed in the first quarter of 2026. The Company has incurred $4,500 in acquisition related expenses life-to-date as of June 30, 2026, with $4,100 being expensed in 2025 and $400 in 2026, that are included in Other operating expenses in the Consolidated Statements of Operations.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction
The following discussion reviews the consolidated financial condition of the Company at June 30, 2026 compared to December 31, 2025, and the consolidated results of operations for the three and six months ended June 30, 2026, compared to the same period in 2025. This discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and Notes included in this Quarterly Report on Form 10-Q.
Forward-Looking Statements
This Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, relating to such matters as 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. Such forward-looking statements could include, but are not limited to:
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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.
On July 10, 2025, CBI announced an underwritten public offering of up to a maximum of 3,788,238 of its common shares. CBI subsequently closed on the sale of 3,294,120 common shares on July 14, 2025, and the sale of an additional 494,118 common shares on July 16, 2025 pursuant to the underwriters' exercise of their overallotment option, at the public offering price of $21.25 per share. The
Page 43
aggregate net proceeds from the offering were approximately $75.7 million, after deducting $608 of direct expenses and the underwriting discount of $4.2 million. The net proceeds from the offering were initially used to pay-down short-term FHLB advances, but the long-term strategic plan is to use the net proceeds for general corporate purposes, which may include supporting organic growth opportunities and future strategic transactions.
Financial Condition
Total assets of the Company at June 30, 2026 were $4,294,298 compared to $4,336,453 at December 31, 2025, a decrease of $42,155, or 1.0%. The decrease was mainly due to decreases in net loans of $14,835, securities available-for-sale of $14,594, and cash and due from financial institutions of $15,577. These decreases were slightly offset by increases in investments in time deposits of $2,960 and other securities of $3,015. Total liabilities at June 30, 2026 were $3,727,513 compared to $3,792,979 at December 31, 2025, a decrease of $65,466, or 1.7%. The decrease in total liabilities was primarily attributable to decreases in short-term FHLB advances of $51,500 and total deposits of $8,221.
Loans outstanding as of June 30, 2026 and December 31, 2025 were as follows:
$ Change
% Change
6,787
2.2
Commercial Real Estate—Owner Occupied
3,887
1.0
Commercial Real Estate—Non-Owner Occupied
(9,286
(0.7
%)
13,632
1.4
(19,649
(6.9
(5,335
(14.1
(2,438
(2,740
(8.0
(15,142
(0.5
307
(14,835
Loans held for sale increased $1,328 since December 31, 2025. The increase was due to an increase in average loan balances held for sale as well as the timing of selling the loans. At June 30, 2026, 28 loans totaling $8,508 were held for sale as compared to 27 loans totaling $7,180 at December 31, 2025.
Net loans decreased $14,835, or 0.5%, since December 31, 2025. The decrease at June 30, 2026 was mainly attributed to decreases in Real Estate Construction, Commercial Real Estate - Non-Owner Occupied, and Farm Real Estate loans, partially offset by increases in Residential Real Estate, Commercial & Agriculture, and Commercial Real Estate - Owner Occupied loans. At June 30, 2026, the loan to deposit ratio was 94.1% compared to 94.3% at December 31, 2025.
During the first six months of 2026, provisions and recoveries made to the allowances for credit losses and off-balance sheet credit exposures resulted in a net expense of $1,141 to the provision for credit losses, compared to an expense of $2,592 during the same period in 2025. The decrease in the provision expense for the first six months of 2026 was the result of loan balances decreasing $15,142 in addition to favorable changes in economic factors for the six months ended June 30, 2026.
Reserves on the Lease Financing Receivables portfolio decreased at June 30, 2026, primarily related to lower balance growth in 2026 as CLF has experienced lower origination for leases. Total delinquencies on Lease Financing Receivables decreased from December 31, 2025 to June 30, 2026. Lease Financing Receivables 30-59 days past due and 60-89 days past due combined decreased from $2,541 to $675, and the balance of 90 days or greater past due also decreased from $454 to $103. Nonaccrual Lease Financing Receivables decreased from $291 at December 31, 2025 to $28 at June 30, 2026.
Net charge-offs for the first six months ended June 30, 2026 totaled $790, compared to net charge-offs of $1,633 for the same period of 2025. For the six months ended June 30, 2026, the Company charged off a total of 21 loans and leases, consisting of three Commercial & Agriculture loans totaling $98, seven Lease Financing Receivables totaling $348, one Commercial Real Estate - Non-Owner Occupied
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loan totaling $484, seven Consumer and Other loans totaling $20 and three Residential Real Estate loan totaling $30. In addition, during the six months ended June 30, 2026, the Company had recoveries on previously charged-off Commercial & Agriculture loans of $96, Commercial Real Estate - Owner Occupied loans of $3, Commercial Real Estate - Non-Owner Occupied loans of $2, Residential Real Estate loans of $34, Lease Financing Receivables of $44 and Consumer and Other loans of $11. 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 credit 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.
