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What changed in CIVISTA BANCSHARES, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CIVISTA BANCSHARES, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+234 added−233 removedSource: 10-K (2025-03-10) vs 10-K (2024-03-14)

Top changes in CIVISTA BANCSHARES, INC.'s 2024 10-K

234 paragraphs added · 233 removed · 188 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

58 edited+22 added−18 removed153 unchanged
Biggest changeCommunity Reinvestment Act: The CRA requires depository institutions to assist in meeting the credit needs of their market areas, including low- and moderate-income areas, consistent with safe and sound banking practice. Under this Act, each institution is required to adopt a statement for each of its market areas describing the depository institution’s efforts to assist in its community’s credit needs.
Biggest changeUnder this Act, each institution is required to adopt a statement for each of its market areas describing the depository institution’s efforts to assist in its community’s credit needs. Depository institutions are periodically examined for compliance and assigned one of four ratings: outstanding, satisfactory, needs improvement, or substantial noncompliance.
The Board of Directors has adopted charters for the Audit Committee, the Compensation Committee, the the Nominating Committee and the Board Risk Committee, as well as a Code of Conduct (Ethics) applicable to all directors, officers and employees of the Company.
The Board of Directors has adopted charters for the Audit Committee, the Compensation Committee, the Nominating Committee and the Board Risk Committee, as well as a Code of Conduct (Ethics) applicable to all directors, officers and employees of the Company.
Civista, through its locations in the Ohio counties of Erie, Crawford, Champaign, Cuyahoga, Franklin, Huron, Logan, Madison, Montgomery, Ottawa, Richland, Henry, Wood and Summit, in the Indiana counties of Dearborn and Ripley and in the Kentucky county of Kenton, conducts a general banking business that involves collecting customer deposits, making loans, purchasing securities, and offering Trust services.
Civista, through its locations in the Ohio counties of Erie, Crawford, Champaign, Cuyahoga, Franklin, Huron, Logan, Madison, Montgomery, Ottawa, Richland, Henry, Wood and Summit, in the Indiana counties of Dearborn and Ripley and in the Kentucky county of Kenton, conducts general banking business that involves collecting customer deposits, making loans, purchasing securities, and offering Trust services.
As a human-capital intensive business, the long-term success of our Company depends on our people. Our goal is to ensure that we have the right talent, in the right place, at the right time. We do that through our commitment to attracting, developing and retaining our employees. 6 We strive to attract individuals who are people-focused and share our values.
As a human-capital intensive business, the long-term success of our Company depends on our people. Our goal is to ensure that we have the right talent, in the right place, at the right time. We do that through our commitment to attracting, developing and retaining our employees. We strive to attract individuals who are people-focused and share our values.
Capital levels as measured by these standards are also used to categorize financial institutions for purposes of certain prompt corrective action regulatory provisions. In July 2013, the United States banking regulators issued new capital rules applicable to smaller banking organizations which also implement certain of the provisions of the Dodd-Frank Act (the “Basel III Capital Rules”).
Capital levels as measured by these standards are also used to categorize financial institutions for purposes of certain prompt corrective action regulatory provisions. 11 In July 2013, the United States banking regulators issued new capital rules applicable to smaller banking organizations which also implement certain of the provisions of the Dodd-Frank Act (the “Basel III Capital Rules”).
Civista has established policies and procedures that Civista believes comply with the requirements of the Patriot Act. The Anti-Money Laundering Act of 2020 (the “AMLA”), which amends the Bank Secrecy Act of 1970 (the “BSA”), was enacted in January 2021. The AMLA is intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws.
Civista has established policies and procedures that Civista believes comply with the requirements of the Patriot Act. 10 The Anti-Money Laundering Act of 2020 (the “AMLA”), which amends the Bank Secrecy Act of 1970 (the “BSA”), was enacted in January 2021. The AMLA is intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws.
We provide individuals, families, 4 business and non-profits with personalized investment management, 401-(k) advisory services for employers, financial planning, trust services, and tailored lending. Core Deposit Growth We plan to continue to focus on growing our core, commercial operating and retail, non-maturity deposit base with an emphasis on relationship banking.
We provide individuals, families, business and non-profits with personalized investment management, 401(-k) advisory services for employers, financial planning, trust services, and tailored lending. Core Deposit Growth We plan to continue to focus on growing our core, commercial operating and retail, non-maturity deposit base with an emphasis on relationship banking.
Qualifying institutions that elected to use the CBLR framework (each, a “CBLR Bank”) and 12 that maintain a leverage ratio of greater than 9.0% will be considered to have satisfied the risk-based and leverage capital requirements in the regulatory agencies' generally applicable capital rules and to have met the well-capitalized ratio requirements.
Qualifying institutions that elected to use the CBLR framework (each, a “CBLR Bank”) and that maintain a leverage ratio of greater than 9.0% will be considered to have satisfied the risk-based and leverage capital requirements in the regulatory agencies' generally applicable capital rules and to have met the well-capitalized ratio requirements.
The Company expects this trend of state-level activity in those areas to continue, and is continually monitoring developments in the states in which our customers are located. In the ordinary course of business, the Company relies on electronic communications and information systems to conduct its operations and to store sensitive data.
The Company expects this trend of state-level activity in those areas to continue, and is continually monitoring developments in the states in which our customers are located. 15 In the ordinary course of business, the Company relies on electronic communications and information systems to conduct its operations and to store sensitive data.
