UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended - March 31, 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 May 1, 2026—20,783,348 shares
CIVISTA BANCSHARES, INC.
Index
PART I.
Financial Information
2
Item 1.
Financial Statements:
Consolidated Balance Sheets (Unaudited) March 31, 2026 and December 31, 2025
Consolidated Statements of Operations (Unaudited) Three months ended March 31, 2026 and 2025
3
Consolidated Statements of Comprehensive Income (Unaudited) Three months ended March 31, 2026 and 2025
4
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) Three months ended March 31, 2026 and 2025
5
Condensed Consolidated Statements of Cash Flows (Unaudited) Three months ended March 31, 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
39
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
49
Item 4.
Controls and Procedures
51
PART II.
Other Information
52
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
53
Mine Safety Disclosures
Item 5.
Item 6.
Exhibits
54
Signatures
55
Part I – Financial Information
ITEM 1. Financial Statements
Consolidated Balance Sheets
(In thousands, except share data)
March 31, 2026
(Unaudited)
December 31, 2025
ASSETS
Cash and due from financial institutions
$
83,525
77,320
Investments in time deposits
2,880
1,165
Securities available-for-sale
679,737
681,908
Equity securities
2,725
2,692
Loans held for sale
6,940
7,180
Loans, net of allowance for credit losses of $40,536 and $42,020
3,189,131
3,228,026
Other securities
25,144
25,942
Premises and equipment, net
39,055
40,611
Accrued interest receivable
14,777
14,436
Goodwill
130,438
Other intangible assets, net
12,336
13,100
Bank owned life insurance
63,543
63,153
Swap assets
2,716
3,494
Deferred taxes
16,208
16,501
Other assets
29,167
30,487
Total assets
4,298,322
4,336,453
LIABILITIES
Deposits
Noninterest-bearing
703,778
702,032
Interest-bearing
2,798,112
2,764,432
Total deposits
3,501,890
3,466,464
Short-term Federal Home Loan Bank advances
100,000
175,000
Long-term Federal Home Loan Bank advances
739
855
Subordinated debentures
104,276
104,234
Other borrowings
3,594
4,090
Swap liabilities
5,853
5,748
Accrued expenses and other liabilities
29,727
36,588
Total liabilities
3,746,079
3,792,979
SHAREHOLDERS’ EQUITY
Common shares, no par value, 40,000,000 shares authorized, 24,658,922 shares issued at March 31, 2026 and 24,607,544 shares issued at December 31, 2025, including Treasury shares
420,488
419,769
Retained earnings
251,041
239,784
Treasury shares, 3,875,574 common shares at March 31, 2026 and 3,861,070 common shares at December 31, 2025, at cost
(76,082
)
(75,764
Accumulated other comprehensive loss
(43,204
(40,315
Total shareholders’ equity
552,243
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
March 31,
2026
2025
Interest and dividend income
Loans, including fees
49,230
47,646
Taxable securities
3,954
3,555
Tax-exempt securities
2,303
2,340
Deposits in other banks
322
192
Total interest and dividend income
55,809
53,733
Interest expense
15,453
15,716
Federal Home Loan Bank advances
1,353
3,938
1,108
1,161
72
145
Total interest expense
17,986
20,960
Net interest income
37,823
32,773
Provision for (recovery of) credit losses - loans and leases
(768
1,248
Provision for credit losses - off-balance sheet credit exposures
139
319
Net interest income after provision
38,452
31,206
Noninterest income
Service charges
1,714
1,524
Net gain (loss) on equity securities
33
(29
Net gain on sale of loans and leases
1,605
604
ATM/Interchange fees
1,386
1,326
Wealth management fees
1,433
1,340
Lease revenue and residual income
1,630
1,896
390
387
Swap fees
56
Other
1,184
740
Total noninterest income
9,431
7,860
Noninterest expense
Compensation expense
16,229
14,043
Net occupancy expense
1,623
1,634
Contracted data processing
730
567
FDIC assessment
423
873
State franchise tax
554
526
Professional services
1,585
2,090
Equipment expense
2,089
2,103
ATM/Interchange expense
732
580
Marketing
478
296
Amortization of core deposit intangibles
696
332
Software maintenance expense
1,475
1,277
Other operating expenses
3,259
2,805
Total noninterest expense
29,873
27,126
Income before taxes
18,010
11,940
Income tax expense
3,021
1,772
Net Income
14,989
10,168
Earnings per common share, basic
0.72
0.66
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
(3,952
1,566
Tax effect
831
(370
Unrealized holding gains (losses) on balance sheet swap
297
—
(65
Pension liability adjustment
268
(56
Total other comprehensive income (loss)
(2,889
1,408
Comprehensive income
12,100
11,576
Page 4
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)
Common Shares
AccumulatedOther
Total
OutstandingShares
Amount
RetainedEarnings
TreasuryShares
ComprehensiveLoss
Shareholders’Equity
Balance, December 31, 2025
20,746,474
Other comprehensive income (loss)
Stock-based compensation
51,378
719
Common stock dividends ($0.18 per share)
(3,732
Purchase of common stock
(14,504
(318
Balance, March 31, 2026
20,783,348
Balance, December 31, 2024
15,487,667
312,037
205,408
(75,586
(53,357
388,502
Other comprehensive income
39,587
155
Common stock dividends ($0.17 per share)
(2,632
(8,182
(167
Balance, March 31, 2025
15,519,072
312,192
212,944
(75,753
(51,949
397,434
Page 5
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31,
Net cash provided by operating activities
12,180
3,612
Cash flows used for investing activities:
Maturities
245
490
Purchases
(1,960
Securities available for sale
Maturities, prepayments, and calls
23,395
41,138
Sales
(23,690
(37,479
Purchase of other securities
(11,258
(5,795
Redemption of other securities
12,056
Net change in loans
39,819
(23,182
Proceeds from sale of premises and equipment
203
Disposal of premises and equipment
95
Purchases of premises and equipment
(441
(161
Net cash provided/(used) for investing activities
38,261
(21,231
Cash flows from financing activities:
Repayment of long-term FHLB advances
(116
(146
Net change in short-term FHLB advances
(75,000
21,000
Repayment of other borrowings
(496
(153
Increase in deposits
35,426
27,018
Purchase of treasury shares
Common stock dividends paid
Net cash (used)/provided by financing activities
(44,236
44,920
Increase in cash and cash equivalents
6,205
27,301
