Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data)

ITEM 2. Management discussion and analysis of the financial situation and results

        of Operations


Introduction

The following discussion focuses on the consolidated financial condition of the
Company at June 30, 2022 compared to December 31, 2021, and the consolidated
results of operations for the three-and six-month periods ended June 30, 2022,
compared to the same periods in 2021. This discussion should be read in
conjunction with the Consolidated Financial Statements and footnotes included in
this Form 10-Q.

Forward-Looking Statements

This Quarterly Report on Form 10-Q may contain "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), relating to such matters as the Company's
financial condition, anticipated operating results, cash flows, business line
results, credit quality expectations, prospects for new lines of business,
economic trends (including interest rates) and similar matters. Forward-looking
statements reflect our expectations, estimates or projections concerning future
results or events. These statements are generally identified by the use of
forward-looking words or phrases such as "believe," "belief," "expect,"
"anticipate," "may," "could," "intend," "intent," "estimate," "plan," "foresee,"
"likely," "will," "should" or other similar words or phrases. Forward-looking
statements are not guarantees of performance and are inherently subject to known
and unknown risks, uncertainties and assumptions that are difficult to predict
and could cause our actual results, performance or achievements to differ
materially from those expressed in or implied by the forward-looking statements.
Factors that could cause actual results, performance or achievements to differ
from those discussed in the forward-looking statements include, but are not
limited to:


• the effects of the continuation of the novel coronavirus (COVID-19) pandemic on

      regional and local economies, and on our customers, counterparties,
      employees and third-party service providers, as well as the effects of
      various responses of governmental and nongovernmental authorities to the
      COVID-19 pandemic, including public health actions directed toward the
      containment of the COVID-19 pandemic (such as quarantines, shut downs and

other restrictions on travel and commercial, social or other activities),

      the development, availability and effectiveness of vaccines, and the
      implementation of fiscal stimulus packages;


   •  current and future economic and financial market conditions, either

nationwide or in the states in which we operate, including the effects

inflation, WE tax debt, budget and tax issues, geopolitics

issues (including conflict in Ukraine), and any slowing of the

economic growth, in addition to the continued impact of COVID-19

pandemic on the operations and financial situation of our customers, each of whom

could adversely affect our levels and composition of deposits, the

quality of investment securities available for purchase, demand for loans,

      the ability of our borrowers to repay their loans, and the value of the
      collateral securing loans;

• changes in unemployment levels in our market area, in particular due to

the continuation of the COVID-19 pandemic;

• changes in the performance of customers, suppliers and other counterparties and

creditworthiness may differ from that expected due to

the impact and different responses to the COVID-19 pandemic;

• variations in interest rates resulting from national and local economic conditions

conditions and policies of regulatory authorities, including monetary

policies of the Board of Governors of the Federal Reserve Systemthat can

negatively affect interest rates, interest margins, loan demand and interest

rate sensitivity;

• the abandonment of LIBOR as the reference rate for financial contracts,

      which could negatively impact our income and expenses and the value of
      various financial contracts;

• operational risks, reputational risks, legal and compliance risks, and

other risks related to possible fraud or theft by employees or third parties,

unauthorized transactions by employees or operational errors or failures,

      disruptions or breaches in security of our systems, including those
      resulting from computer viruses or cyber-attacks;

• our ability to secure sensitive or confidential customer information against

unauthorized disclosure or access through computer systems and

telecommunications networks, including those of our third-party providers and

      other service providers, which may prove inadequate;


   •  a failure in or breach of our operational or security systems or
      infrastructure, or those of our third-party vendors and other service
      providers, resulting in failures or disruptions in customer account

management system, general ledger, depositary, loan or other systems, including as

result of cyber-attacks;

• competitive pressures and factors among financial services organizations

could increase significantly, including product and price pressures,

changes in relationships with third parties and our ability to recruit and retain

qualified management and banking staff;

• unexpected loss of service from our key management personnel, or the

the inability to recruit and retain qualified personnel in the future;

• the lack of assurances as to future income from our tax refund

      program;


                                    Page 37
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                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)


   •  risks inherent in pursuing strategic growth initiatives, including

integration and other risks involved in the past, current and possible future

acquisitions;

• uncertainty regarding the nature, timing, cost and effect of legislative measures or

regulatory changes in the banking sector or otherwise affecting the

Society, including a major reform of the regulatory oversight structure of the

the financial services industry and changing laws and regulations regarding

taxes, FDIC insurance premium levels, pensions, bankruptcy, consumption

protection, rent regulation and housing, financial accounting and reporting,

environmental protection, insurance, banking products and services, banking and

capital and liquidity standards for bank holding companies, fiduciary standards,

securities and other aspects of the financial services industry, as well as

the reforms planned in the Coronavirus Aid, Relief and Economic

Security Act (CARES) and follow-on legislation in the Consolidated

      Appropriations Act, 2021 and the American Rescue Plan Act of 2021;


  • changes in federal, state and/or local tax laws;

• the effect of changes in accounting policies and practices, if any

adopted by the Financial Accounting Standards Board (FASB), the SECONDthe

Public Company Accounting Oversight Council and other regulatory bodies, may

adversely affect our financial condition or results of operations;

• exposure to litigation and regulatory compliance, including costs and

the effects of any adverse developments in legal proceedings or other claims and

the costs and effects of adverse resolution of regulations and other

government reviews or investigations;

• continued availability of Civista earnings and dividends and surpluses

      capital sufficient for us to service our debt and pay dividends to our
      shareholders in compliance with applicable legal and regulatory
      requirements;

• our ability to anticipate and successfully follow technological developments

changes affecting the financial services industry: and

• other risks identified from time to time in the Company’s other public information

documents in the file of SECONDincluding the risks identified under the heading “Point

1A. Risk Factors” in Part I of the Company’s Annual Report on Form 10-K for

the financial year closed December 31, 2021.


The Company does not undertake, and specifically disclaims, any obligation to
publicly release the result of any revisions that may be made to any
forward-looking statements to reflect occurrence of anticipated or unanticipated
events or circumstances after the date of such statements, except as required by
law.

