First Citizens Banc: Civista Bancshares, Inc. Announces Second Quarter 2021 Financial Results

The following excerpt is from the company's SEC filing.
Sandusky, Ohio, July 23, 2021
/PRNewswire/ – Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) announced its unaudited financial
results for the three and six months ending June 30, 2021.
Second quarter and

year-to-date
2021 highlights:
Net income of $9.2 million, or $0.59 per diluted share, for the second quarter of 2021, compared to
$6.5 million, or $0.41 per diluted share, for the second quarter of 2020.
Net income of $19.9 million, or $1.27 per diluted share, compared to $14.3 million, or $0.88 per
diluted share, for the six months ended June 30, 2021 and 2020, respectively.
COVID–19 loan deferrals decreased to 2.5% of total loans at period end, compared to 3.6% at
December 31, 2020 and 21.3% at June 30, 2020.
Second quarterly dividend of $0.12 is equivalent to an annualized yield of 2.17% based on the June 30, 2021
market close of $22.10 and a dividend payout ratio of 20.43%.
Executed a balance sheet restructuring to deploy excess liquidity which included the prepayment of a 2.05%,
$50.0 million FHLB advance, with a $3.7 million prepayment penalty. In addition, we recognized a $1.8 million gain on the sale of our VISA B shares. We also invested $100.0 million dollars into a mix of investment securities
yielding 1.50%.
“Our team executed another great quarter financially as well as several key initiatives operationally. On June 9
, we introduced the new Civista Digital Banking which provides for a better customer experience in both the mobile and online platform. We restructured our balance sheet to reduce cost in the future.
Our mortgage team had another great quarter and our commercial lending team has seen increases in demand. In July, we also increased our third quarter dividend 17%.” said Dennis G. Shaffer, CEO and President of Civista.
Results of Operations
For the three-month period
ended June 30, 2021 and 2020
Net interest income increased $1.8 million, or 8.0%, for the second quarter of 2021 compared to the same period
of 2020, due to a $914 thousand increase in interest income of as well as an $852 thousand decrease in interest expense. Interest income included $2.8 million of accretion of PPP loan fees during the quarter.
The increase in interest income was due to an increase in average earning assets of $248.1 million,
partially offset by a 24 basis point decrease in average yields. Interest income included $2.8 million of PPP fees as well as accretion income of purchased loan portfolios of $565.3 thousand.
The decrease in interest expense is primarily due to a decrease in average rates of 24 basis points offset by an increase in average interest-bearing
liabilities of $118.3 million.
Net interest margin decreased 8 basis points to 3.53% for the second quarter of 2021, compared to 3.61% for the same
period a year ago.
PPP loans averaged $207.5 million during the quarter at an average yield of 6.39%, including the related fee accretion, which
increased the margin by 23 basis points.
Average Balance Analysis
(Unaudited - Dollars in thousands)
Three Months Ended June 30,
Yield/
Assets:
rate *
Interest-earning assets:
Loans **
 2,054,784
 22,653
 1,972,969
 21,613
Taxable securities
204,554
185,956
Non-taxable
208,940
200,882
Interest-bearing deposits in other banks
307,853
168,199
Total interest-earning assets
2,776,131
25,498
2,528,006
24,584
Noninterest-earning assets:
Cash and due from financial institutions
45,626
84,961
Premises and equipment, net
22,375
22,535
Accrued interest receivable
Intangible assets
84,638
84,906
Bank owned life insurance
46,305
45,334
Other assets
37,173
43,297
Less allowance for loan losses
(26,580
(17,098
Total Assets
2,994,131
2,801,253
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand and savings
1,310,998
1,027,678
269,624
289,658
101,923
125,034
Other borrowings
124,819
Subordinated debentures
29,427
Repurchase agreements
25,914
22,987
Total interest-bearing liabilities
1,737,886
1,619,603
Noninterest-bearing deposits
867,561
790,891
Other liabilities
39,428
60,235
Shareholders’ equity
349,256
330,524
Total Liabilities and Shareholders’ Equity
Net interest income and interest rate spread
23,841
22,075
Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and
investments, included in the yields above, was $406 thousand and $413 thousand for the periods ended June 30, 2021 and 2020, respectively.