Cash and cash equivalents at beginning of period
63,155
Cash and cash equivalents at end of period
90,456
Cash paid during the period for:
Interest
18,466
23,553
Income taxes
89
92
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 March 31, 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 March 31, 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 slightly above 1% of total revenue for the quarter ended March 31, 2026 but less than 1% for the quarter ended March 31, 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 March 31, 2026 and its results of operations and changes in cash flows for the periods ended March 31, 2026 and 2025 have been made. The results of operations for the three months ended March 31, 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 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
58,511
235
(1,192
57,554
Obligations of states and political subdivisions
341,047
724
(24,405
317,366
Mortgage-backed securities in government sponsored entities
329,164
517
(24,864
304,817
Total debt securities (1)
728,722
1,476
(50,461
61,935
262
(1,180
61,017
345,214
1,319
(21,735
324,798
319,792
525
(24,224
296,093
726,941
2,106
(47,139
(1) Excludes accrued interest receivable on securities of $3,815 and $4,371 at March 31, 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 March 31, 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
23,846
23,781
Due after one year through five years
64,094
61,892
Due after five years through ten years
63,751
63,333
Due after ten years
247,867
225,914
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 months ended March 31, 2026 or March 31, 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 $265,791 and $239,649 as of March 31, 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 March 31, 2026 and December 31, 2025:
12 Months or less
More than 12 months
Description of Securities
UnrealizedLoss
6,612
(44
43,285
(1,148
49,897
87,192
(670
150,926
(23,735
238,118
Mortgage-backed securities in gov’t sponsored entities
40,882
(284
173,136
(24,580
214,018
134,686
(998
367,347
(49,463
502,033
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 March 31, 2026, there were a total of 434 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 3.0 years. No credit losses were determined to be present as of March 31, 2026, as there was no credit quality deterioration noted. Therefore, no provision for credit losses on securities was recognized for the first quarter of 2026.
The following table presents the net gains and losses on equity investments recognized in earnings for the three months ended March 31, 2026 and 2025, and the portion of unrealized gains and losses for the period that relates to equity investments held at March 31, 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 $2.7 million as of March 31, 2026 and December 31, 2025.
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 $8,905 at March 31, 2026 and $11,645 at December 31, 2025. FRBC stock was recorded at $15,950 at March 31, 2026 and $14,023 at December 31, 2025. United Bankers' Bancorp stock was recorded at $245 at March 31, 2026 and $230 at December 31, 2025. Farmer Mac stock was recorded at $42 at both March 31, 2026 and December 31, 2025. Norwalk Community Development Corp stock was recorded at $2 at both March 31, 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
310,400
308,692
Commercial Real Estate- Owner Occupied
390,786
385,547
Commercial Real Estate- Non-Owner Occupied
1,232,781
1,239,017
Residential Real Estate
943,425
944,328
Real Estate Construction
254,254
285,137
Farm Real Estate
32,700
37,775
Lease Financing Receivables
32,693
35,103
Consumer and Other
32,628
34,447
Total loans
3,229,667
3,270,046
Allowance for credit losses
(40,536
(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 March 31, 2026 and December 31, 2025, accrued interest receivable on loans totaled $10,682 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 March 31, 2026 and December 31, 2025:
Minimum lease payments receivable
35,738
39,332
Unguaranteed residual assets
808
1,558
Unamortized direct costs
14
Unearned income
(3,855
(5,801
Total net investment in direct financing and sales-type leases
The Company earns revenue on direct financing and sales-type leases, as well as operating leases disclosed in Note 17. The components of total lease income were as follows for the three months ended March 31, 2026 and 2025.
Interest and dividend income - Loans and leases, including fees:
Interest income on net investments in direct financing and sales-type leases
657
1,437
Noninterest income - Lease revenue & residual income:
Lease income from operating lease payments
1,463
1,596
Other(1)
167
300
(1) Other consists of lease-related fees and commissions and gains (losses) on sale or disposition of leased assets
(5) Allowance for Credit Losses
The following tables present, by portfolio segment, the changes in the allowance for credit losses ("ACL") for the three months ended March 31, 2026 and 2025.
Allowance for credit losses:
For the three months ended March 31, 2026
Beginning balance
Charge-offs
Recoveries
Provision
Ending Balance
5,153
(96
62
(123
4,996
Commercial Real Estate:
Owner Occupied
4,420
(142
4,280
Non-Owner Occupied
12,118
(484
1
154
11,789
14,718
(3
13
(242
14,486
3,842
(340
3,502
279
(54
225
1,169
(210
45
1,008
321
(13
8
(66
250
42,020
(806
90
40,536
Page 12
For the three months ended March 31, 2025
6,586
(72
291
(611
6,194
4,327
4,466
11,404
(800
11,412
11,866
19
570
12,455
3,708
309
4,017
226
38
264
1,361
(90
25
(19
191
(14
199
39,669
(976
343
40,284
For the three months ended March 31, 2026, the Company released $768 from the allowance for credit losses, as compared to a provision of $1,248 for the three months ended March 31, 2025. The Company experienced a decrease in the allowance for credit losses year-to-date as required by our current expected credit loss ("CECL") model primarily due to a decrease in loan balances from December 31, 2025. Lower provisions were primarily attributable to the slowdown in loan growth as total loans decreased $40.4 million for the three months ended March 31, 2026, compared to an increase of $22.8 million for the same period in 2025.