Financial Condition

Total assets of the Company at June 30, 2022 were $3,039,099 compared to
$3,012,905 at December 31, 2021, an increase of $26,194, or 0.9%. The increase
in total assets was due to increases in loans of $65,548, accompanied by
increases in other securities, loans held for sale, and other assets of $1,500,
$2,195 and $14,861, respectively, partially offset by decreases in cash and cash
equivalents and securities available-for-sale of $30,958 and $29,057,
respectively. Total liabilities at June 30, 2022 were $2,737,037 compared to
$2,657,693 at December 31, 2021, an increase of $79,344, or 3.0%. The increase
in total liabilities was primarily attributable to an increase in
noninterest-bearing demand accounts of $53,630, accompanied by an increase in
accrued expenses and other liabilities of $48,752, partially offset by decreases
in interest-bearing deposits and securities sold under agreements to repurchase
of $14,829 and $8,016, respectively.

                                    Page 38
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                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)

Loans outstanding as of June 30, 2022 and December 31, 2021 were as follows:

                                             June 30, 2022       December 31, 2021      $ Change       % Change
Commercial & Agriculture                    $       226,540     $           246,502     $ (19,962 )         -8.1 %
Commercial Real Estate-Owner Occupied               304,472                 295,452         9,020            3.1 %
Commercial Real Estate-Non-Owner Occupied           876,695                 829,310        47,385            5.7 %
Residential Real Estate                             452,628                 430,060        22,568            5.2 %
Real Estate Construction                            170,633                 157,127        13,506            8.6 %
Farm Real Estate                                     23,295                  28,419        (5,124 )        -18.0 %
Consumer and Other                                    9,958                  11,009        (1,051 )         -9.5 %
Total loans                                       2,064,221               1,997,879        66,342            3.3 %
Allowance for loan losses                           (27,435 )               (26,641 )        (794 )          3.0 %
Net loans                                   $     2,036,786     $         1,971,238     $  65,548            3.3 %


Included in the above commercial and agricultural loans were $3,710 PPP loans to
June 30, 2022 and $43,209 PPP loans to December 31, 2021.

Loans held for sale increased $2,195, or 111.3%, since December 31, 2021. The
increase was due to an increase in the average loan balance held for sale. At
June 30, 2022, 18 loans totaling $4,167 were held for sale as compared to 14
loans totaling $1,972 at December 31, 2021.


Net loans have increased $65,548, or 3.3% since December 31, 2021. The
Commercial Real Estate - Owner Occupied, Commercial Real Estate - Non-Owner
Occupied, Residential Real Estate and Real Estate Construction loan portfolios
increased $9,020, $47,385, $22,568 and $13,506, respectively, since December 31,
2021, while the Commercial & Agriculture, Farm Real Estate and Consumer and
Other loan portfolios decreased $19,962, $5,124 and $1,051, respectively, since
December 31, 2021. At June 30, 2022, the net loan to deposit ratio was 82.9%
compared to 81.6% at December 31, 2021. The increase in the net loan to deposit
ratio is primarily the result of an increase in loans, partially offset by an
increase in deposits.


During the first six months of 2022, provisions made to the allowance for loan
losses totaled $700, compared to a provision of $830 during the same period in
2021. The decrease in provision was due to the improvement of our credit quality
metrics, offset by strong loan growth during the second quarter of 2022. To
address the challenges of the international, national, regional and local
economic conditions adversely impacted by the prior economic shutdown and
restrictions in response to the ongoing COVID-19 pandemic, management maintained
a strong provision in the first quarter of 2021. When conditions stabilized and
criticized loans peaked, management reduced the provision. We continue to be
optimistic that asset quality will continue to improve despite ongoing
headwinds. We remain cautious given the level of classified loans in the
portfolio, particularly loans to borrowers in the hotel industry. However, we
are encouraged by strong loan growth. Our Commercial and Commercial Real Estate
portfolios have been and are expected to continue to be impacted the most.



Net recoveries for the first six months of 2022 totaled $94, compared to net
recoveries of $339 in the first six months of 2021. For the first six months of
2022, the Company charged off a total of nine loans. Four Residential Real
Estate loan totaling $58 and five Consumer and Other loans totaling $32 were
charged off in the first six months of the year. In addition, during the first
six months of 2022, the Company had recoveries on previously charged-off
Commercial and Agriculture loans of $4, Commercial Real Estate - Owner Occupied
loans of $27, Commercial Real Estate - Non-Owner Occupied loans of $52,
Residential Real Estate loans of $76, Farm Real Estate loans of $4 and Consumer
and Other loans of $21. For each loan category, as well as in total, the
percentage of net charge-offs to loans was less than one percent. Nonperforming
loans decreased by $286 since December 31, 2021, which was due to a $286
decrease in loans on nonaccrual status. Each of these factors was considered by
management as part of the examination of both the level and mix of the allowance
by loan type as well as the overall level of the allowance.


Management specifically evaluates loans that are impaired for estimates of loss.
To evaluate the adequacy of the allowance for loan losses to cover probable
losses in the portfolio, management considers specific reserve allocations for
identified portfolio loans, reserves for delinquencies and historical reserve
allocations. Loss migration rates are calculated over a three-year period for
all portfolio segments. Management also considers certain economic factors for
trends that management uses to account for the qualitative and environmental
changes in risk, which affects the level of the reserve.

                                    Page 39
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                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)


Management analyzes each impaired Commercial and Commercial Real Estate loan
relationship with a balance of $350 or larger, on an individual basis and
designates a loan as impaired when it is in nonaccrual status or when an
analysis of the borrower's operating results and financial condition indicates
that underlying cash flows are not adequate to meet its debt service
requirements. Loans held for sale are excluded from consideration as impaired.
Loans are generally moved to nonaccrual status when 90 days or more past due.
Impaired loans, or portions thereof, are charged-off when deemed uncollectible.
The allowance for loan losses as a percent of total loans was 1.33% at June 30,
2022 and 1.33% at December 31, 2021.


The available-for-sale security portfolio decreased by $29,057, from $559,874 at
December 31, 2021 to $530,817 at June 30, 2022. Management continually evaluates
our securities portfolio in response to established asset/liability management
objectives, changing market conditions that could affect profitability and the
level of interest rate risk to which the Company is exposed. These evaluations
may cause the Company to change the level of funds it deploys into investment
securities and change the composition of its investment securities portfolio. As
of June 30, 2022, the Company was in compliance with all pledging requirements.



Other securities increased $1,500 from December 31, 2021 to June 30, 2022. The
increase is the result of additional investments in the Federal Reserve Bank of
Cleveland.


Premises and equipment, net, increased $1,706 of December 31, 2021 at June 30, 2022. The increase is the result of new purchases of $2,672offset by the amortization of $966.