Larger (greater than $350) Commercial & Agricultural and Commercial Real Estate loan relationships, as well as Residential Real Estate and Consumer loans and Lease Financing Receivables that are part of a larger relationship are individually evaluated on a quarterly basis, when they do not share similar risk characteristics with the collectively evaluated pools. 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 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 individually evaluated loans does not differ from its overall policy for interest recognition. Loans held for sale are excluded from consideration as individually evaluated.
Loans are generally moved to nonaccrual status when 90 days or more past due or at an earlier date when full collection of principal and interest is in doubt. Total loans 90 days or more past due increased from $4,109 at December 31, 2025 to $13,853 at June 30, 2026; however, this increase can be attributed to one Commercial Real Estate - Non-Owner Occupied loan with a balance of approximately $7,900 that was 30-59 days past due as of December 31, 2025 and became greater than 90 days past due by June 30, 2026, which is why total loans past due did not experience the same trend, decreasing slightly from December 31, 2025 to June 30, 2026. Further, this loan was already moved to nonaccrual as of December 31, 2025 and was individually evaluated for purpose of the December 31, 2025 allowance calculation, resulting in a specific reserve of $3,000. As of June 30, 2026, the loan remains on nonaccrual and continues to be individually evaluated with a $2,000 specific reserve. For this reason, nonaccrual loans did not move consistently with the increase in 90 days or more past due, decreasing slightly from $30,834 at December 31, 2025 to $29,865 at June 30, 2026 and the increase in 90 days or more past due did not result in an increase to our estimated allowance, because the related risk was already accounted for in both the December 31, 2025 and June 30, 2026 allowance for credit loss estimate. Loans, or portions thereof, are charged-off when deemed uncollectible. The allowance for credit losses as a percent of total loans was 1.28% at both June 30, 2026 and December 31, 2025.
Cash and due from financial institutions decreased by $15,577, from $77,320 at December 31, 2025 to $61,743 at June 30, 2026. The decrease is mainly due to a decrease in overnight investments at the Federal Reserve.
The available-for-sale securities portfolio decreased by $14,594, from $681,908 at December 31, 2025 to $667,314 at June 30, 2026. 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 June 30, 2026, the Company was in compliance with all pledging requirements.
Total deposits as of June 30, 2026 and December 31, 2025 were as follows:
Noninterest-bearing demand
(6,890
(1.0
Interest-bearing demand
380,752
400,403
(19,651
(4.9
Savings and money market
1,271,089
1,234,593
36,496
3.0
761,117
727,294
33,823
4.7
Brokered deposits
350,143
402,142
(51,999
(12.9
Total Deposits
(0.2
Page 45
The Company had approximately $638,065 and $647,472 of uninsured deposits as of June 30, 2026 and December 31, 2025, respectively. Uninsured deposit amounts are estimated based on the portions of customer account balances that exceed the FDIC insurance limit of $250.
Total deposits at June 30, 2026 decreased $8,221 from December 31, 2025. Time deposits and savings and money markets increased $33,823 and $36,496, respectively, from December 31, 2025, while brokered deposits, interest-bearing demand deposits, and noninterest-bearing demand deposits decreased $51,999, $19,651, and $6,890, respectively, from December 31, 2025. The increase in time deposits was mainly due to an increase in jumbo time deposits of $26.5 million and retail certificates of deposit of $8.8 million, respectively. The increase in savings and money markets was due to increases of $34,150 and $10,555 in business money market deposits and public fund money market accounts, respectively, partially offset by a decrease in Insured Cash Sweep (ICS) money market deposits of $5,132. Brokered deposits decreased $51,999 as the Company continues its strategy to reduce brokered deposits and replace them with core deposits. The decrease in interest-bearing demand deposits was primarily due to decreases of $12,448 and $10,441 in retail interest-bearing demand deposits and interest-bearing public fund accounts, respectively, partially offset by an increase of $4,566 in business interest-bearing demand deposits. The decrease in noninterest-bearing demand deposits was mainly due to a decrease in business commercial deposits. The year-to-date average balance of total deposits increased $273,096, compared to the average balance for the same period in 2025 due to increases of $127,663, $107,559, and $37,874 in the average balance of time deposits, demand and savings deposits, and noninterest-bearing deposits, respectively.