The determination of the balance of the allowance for credit losses is based on the CECL methodology and utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity securities and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The methodology replaces the multiple existing impairment methods under prior GAAP, which generally require that a loss be incurred before it is recognized. In management’s judgment, the CECL methodology produces a result that is adequate to provide for future probable credit losses
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 13
Based on the most recent analysis performed, the risk category of loans at March 31, 2026, and year-to-date gross charge-offs as of March 31, 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
20,442
48,553
45,497
35,100
19,412
19,685
95,300
283,989
Special Mention
658
217
214
1,063
2,305
8,307
12,763
Substandard
484
4,531
889
73
5,579
12,139
Doubtful
1,508
Total Commercial & Agriculture
20,498
49,694
50,246
36,203
22,064
110,694
Commercial & Agriculture:
Current-period gross charge-offs
74
22
96
Commercial Real Estate - Owner Occupied
8,205
48,927
32,311
41,206
53,010
165,842
8,784
358,285
560
1,005
14,208
5,971
75
21,818
1,715
197
1,384
5,929
1,458
10,683
Total Commercial Real Estate - Owner Occupied
49,487
34,026
42,408
68,601
177,742
10,316
Commercial Real Estate - Owner Occupied:
Commercial Real Estate - Non-Owner Occupied
34,847
73,487
90,259
246,497
269,870
449,086
30,186
1,194,231
1,436
4,564
4,930
10,930
389
27,231
27,619
Total Commercial Real Estate - Non-Owner Occupied
91,695
274,824
481,246
Commercial Real Estate - Non-Owner Occupied:
24,253
95,930
133,673
119,556
114,356
247,603
197,775
933,146
138
806
995
-
542
1,547
4,385
1,343
7,817
1,020
447
1,466
Total Residential Real Estate
96,068
134,744
120,098
115,903
252,794
199,565
Residential Real Estate:
Page 14
13,360
120,374
16,437
49,644
23,594
9,808
13,717
246,934
6,617
703
Total Real Estate Construction
23,054
50,346
Real Estate Construction:
942
1,490
866
2,630
489
20,080
3,224
29,722
461
535
1,452
2,448
530
Total Farm Real Estate
950
21,145
4,676
Farm Real Estate:
Current-period charge-offs
3,413
4,673
6,793
6,004
2,622
320
23,824
1,745
2,924
1,118
35
5,822
36
1,170
1,584
257
3,047
Total Lease Financing Receivables
6,454
10,886
8,706
2,914
Lease Financing Receivables:
115
210
468
25,227
1,298
2,121
1,211
844
1,417
32,586
11
16
43
Total Consumer and Other
1,300
2,132
1,228
858
Consumer and Other:
Total Loans
105,986
422,282
346,818
509,019
509,014
965,976
370,572
Total Loans:
195
122
486
Page 15
The risk category of loans at December 31, 2025, and year-to-date gross charge-offs as of March 31, 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
61
7,381
12,027
506
4,677
1,267
619
5,325
12,402
56,300
54,444
34,011
23,384
17,656
8,384
114,513
67
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
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
1,520
7,036
9,506
14,593
12,799
27,392
78,325
297,040
157,800
349,971
800
98,026
145,132
126,021
114,905
91,029
160,969
198,707
934,789
551
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
Page 16
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
2,710
1,709
2,600
20,683
3,133
34,661
450
679
1,027
2,617
475
497
3,160
2,170
21,837
4,160
7,631
7,361
7,292
3,193
21
25,984
1,799
3,035
7,213
1,363
265
1,906
9,473
11,759
9,867
3,497
24,261
3,717
2,428
1,416
662
404
1,504
34,392
9
3,726
2,441
1,432
676
1,507
412,783
375,715
556,337
539,662
334,879
678,617
372,053
100
804
976
Page 17
The following tables include an aging analysis of the recorded investment in past due loans outstanding as of March 31, 2026 and December 31, 2025.
30-59DaysPast Due
60-89DaysPast Due
90 Daysor GreaterPast Due
Total PastDue
Current
Past Due90 DaysandAccruing
827
405
253
1,485
308,915
176
140
316
390,470
8,496
10,321
1,222,460
6,380
1,362
1,672
9,414
934,011
770
105
875
31,818
229
93
131
32,497
9,682
2,172
10,688
22,542
3,207,125
382
239
141
762
307,930
179
185
385,362
23
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
335
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 March 31, 2026.
Nonaccrual loans with a related ACL
Nonaccrual loans without a related ACL
Total Nonaccrual loans
6,633
4,008
10,641
1,440
1,625
7,981
594
8,575
6,102
1,945
8,047
365
42
21,048
8,352
29,400
Page 18
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
98
377
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: There were two loans modified to a borrower experiencing financial difficulty during the three months ended March 31, 2026. There were no loans modified to borrowers experiencing financial difficulty during the three months ended March 31, 2025. 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 19
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 three months ended March 31, 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 also presented below:
Loans Modifications Made to Borrowers Experiencing Financial Difficulty
Three Months Ended March 31, 2026
(Dollars in Thousands)
Term Extension
Loan Type
Amortized Cost Basis
Percent of total loans bycategory
527
1.61
%
Total Loan Modifications
The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty as of March 31, 2026.
Financial Effect
- 24 month term extension
There were no financial effects of the modifications to borrowers experiencing financial difficulty as of March 31, 2025.
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 modified loans that had a payment default during the three months ended March 31, 2026 and March 31, 2025, and were modified during the twelve months prior to that default to borrowers experiencing financial difficulty.
Page 20
The following table presents the payment status of the loans that were modified to borrowers experiencing financial difficulties in the last twelve months ended March 31, 2026.
Non-Accrual
5,867
5,856
7,414
6,876
There were no loans to present the payment status for that were modified to borrowers experiencing difficulties for the last twelve months ended March 31, 2025.
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.
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 March 31, 2026 and December 31, 2025.
Real Estate
Allowance for Credit Losses
2,653
259
3,000
12,246
Page 21
2,687
248
9,010
119
13,701
2,806
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 March 31, 2026 and December 31, 2025, there were no foreclosed assets included in other assets. As of March 31, 2026 and December 31, 2025, the Company had initiated formal foreclosure procedures on $1,028 and $1,228, respectively, of Residential Real Estate loans.
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 table lists the allowance for credit losses on off-balance sheet credit exposures as of the three months ended March 31, 2026 and March 31, 2025:
Beginning of Period
3,236
3,380
Provision for
End of Period
3,375
3,699
Page 22
(6) Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax for the three month periods ended March 31, 2026 and March 31, 2025.