Bank-owned life insurance (BOLI) increased $477 of December 31, 2021 at
June 30, 2022. The increase results from the increase in the cash value of the underlying insurance policies.

Other assets increased $14,861 of December 31, 2021 at June 30, 2022. The increase results from an increase in deferred taxes – equity securities
$14,743.

Total deposits at June 30, 2022 and December 31, 2021 were the following:

                                           June 30, 2022       December 31, 2021      $ Change       % Change
Noninterest-bearing demand                $       842,536     $           788,906     $  53,630            6.8 %
Interest-bearing demand                           529,812                 537,510        (7,698 )         -1.4 %
Savings and money market                          861,368                 843,837        17,531            2.1 %
Time deposits                                     221,786                 246,448       (24,662 )        -10.0 %
Total Deposits                            $     2,455,502     $         2,416,701     $  38,801            1.6 %



Total deposits at June 30, 2022 increased $38,801 from year-end 2021.
Noninterest-bearing deposits increased $53,630 from year-end 2021, while
interest-bearing deposits, including savings and time deposits, decreased
$14,829 from December 31, 2021. The increase in noninterest-bearing deposits was
partially due to increases in cash balances related to the Company's
participation in a tax refund processing program, which added
noninterest-bearing deposits of $39,466. This increase is temporary as
transactions are processed and is expected to return to levels more consistent
with December 31, 2021 over the next two quarters. In addition, public fund
demand deposit accounts increased $14,262. The decrease in interest-bearing
deposits was primarily due to decreases in business interest-bearing demand and
JUMBO NOW accounts of $29,664 and $4,129, respectively, accompanied by increases
in personal interest-bearing demand and public fund interest-bearing demand
accounts of $5,751 and $19,951, respectively. Statement savings, money market
savings and public fund money market savings accounts increased by $27,861,
$16,040 and $9,433, respectively, accompanied by decreases in business money
market savings and brokered money market savings accounts of $19,209 and
$19,002, respectively. Time certificates over $250, time certificates and Jumbo
time certificates decreased $10,194, $7,905 and $7,256, respectively. The
year-to-date average balance of total deposits decreased $1,794, compared to the
average balance for the same period in 2021, mainly due to a decrease in the
average balance of noninterest-bearing demand accounts of $72,022, accompanied
by increases in the average balances of interest-bearing demand and savings and
money markets accounts of $63,670 and $48,711, respectively. In addition, the
average balance of time deposits decreased $42,153 as compared to the same
period in 2021.

                                    Page 40
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                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)

Securities sold under repurchase agreements, which tend to fluctuate with client liquidity needs and the short-term nature of the instrument, decreased $8,016 of December 31, 2021 at June 30, 2022.

Securities purchased payable increased $11,501 of December 31, 2021 at June 30, 2022. The increase is primarily the result of an increase in accounts payable related to securities purchased but not yet funded by $11,435.

Ongoing tax refunds have increased $38,899 of December 31, 2021 at June 30, 2022. The increase is primarily the result of an increase in the clearing account related to our tax refund processing program from $38,899.


Shareholders' equity at June 30, 2022 was $302,062, or 9.9% of total assets,
compared to $355,212, or 11.8% of total assets, at December 31, 2021. The
decrease was the result of a decrease in the fair value of securities
available-for-sale, net of tax, of $55,172, dividends on common shares of $4,133
and the purchase of treasury shares of $10,621, offset by net income of $16,167
and a decrease in the Company's pension liability, net of tax, of $110, offset
by.


Total outstanding common shares at June 30, 2022 were 14,537,433, which
decreased from 14,954,200 common shares outstanding at December 31, 2021. Common
shares outstanding decreased as a result of 453,627 common shares being
repurchased by the Company at an average repurchase price of $23.41. The Company
repurchased 55,352 common shares pursuant to a stock repurchase program
announced on May 4, 2022 and 392,847 common shares pursuant to a stock
repurchase program announced on August 12, 2021. An additional 5,428 common
shares were surrendered by officers to the Company to pay taxes upon vesting of
restricted shares and 2,138 restricted common shares were forfeited. The
repurchase program announced on May 4, 2022 authorized the Company to repurchase
a maximum aggregate value of $13,500 of the Company's common shares until May 9,
2023. The repurchase plan publicly announced on August 12, 2021 authorized the
Company to repurchase a maximum aggregate value of $13,500 of the Company's
common shares until August 10, 2022. The repurchase of common shares was offset
by the grant of 31,774 restricted common shares to certain officers under the
Company's 2014 Incentive Plan. In addition, 7,224 common shares were issued to
Civista directors as a retainer payment for service on the Civista Board of
Directors.


Results of Operations

Three months completed June 30, 2022 and 2021

The Company had net income of $7,701 for the three months ended June 30, 2022, a
decrease of $1,463 from net income of $9,164 for the same three months of 2021.
Basic earnings per common share were $0.53 for the quarter ended June 30, 2022,
compared to $0.59 for the same period in 2021. Diluted earnings per common share
were $0.53 for the quarter ended June 30, 2022, compared to $0.59 for the same
period in 2021. The primary reasons for the changes in net income are explained
below.

Net interest income for the three months ended June 30, 2022 was $24,268, an
increase of $427 from $23,841 for the same three months of 2021. This increase
is the result of an increase of $566 in total interest income, offset by an
increase of $139 in interest expense. Interest-earning assets averaged
$2,866,362 during the three months ended June 30, 2022, an increase of $90,231
from $2,776,131 for the same period of 2021. The Company's average
interest-bearing liabilities increased from $1,738,808 during the three months
ended June 30, 2021 to $1,830,089 during the three months ended June 30,
2022. The Company's fully tax equivalent net interest margin for the three
months ended June 30, 2022 and 2021 was 3.43% and 3.53%, respectively.

Total interest income was $26,064 for the three months ended June 30, 2022, an
increase of $566 from $25,498 of total interest income for the same period in
2021. The increase in interest income is attributable to increases in interest
income on taxable and tax-exempt securities of $545 and %357, respectively,
offset by a decrease of $802 in interest and fees on loans. Interest on loans
decreased $802 to $21,851 for the three months ended June 30, 2022, as compared
to $22,653 for the same period in 2021. The average balance of loans decreased
by $21,406, or 1.0% to $2,033,378 for the three months ended June 30, 2022 as
compared to $2,054,784 for the same period in 2021. The loan yield decreased to
4.31% for the three months ended June 30, 2022, from 4.42% for the same period
in 2021. During the quarter, the average balance of PPP loans was $6,543. These
loans had an average yield of 27.5%, which includes the amortization of PPP
fees.