Short-term FHLB advances decreased $51,500 from December 31, 2025 to June 30, 2026, due to liquidity generated from reductions in loans and in our securities portfolio, together with operating cash flows, which were used to repay short-term FHLB advances.
Shareholders’ equity at June 30, 2026 was $566,785, or 13.2% of total assets, compared to $543,474, or 12.5% of total assets, at December 31, 2025. The increase was a result of net income of $29,304 and a decrease in accumulated other comprehensive loss of $645 resulting from the change in the unrealized loss on available-for-sale securities and derivatives, in addition to an increase of $1,153 in stock compensation , partially offset by dividends paid on common shares of $7,473.
Total outstanding common shares at June 30, 2026 were 20,794,238, which increased slightly from 20,746,474 common shares outstanding at December 31, 2025. Common shares outstanding increased due to the grant of 10,890 common shares to Civista directors as payment for their service on the Civista Board of Directors and 51,378 restricted common shares to certain officers under the Company’s 2024 Incentive Plan, partially offset by 14,504 common shares surrendered by officers to the Company to pay taxes upon vesting of restricted shares.
Results of Operations
Three Months Ended June 30, 2026 and 2025
The Company had net income of $14,315 for the three months ended June 30, 2026, an increase of $3,300 from net income of $11,015 for the same period of 2025. Basic and diluted earnings per common share were $0.69 for the quarter ended June 30, 2026, compared to $0.71 for the same period of 2025. In the second quarter of 2025, net income was increased by $757 from non-recurring adjustments resulting from the Civista Leasing and Finance ("CLF") division's core system conversion. The primary reasons for the changes in net income are explained below.
Net interest income for the three months ended June 30, 2026 was $38,593, an increase of $3,779 from $34,814 for the same period of 2025. In the second quarter of 2025, net interest income was increased by $1,621 resulting from the non-recurring adjustments from the CLF core system conversion. The quarterly increase was a result of an increase of $276 in total interest and dividend income, coupled with a $3,503 decrease in total interest expense. Total interest-earning assets averaged $3,992,950 during the three months ended June 30, 2026, an increase of $151,581 from $3,841,369 for the same period of 2025. The Company’s total average interest-bearing liabilities decreased from $3,062,324 during the three months ended June 30, 2025 to $2,997,826 during the three months ended June 30, 2026. The Company’s fully tax equivalent net interest margin for the three months ended June 30, 2026 and 2025 was 3.89% and 3.64%, respectively.
Total interest and dividend income was $56,547 for the three months ended June 30, 2026, an increase of $276 from $56,271 for the same period of 2025. The increase in interest and dividend income is mainly attributable to increases of $156 and $264 in taxable securities and deposits in other banks, respectively, partially offset by a decrease in interest and fees on loans of $84 which was impacted by the non-recurring adjustment mentioned above in the second quarter of 2025. The average balance of loans increased by $107,864, or 3.4%, to $3,243,955 for the three months ended June 30, 2026, as compared to $3,136,091 for the same period of 2025.
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Interest on taxable securities increased $156 to $3,907 for the three months ended June 30, 2026, compared to $3,751 for the same period of 2025. The average balance of taxable securities increased $13,820 to $417,924 for the three months ended June 30, 2026, as compared to $404,104 for the same period of 2025. The yield on taxable securities increased 9 basis points to 3.51% for the three months ended June 30, 2026, compared to 3.42% for the same period of 2025, resulting from the purchase of similar securities to replace matured securities with the new securities having higher rates than when the matured securities were originally purchased. Interest on tax-exempt securities decreased $60 to $2,278 for the three months ended June 30, 2026, compared to $2,338 for the same period of 2025. Interest on deposits in other banks increased $264 to $474 for the three months ended June 30, 2026, compared to $210 for the same period of 2025. The average balance of interest-bearing deposits in other banks increased $29,676 to $52,919 for the three month period ended June 30, 2026, compared to $23,243 for the same period of 2025. The yield on interest-bearing deposits in other banks decreased 2 basis points to 3.59% for the three months ended June 30, 2026, compared to 3.61% for the same period of 2025.