The adoption of CECL resulted in an increase to our total allowance for credit losses (“ACL”) on loans held for investment of $4.3 million, an increase in allowance for credit losses on unfunded loan commitments of $3.4 million, a reclassification of PCI discount from loans to the ACL of $1.7 million, and an increase in deferred tax asset of $1.6 million.
The adoption 12 of CECL resulted in an increase to our total allowance for credit losses (“ACL”) on loans held for investment of $4.3 million, an increase in allowance for credit losses on unfunded loan commitments of $3.4 million, a reclassification of PCI discount from loans to the ACL of $1.7 million, and an increase in deferred tax asset of $1.6 million.
On July 26, 2023, the SEC adopted final rules that require public companies to promptly disclose material cybersecurity incidents in a Current Report on Form 8-K and detailed information regarding their cybersecurity risk 15 management, strategy, and governance on an annual basis in an Annual Report on Form 10-K.
On July 26, 2023, the SEC adopted final rules that require public companies to promptly disclose material cybersecurity incidents in a Current Report on Form 8-K and detailed information regarding their cybersecurity risk management, strategy, and governance on an annual basis in an Annual Report on Form 10-K.
In March, 2000, CBI became a financial holding company. No regulatory approval is required for a financial holding company to acquire a company, other than a bank or a savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve Board.
In March 2000, CBI became a financial holding company. No regulatory approval is required for a financial holding company to acquire a company, other than a bank or a savings association, engaged 7 in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve Board.
The Federal Reserve Board may require a financial or bank holding 7 company to contribute additional capital to an undercapitalized subsidiary bank and may disapprove of the payment of dividends to shareholders if the Federal Reserve Board believes the payment of such dividends would be an unsafe or unsound practice.
The Federal Reserve Board may require a financial or bank holding company to contribute additional capital to an undercapitalized subsidiary bank and may disapprove of the payment of dividends to shareholders if the Federal Reserve Board believes the payment of such dividends would be an unsafe or unsound practice.
Civista maintains its main office at 100 East Water Street, Sandusky, Ohio and operates branch banking offices in the following Ohio communities: Sandusky (2), Norwalk (2), Berlin Heights, Huron, Port Clinton, Castalia, New Washington, Shelby (2), Willard, Greenwich, Plymouth, Shiloh, Akron, Dublin, Plain City, Russells Point, Urbana (2), West Liberty, Quincy, Dayton (3), Beachwood, Gahanna, Napoleon (3), Malinta, Liberty Center, Holgate, Bowling Green, and in the following Indiana communities: Lawrenceburg (3), Aurora, West Harrison, Milan, Osgood and Versailles.
Civista maintains its main office at 100 East Water Street, Sandusky, Ohio and operates branch banking offices in the following Ohio communities: Sandusky, Norwalk, Berlin Heights, Huron, Port Clinton, Castalia, New Washington, Shelby, Willard, Greenwich, Plymouth, Shiloh, Akron, Dublin, Plain City, Russells Point, Urbana, West Liberty, Quincy, Dayton, Beachwood, Gahanna, Napoleon, Malinta, Liberty Center, Holgate, Bowling Green, and in the following Indiana communities: Lawrenceburg, Aurora, West Harrison, Milan, Osgood and Versailles.
Certain other regulatory requirements applied only to 10 banks with consolidated assets in excess of $50 billion and so did not apply to CBI or Civista even before the enactment of the Regulatory Relief Act.
Certain other regulatory requirements applied only to banks with consolidated assets in excess of $50 billion and so did not apply to CBI or Civista even before the enactment of the Regulatory Relief Act.
Regulation of Bank Subsidiary: As an Ohio chartered bank, Civista is subject to supervision and regulation by the ODFI. In addition, Civista is a member of the Federal Reserve System and, therefore, is subject to supervision and regulation by the Federal Reserve Board. Civista is subject to periodic examinations by both ODFI and the Federal 11 Reserve Board.
Regulation of Bank Subsidiary: As an Ohio chartered bank, Civista is subject to supervision and regulation by the ODFI. In addition, Civista is a member of the Federal Reserve System and, therefore, is subject to supervision and regulation by the Federal Reserve Board. Civista is subject to periodic examinations by both ODFI and the Federal Reserve Board.
CBI and its subsidiaries are not parties to any collective bargaining agreements. Management considers its relationship with its employees to be good. Supervision and Regulation CBI and its subsidiaries are subject to extensive supervision and regulation by federal and state agencies.
CBI and its subsidiaries are not parties to any collective bargaining agreements. Management considers its relationship with its employees to be good. 6 Supervision and Regulation CBI and its subsidiaries are subject to extensive supervision and regulation by federal and state agencies.
These regulations affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors. Civista is also subject to regulatory guidelines establishing standards for safeguarding customer information.
These regulations affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors. 14 Civista is also subject to regulatory guidelines establishing standards for safeguarding customer information.
Commercial real estate loans include loans secured by first liens on completed commercial properties, including multi-family properties, to purchase or refinance such properties. Residential mortgages include loans secured by first liens on residential real estate to purchase or refinance primary and secondary residences.
Commercial real estate loans include loans secured by first liens on completed commercial 5 properties, including multi-family properties, to purchase or refinance such properties. Residential mortgages include loans secured by first liens on residential real estate to purchase or refinance primary and secondary residences.
Under the final rule, community banks with $10 billion or less in total consolidated assets and total trading assets and 13 liabilities of 5.0% or less of total consolidated assets were excluded from the restrictions of the Volcker Rule.