                                    Page 41
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                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)


Interest on taxable securities increased $545 to $1,775 for the three months
ended June 30, 2022, compared to $1,230 for the same period in 2021. The average
balance of taxable securities increased $92,702 to $297,256 for the three months
ended June 30, 2022, as compared to $204,554 for the same period in 2021. The
yield on taxable securities decreased 24 basis points to 2.23% for 2022,
compared to 2.47% for 2021. Interest on tax-exempt securities increased $357 to
$1,882 for the three months ended June 30, 2022, compared to $1,525 for the same
period in 2021. The average balance of tax-exempt securities increased $50,156
to $259,096 for the three months ended June 30, 2022, as compared to $208,940
for the same period in 2021. The yield on tax-exempt securities decreased 52
basis points to 3.52% for 2022, compared to 4.04% for 2021 due to the impact of
lower interest rates in 2022 as compared to the same period of 2021.


Interest expense increased $139, or 8.4%, to $1,796 for the three months ended
June 30, 2022, compared with $1,657 for the same period in 2021. The change in
interest expense can be attributed to an increase in the average balance of
interest-bearing liabilities, offset by a decrease in rates on interest-bearing
deposit accounts and Federal Home Loan Bank (FHLB) borrowings. For the three
months ended June 30, 2022, the average balance of interest-bearing liabilities
increased $91,281 to $1,830,089, as compared to $1,738,808 for the same period
in 2021. Interest incurred on deposits decreased by $426 to $710 for the three
months ended June 30, 2022, compared to $1,136 for the same period in
2021. Although the average balance of interest-bearing deposits increased by
$49,462 for the three months ended June 30, 2022, as compared to the same period
in 2021, deposit expense decreased due to a decrease in the rate paid on demand
and savings accounts from 0.10% in 2021 to 0.07% in 2022. The rate paid on time
deposits decreased from 1.19% to 0.81% in 2022. Interest expense incurred on
FHLB advances decreased 41.5% from 2021. The average balance on FHLB balances
decreased $26,923 for the three months ended June 30, 2022, as compared to the
same period in 2021, as a result of the prepayment of a long-term
advance. Interest expense incurred on subordinated debentures increased $705, to
$890 for the three months ended June 30, 2022, compared to $185 for the same
period in 2021. For the three months ended June 30, 2022, the average balance of
subordinated debentures increased $73,365 to $103,714, as compared to $30,349
for the same period in 2021. During the fourth quarter of 2021, the Company
entered into a Subordinated Note Purchase Agreement pursuant to which the
Company sold and issued $75,000 aggregate principal amount of its 3.25%
Fixed-to-Floating Rate Subordinated Notes due 2031.

                                    Page 42
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                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)


The following table presents the condensed average balance sheets for the three
months ended June 30, 2022 and 2021. The daily average loan amounts outstanding
are net of unearned income and include loans held for sale and nonaccrual loans.
The average balance of securities is computed using the carrying value of
securities. Rates are annualized and taxable equivalent yields are computed
using a 21% tax rate for tax-exempt interest income. The average yield has been
computed using the historical amortized cost average balance for
available-for-sale securities.

                                                              Three Months Ended June 30,
                                                    2022                                       2021
                                     Average                      Yield/        Average                      Yield/
Assets:                              balance       Interest       rate*         balance       Interest       rate*
Interest-earning assets:
Loans, including fees**            $ 2,033,378     $  21,851         4.31 %   $ 2,054,784     $  22,653         4.42 %
Taxable securities                     297,256         1,775         2.23 %       204,554         1,230         2.47 %
Tax-exempt securities                  259,096         1,882         3.52 %       208,940         1,525         4.04 %
Interest-bearing deposits in
other banks                            276,632           556         0.81 %       307,853            90         0.12 %

Total interest-earning assets $2,866,362 $26,064 3.67%

  $ 2,776,131     $  25,498         3.77 %
Noninterest-earning assets:
Cash and due from financial
institutions                            44,538                                     45,626
Premises and equipment, net             22,264                                     22,375
Accrued interest receivable              7,993                                      8,463
Intangible assets                       84,167                                     84,638
Other assets                            46,608                                     38,095
Bank owned life insurance               46,966                                     46,305
Less allowance for loan losses         (27,174 )                                  (26,580 )
Total Assets                       $ 3,091,724                                $ 2,995,053
Liabilities and Shareholders
Equity:
Interest-bearing liabilities:
Demand and savings                 $ 1,401,351     $     247         0.07 %   $ 1,310,998     $     334         0.10 %
Time                                   228,733           463         0.81 %       269,624           802         1.19 %
Long-term FHLB advances                 75,000           193         1.03 %       101,923           330         1.30 %
Subordinated debentures                103,714           890         3.44 %        30,349           185         2.52 %
Repurchase Agreements                   21,291             3         0.06 %        25,914             6         0.09 %
Total interest-bearing
liabilities                        $ 1,830,089     $   1,796         0.39 %   $ 1,738,808     $   1,657         0.38 %
Noninterest-bearing deposits           894,887                                    867,561
Other liabilities                       53,476                                     39,428
Shareholders' Equity                   313,272                                    349,256
Total Liabilities and
Shareholders' Equity               $ 3,091,724                                $ 2,995,053
Net interest income and interest
rate spread                                        $  24,268         3.28 %                   $  23,841         3.39 %
Net interest margin                                                  3.43 %                                     3.53 %



*-Average yields are presented on a tax equivalent basis. The tax equivalent
effect associated with loans and investments, included in the yields above, was
$501 and $406 for the periods ended June 30, 2022 and 2021, respectively.

**-Average balance includes outstanding loans.

                                    Page 43
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                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)

Net interest income can also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table presents an analysis of the changes in interest income and expense between the three months ended June 30, 2022 and 2021.