For the Three-Month Period Ended
March 31, 2026(a)
March 31, 2025(a)
UnrealizedGains (Losses) onAvailable-for-SaleSecurities (a)
DefinedBenefitPensionItems (a)
Cashflow Hedge (a)
Total (a)
(35,522
(4,735
(58
(48,851
(4,506
Other comprehensive gain (loss) before reclassifications
(3,121
232
1,196
212
Ending balance
(38,643
174
(47,655
(4,294
(a) Amounts in parentheses indicate debits on the Consolidated Balance Sheets.
There were no amounts reclassified out of any component of accumulated other comprehensive income (loss) for the three month periods ended March 31, 2026 and March 31, 2025.
(7) Goodwill and Intangible Assets
The carrying amount of goodwill was $130,438 at both March 31, 2026 and December 31, 2025.
Acquired intangible assets, other than goodwill, as of March 31, 2026 and December 31, 2025 were as follows:
GrossCarryingAmount
AccumulatedAmortization
NetCarryingAmount
Core deposit intangible assets:
Core deposit intangibles
19,643
9,922
9,721
9,226
10,417
Total core deposit intangible assets
Aggregate core deposit intangible amortization expense was $696 and $332 for the three months ended March 31, 2026 and 2025, respectively.
Activity for mortgage servicing rights ("MSRs") for the three months ended March 31, 2026 and March 31, 2025 was as follows:
Mortgage Servicing Rights:
Balance at Beginning of Period
2,683
2,877
Additions
24
Additions from acquisition
Disposals
Amortized to expense
(81
(69
Other charges
Change in valuation allowance
Balance at End of Period
2,615
2,832
Page 23
There was no valuation allowance for the three months ended March 31, 2026 and March 31, 2025.
Estimated amortization expense for each of the next five years and thereafter is as follows:
MSRs
Core depositintangibles
2026(1)
2,015
2,130
2027
152
2,395
2,547
2028
147
1,923
2,070
2029
1,218
2030
144
944
1,088
Thereafter
1,912
1,226
3,138
(1) 2026 includes nine months of amortization expense for the period from April 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
Interest rate on balance
3.82
3.81
Overnight advances
75,000
Total Short-term FHLB Advances
The single maturity fixed rate advances consisted of one advance that matures on May 18, 2026.
Maximum indebtedness
270,500
394,000
Rate
3.71
4.42
End of period balance
360,000
Average balance
148,656
355,589
3.77
Average balance during the period represents daily averages. Average rate paid represents interest expense divided by the related average balances.
Page 24
The following table summarizes the Company's subordinated debentures at March 31, 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
2,578
Futura TPF Trust II
1,997
Long-Term Subordinated Debentures, net of unamortized debt issuance costs
73,927
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 $3,594 and $4,090 at March 31, 2026 and December 31, 2025, respectively. The weighted average rate on these borrowings was 8.31% and 8.22% at March 31, 2026 and December 31, 2025, respectively. The weighted average life was 22 months and 23 months at March 31, 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 months ended March 31, 2026 and March 31, 2025.
Basic
Less allocation of earnings and dividends to participating securities
28
44
Net income available to common shareholders—basic
14,961
10,124
Weighted average common shares outstanding
20,745,499
15,488,813
Less average participating securities
39,169
66,711
Weighted average number of shares outstanding used in the calculation of basic earnings per common share
20,706,330
15,422,102
Earnings per common share:
Diluted
Page 25
(10) Commitments, Contingencies and Off-Balance Sheet Risk
Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customers’ financing needs. These are agreements to provide credit or to support the credit of others, as long as the conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk of credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of commitment. The contractual amounts of financial instruments with off-balance-sheet risk were as follows at March 31, 2026 and December 31, 2025:
Contract Amount
Fixed Rate
VariableRate
Commitment to extend credit:
Lines of credit and construction loans
38,940
669,101
34,580
652,725
Overdraft protection
10
45,654
51,961
Letters of credit
77
82
38,966
714,832
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 3.10% to 7.8% at March 31, 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
94
Expected return on plan assets
(108
Other components
Net periodic pension benefit
(20
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 340,377 shares available for grants under the 2024 Incentive Plan at March 31, 2026.
Page 26
No options were granted under the 2024 Incentive Plan during the three months ended March 31, 2026 and March 31, 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 months ended March 31, 2026:
Number ofRestrictedShares
WeightedAverage GrantDate Fair Value
Nonvested at beginning of period
90,155
19.72
Granted
24.87
Vested
(62,527
20.92
Forfeited
Nonvested at end of period
79,006
22.12
The following is a summary of the status of the Company’s outstanding restricted common shares as of March 31, 2026:
At March 31, 2026
Date of Award
Shares
Remaining Expense
Remaining VestingPeriod (Years)
March 3, 2022
1,467
27
0.75
March 14, 2023
4,373
87
1.75
March 12, 2024
10,931
158
2.75
2,586
September 9, 2024
1.50
March 11, 2025
13,002
258
3.75
7,269
135
March 13, 2026
15,317
373
5.00
23,203
556
3.00
1,632
3.16
The Company recorded $719 and $155 of share-based compensation expense during the three months ended March 31, 2026 and March 31, 2025, respectively. At March 31, 2026, the total compensation cost related to unvested awards not yet recognized was $1,632, which was expected to be recognized over the weighted average remaining life of the grants of 3.16 years.
(13) Fair Value Measurement
The Company uses a fair value hierarchy to measure fair value. This hierarchy describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices for identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; and Level 3: Significant unobservable inputs that reflect the Company’s own view about the assumptions that market participants would use in pricing an asset.
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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 30% to account for other factors that may impact the value of collateral.
Assets and liabilities measured at fair value are summarized in the tables below.
Fair Value Measurements at March 31, 2026 Using:
(Level 1)
(Level 2)
(Level 3)
Assets measured at fair value on a recurring basis:
U.S. Treasury securities
32,475
Obligations of U.S. Government agencies
25,079
647,262
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
11,640
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Fair Value Measurements at December 31, 2025 Using:
33,902
27,115
648,006
13,140
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 March 31, 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
10 - 61%
44%
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.