Under the final rule, community banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5.0% or less of total consolidated assets were excluded from the restrictions of the Volcker Rule.
The Volcker Rule exempted specified U.S. Government, agency and/or municipal obligations, and it excepts trading conducted in certain capacities, including as a broker or other agent, through a deferred compensation or pension plan, as a fiduciary on behalf of customers, to satisfy a debt previously contracted, repurchase and securities lending agreements and risk-mitigating hedging activities.
The Volcker Rule exempted specified U.S. Government, agency and/or municipal obligations, and it exempts trading conducted in certain capacities, including as a broker or other agent, through a deferred compensation or pension plan, as a fiduciary on behalf of customers, to satisfy a debt previously contracted, repurchase and securities lending agreements and risk-mitigating hedging activities.
Our annualized voluntary turnover is relatively low, as is the case for turnover of our top performers, a record which we attribute to our strong values-based culture, commitment to career development, and attractive compensation and benefit programs. Civista employs approximately 532 full-time equivalent employees to whom a variety of benefits are provided. CBI has no employees.
Our annualized voluntary turnover is relatively low, as is the case for turnover of our top performers, a record which we attribute to our strong values-based culture, commitment to career development, and attractive compensation and benefit programs. Civista employs approximately 527 full-time equivalent employees to whom a variety of benefits are provided. CBI has no employees.
The Company has 14 implemented a clawback policy and it is posted under the “Corporate Overview” tab on the “Governance Documents” page of CBI’s Internet website.
The Company has implemented a clawback policy and it is posted under the “Corporate Overview” tab on the “Governance Documents” page of CBI’s Internet website.
Market Area and Competition At December 31, 2023, our primary market area consisted of the counties in which we currently operate branches, and loan production offices, including Erie, Crawford, Champaign, Cuyahoga, Franklin, Huron, Logan, Madison, Montgomery, Ottawa, Richland, Henry, Wood and Summit Counties in Ohio, Dearborn and Ripley Counties in Indiana and Kenton County in Kentucky.
Market Area and Competition At December 31, 2024, our primary market area consisted of the counties in which we currently operate branches, and loan production offices, including Erie, Crawford, Champaign, Cuyahoga, Franklin, Huron, Logan, Madison, Montgomery, Ottawa, Richland, Henry, Wood and Summit Counties in Ohio, Dearborn and Ripley Counties in Indiana and Kenton County in Kentucky.
Federal Reserve System: The Federal Reserve Board requires all depository institutions to maintain reserves at specified levels against their transaction accounts, primarily checking accounts. In response to the COVID-19 pandemic, the Federal Reserve Board reduced reserve requirement rations to 0% effective on March 26, 2020, to support lending to households and businesses.
Federal Reserve System: The Federal Reserve Board requires all depository institutions to maintain reserves at specified levels against their transaction accounts, primarily checking accounts. In response to the COVID-19 pandemic, the Federal Reserve Board reduced reserve requirement ratios to 0% effective on March 26, 2020, to support lending to households and businesses.
Civista’s capital at December 31, 2023, met the standards for the highest capital category, a “well-capitalized” bank. Federal Reserve Board regulations also limit the payment of dividends by Civista to CBI. Civista may not pay a dividend if it would cause Civista not to meet its capital requirements.
Civista’s capital at December 31, 2024, met the standards for the highest capital category, a “well-capitalized” bank. Federal Reserve Board regulations also limit the payment of dividends by Civista to CBI. Civista may not pay a dividend if it would cause Civista not to meet its capital requirements.
CRMI, as a Delaware-chartered captive insurance company, is subject to the laws and regulations of the State of Delaware and undergoes periodic examinations by the Delaware Division of Insurance. Executive and Incentive Compensation The Dodd-Frank Act requires that the federal banking agencies, including the Federal Reserve Board and the FDIC, issue a rule related to incentive-based compensation.
CRMI, as a Delaware-chartered captive insurance company, is subject to the laws and regulations of the State of Delaware and undergoes periodic examinations by the Delaware Department of Insurance. 13 Executive and Incentive Compensation The Dodd-Frank Act requires that the federal banking agencies, including the Federal Reserve Board and the FDIC, issue a rule related to incentive-based compensation.
Despite the decline in the reserve ratio, the FDIC staff projected that the reserve ratio remains on track to reach the statutory minimum of 1.35% ahead of the deadline of September 30, 2028. As a result, the FDIC staff recommended no changes to the Amended Restoration Plan and all scheduled assessment rates were maintained.
The FDIC staff projected that the reserve ratio remains on track to reach the statutory minimum of 1.35% ahead of the deadline of September 30, 2028. As a result, the FDIC staff recommended no changes to the Amended Restoration Plan and all scheduled assessment rates were maintained.
No final rule implementing this provision of the Dodd-Frank Act has, as of the date of the filing of this Annual Report on Form 10-K, been adopted, but a proposed rule was published in 2016 that expanded upon a prior proposed rule published in 2011.
No final rule implementing this provision of the Dodd-Frank Act has, as of the date of the filing of this Annual Report on Form 10-K, been adopted, but a proposed rule was published in 2016, and again in 2024, that expanded upon a prior proposed rule published in 2011.
Following the adoption of additional listing requirements in 2023 to comply with the Dodd-Frank Act and rules adopted by the SEC in October 2022, public companies will be required, once stock exchanges impose additional listing requirements under the Dodd-Frank Act and rules adopted by the SEC in October 2022, to adopt and implement "clawback" policies for incentive compensation payments and to disclose the details of the procedures which allow recovery of incentive compensation that was paid on the basis of erroneous financial information necessitating a restatement due to material noncompliance with financial reporting requirements.