Average balance includes nonaccrual loans
six-month
period ended June 30, 2021 and 2020

Net interest income increased $3.5 million, or 7.9%, compared to the same period in 2020.
Interest income increased $1.6 million, or 3.3%, for the first six months of 2021. Average earning assets increased $510.7 million, which resulted
in a $5.3 million increase in interest income. Average yields decreased 64 basis points which resulted in a $3.7 million decrease in interest income. During the
period, the Bank had average
PPP Loans totaling $228.1 million. These loans had an average yield of 6.22% including the amortization of PPP fees, which increased the margin by 24 basis points.
Interest expense decreased $1.8 million, or 34.1%, for the first six months of 2021 compared to the same period of 2020. Average rates decreased 31 basis
points, resulting in a $1.8 million decrease in interest expense. Average interest-bearing liabilities increased $225.6 million, but led to a decrease in interest expense of $20 thousand, primarily due to a mix shift toward
interest-bearing demand deposits.
Net interest margin decreased 43 basis points to 3.41% for the first six months of 2021, compared to 3.84% for the same
period a year ago.
Six Months Ended June 30,
 2,062,061
 45,436
 1,849,327
 43,286
189,729
186,780
208,260
199,233
430,705
144,748
2,890,755
51,224
2,380,088
49,586
39,777
126,655
22,442
22,636
84,749
84,994
46,185
45,210
37,157
36,229
(26,087
(16,013
3,103,493
2,687,830
1,280,030
961,285
1,044
276,793
285,179
113,398
141,391
62,410
Federal funds purchased
28,531
22,555
1,728,179
1,502,552
986,185
795,215
39,690
58,500
349,439
331,563
47,669
44,190
Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and
investments, included in the yields above, was $814 thousand and $819 thousand for the periods ended June 30, 2021 and 2020, respectively.
No provision for loan losses was recorded during the second quarter and was $830 thousand for the first
six months of 2021. Provision for loan losses was $3.5 million for the second quarter of 2020 and $5.6 million for the first six months of 2020. The reserve ratio increased to 1.30% at June 30, 2021 from 1.22% at December 31,
2020. The reserve ratio without $153.0 million of PPP loans would have been 10 basis points higher.
For the second quarter of 2021, noninterest
income totaled $9.0 million, an increase of $2.2 million, or 31.7%, compared to the prior year’s second quarter.
Noninterest income
(unaudited - dollars in thousands)
Three months ended June 30,
$ change
% change
Service charges
1,317
Net loss on sale of securities
Net gain/(loss) on equity securities
Net gain on sale of loans
ATM/Interchange fees
Wealth management fees
Tax refund processing fees
Swap fees
Total noninterest income
 9,025
 6,854
 2,171
N/M - not meaningful
Service
charges increased as a result of higher overdraft fees and service charges. During 2020, customer behavior changed as a result of the
COVID-19
pandemic, resulting in fewer overdrafts. Civista also waived
service fees on deposit accounts of $93 thousand during 2020. Overdraft fees are rebounding to
pre-pandemic
levels.
Net gain on sale of securities increased as a result of the sale of Visa Class B shares.
ATM/Interchange fees increased as a result of increased volume of transactions and incentives from our network providers.
Wealth management fees increased due to an increase in average assets under management as well as an increase in the average rate earned on the assets in
2021.
Swap fees decreased due to the volume. For the quarter, we swapped $4.2 million compared to $44.8 million during the same period last
year. We reduced the loans we entered into swaps on as a part of our asset liability management program.
For the six months ended June 30, 2021, noninterest income totaled $18.2 million, an increase of
$4.5 million, or 32.7%, compared to the same period in the prior year.