Total interest expense decreased $3,503, or 16.3%, to $17,954 for the three months ended June 30, 2026, compared to $21,457 for the same period of 2025. For the three months ended June 30, 2026, the average balance of interest-bearing liabilities decreased $64,498 to $2,997,826, as compared to $3,062,324 for the same period of 2025. Interest incurred on deposits increased by $336 to $15,894 for the three months ended June 30, 2026, compared to $15,558 for the same period of 2025. The average balance of interest-bearing deposits increased by $243,145 to $2,781,645 for the three months ended June 30, 2026, as compared to the same period in 2025, which was almost fully offset by the decrease in the rate paid on interest-bearing deposits from 2.46% for the second quarter of 2025 to 2.29% in the second quarter of 2026. The decrease in rates was mainly driven by time deposits related to paying lower rates on retail and brokered CDs due to the lower rate environment in the second quarter of 2026 compared to the same period of 2025. Interest expense incurred on short-term FHLB advances decreased mainly due to the average balance of short-term FHLB advances decreasing by $304,722 to $107,823 for the three months ended June 30, 2026, as compared to the same period in 2025.
The following table presents the condensed average balance sheets for the three months ended June 30, 2026 and 2025. 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
Page 47
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.
Averagebalance
Yield/rate*
Interest-earning assets:
Loans, including fees**
3,243,955
6.17
3,136,091
6.39
417,924
3.51
404,104
3.42
278,152
3.90
277,931
Interest-bearing deposits in other banks
52,919
3.59
23,243
3.61
Total interest-earning assets
3,992,950
5.67
3,841,369
5.84
Noninterest-earning assets:
34,901
40,329
38,277
44,687
14,267
13,919
Intangible assets
142,469
132,887
63,680
63,302
52,725
59,948
Less allowance for loan losses
(40,734
(40,546
Total Assets
4,298,535
4,155,895
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings
1,690,167
5,997
1.42
1,551,856
5,632
1.46
Time
1,091,478
9,897
3.64
986,644
9,926
4.04
4,603
4.48
644
2.85
1,260
2.57
3,421
11.38
5,874
8.40
104,293
4.31
104,145
4.49
Total interest-bearing liabilities
2,997,826
2.40
3,062,324
2.81
703,040
652,092
36,568
40,564
Shareholders’ Equity
561,101
400,915
Total Liabilities and Shareholders’ Equity
Net interest income and interest rate spread(1)
3.27
3.03
Net interest margin(2)
3.89
(1) Net interest spread represents the difference between the yield on average interest-earning assets and the cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income divided by average interest-earning assets.
*Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $606 and $622 for the three months ended June 30, 2026 and 2025, respectively.
**Average balance includes nonaccrual loans.
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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 June 30, 2026 and 2025.
Increase (decrease) due to:
Volume (1)
Rate (1)
Net
(Dollars in thousands)
Interest income:
1,689
(1,774
(85
99
156
(77
(60
266
(1
Total interest income
1,935
(1,659
276
Interest expense:
493
(128
365
1,001
(1,030
(29
(2,669
(1,096
(3,765
(3
(61
35
(47
(1,239
(2,264
(3,503
3,174
605
3,779
(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 credit losses through regular provisions to the allowance for credit losses. During the three months ended June 30, 2026, the Company recorded a provision for credit losses for loans and off-balance sheet credit exposures of $1,770, an increase of $745, from an expense of $1,025 during the three months ended June 30, 2025.
Noninterest income for the three month periods ended June 30, 2026 and 2025 was as follows:
20.8
289.2
660
78.5
137
9.7
134
10.1
879
167.4
3.4
(50
(94.3
106
19.2
36.7
Total noninterest income for the three months ended June 30, 2026 was $9,007, an increase of $2,418, or 36.7%, from $6,589 for the same period of 2025. Noninterest income was reduced by $1,044 in the second quarter of 2025 from non-recurring adjustments resulting from the CLF core system conversion. Service charges increased $325 for the three months ended June 30, 2026, compared to the same period of 2025, primarily from higher business service charges and retail overdrafts. Net gain on sale of loans and leases increased $660 for the three months ended June 30, 2026, compared to the same period of 2025, resulting from favorable secondary market conditions resulting in higher sales volumes for both loans and leases. Lease revenue and residual income increased $879 for the three months ended June 30, 2026, compared to the same period of 2025, mainly due to the non-recurring adjustment noted above.