Following the adoption of additional listing requirements in 2023 to comply with the Dodd-Frank Act and rules adopted by the SEC in October 2022, public companies are now required to adopt and implement "clawback" policies for incentive compensation payments and to disclose the details of the procedures which allow recovery of incentive compensation that was paid on the basis of erroneous financial information necessitating a restatement due to material noncompliance with financial reporting requirements.
As a result of their size, resources and ability to achieve economies of scale, certain of our competitors offer a broader range of products and services than we offer, as well as higher lending limits, which may adversely affect the ability of Civista to compete. 5 Products and Services We offer a broad range of deposit and loan products and other banking services.
As a result of their size, resources and ability to achieve economies of scale, certain of our competitors offer a broader range of products and services than we offer, as well as higher lending limits, which may adversely affect the ability of Civista to compete.
Maintain Robust Capital and Liquidity Levels The Company’s capital position provides a source of strength and continues to significantly exceed all regulatory capital guidelines as demonstrated by the December 31, 2023 Tier 1 Leverage ratios of the Company and Civista of 8.8 percent and 10.0 percent, respectively. We plan to continue to maintain robust capital reserves.
Maintain Robust Capital and Liquidity Levels 4 The Company’s capital position provides a source of strength and continues to significantly exceed all regulatory capital guidelines as demonstrated by the December 31, 2024, Tier 1 Leverage ratios of the Company and Civista of 8.6 percent and 9.6 percent, respectively. We plan to continue to maintain robust capital reserves.
At December 31, 2023, Civista had $56,886 of accumulated net profits available to pay dividends to CBI without approval of the ODFI. The Company’s business is not seasonal, nor is it dependent on a single or small group of customers.
At December 31, 2024, Civista had $51,007 of accumulated net profits available to pay dividends to CBI without approval of the ODFI. The Company’s business is not seasonal, nor is it dependent on a single or small group of customers.
The reserve requirement ratio remained at 0% as of December 31, 2023.
The reserve requirement ratio remained at 0% as of December 31, 2024.
Civista also operates loan production offices in Westlake, Ohio and Fort Mitchell, Kentucky and a leasing company office in Pittsburgh, Pennsylvania. Civista and its consolidated subsidiaries as discussed below, accounted for 99.5% of the Company’s consolidated assets at December 31, 2023. FIRST CITIZENS INSURANCE AGENCY, INC.
Civista also operates loan production offices in Westlake, Ohio and Fort Mitchell, Kentucky and a leasing company office in Pittsburgh, Pennsylvania. Civista and its consolidated subsidiaries as discussed below, accounted for 99.4% of the Company’s consolidated assets at December 31, 2024. FIRST CITIZENS INVESTMENTS, INC.
CBI and its subsidiaries are sometimes referred to together as the “Company”. The Company had total consolidated assets of $3,861,418 at December 31, 2023. CIVISTA BANK (“Civista”), owned by the Company since 1987, opened for business in 1884 as The Citizens National Bank.
CBI and its subsidiaries are sometimes referred to together as the “Company”. The Company had total consolidated assets of $4,098,469 at December 31, 2024. CIVISTA BANK (“Civista”), owned by the Company since 1987, opened for business in 1884 as The Citizens National Bank.
Residential real estate mortgage loans comprised 23% of the total loan portfolio in 2023, 22% of the total loan portfolio in 2022 and 22% of the total loan portfolio in 2021. Commercial and agriculture loans comprised 11% of the total loan portfolio in 2023, 11% in 2022, and 12% in 2021.
Residential real estate mortgage loans 3 comprised 25% of the total loan portfolio in 2024, 23% of the total loan portfolio in 2023 and 22% of the total loan portfolio in 2022. Commercial and agriculture loans comprised 11% of the total loan portfolio in 2024, 11% in 2023, and 11% in 2022.
In addition, we had the capacity to borrow additional funds totaling $426.8 million from the Federal Home Loan Bank of Cincinnati at December 31, 2023.
In addition, we had the capacity to borrow additional funds totaling $370.1 million from the Federal Home Loan Bank of Cincinnati at December 31, 2024.
At December 31, 2023, our liquid assets included $60.4 million of short-term cash and equivalents supplemented by $618.3 million of investment securities classified as available for sale which can be readily sold or pledged as collateral, if necessary.
At December 31, 2024, our liquid assets included $63.2 million of short-term cash and equivalents supplemented by $648.1 million of investment securities classified as available for sale which can be readily sold or pledged as collateral, if necessary.
This occurs in increments of less than the FDIC insurance limits so that both the principal and interest are eligible for complete FDIC insurance coverage. The FDIC currently considers these funds as brokered deposits.
This occurs in increments of less than the FDIC insurance limits so that both the principal and interest are eligible for complete FDIC insurance coverage.
(“FCIA”) was formed as a wholly owned subsidiary of CBI to allow the Company to participate in commission revenue generated through its third party insurance agreement. Assets of FCIA were not significant as of December 31, 2023. WATER STREET PROPERTIES, INC. (“WSP”) was formed as a wholly owned subsidiary of CBI to hold properties repossessed by CBI subsidiaries.
(“FCIA”) was formed as a wholly owned subsidiary of CBI to allow the Company to participate in commission revenue generated through its third-party insurance agreement. WATER STREET PROPERTIES, INC. (“WSP”) was formed as a wholly owned subsidiary of CBI to hold properties repossessed by CBI subsidiaries. CIVB RISK MANAGEMENT, INC.