Six months ended June 30,
$ change
2,573
2,398
(1,008
 18,215
 13,730
4,485
Service charges increased as a result of higher overdraft fees and service charges. During 2020, customer behavior changed as
a result of the
pandemic, resulting in fewer overdrafts. Civista also waived service fees on deposit accounts of $93 thousand during 2020. Overdraft fees are rebounding to
Net gain (loss) on equity securities increased as a result of market value increases.
Net gain on sale of loans increased due to an increase in loans sold of $21.0 million and an increase in the premium on sold loans of 93 basis points.

Swap fees decreased as a result of a decline in the volume of loans. Year to date we swapped $5.7 million compared to $77.4 million
during the same period last year. We reduced the loans we entered into swaps on as a part of our asset liability management program.
For the second quarter of 2021, noninterest expense totaled $22.5 million, an increase of
$4.4 million, or 24.0%, compared to the prior year’s second quarter.
Noninterest expense
Compensation expense
11,406
10,597
Net occupancy and equipment
Contracted data processing
Taxes and assessments
Professional services
Amortization of intangible assets
ATM/Interchange expense
Marketing
Software maintenance expense
Total noninterest expense
 22,467
 18,114
 4,353
The increase in other expense is due to the prepayment penalty of $3.7 million related to the early payoff of an FHLB
long-term advance. This was partially offset by a $465 thousand credit valuation adjustment to mortgage servicing rights.
Compensation expense
included increases in commissions of $465 thousand as well as salaries of $183 thousand. The increase in commissions is due to increased mortgage loan activity. The increase in salaries is due to annual pay increases, which occur every
year in April.
Taxes and assessments increased due to an increase in the FDIC assessment base, as well as a $64 thousand credit for small banks that
was applied to the June 2020 assessments.
The increase in ATM/Interchange expense is primarily due to additional volume and to a settlement received in
the second quarter of 2020.
The increase in software maintenance expense is due to both increases in software maintenance contracts the implementation of
our new digital banking.
The efficiency ratio was 67.5% for the quarter ended June 30, 2021 compared to 61.7% for the quarter ended June 30,
2020. Removing the effect of the FHLB prepayment and the gain on the sale of the VISA B shares, the efficiency ratio would have been 59.5%.
Civista’s effective income tax rate for the second quarter 2021 was 11.9% compared to 11.3% in 2020.
For the six months ended June 30, 2021, noninterest expense totaled $41.9 million, an increase of
$5.9 million, or 16.4%, compared to the same period in the prior year.
23,188
21,468
1,720
 41,857
 35,970
 5,887
Compensation expense
included increases in commissions of $1.1 million as well as salaries of $375 thousand. The increase in commission expense is a result of increased mortgage loan activity. The increase in salaries is due to annual pay increases which occur
in April.
The increase in ATM/Interchange expense is primarily due to additional volume and to a settlement received in the second quarter of 2020.
The increase in software maintenance expense is due to both increases in software maintenance contracts as well as the implementation of the new digital
banking platform.
The efficiency ratio was 62.8% for the six months ended June 30, 2021 compared to 61.2% for the six months ended June 30,
2020. Removing the effect of the FHLB prepayment and the gain on the sale of the VISA B shares, the efficiency ratio would have been 58.8%.
Civista’s effective income tax rate for the first six months of 2021 was 14.1% compared to 12.2% in same period in 2020.
Balance Sheet
Total assets increased $155.8 million, or 5.6%, from December 31, 2020 to June 30, 2021, primarily due to an increase in cash of
$105.8 million, or 75.8%. Securities available for sale increased $94.3 million, or 26.0%. The loan portfolio decreased $38.3 million, which includes a decrease in PPP loans of $64.3 million.
End of period loan balances
$ Change
% Change
Commercial and Agriculture
328,871
409,876
(81,005
Commercial Real Estate:
Owner Occupied
271,667
278,413
(6,746
Non-owner
762,983
705,072
57,911
Residential Real Estate
426,731
442,588
(15,857
Real Estate Construction
188,368
175,609
12,759
Farm Real Estate
28,616
33,102
(4,486
Consumer and Other
11,960
12,842
Total Loans
 2,019,196
 2,057,502
(38,306
June 30, 2021 includes PPP loans totaling $153,007 and December 31, 2020 includes PPP loans totaling
$217,295.