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Noninterest expense for the three month periods ended June 30, 2026 and 2025 was as follows:
726
4.8
11.6
46
8.6
FDIC Assessment
(269
(39.0
(35
(5.5
(577
(32.1
(44
(2.5
8.8
253
87.5
358
105.9
(59
(4.6
18.1
4.3
Total noninterest expense for the three months ended June 30, 2026 was $28,653, an increase of $1,171 or 4.3%, from $27,482 compared to the same period of 2025. Noninterest expenses were reduced by $311 in the second quarter of 2025 from non-recurring adjustments resulting from the CLF core system conversion. The increase in total noninterest expense was primarily due to increases in compensation, amortization of core deposit intangibles, and other expenses, partially offset by decreases in FDIC assessment and professional fees. The increase in compensation expense was primarily due to increases in salaries, commissions, and medical expenses associated with operating with higher average full-time equivalent (FTE) employees year-over-year. The average number of FTEs for the three months ended June 30, 2026 was 549, compared to 526 for the same period of 2025. The increase in amortization of core deposit intangibles is related to the FSB merger. The increase in other expense is mainly related to the non-recurring adjustment mentioned above in the second quarter of 2025. The decrease in FDIC assessment is mainly due to an improvement in Civista's risk-based assessment rate, reflecting favorable trends in regulatory ratios and supervisory metrics used in the FDIC's pricing methodology. The decrease in professional fees is primarily due to higher consulting expenses in 2025 related to CLF's core system conversion.
Income tax expense for the three months ended June 30, 2026 totaled $2,862, up $981 compared to the same period of 2025. The effective tax rates for the three month periods ended June 30, 2026 and 2025 were 16.7% and 14.6%, respectively. The increase in the effective tax rate for the three month period ended June 30, 2026, was primarily due to an increase in the forecasted pre-tax income outpacing the permanent differences for 2026, thus, creating more taxable income at the statutory tax rate of 21% and increasing the Company's effective tax rate. 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.
Six Months Ended June 30, 2026 and 2025
The Company had net income of $29,304 for the six months ended June 30, 2026, an increase of $8,121 from $21,183 for the same period of 2025. Basic and diluted earnings per common share were $1.41 for the six months ended June 30, 2026, compared to $1.37 for the same period of 2025. For the six months ended June 30, 2026, net income was reduced by $374 from non-recurring adjustments related to acquisition-related expenses associated with the FSB merger. For the six months ended June 30, 2025, net income was increased by $757 from non-recurring adjustments resulting from the CLF core system conversion. The primary reasons for the changes in net income are explained below.
Net interest income for the six months ended June 30, 2026 was $76,416, an increase of $8,829 from $67,587 for the same period of 2025. For the six months ended June 30, 2025, net interest income was increased by $1,621 resulting from the non-recurring adjustments from the CLF core system conversion. The year-to-date increase was a result of an increase of $2,352 in total interest and dividend income, coupled with a $6,477 decrease in total interest expense. Total interest-earning assets averaged $3,998,020 during the six months ended June 30, 2026, an increase of $176,371 from $3,821,649 for the same period of 2025. The Company’s total average interest-bearing liabilities decreased from $3,010,528 during the six months ended June 30, 2025 to $3,034,362 during the six months ended
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June 30, 2026. The Company’s fully tax equivalent net interest margin for the six months ended June 30, 2026 and 2025 was 3.87% and 3.57%, respectively.
Total interest and dividend income was $112,356 for the six months ended June 30, 2026, an increase of $2,352 from $110,004 for the same period of 2025. The increase in interest and dividend income is mainly attributable to increases of $1,500, $555 and $394 in interest and fees on loans, taxable securities and deposits in other banks, respectively, partially offset by a decrease in tax-exempt securities of $97. The average balance of loans increased by $130,259, or 4.2%, to $3,248,126 for the six months ended June 30, 2026, as compared to $3,117,867 for the same period of 2025.
Interest on taxable securities increased $555 to $7,861 for the six months ended June 30, 2026, compared to $7,306 for the same period of 2025. The average balance of taxable securities increased $24,783 to $425,301 for the six months ended June 30, 2026, as compared to $400,518 for the same period of 2025. The yield on taxable securities increased 13 basis points to 3.50% for the six months ended June 30, 2026, compared to 3.37% for the same period of 2025, resulting from the purchase of similar securities to replace matured securities with the new securities having higher rates than when the matured securities were originally purchased. Interest on deposits in other banks increased $394 to $796 for the six months ended June 30, 2026, compared to $402 for the same period of 2025. The average balance of interest-bearing deposits in other banks increased $21,817 to $42,898 for the six months ended June 30, 2026, compared to $21,081 for the same period of 2025. The yield on interest-bearing deposits in other banks decreased 13 basis points to 3.71% for the six months ended June 30, 2026, compared to 3.84% for the same period of 2025.