Such loans are generally originated by and sourced from the same resources and markets as those loans originated and held in our portfolio. Through our equipment leasing and financing business operated by our CLF division, which was acquired as a who1ly-owned subsidiary of Civista in October 2022, we offer commercial equipment leasing services for businesses nationwide.
Such loans are generally originated by and sourced from the same resources and markets as those loans originated and held in our portfolio. Through our equipment leasing and financing business operated by our CLF division, we offer commercial equipment leasing services for businesses nationwide.
Time deposits consist of certificates of deposit, including those held in IRA accounts. Reciprocal deposits are offered through Civista’s participation in the Certificate of Deposit Account Registry Service® (CDARS) and Insured Cash Sweep (ICS) programs offered through IntraFi, LLC.
Reciprocal deposits are offered through Civista’s participation in the Certificate of Deposit Account Registry Service® (CDARS) and Insured Cash Sweep (ICS) programs offered through IntraFi, LLC.
("VFG") was acquired in the fourth quarter of 2022 as a wholly owned subsidiary of Civista. Effective as of August 31, 2023, VFG was merged with and into Civista, and CLF is now operated as a full-service general equipment leasing and financing division of Civista. The operations of CLF are located in Pittsburgh, Pennsylvania. CIVB RISK MANAGEMENT, INC.
Effective as of August 31, 2023, VFG was merged with and into Civista, and CLF is now operated as a full-service general equipment leasing and financing division of Civista. The operations of CLF are located in Pittsburgh, Pennsylvania. FIRST CITIZENS INSURANCE AGENCY, INC.
CRMI pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. CRMI is subject to regulations of the State of Delaware and undergoes periodic examinations by the Delaware Division of Insurance. Acquisition of Comunibanc Corp.
CRMI pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. CRMI is subject to regulations of the State of Delaware and undergoes periodic examinations by the Delaware Department of Insurance. Narrative Description of Business General The Company’s primary business is incidental to the subsidiary bank and its subsidiaries.
The Dodd-Frank Act requires the FDIC to offset the effect on insured institutions with assets of less than $10 billion of the increase in the statutory minimum DRR to 1.35% from the former statutory minimum of 1.15%.
In March 2016, the FDIC adopted final rules designed to meet the statutory minimum DRR of 1.35% by September 30, 2020, the deadline imposed by the Dodd-Frank Act. 8 The Dodd-Frank Act requires the FDIC to offset the effect on insured institutions with assets of less than $10 billion of the increase in the statutory minimum DRR to 1.35% from the former statutory minimum of 1.15%.
At December 31, 2023, both CBI and Civista were in compliance with all of the regulatory capital requirements to which they are subject. For CBI’s and Civista’s capital ratios, see Note 19 to the Company’s 2022 Consolidated Financial Statements.
The Company also recorded a net reduction of retained earnings of $6.1 million upon adoption. At December 31, 2024, both CBI and Civista were in compliance with all of the regulatory capital requirements to which they are subject. For CBI’s and Civista’s capital ratios, see Note 19 to the Company’s 2024 Consolidated Financial Statements.
The applicability date for the majority of the changes to the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027. The Company cannot predict the impact the changes to the CRA will have on its operations at this time.
The applicability date for the majority of the changes to the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027. The Company is currently evaluating the final rule and its potential impact on the Company's CRA activities and operations.
We are committed to ensuring that all our employees feel welcomed, valued, respected and heard so that they can fully contribute their unique talents for the benefit of our customers, their careers, our Company and our communities. We have established a Diversity, Equity and Inclusion Council (“DEI Council”).
We are committed to ensuring that all our employees feel welcomed, valued, respected and heard so that they can fully contribute their unique talents for the benefit of our customers, their careers, our Company and our communities. We monitor and evaluate various turnover and attrition metrics throughout our organization.
The term “covered transaction” includes the making of loans to an affiliate, the purchase of assets from an affiliate, the issuance of a guarantee on behalf of an affiliate, the purchase of securities issued by an affiliate and other similar types of transactions. 8 A bank’s authority to extend credit to executive officers, directors and greater than 10% shareholders, as well as entities such persons control, is subject to Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O promulgated thereunder by the Federal Reserve Board.
A bank’s authority to extend credit to executive officers, directors and greater than 10% shareholders, as well as entities such persons control, is subject to Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O promulgated thereunder by the Federal Reserve Board.
Because Civista's uninsured deposits were less than $5 billion for the quarter ended December 31, 2022, Civista will not be subject to this special assessment. 9 The FDIC is authorized to prohibit any insured institution from engaging in any activity that poses a serious threat to the insurance fund and may initiate enforcement actions against a bank, after first giving the institution’s primary regulatory authority an opportunity to take such action.
The FDIC is authorized to prohibit any insured institution from engaging in any activity that poses a serious threat to the insurance fund and may initiate enforcement actions against a bank, after first giving the institution’s primary regulatory authority an opportunity to take such action.
Ensure the Adequacy of Our Allowance for Credit Losses Despite the economic implications and challenges resulting from the COVID-19 pandemic on our business over the past four years, our reserve levels have remained adequate with total allowance amounting to $37.2 million at December 31, 2023.
Ensure the Adequacy of Our Allowance for Credit Losses Despite the challenges presented by the economic and overall market conditions over the past five years, our reserve levels have remained adequate with total allowance amounting to $39.7 million at December 31, 2024.