                                                Increase (decrease) due to:
                                           Volume (1)        Rate (1)       Net
                                                   (Dollars in thousands)
Interest income:
Loans, including fees                      $      (234 )     $    (568 )   $ (802 )
Taxable securities                                 676            (131 )      545
Tax-exempt securities                              571            (214 )      357
Interest-bearing deposits in other banks           (10 )           476        466
Total interest income                      $     1,003       $    (437 )   $  566
Interest expense:
Demand and savings                         $        22       $    (109 )   $  (87 )
Time                                              (109 )          (230 )     (339 )
Long-term FHLB advances                            (77 )           (60 )     (137 )
Subordinated debentures                            603             102        705
Repurchase agreements                               (1 )            (2 )       (3 )
Total interest expense                     $       438       $    (299 )   $  139
Net interest income                        $       565       $    (138 )   $  427


(1) The change in interest income and interest expense due to changes in the two

    volume and rate, which cannot be segregated, has been allocated
    proportionately to the change due to volume and the change due to rate.




The Company provides for loan losses through regular provisions to the allowance
for loan losses. Provisions for loan losses totaled $400 and $0 during the
quarters ended June 30, 2022 and 2021, respectively. The increase in the
provision in the second quarter of 2022 reflects the Company's strong loan
growth during the quarter. Our credit quality metrics remain stable despite the
ongoing headwinds of the challenging international, national, regional and local
economic conditions. While COVID-19 vaccinations and improved treatments have
created a level of optimism, there remains caution due to the lingering concerns
over potential infection spikes. We remain cautious given the level of
classified loans in the portfolio, particularly loans to borrowers in the hotel
industry as well as challenges businesses face in today's environment. Economic
impacts related to the COVID-19 pandemic have improved somewhat, but continued
concerns linger due to the disruption of supply chains, additional employee
costs, hiring challenges throughout our footprint, rising inflationary pressures
and the prospects of recession. Our Commercial and Commercial Real Estate
portfolios have been, and are expected to continue to be, impacted the most.

Noninterest income for the three-month periods ended June 30, 2022 and 2021 are
as follows:

                                           Three months ended June 30,
                                  2022        2021       $ Change      % Change
Service charges                  $ 1,540     $ 1,317     $     223          16.9 %
Net gain on sale of securities         6       1,784        (1,778 )       -99.7 %
Net gain on equity securities         39          53           (14 )       -26.4 %
Net gain on sale of loans            573       2,218        (1,645 )       -74.2 %
ATM/Interchange fees               1,355       1,373           (18 )        -1.3 %
Wealth management fees             1,228       1,188            40           3.4 %
Bank owned life insurance            233         248           (15 )        -6.0 %
Tax refund processing fees           475         475             -           0.0 %
Swap fees                              -          17           (17 )      -100.0 %
Other                                186         352          (166 )       -47.2 %
Total noninterest income         $ 5,635     $ 9,025     $  (3,390 )       -37.6 %


                                    Page 44
--------------------------------------------------------------------------------
                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)


Noninterest income for the three months ended June 30, 2022 was $5,635, a
decrease of $3,390, or 37.6%, from $9,025 for the same period of 2021. The
decrease was primarily due to decreases in net gain on sale of securities, net
gain on equity securities, net gain on sale of loans, swap fees and other
income, offset by increases in service charges. Net gain on sale of securities
decreased due to the sale of Visa Class B shares in 2021. Net gain on equity
securities decreased as a result of market value decreases. Net gain on sale of
loans decreased primarily as a result of a decrease in volume of loans
sold. During the three-months ended June 30, 2022, 186 loans were sold, totaling
$35,494. During the three-months ended June 30, 2021, 372 loans were sold,
totaling $69,200. Swap fees decreased due to the volume of swaps performed
during the quarter ended June 30, 2022 as compared to the same period of
2021. Other income decreased as result of an increase in insurance loss reserves
from the Company's reinsurance subsidiary. Service charges increased due to
higher overdraft fees of $222.

Additionally, the Company processes state and federal income tax refunds for
customers of third-party income tax preparation vendors for which we receive a
fee for processing the refund payments. Tax refund processing fees were $475 for
each of the three months ended June 30, 2022 and 2021. This fee income is
seasonal in nature, the majority of which is earned in the first quarter of the
year.


Noninterest expense for the three-month periods ended June 30, 2022 and 2021 are
as follows:

                                               Three months ended June 30,
                                      2022         2021       $ Change       % Change
Compensation expense                $ 11,947     $ 11,406     $     541            4.7 %
Net occupancy expense                  1,026        1,007            19            1.9 %
Equipment expense                        562          482            80           16.6 %
Contracted data processing               433          490           (57 )        -11.6 %
FDIC assessment                          195          322          (127 )        -39.4 %
State franchise tax                      628          471           157           33.3 %
Professional services                  1,209          741           468           63.2 %
Amortization of intangible assets        217          223            (6 )         -2.7 %
ATM/Interchange expense                  542          656          (114 )        -17.4 %
Marketing                                380          343            37           10.8 %
Software maintenance expense             790          545           245           45.0 %
Other                                  2,450        5,578        (3,128 )        -56.1 %
Total noninterest expense           $ 20,379     $ 22,264     $  (1,885 )         -8.5 %




Noninterest expense for the three months ended June 30, 2022 was $20,379, a
decrease of $1,885, or 8.5%, from $22,264 reported for the same period of 2021.
The primary reasons for the decrease were decreases in contracted data
processing expense, FDIC assessment, ATM/Interchange expense and other operating
expense, offset by increases in compensation expense, equipment expense, state
franchise tax, professional services, marketing and software maintenance
expense. The increase in compensation expense was due to increased salary,
payroll taxes and commission and incentive based costs, offset by a decrease in
employer savings contributions. Equipment expense increased due to an increase
in computer equipment purchases of $48. Contracted data processing fees
decreased due to a decrease in monthly processing fees of $62. The
quarter-over-quarter decrease in FDIC assessments was attributable to lower
assessment multipliers charged to Civista. The increase in state franchise tax
expense was attributable to an increase in equity capital, which is the basis of
the Ohio Financial Institutions tax. Professional services increased due to
merger related legal and audit fees of $118, accompanied by increases in
recruitment fees and increased call volumes at the Company's call center. The
quarter-over-quarter decrease in ATM/Interchange expense is the result of a
decrease in billings from Mastercard of $94 in 2022. The increase in software
maintenance expense is due to a general increase in legacy software maintenance
contracts and the implementation of our new digital banking. The decrease in
other operating expense is primarily due to a prepayment fee paid in the second
quarter of 2021 related to the early payoff of an FHLB long-term advance.