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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 noninterest-bearing 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.
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 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
3,112,683
Financial Liabilities:
Nonmaturing deposits
2,416,467
Time deposits
1,085,423
1,086,508
Short-term FHLB advances
Long-term FHLB advances
723
102,208
Accrued interest payable
4,914
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3,134,413
2,339,170
1,127,294
1,129,549
838
102,843
5,393
(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 value 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.
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An interest rate swap with a notional amount totaling $100.0 million as of March 31, 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 $223 and is recorded in Swap assets in the Consolidated Balance Sheets at March 31, 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
3.66
3.69
Weighted average remaining maturity (in years)
0.9
1.2
223
(74
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 $3,360 and $2,180 as of March 31, 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 March 31, 2026 and December 31, 2025:
NotionalAmount
Included in Swap assets:
Interest rate swaps with loan customers in an asset position
111,766
2,053
114,463
2,792
Counterparty positions with financial institutions in an asset position
239,831
3,800
244,495
2,882
Total before netting adjustments
5,674
Netting adjustments - cash collateral posted by counterparties*
(3,360
(2,180
Total Swap assets
2,493
Included in Swap liabilities:
Interest rate swaps with loan customers in a liability position
128,065
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 March 31, 2026 or the period ended March 31, 2025.
At March 31, 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 March 31, 2026 and December 31, 2025, the balance of the Company's investments in qualified affordable housing projects was $16,014 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 $4,617 and $5,113 at March 31, 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 March 31, 2026 and 2025, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $371 and $350, respectively, offset by tax credits and other benefits from its investments in affordable housing tax credits of $456 and $416 respectively. During the three months ended March 31, 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 months ended March 31, 2026 and 2025.
Noninterest Income
In-scope of Topic 606:
282
605
Noninterest Income (in-scope of Topic 606)
4,815
4,795
Noninterest Income (out-of-scope of Topic 606)
4,616
3,065
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 March 31, 2026 and December 31, 2025:
Classification on the Consolidated Balance Sheet
Assets:
Operating lease
2,221
2,387
Liabilities:
The cost components of our operating leases were as follows for the three months ended March 31, 2026 and March 31, 2025:
Lease cost
Operating lease cost
207
205
Short-term lease cost
12
Sublease income
(5
Total lease cost
233
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Maturities of our lease liabilities for all operating leases for each of the next five years and thereafter is as follows:
2026 (1)
566
583
395
78
Total lease payments
2,362
Less: Imputed Interest
Present value of lease liabilities
(1) 2026 includes lease payments from April 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 March 31, 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.
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.
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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 $813 as of March 31, 2026, representing $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 March 31, 2026 was $6,329. The amount of amortization expense recognized on the FSB core deposit intangibles life-to-date was $646 as of March 31, 2026, representing $388 in the first quarter of 2026 and $258 in the fourth quarter of 2025.
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As of March 31, 2026, the estimated future amortization expense for the core deposit intangible is as follows:
1,324
936
743
1,066
6,329
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition 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
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, have been completed in the first quarter of 2026. The Company has incurred approximately $4,500 in acquisition related expenses life-to-date as of March 31, 2026, with $4,100 being expensed in 2025 and $400 in the first quarter of 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 March 31, 2026 compared to December 31, 2025, and the consolidated results of operations for the three months ended March 31, 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 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
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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 March 31, 2026 were $4,298,322 compared to $4,336,453 at December 31, 2025, a decrease of $38,131, or 0.9%. The decline was mainly due to a decrease in net loans of $38,895 and a decrease in securities available-for-sale of $2,171. These decreases were slightly offset by increases in cash and due from financial institutions of $6,205 and investments in time deposits of $1,715. Total liabilities at March 31, 2026 were $3,746,079 compared to $3,792,979 at December 31, 2025, a decrease of $46,900, or 1.2%. The decrease in total liabilities was primarily attributable to a decrease in short-term FHLB advances of $75,000 coupled with a decrease in accrued incentives of $3,571, partially offset by an increase in total deposits of $35,426.
Loans outstanding as of March 31, 2026 and December 31, 2025 were as follows:
$ Change
% Change
1,708
0.6
Commercial Real Estate—Owner Occupied
5,239
1.4
Commercial Real Estate—Non-Owner Occupied
(6,236
(0.5
%)
(903
(0.1
(30,883
(10.8
(5,075
(13.4
(2,410
(6.9
(1,819
(5.3
(40,379
(1.2
1,484
(3.5
(38,895
Loans held for sale decreased $240 since December 31, 2025. The decrease was due to a decrease in average loan balances held for sale. At March 31, 2026, 32 loans totaling $6,940 were held for sale as compared to 27 loans totaling $7,180 at December 31, 2025.
Net loans decreased $38,895, or 1.2%, since December 31, 2025. The decrease at March 31, 2026 was mainly attributed to decreases in Real Estate Construction, Commercial Real Estate - Non-Owner Occupied, and Farm Real Estate, partially offset by increases in Commercial Real Estate - Owner Occupied and Commercial & Agriculture. At March 31, 2026, the loan to deposit ratio was 92.2% compared to 94.3% at December 31, 2025.
During the first three months of 2026, provisions and recoveries made to the allowances for credit losses and off-balance sheet credit exposures resulted in a net credit of $629 to the provision for credit losses, compared to an expense of $1,567 during the same period in 2025. The decrease in the provision for the first three months of 2026 was primarily the result of loan balances decreasing $40,379 for the three months ended March 31, 2026, coupled with an improvement in the historical loss rates in the majority of our loan segments.
Reserves on the Lease Financing Receivables portfolio decreased at March 31, 2026, primarily related to lower balance growth in 2026 as the first quarters are historically a lower origination period for leases. Total delinquencies on Lease Financing Receivables decreased from December 31, 2025 to March 31, 2026. Lease Financing Receivables 30-59 days past due and 60-89 days past due combined decreased from $2,541 to $770, and the balance of 90 days or greater past due also decreased from $454 to $105. Nonaccrual Lease Financing Receivables decreased from $291 at December 31, 2025 to $105 at March 31, 2026.