Civista also engages in a general equipment leasing and financing business through its, CLF division, which was acquired in October 2022. Interest and fees on loans accounted for 73% of total revenue for 2023, 69% of total revenue for 2022, and 69% of total revenue for 2021.
Civista also engages in a general equipment leasing and financing business nationwide through its CLF division. Interest and fees on loans accounted for 75% of total revenue for 2024, 73% of total revenue for 2023, and 69% of total revenue for 2022. The Company’s primary focus of lending continues to be real estate loans, both residential and commercial in nature.
This final rule became effective on October 1, 2020. The Company did not utilize the CBLR in assessing capital adequacy and, instead, continued to follow existing capital rules.
This final rule became effective on October 1, 2020. The Company did not utilize the CBLR in assessing capital adequacy and, instead, continued to follow existing capital rules. In December 2018, the federal banking agencies issued a final rule to address regulatory capital treatment of credit loss allowances under the current expected credit loss (“CECL”) model (accounting standard).
The Company’s primary focus of lending continues to be real estate loans, both residential and commercial in nature. Commercial real estate loans comprised 54% of the total loan portfolio in 2023, 55% of the total loan portfolio in 2022, and 56% of the total loan portfolio in 2021.
Commercial real estate loans comprised 52% of the total loan portfolio in 2024, 54% of the total loan portfolio in 2023, and 55% of the total loan portfolio in 2022.
Assets of WSP were not significant as of December 31, 2023. FIRST CITIZENS INVESTMENTS, INC. (“FCI”) was formed in 2007 as a wholly owned subsidiary of Civista to hold and manage its securities portfolio. The operations of FCI are located in Wilmington, Delaware.
(“FCI”) was formed in 2007 as a wholly owned subsidiary of Civista to hold and manage its securities portfolio. The operations of FCI are located in Wilmington, Delaware. CIVISTA LEASING & FINANCING (“CLF”) formerly known as Vision Financial Group, Inc. ("VFG") was acquired in the fourth quarter of 2022 as a wholly owned subsidiary of Civista.
These include personal and commercial checking accounts, retirement accounts, money market accounts, time and savings accounts, safe deposit boxes, wire transfers, access to automated teller services, internet banking, ACH origination, telephone banking, and mobile/digital banking. Civista also offers remote deposit capture banking for both retail and business customers, providing the ability to electronically scan and transmit checks for deposit.
Products and Services We offer a broad range of deposit and loan products and other banking services. These include personal and commercial checking accounts, retirement accounts, money market accounts, time and savings accounts, safe deposit boxes, wire transfers, access to automated teller services, internet banking, ACH origination, telephone banking, and mobile/digital banking.
In the FDIC's most recent semiannual update for the Amended Restoration Plan in November 2023, the FDIC noted that increased loss provisions associated with the failures of Silicon Valley Bank, Signature Bank and First Republic Bank in 2023 that reduced the DIF balance, coupled with strong growth in insured deposits, resulted in the reserve ratio declining 15 basis points from 1.25% as of December 31, 2022 to 1.10% as of June 30, 2023.
In the FDIC's most recent semiannual update for the Amended Restoration Plan in October 2024, the FDIC noted the reserve ratio increased 6 basis points from 1.15% as of December 31, 2023 to 1.21% as of June 30, 2024.
Removed
FIRST CITIZENS CAPITAL LLC (“FCC”) was also formed in 2007 as a wholly owned subsidiary of Civista to hold inter-company debt that is eliminated in consolidation. The operations of FCC were discontinued December 31, 2021 as a result of inactivity. CIVISTA LEASING & FINANCING (“CLF”) formerly known as Vision Financial Group, Inc.
Added
Civista also offers remote deposit capture banking for both retail and business customers, providing the ability to electronically scan and transmit checks for deposit. Time deposits consist of certificates of deposit, including those held in IRA accounts.
Removed
On July 1, 2022, CBI completed the acquisition by merger of Comunibanc Corp. in a stock and cash transaction for aggregate consideration of approximately $46,090. Immediately following the merger, Comunibanc Corp.’s banking subsidiary, The Henry County Bank, was merged into Civista.
Added
The term “covered transaction” includes the making of loans to an affiliate, the purchase of assets from an affiliate, the issuance of a guarantee on behalf of an affiliate, the purchase of securities issued by an affiliate and other similar types of transactions.
Removed
At the time of the merger, Comunibanc Corp. had total consolidated assets of $315,083, including $175,500 in loans, and $271,081 in deposits.
Added
In November 2023, the FDIC issued a final rule to implement a special assessment to recover losses to the DIF incurred as a result of bank failures earlier that year and the FDIC’s use of the systemic risk exception to cover certain deposits that were otherwise uninsured.
Removed
As a result of the merger, we acquired seven offices of Comunibanc Corp. in the Ohio communities of Napoleon (3), Malinta, Holgate, Liberty Center, and Bowling Green. 3 Acquisition of Vision Financial Group On October 3, 2022, CBI and Civista completed the acquisition by Civista of all of the issued and outstanding shares of capital stock of VFG for aggregate cash and stock consideration of approximately $46,544.
Added
The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion) and was assessed at a quarterly rate of 3.36 basis points, over eight quarterly assessment periods, that began in the first quarter of 2024.
Removed
Prior to the acquisition, VFG was a privately held, independent, full-service equipment leasing and financing company headquartered in Pittsburgh, Pennsylvania. At the time of the acquisition, VFG had total assets of $93,870, including $62,712 in loans and leases. As a result of the acquisition, VFG became a wholly-owned subsidiary of Civista.