                                    Page 45
--------------------------------------------------------------------------------
                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)


Income tax expense for the three months ended June 30, 2022 totaled $1,423, down
$15 compared to the same period in 2021. The effective tax rates for the
three-month periods ended June 30, 2022 and 2021 were 15.6% and 13.6%,
respectively. The difference between the statutory federal income tax rate and
the Company's effective tax rate is the permanent tax differences, primarily
consisting of tax-exempt interest income from municipal investments and loans,
low income housing tax credits and bank owned life insurance income.



Semester completed June 30, 2022 and 2021

The Company had net income of $16,167 for the six months ended June 30, 2022, a
decrease of $3,755 from net income of $19,922 for the same six months of 2021.
Basic earnings per common share were $1.10 for the period ended June 30, 2022,
compared to $1.27 for the same period in 2021. Diluted earnings per common share
were $1.10 for the period ended June 30, 2022, compared to $1.27 for the same
period in 2021. The primary reasons for the changes in net income are explained
below.

Net interest income for the six months ended June 30, 2022 was $47,200, a
decrease of $469 from $47,669 in the same six months of 2021. This decrease is
the result of a decrease of $494 in total interest income, partially offset by a
decrease of $25 in interest expense. Interest-earning assets averaged $2,840,619
during the six months ended June 30, 2022, a decrease of $50,136 from $2,890,755
for the same period of 2021. The Company's average interest-bearing liabilities
increased from $1,729,101 for the first six months of 2021 to $1,829,191 for the
same period in 2022. The Company's fully tax equivalent net interest margin for
the six months ended June 30, 2022 and 2021 was 3.40% and 3.41%, respectively.

Total interest income decreased $494 to $50,730 for the period ended June 30,
2022 This change was the result of a decrease in the average balance of loans,
accompanied by a lower yield on the portfolio. The average balance of loans
decreased by $41,807, or 2.0%, to $2,020,254 for the period ended June 30, 2022,
as compared to $2,062,061 for the period ended June 30, 2021. The loan yield
decreased to 4.28% for 2022, from 4.44% in 2021. During the six months ended
June 30, 2022, the average balance of PPP loans was $17,043. These loans had an
average yield of 20.1%, which includes the amortization of PPP fees.

Interest on taxable securities increased $990 to $3,495 for the period ended
June 30, 2022, compared to $2,505 for the same period in 2021. The average
balance of taxable securities increased $116,098 to $305,827 for the period
ended June 30, 2022, as compared to $189,729 for the period ended June 30,
2021. The yield on taxable securities decreased 54 basis points to 2.21% for
2022, compared to 2.75% for 2021. Interest on tax-exempt securities increased
$627 to $3,671 for the period ended June 30, 2022, compared to $3,044 for the
same period in 2021. The average balance of tax-exempt securities increased
$51,716 to $259,976 for the period ended June 30, 2022, as compared to $208,260
for the period ended June 30, 2021. The yield on tax-exempt securities decreased
49 basis points to 3.59% for 2022, compared to 4.08% for 2021.

Interest on interest-bearing deposits in other banks increased $436 to $675 for
the period ended June 30, 2022, compared to $239 for the same period in
2021. The average balance of interest-bearing deposits in other banks decreased
$176,143 to $254,562 for the period ended June 30, 2022, as compared to $430,705
for the period ended June 30, 2021. The yield on interest-bearing deposits in
other banks increased 42 basis points to 0.53% for 2022, compared to 0.11% for
2021.

Interest expense decreased $25, or 0.7%, to $3,530 for the period ended June 30,
2022, compared with $3,555 for the same period in 2021. The change in interest
expense can be attributed to a decrease in rate, partially offset by an increase
in the average balance of interest-bearing liabilities. For the period ended
June 30, 2022, the average balance of interest-bearing liabilities increased
$100,090 to $1,829,191, as compared to $1,729,101 for the period ended June 30,
2021. Interest incurred on deposits decreased by $981 to $1,415 for the period
ended June 30, 2022, compared to $2,396 for the same period in 2021. Although
the average balance of interest-bearing deposits increased by $112,381 for the
period ended June 30, 2022, as compared to the same period in 2021, deposit
expense decreased due to a decrease in the rate paid on demand and savings
accounts from 0.11% in 2021 to 0.07% in 2022. The rate paid on time deposits
decreased from 1.25% in 2021 to 0.80% in 2022. Interest expense incurred on FHLB
advances and subordinated debentures increased 84.2% from 2021. The average
balance on FHLB balances decreased $38,398 as a result of the prepayment of a
long-term advance for the period ended June 30, 2022, as compared to the same
period in 2021, while the rate paid decreased 8 basis points. In addition, the
average balance of subordinated debentures increased $73,364 to $103,713, as
compared to $30,349 for the same period in 2021. During the fourth quarter of
2021, the Company entered into a Subordinated Note Purchase Agreement pursuant
to which the Company sold and issued $75,000 aggregate principal amount of its
3.25% Fixed-to-Floating Rate Subordinated Notes due 2031. The rate paid on
subordinated debentures increased 82 basis points for the period ended June 30,
2022, as compared to the same period in 2021.

                                    Page 46
--------------------------------------------------------------------------------
                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)



The following table presents the condensed average balance sheets for the six
months ended June 30, 2022 and 2021. The daily average loan amounts outstanding
are net of unearned income and include loans held for sale and nonaccrual loans.
The average balance of securities is computed using the carrying value of
securities. Rates are annualized and taxable equivalent yields are computed
using a 21% tax rate for tax-exempt interest income. The average yield has been
computed using the historical amortized cost average balance for
available-for-sale securities.

                                                               Six Months Ended June 30,
                                                    2022                                       2021
                                     Average                      Yield/        Average                      Yield/
Assets:                              balance       Interest       rate*         balance       Interest       rate*
Interest-earning assets:
Loans, including fees**            $ 2,020,254     $  42,889         4.28 %   $ 2,062,061     $  45,436         4.44 %
Taxable securities                     305,827         3,495         2.21 %       189,729         2,505         2.75 %
Tax-exempt securities                  259,976         3,671         3.59 %       208,260         3,044         4.08 %
Interest-bearing deposits in
other banks                            254,562           675         0.53 %       430,705           239         0.11 %