Net charge-offs for the first three months ended March 31, 2026 totaled $716, compared to net charge-offs of $633 for the same period of 2025. For the first three months ended March 31, 2026, the Company charged off a total of 12 loans and leases, consisting of two Commercial & Agriculture loans totaling $96, four Lease Financing Receivables totaling $210, one Commercial Real Estate - Non-Owner Occupied loan totaling $484, four Consumer and Other loans totaling $13 and one Residential Real Estate loan totaling $3. In addition, during the three months ended March 31, 2026, the Company had recoveries on previously charged-off Commercial & Agriculture loans of $62, Commercial Real Estate - Owner Occupied loans of $2, Commercial Real Estate - Non-Owner Occupied loans
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of $1, Residential Real Estate loans of $13, Lease Financing Receivables of $4 and Consumer and Other loans of $8. 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 $10,688 at March 31, 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 March 31, 2026, which is why total loans past due did not experience the same trend, decreasing slightly from December 31, 2025 to March 31, 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 March 31, 2026, the loan remains on nonaccrual and continues to be individually evaluated with a $3,000 specific reserve. This is why nonaccrual loans did not move consistently with the increase in 90 days or more past due, decreasing slightly from $30,384 at December 31, 2025 to $29,400 at March 31, 2026. This is also why the increase in 90 days or more past due did not result in an increase to our estimate allowance, because the related risk was already accounted for with the $3,000 specific reserve included in both the December 31, 2025 and March 31, 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 1.26% at March 31, 2026 and 1.28% at December 31, 2025.
Cash and due from financial institutions increased by $6,205, from $77,320 at December 31, 2025 to $83,525 at March 31, 2026. The increase is mainly due to an increase in overnight investments at the Federal Reserve.
The available-for-sale securities portfolio decreased by $2,171, from $681,908 at December 31, 2025 to $679,737 at March 31, 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 March 31, 2026, the Company was in compliance with all pledging requirements.
Premises and equipment, net, decreased $1,556 from December 31, 2025 to March 31, 2026. The decrease was mainly the result of depreciation expenses of $1,902 coupled with maturing operating leases, partially offset by purchases. The depreciation expense was mainly attributable to leasing operations as operating leases matured. Since mid-2024, new lease originations have primarily consisted of finance leases which are recorded in Loans on the Consolidated Balance Sheets.
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Total deposits as of March 31, 2026 and December 31, 2025 were as follows:
Noninterest-bearing demand
1,746
0.2
Interest-bearing demand
419,295
400,403
18,892
4.7
Savings and money market
1,291,253
1,234,593
56,660
4.6
710,423
727,294
(16,871
(2.3
Brokered deposits
377,141
402,142
(25,001
(6.2
Total Deposits
1.0
The Company had approximately $636,183 and $647,472 of uninsured deposits as of March 31, 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 March 31, 2026 increased $35,426 from December 31, 2025. Noninterest-bearing deposits, interest-bearing demand deposits, and savings and money market accounts increased $1,746, $18,892, and $56,660, respectively, from December 31, 2025, while time deposits and brokered deposits decreased $16,871 and $25,001, respectively, from December 31, 2025. The increase in interest-bearing demand deposits was primarily due to an $18,568 increase in interest-bearing public fund accounts and a $4,987 increase in business interest-bearing demand deposits, slightly offset by decreases of $4,589 and $2,795 in jumbo demand deposits and retail interest-bearing demand deposits, respectively. The increase in savings and money markets was due to increases of $27,030, $13,308, $8,814, $6,130, and $4,222 in business money market deposits, public fund money market accounts, Insured Cash Sweep (ICS) money market deposits, retail money market accounts, and statement savings, respectively. The $16,871 decrease in time deposits was due to a decrease of $15,378 in jumbo time deposits. Brokered deposits decreased $25,001 as the Company continues its strategy to reduce brokered deposits and replace them with core deposits. The year-to-date average balance of total deposits increased $251,868, compared to the average balance for the same period in 2025, mainly due to increases of $150,746, $76,467, and $24,655 in the average balance of time deposits, demand and savings deposits, and noninterest-bearing deposits, respectively.
Short-term FHLB advances decreased $75,000 from December 31, 2025 to March 31, 2026, due to an increase in available liquidity, primarily as a result of deposit growth coupled with the net decrease in outstanding loans and leases in the first quarter of 2026.
Shareholders’ equity at March 31, 2026 was $552,243, or 12.8% 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 $14,989, partially offset by dividends paid on common shares of $3,732 and an increase in accumulated other comprehensive loss of $2,889 resulting from the change in the unrealized loss on available-for-sale securities.
Total outstanding common shares at March 31, 2026 were 20,783,348, which increased slightly from 20,746,474 common shares outstanding at December 31, 2025. Common shares outstanding increased due to the grant of 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 March 31, 2026 and 2025
The Company had net income of $14,989 for the three months ended March 31, 2026, an increase of $4,821 from net income of $10,168 for the same period of 2025. Basic and diluted earnings per common share were $0.72 for the quarter ended March 31, 2026, compared to $0.66 for the same period of 2025. In the first quarter of 2026, net income was decreased by $358 from non-recurring adjustments resulting from acquisition-related expenses from the FSB merger relating to the core system conversion that was completed in February 2026. The primary reasons for the changes in net income are explained below.
Net interest income for the three months ended March 31, 2026 was $37,823, an increase of $5,050 from $32,773 for the same period of 2025. This increase was a result of an increase of $2,076 in total interest and dividend income, coupled with a $2,974 decrease in total interest expense. Total interest-earning assets averaged $4,003,144 during the three months ended March 31, 2026, an increase of $201,435 from $3,801,709 for the same period of 2025. The Company’s total average interest-bearing liabilities increased from
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$3,006,090 during the three months ended March 31, 2025 to $3,023,372 during the three months ended March 31, 2026. The Company’s fully tax equivalent net interest margin for the three months ended March 31, 2026 and 2025 was 3.85% and 3.51%, respectively.