Total interest expense decreased $6,477, or 15.3%, to $35,940 for the six months ended June 30, 2026, compared to $42,417 for the same period of 2025. For the six months ended June 30, 2026, the average balance of interest-bearing liabilities decreased $23,834 to $3,010,528, as compared to $3,034,362 for the same period of 2025. Interest incurred on deposits were basically flat at $31,347 for the six months ended June 30, 2026, compared to $31,274 for the same period of 2025. The average balance of interest-bearing deposits increased by $235,222 to $2,773,752 for the six months ended June 30, 2026, as compared to the same period in 2025, which was fully offset by the decrease in the rate paid on interest-bearing deposits from 2.48% for the six months ended June 30, 2025 to 2.28% for the six months ended June 30, 2026. The decrease in rates was mainly driven by paying lower rates on retail and brokered CDs due to the lower rate environment in the first six month of 2026 compared to the same period of 2025. Interest expense incurred on short-term FHLB advances decreased mainly due to the average balance of short-term FHLB advances decreasing by $256,097 to $128,127 for the six months ended June 30, 2026, as compared to the same period in 2025.
The following table presents the condensed average balance sheets for the six months ended June 30, 2026 and 2025. 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.
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3,248,126
6.15
3,117,867
6.31
425,301
400,518
3.37
281,695
3.92
282,183
42,898
3.71
21,081
3.84
3,998,020
3,821,649
5.77
37,004
41,758
39,128
45,541
14,232
13,744
142,868
133,076
63,484
63,110
52,206
59,271
(41,196
(40,252
4,305,746
4,137,897
1,672,887
11,428
1.38
1,565,328
11,360
1,100,865
19,919
973,202
19,914
Short-term FHLB advance
2,186
8,532
Long-term FHLB advance
2.78
1,334
3,666
9.32
6,150
8.78
104,271
4.32
104,124
4.50
3,010,528
2.41
3,034,362
2.82
699,256
661,382
38,422
43,174
557,540
398,979
2.95
3.87
3.57
*Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1.2 million and $1.2 million for the six month periods ended June 30, 2026 and 2025, respectively.
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 six months ended June 30, 2026 and 2025. The table is presented on a fully tax-equivalent basis.
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4,013
(2,514
1,499
256
300
556
(129
32
(97
Federal funds purchased
403
(15
4,549
(2,197
(689
68
2,452
(2,447
(4,709
(1,637
(6,346
(114
15
(99
(100
(1,621
(4,856
(6,477
6,170
2,659
8,829
The Company provides for credit losses through regular provisions to the allowance for credit losses. During the six months ended June 30, 2026, the Company recorded a provision for credit losses of $1,141, a decrease of $1,451, from $2,592 during the six months ended June 30, 2025.
Noninterest income for the six months ended June 30, 2026 and 2025 was as follows:
515
16.7
268.0
1,661
114.9
7.2
227
8.5
613
25.3
2.1
(66
-52.8
42.6
3,989
27.6
Total noninterest income for the six months ended June 30, 2026 was $18,438, an increase of $3,989, or 27.6%, from $14,449 for the same period of 2025. Noninterest income was reduced by $1,044 for the six months ended June 30, 2025, from non-recurring adjustments resulting from the CLF core system conversion. Service charges increased $515 for the six months ended June 30, 2026, compared to the same period of 2025, primarily from higher business service charges and retail overdrafts. Net gain on sale of loans and leases increased $1,661 for the six months ended June 30, 2026, compared to the same period of 2025, resulting from favorable secondary market conditions resulting in higher sales volumes for both loans and leases, coupled with disciplined pricing strategies on both the loan and lease gain on sale margins. Lease revenue and residual income increased $613 for the six months ended June 30, 2026, compared to the same period of 2025, mainly due to the non-recurring adjustment noted above.
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The components of noninterest expense for the six month periods ended June 30, 2026 and 2025 are as follows:
2,912
10.0
153
5.0
18.9
(719
-46.0
-0.6
(1,082
-27.8
-1.5
16.8
74.4
722
107.8
5.4
1,002
17.2
3,918
Total noninterest expense for the six months ended June 30, 2026 was $58,526, an increase of $3,918, or 7.2%, from $54,608 compared to the same period of 2025. Noninterest expenses were reduced by $311 for the six months ended June 30, 2025 from non-recurring adjustments resulting from the CLF core system conversion. The increase in total noninterest expense was primarily due to increases in compensation, marketing, amortization of core deposit intangibles, software maintenance, and other expenses, partially offset by decreases in FDIC assessment and professional fees. The increase in compensation expense was primarily due to increases in salaries, commissions, and medical expenses resulting from operating with higher average full-time equivalent (FTE) employees year-over-year. The average number of FTEs for the six months ended June 30, 2026 was 548, compared to 523 for the same period of 2025. The increase in marketing expenses is related to an increase in digital marketing campaigns. The increase in amortization of core deposit intangibles is related to the FSB merger. The increase in software maintenance expense is primarily related to year-over-year maintenance increases as well as having more users increasing licensing costs. The increase in other expense is mainly related to the non-recurring adjustments related to the FSB merger for the six months ended June 30, 2026 and the non-recurring adjustment mentioned above related to the CLF core system conversion for the six months ended June 30, 2025. The decrease in FDIC assessment is mainly due to an improvement in Civista's risk-based assessment rate, reflecting favorable trends in regulatory ratios and supervisory metrics used in the FDIC's pricing methodology. The decrease in professional fees is primarily due to lower consulting expenses related to CLF's core system conversion.