Total interest-earning assets $2,840,619 $50,730 3.65%

  $ 2,890,755     $  51,224         3.66 %
Noninterest-earning assets:
Cash and due from financial
institutions                           133,452                                     39,777
Premises and equipment, net             22,292                                     22,442
Accrued interest receivable              7,577                                      8,515
Intangible assets                       84,270                                     84,749
Other assets                            41,838                                     38,079
Bank owned life insurance               46,847                                     46,185
Less allowance for loan losses         (26,976 )                                  (26,087 )
Total Assets                       $ 3,149,919                                $ 3,104,415
Liabilities and Shareholders
Equity:
Interest-bearing liabilities:
Demand and savings                 $ 1,392,411     $     481         0.07 %   $ 1,280,030     $     677         0.11 %
Time                                   234,640           934         0.80 %       276,793         1,719         1.25 %
Short-term FHLB advance                    178             -            -               -             -            -
Long-term FHLB advance                  75,000           383         1.03 %       113,398           774         1.38 %
Subordinated debentures                103,713         1,726         3.36 %        30,349           371         2.54 %
Repurchase Agreements                   23,249             6         0.05 %        28,531            14         0.10 %
Total interest-bearing
liabilities                        $ 1,829,191     $   3,530         0.39 %   $ 1,729,101     $   3,555         0.41 %
Noninterest-bearing deposits           914,163                                    986,185
Other liabilities                       76,372                                     39,690
Shareholders' Equity                   330,193                                    349,439
Total Liabilities and
Shareholders' Equity               $ 3,149,919                                $ 3,104,415
Net interest income and interest
rate spread                                        $  47,200         3.26 %                   $  47,669         3.25 %
Net interest margin                                                  3.40 %                                     3.41 %



*-Average yields are presented on a tax equivalent basis. The tax equivalent
effect associated with loans and investments, included in the yields above, was
$977 and $814 for the periods ended June 30, 2022 and 2021, respectively.

**-Average balance includes outstanding loans.

                                    Page 47
--------------------------------------------------------------------------------
                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)



Net interest income may also be analyzed by comparing the volume and rate
components of interest income and interest expense. The following table provides
an analysis of the changes in interest income and expense between the six months
ended June 30, 2022 and 2021. The table is presented on a fully tax-equivalent
basis.

                                                 Increase (decrease) due to:
                                            Volume (1)       Rate (1)        Net
                                                    (Dollars in thousands)
Interest income:
Loans, including fees                      $       (909 )    $  (1,638 )   $ (2,547 )
Taxable securities                                1,551           (561 )        990
Tax-exempt securities                             1,022           (395 )        627
Interest-bearing deposits in other banks           (134 )          570          436
Total interest income                      $      1,530      $  (2,024 )   $   (494 )
Interest expense:
Demand and savings                         $         55      $    (251 )   $   (196 )
Time                                               (234 )         (551 )       (785 )
Short-term FHLB advance                               -              -            -
Long-term FHLB advance                             (224 )         (167 )       (391 )
Subordinated debentures                           1,179            176        1,355
Repurchase agreements                                (2 )           (6 )         (8 )
Total interest expense                     $        774      $    (799 )   $    (25 )
Net interest income                        $        756      $  (1,225 )   $   (469 )



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

The Company provides for loan losses through regular provisions to the allowance
for loan losses. Provisions for loan losses totaled $700 and $830 during the
periods ended June 30, 2022 and 2021, respectively. The decrease in provision
was due to the improvement of our credit quality metrics, offset by strong loan
growth during the second quarter of 2022. To address the challenges of the
international, national, regional and local economic conditions adversely
impacted by the prior economic shutdown and restrictions in response to the
ongoing COVID-19 pandemic, management maintained a strong provision in the first
quarter of 2021. When conditions stabilized and criticized loans peaked,
management reduced the provision. We continue to be optimistic that asset
quality will continue to improve despite ongoing headwinds. We remain cautious
given the level of classified loans in the portfolio, particularly loans to
borrowers in the hotel industry. However, we are encouraged by strong loan
growth. Our Commercial and Commercial Real Estate portfolios have been and are
expected to continue to be impacted the most.

Noninterest income for the six-month periods ended June 30, 2022 and 2021 are as
follows:

                                             Six months ended June 30,
                                   2022         2021       $ Change      % Change
Service charges                  $  3,119     $  2,573     $     546          21.2 %
Net gain on sale of securities          6        1,783        (1,777 )       -99.7 %
Net gain on equity securities          89          141           (52 )       -36.9 %
Net gain on sale of loans           1,509        4,963        (3,454 )       -69.6 %
ATM/Interchange fees                2,596        2,620           (24 )        -0.9 %
Wealth management fees              2,505        2,334           171           7.3 %
Bank owned life insurance             477          491           (14 )        -2.9 %
Tax refund processing fees          2,375        2,375             -           0.0 %
Swap fees                               -           94           (94 )      -100.0 %
Other                                 602          841          (239 )       -28.4 %
Total noninterest income         $ 13,278     $ 18,215     $  (4,937 )       -27.1 %




                                    Page 48
--------------------------------------------------------------------------------
                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)



Noninterest income for the six months ended June 31, 2022 was $13,278, a
decrease of $4,937, or 27.1%, from $18,215 for the same period of 2021. The
decrease was primary due to decreases in net gain on the sale of securities of
$1,777, net gain on equity securities of $52, net gain on sale of loans of
$3,454, swap fees of $94 and other income of $239, which was offset by an
increase in service charges of $546. Net gain on sale of securities decreased
due to the sale of Visa Class B shares in 2021. Net gain (loss) on equity
securities decreased as a result of market value increases. Net gain on sale of
loans decreased primarily as a result of a decrease in volume of loans
sold. During the six-months ended June 30, 2022, 394 loans were sold, totaling
$73,659. During the six-months ended June 30, 2021, 752 loans were sold,
totaling $147,841. Swap fees decreased due to the volume of swaps performed
during the six-months ended June 30, 2022, as compared to the same period of
2021. Other income decreased as result of an increase in insurance loss reserves
from the Company's reinsurance subsidiary.  Service charges increased due to an
increase in service charges and overdraft fees of $101 and $445, respectively.


Tax refund processing fees were $2,375 for each of the six months ended June 30,
2022 and 2021. These fees are received for processing state and federal income
tax refund payments for customers of third party income tax preparation
vendors. This fee income is seasonal in nature, the majority of which is earned
in the first quarter of the year.