Added
In June 2024, due to the increased estimate of losses, the FDIC announced that it projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate.
Removed
Effective as of August 31, 2023, VFG was merged with and into Civista, and is now operated as the CLF division of Civista. CBI is a financial holding company. Through its subsidiaries, including Civista, the Company is primarily engaged in the business of community banking, which accounts for substantially all of its revenue, operating income and assets.
Added
This updated assessment was made under the FDIC’s final rule whereby the estimated loss pursuant to the systemic risk determination can be periodically adjusted. The FDIC has also retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment. The special assessments are tax deductible.
Removed
Refer to the Consolidated Financial Statements on pages 26 through 31 of the 2023 Annual Report for additional information. Narrative Description of Business General The Company’s primary business is incidental to the subsidiary bank and its subsidiaries.
Added
The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain. Because Civista's uninsured deposits were less than $5 billion for the quarter ended December 31, 2022, Civista will not be subject to this special assessment.
Removed
This Company-wide diversity and inclusion advisory council stewards the Company’s efforts and provides guidance on priorities. The DEI Council is composed of employees from all areas of our Company and locations where we operate. We monitor and evaluate various turnover and attrition metrics throughout our organization.
Added
Consumer Financial Protection Bureau: Civista is subject to a number of federal and state consumer protection laws that extensively govern our relationship with our customers.
Removed
In March 2016, the FDIC adopted final rules designed to meet the statutory minimum DRR of 1.35% by September 30, 2020, the deadline imposed by the Dodd-Frank Act.
Added
These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices.
Removed
On November 16, 2023, the FDIC adopted a final rule implementing a special assessment to recover the loss to the DIF arising from the protection of uninsured depositors following the failures of Silicon Valley Bank and Signature Bank.
Added
These and other federal and state laws, among other things, require disclosures of the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, prohibit unfair, deceptive and abusive practices, restrict our ability to raise interest rates and subject us to substantial regulatory oversight.
Removed
The assessment base for the special assessment is equal to an insured depository institution's estimated uninsured deposits reported for the quarter ended December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured deposits.
Added
Violations of applicable consumer protection laws can result in significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys’ fees.

… 18 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

35 edited+11 added−7 removed140 unchanged
Biggest changeWe are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as we are) and to the risk that our (or our vendors’) consumer compliance, business continuity and data security systems prove to be inadequate. 19 Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, social media and other marketing activities, the implementation of environmental, social and governance (ESG) practices, and from actions taken by governmental regulators and community organizations in response to any of the foregoing activities.
Biggest changeWe are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as we are) and to the risk that our (or our vendors’) consumer compliance, business continuity and data security systems prove to be inadequate.
All subsequent written and oral forward-looking statements attributable to the Company or any person acting on the Company’s behalf are qualified in their entirety by the following cautionary statements. RISK FACTORS The following sets forth certain risk factors that we are believe are relevant to the Company and its business.
All subsequent written and oral forward-looking statements attributable to the Company or any person acting on the Company’s behalf are qualified in their entirety by the following cautionary statements. RISK FACTORS The following sets forth certain risk factors that we believe are relevant to the Company and its business.
Our credit risk may be exacerbated when collateral held by us to secure obligations to us cannot be realized upon or is liquidated at prices that are not sufficient to recover the full amount of the loan or derivative exposure due us.
Our credit risk may be exacerbated when collateral held by us to secure obligations to us cannot be realized upon or is liquidated at prices that are not sufficient to recover the full amount of the loan or derivative exposure due to us.
Due in part to improvement in local and general economic conditions, as well as actions we have taken to manage our loan portfolio, our provision for credit losses has declined since the end of the 2007-2008 financial crisis. However, if we experience higher levels of provision for loan losses in the future, our net income could be negatively affected.
Due in part to improvement in local and general economic conditions, as well as actions we have taken to manage our loan portfolio, our provision for credit losses has declined since the end of the 2007-2008 financial crisis. However, if we experience higher levels of provision for credit losses in the future, our net income could be negatively affected.
If the Company’s policies, procedures, and systems are deemed deficient, or if the policies, procedures, and systems of the financial institutions that the Company has already acquired or may acquire in the future are deficient, the Company may be subject to liability, including fines and regulatory actions such as restrictions on the Company’s ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain planned business activities, including acquisition plans, which could negatively impact our business, financial condition, and results of operations.
If the Company’s policies, procedures, and systems are deemed deficient, or if the policies, procedures, and systems of the financial institutions that the Company has already acquired or may acquire in the future are deficient, the Company may be subject to liability, including fines and regulatory actions such as restrictions on the Company’s ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain 21 planned business activities, including acquisition plans, which could negatively impact our business, financial condition, and results of operations.
Such data breaches could result in us incurring significant expenses to reissue debit cards and cover losses, which could result in a material adverse effect on our results of operations. 20 There can be no assurance that we will not suffer such cyber-attacks or other information security breaches or attempted breaches, incur resulting losses in the future.
Such data breaches could result in us incurring significant expenses to reissue debit cards and cover losses, which could result in a material adverse effect on our results of operations. There can be no assurance that we will not suffer such cyber-attacks or other information security breaches or attempted breaches, incur resulting losses in the future.
In addition, federal banking agencies have recently finalized extensive changes to their capital requirements, including the adoption of the final “Basel III” rules as discussed above, which result in higher capital requirements and more restrictive leverage and liquidity ratios than those previously in place. If we experience significant credit losses, addition capital may need to be infused.