Total interest and dividend income was $55,809 for the three months ended March 31, 2026, an increase of $2,076 from $53,733 for the same period of 2025. The increase in interest and dividend income is mainly attributable to a $1,584 increase in interest and fees on loans and a $399 increase in interest income on taxable securities. The $1,584 increase in interest and fees on loans is attributable to an increase in the average balance of loans. The average balance of loans increased by $152,902, or 4.9%, to $3,252,342 for the three months ended March 31, 2026, as compared to $3,099,440 for the same period of 2025.
Interest on taxable securities increased $399 to $3,954 for the three months ended March 31, 2026, compared to $3,555 for the same period of 2025. The average balance of taxable securities increased $35,867 to $432,760 for the three months ended March 31, 2026, as compared to $396,893 for the same period of 2025. The yield on taxable securities increased 18 basis points to 3.49% for the three months ended March 31, 2026, compared to 3.31% 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 $37 to $2,303 for the three months ended March 31, 2026, compared to $2,340 for the same period of 2025. The average balance of tax-exempt securities decreased $1,204 to $285,277 for the three months ended March 31, 2026, as compared to $286,481 for the same period of 2025. The yield on tax-exempt securities increased 3 basis points to 3.94% for the three months ended March 31, 2026, compared to 3.91% for the same period of 2025. Interest on deposits in other banks increased $130 to $322 for the three months ended March 31, 2026, compared to $192 for the same period of 2025. The average balance of interest-bearing deposits in other banks increased $13,870 to $32,765 for the three month period ended March 31, 2026, compared to $18,895 for the same period of 2025. The yield on interest-bearing deposits in other banks decreased 22 basis points to 3.91% for the three months ended March 31, 2026, compared to 4.13% for the same period of 2025.
Total interest expense decreased $2,974, or 14.2%, to $17,986 for the three months ended March 31, 2026, compared to $20,960 for the same period of 2025. For the three months ended March 31, 2026, the average balance of interest-bearing liabilities increased $17,282 to $3,023,372, as compared to $3,006,090 for the same period of 2025. Interest incurred on deposits decreased by $263 to $15,453 for the three months ended March 31, 2026, compared to $15,716 for the same period of 2025. The average balance of interest-bearing deposits increased by $227,213 to $2,765,773 for the three months ended March 31, 2026, as compared to the same period in 2025, which was more than offset by a decrease in the rate paid on interest-bearing deposits from 2.51% for the first three months ended March 31, 2025 to 2.27% in the first three months 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 first 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 $206,933 to $148,656 for the three months ended March 31, 2026, as compared to the same period in 2025.
The following table presents the condensed average balance sheets for the three months ended March 31, 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
Page 44
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.
Averagebalance
Yield/rate*
Interest-earning assets:
Loans, including fees**
3,252,342
6.14
3,099,440
6.23
432,760
3.49
396,893
3.31
285,277
3.94
286,481
3.91
Interest-bearing deposits in other banks
32,765
18,895
4.13
Total interest-earning assets
4,003,144
5.66
3,801,709
5.71
Noninterest-earning assets:
39,130
43,203
39,989
46,404
14,196
13,567
Intangible assets
143,272
133,268
63,287
62,916
51,682
58,588
Less allowance for loan losses
(41,663
(39,956
Total Assets
4,313,037
4,119,699
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings
1,655,416
5,431
1.33
1,578,949
5,729
1.47
Time
1,110,357
10,022
959,611
9,987
4.22
1,348
3.68
3,929
4.48
781
2.73
2.56
3,913
7.50
6,430
9.14
104,249
4.31
104,103
4.52
Total interest-bearing liabilities
3,023,372
2.41
3,006,090
2.83
695,429
670,774
40,296
45,814
Shareholders’ Equity
553,940
397,021
Total Liabilities and Shareholders’ Equity
Net interest income and interest rate spread(1)
3.25
2.88
Net interest margin(2)
3.85
3.51
(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 $612 and $622 for the periods ended March 31, 2026 and 2025, respectively.
**Average balance includes nonaccrual loans.
Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the three months ended March 31, 2026 and 2025.
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Increase (decrease) due to:
Volume (1)
Rate (1)
Net
(Dollars in thousands)
Interest income:
2,323
(739
198
201
399
(52
15
(37
137
(7
130
Total interest income
2,606
(530
2,076
Interest expense:
269
(567
(298
1,456
(1,421
(1,973
(608
(2,581
(4
(50
(23
(73
(55
(53
(300
(2,674
(2,974
2,906
2,144
5,050
(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 March 31, 2026, the Company recorded a credit to the provision for credit losses for loans and off-balance sheet credit exposures of $629, a decrease of $2,196, from an expense of $1,567 during the three months ended March 31, 2026.
Noninterest income for the three month periods ended March 31, 2026 and 2025 was as follows:
190
12.5
213.8
1,001
165.7
60
4.5
6.9
(266
(14.0
0.8
(16
(22.2
444
60.0
1,571
20.0
Total noninterest income for the three months ended March 31, 2026 was $9,431, an increase of $1,571, or 20.0%, from $7,860 for the same period of 2025. Net gain on sale of loans and leases increased $1,001 for the three months ended March 31, 2026, compared to the same period of 2025, resulting from changes in the rate environment at the time of sale that resulted in higher sales volume. Lease revenue and residual income decreased $266 for the three months ended March 31, 2026, compared to the same period of 2025, mainly due to a decrease in operating lease originations as the Company continues to shift towards finance leases. Other income increased $444 for the three months ended March 31, 2026, compared to the same period of 2025, due to income from the Company's captive insurance subsidiary, CIVB Risk Management, recording $487 of income related to the resolution of three prior period claims that were closed without payment, resulting in a reduction of ceded reserves in the first quarter of 2026.