Loan balances have declined during the first half of 2021, primarily due to a net decline in PPP loans. Removing the effects
of PPP loans, the loan portfolio would have increased $26.0 million, or 1.4%. Commercial Real Estate continued to grow due to consistent demand in the
Occupied category. Real Estate Construction
loans increased as the construction season got underway during the second quarter. Construction availability remains near
all-time
highs. Commercial and Agriculture loans have been negatively impacted by the
amount of governmental stimulus money. The decrease in Residential Real Estate continues as a result of portfolio loans refinanced into saleable mortgage products.
Paycheck Protection Program
During 2021, we processed
approximately 1,300 loans totaling $131.1 million of PPP loans as part of the second round of the PPP. This is in addition to the $268.3 million that we processed in round one during 2020. Of the total PPP loans we have originated,
$246.4 million have been forgiven or have paid off. We recognized $2.8 million of PPP fees in income during the quarter, and $5.9 million for the six months ended June 30, 2021. At June 30, 2021, $5.9 million of prepaid
SBA fees remain.
Loan Modifications
As of June 30, 2021, the remaining loans modified under the CARES Act total $50.4 million. Details with respect to the loan modifications that remain
on deferred status are as follows:
Loans currently modified under
programs
Type of Loan
Number of
Percent of
outstanding
4,222
37,544
 50,436
Deposits
Total deposits
increased $213.6 million, or 9.8%, from December 31, 2020 to June 30, 2021.
End of period deposit balances
$ Change
Noninterest-bearing demand
853,724
720,809
132,915
Interest-bearing demand
480,281
410,139
70,142
Savings and money market
809,530
771,612
37,918
Time deposits
259,457
286,838
(27,381
Total Deposits
 2,402,992
 2,189,398
 213,594
The increase in noninterest-bearing demand of $132.9 million was primarily due to a $61.1 million
increase in business demand deposit accounts, primarily due to the deposit of PPP loan proceeds. Additionally, balances related to the tax refund processing program increased $50.8 million, which is temporary, and is expected to return to
levels more consistent with December 31, 2020 over the next two quarters. Interest-bearing demand deposits increased due to a $47.6 million increase in public fund accounts and a $26.7 million increase in
non-public
fund accounts. The increase in savings and money market was primarily due to a $40.9 million increase in statement savings, a $26.7 million increase in personal money markets and a
$14.8 million increase in public fund money markets. These increases were partially offset by a decrease of $40.1 million increase in brokered money market accounts.
FHLB advances totaled $75.0 million at June 30, 2021, down $50.0 million from December 31, 2020. The decrease was due to the prepayment of
a $50 million, 2.05% long-term advance.
Stock Repurchase Program
During the first six months of 2021, Civista repurchased 505,239 shares for $11.3 million at a weighted average price of $22.30 per share. We have
approximately $7.4 million remaining of the current $13.5 million repurchase authorization, which was approved in April 2021. In addition, Civista liquidated 5,065 shares held by employees, at $17.71 per share, to satisfy tax obligations
stemming from vesting of restricted shares.
Shareholder Equity
Total shareholders’ equity increased $2.3 million from December 31, 2020 to June 30, 2021. Retained earnings increased $16.1 million
and was partially offset by an $11.4 million repurchase of treasury shares and a $3.1 million decrease in accumulated other comprehensive income.
Asset Quality
Civista recorded net recoveries of
$339 thousand for the six months of 2021 compared to net recoveries of $41 thousand for the same period of 2020. The allowance for loan losses to loans was 1.30% at June 30, 2021 and 1.22% at December 31, 2020. Removing the PPP
loans, the allowance ratio would have been 10 basis points higher.