Noninterest expense for the six-month periods ended June 30, 2022 and 2021 are
as follows:

                                                Six months ended June 30,
                                      2022         2021       $ Change       % Change
Compensation expense                $ 24,170     $ 23,188     $     982            4.2 %
Net occupancy expense                  2,176        2,231           (55 )         -2.5 %
Equipment expense                      1,057          896           161           18.0 %
Contracted data processing             1,053          933           120           12.9 %
FDIC assessment                          398          582          (184 )        -31.6 %
State franchise tax                    1,219        1,096           123           11.2 %
Professional services                  2,258        1,479           779           52.7 %
Amortization of intangible assets        434          445           (11 )         -2.5 %
ATM/Interchange expense                1,055        1,249          (194 )        -15.5 %
Marketing                                697          641            56            8.7 %
Software maintenance expense           1,498        1,053           445           42.3 %
Other operating expenses               4,622        7,658        (3,036 )        -39.6 %
Total noninterest expense           $ 40,637     $ 41,451     $    (814 )         -2.0 %




Noninterest expense for the six months ended June 30, 2022 was $40,637, a
decrease of $814, or 2.0%, from $41,451 reported for the same period of 2021.
The primary reasons for the decrease were decreases in FDIC assessments of $184,
ATM/Interchange expense of $194 and other operating expenses of $3,036, offset
by increases in compensation expenses of $982, equipment expense of $161,
contracted data processing of $120, state franchise tax of $123, professional
services of $779 and software maintenance expense of $445. The increase in
compensation expense was due to increased payroll, 401k expenses, payroll taxes
and commission and incentive based costs. Payroll and payroll related expenses
increased due to annual pay increases. Equipment expense increased due to an
increase in computer equipment purchases of $110 and reimbursement of COVID-19
expenses of $12 in 2021. Contracted data processing fees increased due to merger
related system deconversion fees of $234, offset by a decrease in computer
processing fees. The decrease in FDIC assessments was attributable to lower
assessment multipliers charged to Civista. The increase in state franchise tax
expense was attributable to an increase in equity capital, which is the basis of
the Ohio Financial Institutions tax, offset by the payment of $172 of additional
taxes in 2021 as a result of findings from a State of Ohio audit. Professional
services increased due to merger related legal and audit fees of $428,
accompanied by increases in recruitment fees and increased call volumes at the
Company's call center. The decrease in ATM/Interchange expense is the result of
a decrease in billings from Mastercard of $152 in 2022 and lower processing
fees. The increase in marketing expense is the result of efforts to promote our
new digital banking and other initiatives. The increase in software maintenance
expense is due to a general increase in legacy software maintenance contracts
and the implementation of our new digital banking. The decrease in other
operating expense is primarily due to a prepayment fee paid in the second
quarter of 2021 related to the early payoff of an FHLB long-term advance. The
increase in other operating expense is primarily due to the prepayment expense
of $3,717 related to the early payoff of an FHLB long-term advance, offset by a
credit to the valuation adjustment for mortgage servicing rights.



                                    Page 49
--------------------------------------------------------------------------------
                            Civista Bancshares, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations
                                   Form 10-Q
                   (Amounts in thousands, except share data)


Income tax expense for the six months ended June 30, 2022 totaled $2,974, down
$707 compared to the same period in 2021. The effective tax rates for the
six-month periods ended June 30, 2022 and 2021 were 15.5% and 15.6%,
respectively. The difference between the statutory federal income tax rate and
the Company's effective tax rate is the permanent tax differences, primarily
consisting of tax-exempt interest income from municipal investments and loans,
low income housing tax credits and bank owned life insurance income.



Capital resources

Shareholders' equity totaled $302,062 at June 30, 2022 compared to $355,212 at
December 31, 2021. Shareholders' equity decreased during the first six months of
2022 as a result of a decrease in fair value of securities available-for-sale,
net of tax, of $55,172, dividends on common stock of $4,133 and the Company's
repurchase of common shares during the period, which totaled $10,621, offset by
net income of $16,167 and a $110 net decrease in the Company's pension
liability.

All of the Company's capital ratios exceeded the regulatory minimum guidelines
as of June 30, 2022 and December 31, 2021 as identified in the following table:

                                           Total Risk       Tier I Risk       CET1 Risk
                                              Based            Based            Based         Leverage
                                             Capital          Capital          Capital         Ratio
Company Ratios-June 30, 2022                      18.2 %            13.6 %          12.3 %          9.9 %
Company Ratios-December 31, 2021                  19.2 %            14.3 %          12.9 %         10.2 %
For Capital Adequacy Purposes                      8.0 %             6.0 %           4.5 %          4.0 %
To Be Well Capitalized Under Prompt
Corrective Action Provisions                      10.0 %             8.0 %           6.5 %          5.0 %




Liquidity

The Company maintains a conservative liquidity position. All securities, with
the exception of equity securities, are classified as available-for-sale.
Securities, with maturities of one year or less, totaled $980, or 0.18% of the
total security portfolio at June 30, 2022. The available-for-sale portfolio
helps to provide the Company with the ability to meet its funding needs. The
Condensed Consolidated Statements of Cash Flows (Unaudited) contained in the
Consolidated Financial Statements detail the Company's cash flows from operating
activities resulting from net earnings.


As reported in the Condensed Consolidated Statements of Cash Flows (Unaudited),
our cash flows are classified for financial reporting purposes as operating,
investing or financing cash flows. Net cash provided by operating activities was
$47,628 and $19,996 for the six months ended June 30, 2022 and 2021,
respectively. The primary additions to cash from operating activities are from
proceeds from the sale of loans. The primary use of cash from operating
activities is from loans originated for sale. Net cash used by investing
activities was $94,617 and $58,661 for the six months ended June 30, 2022 and
2021, respectively, principally reflecting our loan and investment security
activities. Cash provided by and used for deposits and purchase of treasury
shares comprised most of our financing activities, which resulted in net cash
provided by of $16,031 and $144,449 for the six months ended June 30, 2022 and
2021, respectively.

Future loan demand of Civista may be funded by increases in deposit accounts,
proceeds from payments on existing loans, the maturity of securities, and the
sale of securities classified as available-for-sale. Additional sources of funds
may also come from borrowing in the Federal Funds market and/or borrowing from
the FHLB. Through its correspondent banks, Civista maintains federal funds
borrowing lines totaling $50,000. As of June 30, 2022, Civista had total credit
availability with the FHLB of $725,428 with standby letters of credit totaling
$21,300 and a remaining borrowing capacity of approximately $629,128 In
addition, CBI maintains a credit line with a third party lender totaling
$10,000. No borrowings were outstanding by CBI under this credit line as of June
30, 2022.




                                    Page 50
--------------------------------------------------------------------------------
                            Civista Bancshares, Inc.

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