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Noninterest expense for the three month periods ended March 31, 2026 and 2025 was as follows:
2,186
15.6
(11
(0.7
163
28.7
FDIC Assessment
(450
(51.5
5.3
(505
(24.2
26.2
182
61.5
364
109.6
15.5
16.2
2,747
10.1
Total noninterest expense for the three months ended March 31, 2026 was $29,873, an increase of $2,747 or 10.1%, from $27,126 compared to the same period of 2025. The increase in total noninterest expense was primarily due to increases in compensation 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 from operating with higher full-time equivalent (FTE) employees year-over-year. The number of FTEs at March 31, 2026 was 535, compared to 520 for the same period of 2025. The increase in other expense is mainly related to acquisition-related expenses in the first quarter of 2026 of $427 for the FSB merger. The decrease in FDIC assessment is related to better credit ratings lowering the Company's overall quarterly assessment in the first quarter of 2026 compared to the same period of 2025. The decrease in professional fees is primarily due to lower consulting expenses related to CLF's core system conversion.
Income tax expense for the three months ended March 31, 2026 totaled $3,021, up $1,249 compared to the same period of 2025. The effective tax rates for the three month periods ended March 31, 2026 and 2025 were 16.8% and 14.8%, respectively. The increase in the effective tax rate for the three month period ended March 31, 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
All of the Company’s capital ratios exceeded the regulatory minimum guidelines as of March 31, 2026 and December 31, 2025 as identified in the following table:
Total RiskBasedCapital
Tier I RiskBasedCapital
CET1 RiskBasedCapital
LeverageRatio
Company Ratios—March 31, 2026
18.7
15.1
14.2
11.6
Company Ratios—December 31, 2025
18.0
14.5
13.6
11.3
For Capital Adequacy Purposes
8.0
6.0
4.0
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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 $23,781, or 3.50% of the total securities portfolio, at March 31, 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 $12,180 and $3,612 for the three months ended March 31, 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 $38,261 and $(21,231) for the three months ended March 31, 2026 and 2025, respectively, principally reflecting our loan and investment security activities. Net cash (used)/provided by financing activities was ($44,236) and $44,920 for the three months ended March 31, 2026 and 2025, respectively. The primary changes in financing activities is the decrease in short-term FHLB advances and the payment of common dividends, somewhat offset by an increase 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 March 31, 2026, Civista had total credit availability with the FHLB of $1,022,339 with standby letters of credit totaling $132,700 and a remaining borrowing capacity of approximately $788,900. 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 March 31, 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 decline when rates rose and increase when rates fell. Also, these examples assume that interest rate changes for assets and liabilities are of the same magnitude, whereas actual interest rate changes generally differ in magnitude for assets and liabilities.
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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.
The following table provides information about the Company’s financial instruments that were sensitive to changes in interest rates as of and March 31, 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 portfolio value (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 March 31, 2026 and December 31, 2025.
Net Portfolio Value
Change in Rates
DollarAmount
DollarChange
PercentChange
+400bp
888,422
71,917
8.81
863,959
64,730
8.10
+300bp
875,167
58,662
7.18
852,282
53,053
6.64
+200bp
859,461
42,956
5.26
838,444
39,215
4.91
+100bp
841,319
24,814
3.04
822,260
23,031
Base
816,505
0.00
799,229
-100bp
798,386
(18,119
(2.22
783,907
(15,322
(1.92
-200bp
775,920
(40,585
(4.97
762,828
(36,401
(4.55
-300bp
789,954
(26,551
(3.25
794,297
(4,932
(0.62
-400bp
886,175
69,670
8.53
892,836
93,607
11.71
The change in net portfolio value from December 31, 2025 to March 31, 2026, can be attributed to a couple of factors. The volume of assets and funding sources has changed, but the asset mix remains centered on loan and deposits. The volume of loans decreased while deposits increased, coupled with the volume of short-term FHLB advances has decreased in the first quarter of 2026. The volume shifts from the end of the year contributed to an increase in the base net portfolio value. Beyond the change in the base level of net portfolio value, projected movements in rates, up or down, would also lead to changes in market values.
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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 March 31, 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
The disclosure below supplements and updates 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.
CHANGES IN ECONOMIC AND POLITICAL CONDITIONS COULD ADVERSELY AFFECT OUR EARNINGS THROUGH DECLINES IN DEPOSITS, LOAN DEMAND, THE ABILITY OF OUR CUSTOMERS TO REPAY LOANS AND THE VALUE OF THE COLLATERAL SECURING OUR LOANS.
Our success depends to a significant extent upon local and national economic and political conditions, as well as governmental fiscal and monetary policies. Conditions such as inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy, an increasing federal government budget deficit, the failure of the federal government to raise the federal debt ceiling and/or possible future U.S. government shutdowns over budget disagreements, slowing gross domestic product, threatened or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements and other changes in the relationship of the U.S. and U.S. global partners, trade wars, and other factors beyond our control may adversely affect Civista’s deposit levels and composition, the quality of investment securities available for purchase, demand for loans, the ability of Civista’s borrowers to repay their loans, and the value of the collateral securing loans made by Civista. As evidenced by the ongoing conflict between the U.S. and Iran, disruptions and changes in oil production and the supply of oil and related commodities and products in the Middle East, as well as other disruptions in U.S. and global markets, also effect the economy and stock prices in the U.S. Because we have a significant amount of real estate loans, decreases in real estate values could adversely affect the value of property used as collateral and our ability to sell the collateral upon foreclosure. Adverse changes in the economy may also have a negative effect on the ability of our borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings and cash flows.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
The following table details repurchases by the Company and purchases by "affiliated purchasers" as defined in Rule 10b-18(a)(3) under the Exchange Act of the Company's common shares during the third quarter ended March 31, 2026.
Period
Total Number ofShares Purchased
Average Price Paidper Share
Total Number of SharesPurchased as Part ofPublicly AnnouncedPlans or Programs
Maximum Number(or Approximate DollarValue) of Shares (Units)that May Yet BePurchased Under thePlans or Programs
January 1, 2026 - January 31, 2026
12,003,223
February 1, 2026 - February 28, 2026
March 1, 2026 - March 31, 2026
Pursuant to the Company's previous common share repurchase program that was announced on April 15, 2025, and expired on April 16, 2026, an aggregate of $12,003,223 of common shares remained available for purchase at March 31, 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.
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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 March 31, 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
2.1
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
May 8, 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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