Allowance for Loan Losses
Six months ended June 30,
Beginning of period
 25,028
 14,767
Charge-offs
Recoveries
26,197
20,420
Non-performing
assets at June 30, 2021 were $5.9 million,
a 19.4% decrease from December 31, 2020. The
non-performing
assets to assets ratio decreased to 0.20 % from 0.27% at December 31, 2020. The allowance for loan losses to
loans increased to 443.50% from 343.05% at December 31, 2020.
(dollars in thousands)
Non-accrual
4,288
5,399
Restructured loans
Other Real Estate Owned
 5,907
 7,327
Conference Call and Webcast
Civista Bancshares, Inc. will also host a conference call to discuss the Company’s financial results for the second quarter of 2021 at 1:00 p.m. ET on
Friday, July 23, 2021. Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company’s website, www.civb.com. Participants can also listen to the conference call by dialing
855-238-2712
and ask to be joined into the Civista Bancshares, Inc. second quarter 2021 earnings call. Please log in or dial in at least 10 minutes prior to the start time to
ensure a connection.
An archive of the webcast will be available for one year on the Investor Relations section of the Company’s website
(
Forward Looking Statements
This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Civista.
For these statements, Civista claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the
other information available about Civista, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of
future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as
“anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.
Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual
results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Civista’ reports filed with the Securities and Exchange Commission, including those described in “Item
1A Risk Factors” of Part I of Civista’s Annual Report on Form
for the fiscal year ended December 31, 2020, and any additional risks identified in the Company’s subsequent Form
10-Q’s.

Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Civista does not undertake, and specifically disclaims any obligation, to update any
forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.
Civista Bancshares, Inc. is a $2.9 billion financial holding company headquartered in Sandusky, Ohio. The Company’s banking subsidiary, Civista
Bank, operates 35 locations in Northern, Central and Southwestern Ohio, Southeastern Indiana and Northern Kentucky. Civista Bancshares, Inc. may be accessed at HUwww.civb.comUH. The Company’s common shares are traded on the NASDAQ Capital
Market under the symbol “CIVB”.
For additional information, contact:
Dennis G. Shaffer
888-645-4121
Financial Highlights
(Unaudited,
dollars in thousands, except share and per share amounts)
Consolidated Condensed Statement of Income
25,498
24,584
51,224
49,586
Net interest income after provision
18,589
46,839
38,578
Income before taxes
10,399
23,197
16,338
Income tax expense
19,922
14,337
Dividends paid per common share
Earnings per common share,
Average shares outstanding,
15,529,766
15,989,851
15,674,231
16,237,242
Selected financial ratios:
Return on average assets
Return on average equity
Dividend payout ratio
Net interest margin (tax equivalent)
The Company is now presenting earnings per share using the
two-class

method. As such, the presentation for the prior periods have been revised. Earnings per share for the prior periods did not change as a result od using the
method.