Income tax expense for the six months ended June 30, 2026 totaled $5,883, up $2,230 compared to the same period of 2025. The effective tax rates for the six month periods ended June 30, 2026 and 2025 were 16.7% and 14.7%, respectively. The increase in the effective tax rate for the six month period ended June 30, 2026, was primarily due to an increase in the forecasted pre-tax income outpacing the permanent differences for 2026, thus, creating more taxable income at the statutory tax rate of 21% and increasing the Company's effective tax rate. 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.
Capital Resources
Shareholders’ equity at June 30, 2026 was $566,785, or 13.2% of total assets, compared to $543,474, or 12.5% of total assets, at December 31, 2025. The increase was a result of net income of $29,304 and a decrease in accumulated other comprehensive loss of $645 resulting from the change in the unrealized loss on available-for-sale securities and derivatives, in addition to an increase of $1,153 in stock compensation, partially offset by dividends paid on common shares of $7,473.
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All of the Company’s capital ratios exceeded the regulatory minimum guidelines as of June 30, 2026 and December 31, 2025 as identified in the following table:
Total RiskBasedCapital
Tier I RiskBasedCapital
CET1 RiskBasedCapital
LeverageRatio
Company Ratios—June 30, 2026
15.3
14.4
11.9
Company Ratios—December 31, 2025
18.0
14.5
13.6
11.3
For Capital Adequacy Purposes
8.0
6.0
4.5
4.0
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 $7,748, or 1.2% of the total securities portfolio, at June 30, 2026. The available-for-sale securities portfolio helps to provide the Company with the ability to meet its funding needs.
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 $29,286 and $14,693 for the six months ended June 30, 2026 and 2025, 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 provided/(used) for investing activities was $23,912 and $(76,078) for the six months ended June 30, 2026 and 2025, respectively, principally reflecting our loan and investment security activities. Net cash (used)/provided by financing activities was $(68,775) and $72,088 for the six months ended June 30, 2026 and 2025, respectively. The primary changes in financing activities is the decrease in short-term FHLB advances, payment of common dividends, and change in deposits.
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 June 30, 2026, Civista had total credit availability with the FHLB of $1,050,078 with standby letters of credit totaling $132,700 and a remaining borrowing capacity of approximately $793,317. In addition, CBI maintains a credit line with a third party lender totaling $10,000. No borrowings were outstanding by CBI under this credit line as of June 30, 2026.
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The Company’s primary market risk exposure is interest-rate risk and, to a lesser extent, liquidity risk. All of the Company’s transactions are denominated in U.S. dollars with no specific foreign exchange exposure.
Interest-rate risk is the exposure of a banking organization’s financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value. However, excessive levels of interest-rate risk can pose a significant threat to the Company’s earnings and capital base. Accordingly, effective risk management that maintains interest-rate risk at prudent levels is essential to the Company’s safety and soundness.
Evaluating a financial institution’s exposure to changes in interest rates includes assessing both the adequacy of the management process used to control interest-rate risk and the organization’s quantitative level of exposure. When assessing the interest-rate risk management process, the Company seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest-rate risk at prudent levels with consistency and continuity. Evaluating the quantitative level of interest rate risk exposure requires the Company to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity and, where appropriate, asset quality.
The Federal Reserve Board, together with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, issue policy statements and guidance on sound practices for managing interest-rate risk, which form the basis for ongoing evaluation of the adequacy of interest-rate risk management at supervised institutions. The guidance also outlines fundamental elements of sound management and discusses the importance of these elements in the context of managing interest-rate risk. The guidance emphasizes the need for active board of director and senior management oversight and a comprehensive risk-management process that effectively identifies, measures, and controls interest-rate risk.
Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institution’s assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institution’s interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution’s profits could decrease on existing assets because the institution will have either lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment.