Selected Balance Sheet Items
(Dollars in thousands, except share and per share amounts)
(unaudited)
245,306
139,522
Investment securities
458,831
364,350
Loans held for sale
Less: allowance for loan losses
(26,197
(25,028
Net loans
1,992,999
2,032,474
Other securities
20,537
22,817
22,580
Goodwill and other intangibles
84,980
84,926
46,467
45,976
46,088
51,496
2,924,643
2,768,862
2,402,992
2,189,398
Federal Home Loan Bank advances
75,000
125,000
Securities sold under agreements to repurchase
24,916
28,914
Accrued expenses and other liabilities
39,895
46,015
352,413
350,108
Total liabilities and shareholders’ equity
Shares outstanding at period end
15,434,592
15,898,032
Book value per share
22.83
22.02
Equity to asset ratio
Selected asset quality ratios:
Allowance for loan losses to total loans
assets to total assets
asset analysis
Nonaccrual loans
Troubled debt restructurings
Other real estate owned
5,907
7,327
Supplemental Financial Information
(Unaudited - dollars in thousands except share data)
March 31,
September 30,
End of Period Balances
Cash and due from banks
437,238
194,773
196,520
357,798
366,691
369,181
10,769
13,256
18,523
2,060,239
2,040,940
2,022,965
(26,133
(22,637
(20,420
Net Loans
2,034,106
2,018,303
2,002,545
22,265
22,958
23,137
84,682
84,896
84,852
46,219
45,732
45,489
43,754
50,847
51,369
3,057,368
2,817,993
2,812,153
2,475,907
2,068,769
2,069,261
Securities sold under agreement to repurchase
29,513
25,813
23,608
183,695
47,463
43,234
44,549
2,572,230
2,707,310
2,418,754
2,475,938
2,475,540
Common shares
277,495
277,164
277,039
276,940
276,841
109,178
101,899
93,048
84,628
78,712
Treasury shares
(45,953
(38,574
(34,598
(33,900
(32,594
Accumulated other comprehensive income
11,693
14,619
14,387
13,654
350,058
342,055
336,613
Quarterly Average Balances
Earning assets
 2,776,131
 3,006,653
 2,603,961
 2,617,884
 2,528,006
413,494
382,313
386,179
388,594
386,838
2,069,419
2,072,477
2,040,492
2,448,183
2,632,782
2,144,865
2,084,791
2,108,227
1,580,622
1,532,759
1,458,967
1,401,318
1,317,336
Other interest-bearing liabilities
157,264
185,605
278,357
362,965
302,267
349,625
343,335
339,278
Income statement
Total interest and dividend income
25,725
25,721
24,558
Total interest expense
23,828
23,531
22,006
19,390
16,968
17,727
12,798
11,979
9,164
10,758
10,173
7,682
6,504
Common shares dividend paid
1,885
1,907
1,753
1,766
1,764
Per share data
Diluted
Average common shares outstanding,

15,820,301
15,861,095
15,991,270
Asset quality
Allowance for loan losses, beginning of period
26,133
25,028
22,637
16,948
Allowance for loan losses, end of period
Ratios
Allowance to total loans
Allowance to nonperforming assets
423.09
341.59
292.88
262.14
Allowance to nonperforming loans
Nonperforming assets
Nonperforming loans
6,177
7,296
7,729
7,790
Total nonperforming assets
Capital and liquidity
Tier 1 leverage ratio
Tier 1 risk-based capital ratio
Total risk-based capital ratio
Tangible common equity ratio
See reconciliation of
non-GAAP
measures at the end of this press
release.
Reconciliation of
Non-GAAP
Financial Measures
Tangible Common Equity
Total Shareholder’s Equity - GAAP
352,413
350,058
350,108
342,055
336,613
Less: Goodwill and intangible assets
82,235
82,458
82,681
82,907
83,135
(Non-GAAP)
270,178
267,600
267,427
259,148
253,478
Total Shares Outstanding
15,750,479
15,945,479
16,052,979
Tangible book value per share
17.50
16.99
16.82
16.25
15.79
Tangible Assets
Total Assets - GAAP
2,762,918
Tangible assets
2,842,408
2,974,910
2,680,237
2,735,086
2,729,018
Tangible common equity to tangible assets
Efficiency Ratio
For the three months ended:
(3,717
18,750
Net interest income (FTE)
24,247
22,488
(1,785
Efficiency ratio
For the six months ended:
38,140
48,483
45,009
16,430
FHLB prepayment penalty
Gain on sale of VISA B shares

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

First Citizens Banc: Civista Bancshares, Inc. Announces Third Quarter 2021 Financial Results Sandusky, Ohio, October - Oct. 27, 2021
Registration statement under Securities Act of 1933 - Oct. 22, 2021
Registration statement under Securities Act of 1933 - Oct. 15, 2021
First Citizens Banc: Civista Bancshares, Inc. Declares Fourth Quarter Common Dividend Sandusky, Ohio, October - Oct. 8, 2021
First Citizens Banc: Civista Bancshares, Inc. Announces Third Quarter 2021 Earnings Release Date Sandusky, Ohio, October - Oct. 7, 2021

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