Several techniques may be used by an institution to minimize interest-rate risk. One approach used by the Company is to periodically analyze its assets and liabilities and make future financing and investment decisions based on payment streams, interest rates, contractual maturities, and estimated sensitivity to actual or potential changes in market interest rates. Such activities fall under the broad definition of asset/liability management. The Company’s primary asset/liability management technique is the measurement of the Company’s asset/liability gap, that is, the difference between the cash flow amounts of interest sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year, or longer period, the institution is in an asset sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. If, alternatively, more liabilities than assets will reprice, the institution is in a liability sensitive position. Accordingly, net interest income would decrease 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.
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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. 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.
During the second quarter of 2026, the Company enhanced its interest rate risk disclosure to focus on net interest income sensitivity rather than economic value of equity. Management believes that net interest income sensitivity better reflects the Company's near-term earnings exposure to changes in interest rates and aligns more closely with how interest rate risk is managed internally.
The following table provides information about the Company’s earnings at risk that were sensitive to changes in interest rates as of and June 30, 2026 and December 31, 2025, based on certain prepayment and account decay assumptions that management believes are reasonable. The table shows the changes in the Company’s net interest income (in amount and percent) that would result from hypothetical interest rate increases of up to 400 basis points from 100 basis points and interest rate decreases of 100 basis points and up to 400 basis points at June 30, 2026 and December 31, 2025.
Net Interest Income
Change in Rates
DollarAmount
DollarChange
PercentChange
+400bp
164,844
6,309
3.98
168,153
6,879
4.27
+300bp
164,295
5,760
3.63
167,915
6,641
4.12
+200bp
163,027
4,492
2.83
166,289
5,015
3.11
+100bp
161,174
2,639
1.66
164,007
2,733
1.69
Base
158,535
161,274
-100bp
153,637
(4,898
(3.09
157,104
(4,170
(2.59
-200bp
146,835
(11,700
(7.38
153,092
(5.07
-300bp
139,952
(18,583
(11.72
149,323
(11,951
(7.41
-400bp
136,014
(22,521
(14.21
146,296
(14,978
(9.29
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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, the Company 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 June 30, 2026, 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.
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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 that damages, if any, and other amounts related to pending legal proceedings will not have a material adverse effect on the consolidated financial position, results of operations or liquidity of CBI or Civista.
Item 1A. Risk Factors
There were no material changes during the current period to the risk factors previously disclosed under “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as supplemented by the disclosures under "Item 1A. Risk Factors" of Part II of the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Share Repurchases:
There were no repurchases by the Company or by "affiliated purchasers" as defined in Rule 10b-18(a)(3) under the Exchange Act of the Company's common shares during the second quarter ended June 30, 2026.
On April 21, 2026, the Company announced a new common share repurchase program pursuant to which the Company is authorized to repurchase a maximum aggregate value of $25.0 million of its outstanding common shares through April 2027, of which all $25.0 million remained available to purchase at June 30, 2026.
Issuance of Shares to Directors:
During the second quarter of 2026, Civista Bank paid a retainer to each director of Civista Bank in the amount of $5,000 in cash and $30,000 in common shares of the Company, in consideration for service on the board of Civista Bank for the period from May 20, 2026 until the Company’s annual meeting in 2027. For each director, $25,000 of the common shares of the Company were issued pursuant to grants under the 2024 Incentive Plan. The remaining common shares, consisting of an aggregate of 1,818 issued to all directors, were issued in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act, as a transaction not involving a public offering.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the quarter ended June 30, 2026, 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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Item 6. Exhibits
Exhibit
Description
Location
Agreement and Plan of Merger, dated as of July 10, 2025, by and among Civista Bancshares, Inc., Civista Bank and The Farmers Savings Bank.
Filed as Exhibit 2.1 to Civista Bancshares, Inc.'s Current Report on Form 8-K dated and filed on July 11, 2025 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 dated November 15, 2018 and filed on November 16, 2018 and incorporated herein by reference. (File No. 001-36192)
3.2
Second Amended and Restated Code of Regulations of Civista Bancshares, Inc. (adopted July 22, 2025)
Filed as Exhibit 3.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated July 22, 2025 and filed on July 28, 2025 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.
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.
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.
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
101.SCH
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents
Cover page formatted in Inline Extensible Business Reporting Language.
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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.
/s/ Dennis G. Shaffer
August 6, 2026
Dennis G. Shaffer
Date
Chief Executive Officer and President
/s/ Ian Whinnem
Ian Whinnem
Senior Vice President and Chief Financial Officer
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