In addition, federal banking agencies have recently finalized extensive changes to their capital requirements, including the adoption of the final “Basel III” rules as discussed above, which result in higher capital requirements and more restrictive leverage and liquidity ratios than those previously in place. If we experience significant credit losses, additional capital may need to be infused.
If a critical third-party provider is unable to meet the 21 needs of the Company in a timely manner, or if the services or products provided by such third party are terminated or otherwise delayed and if the Company is not able to develop alternative sources for these services and products quickly and cost-effectively, our business could be materially adversely effected.
If a critical third-party provider is unable to meet the needs of the Company in a timely manner, or if the services or products provided by such third party are terminated or otherwise delayed and if the Company is not able to develop alternative sources for these services and products quickly and cost-effectively, our business could be materially adversely effected.
Any decrease in our borrowers’ ability to repay loans would result in higher levels of nonperforming loans, net charge-offs, and provision for loan losses. Despite maintaining a diversified loan portfolio, in the ordinary course of business, we may have concentrated credit exposure to a particular person or entity, industry, region or counterparty.
Any decrease in our borrowers’ ability to repay loans would result in higher levels of nonperforming loans, net charge-offs, and provision for credit losses. 23 Despite maintaining a diversified loan portfolio, in the ordinary course of business, we may have concentrated credit exposure to a particular person or entity, industry, region or counterparty.
Our ability to retain executive officers and the current management teams will 23 continue to be important to successful implementation of our strategies. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business and financial results.
Our ability to retain executive officers and the current management teams will continue to be important to successful implementation of our strategies. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business and financial results.
Excessive loan losses and significant additions to our allowance for credit losses could have a material adverse impact on our financial condition and results of operations. In addition, bank regulators periodically review our allowance for credit losses and may require us to increase our allowance for credit losses or recognize further loan charge-offs.
Excessive 22 loan losses and significant additions to our allowance for credit losses could have a material adverse impact on our financial condition and results of operations. In addition, bank regulators periodically review our allowance for credit losses and may require us to increase our allowance for credit losses or recognize further loan charge-offs.
The FDIC recently adopted rules revising its assessments in a manner benefitting banks with assets totaling less than $10 billion. There can be no assurance, however, that assessments will not be changed in the future. We are subject to examinations and challenges by tax authorities.
The FDIC recently adopted rules revising its assessments in a manner benefiting banks with assets totaling less than $10 billion. There can be no assurance, however, that assessments will not be changed in the future. We are subject to examinations and challenges by tax authorities.
LIBOR is set based on interest rate information reported by certain banks. In the U.S., as a result of efforts to identify a set of alternative U.S. dollar reference interest rates the Alternative Reference Rate Committee (“ARRC”) recommended the use of a Secured Overnight Funding Rate (“SOFR”) as the set of alternative U.S. dollar reference interest rates.
LIBOR was set based on interest rate information reported by certain banks. In the U.S., as a result of efforts to identify a set of alternative U.S. dollar reference interest rates the Alternative Reference Rate Committee (“ARRC”) recommended the use of a Secured Overnight Funding Rate (“SOFR”) as the set of alternative U.S. dollar reference interest rates.
Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on the operation of an institution 24 and the ability to determine the adequacy of an institution’s allowance for loan losses.
Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on the operation of an institution and the ability to determine the adequacy of an institution’s allowance for credit losses.
Under the incurred loss model, loans are recognized as impaired when there is no longer an assumption that future cash flows will be collected in full under the originally contracted terms. Under the CECL model, financial institutions are required to use historical information, current conditions and reasonable forecasts to estimate the expected loss over the life of the loan.
Under the incurred loss model, loans were recognized as impaired when there was no longer an assumption that future cash flows would be collected in full under the originally contracted terms. Under the CECL model, financial institutions are required to use historical information, current conditions and reasonable forecasts to estimate the expected loss over the life of the loan.
In June 2016, FASB issued a new accounting standard for recognizing current expected credit losses, commonly referred to as CECL. CECL will result in earlier recognition of credit losses and requires consideration of not only past and current events but also reasonable and supportable forecasts that affect collectability. The Company adopted CECL effective January 1, 2023.
In June 2016, FASB issued a new accounting standard for recognizing current expected credit losses, commonly referred to as CECL. CECL has 25 resulted in earlier recognition of credit losses and requires consideration of not only past and current events but also reasonable and supportable forecasts that affect collectability. The Company adopted CECL effective January 1, 2023.
However, any significant, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations. 18 See the discussion under "Quantitative and Qualitative Disclosures About Market Risk” on pages 17 through 18 of the Annual Report for additional information related to the Company’s interest rate risk.
However, any significant, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations. See the discussion under "Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for additional information related to the Company’s interest rate risk.
Such activity can result in financial liability and harm to our reputation. We have implemented security controls to prevent unauthorized access to the computer systems, and we require our third-party service providers to maintain similar controls. However, we cannot be certain that these measures will be successful.
We have implemented security controls to prevent unauthorized access to the computer systems, and we require our third-party service providers to maintain similar controls. However, we cannot be certain that these measures will be successful.
Future litigation could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We are also involved from time to time in other reviews, investigations and proceedings (both formal and informal) by 25 governmental and other agencies regarding our business. These matters also could result in adverse judgments, settlements, fines, penalties, injunctions or other relief.
We are also involved from time to time in other reviews, investigations and proceedings (both formal and informal) by governmental and other agencies regarding our business. These matters also could result in adverse judgments, settlements, fines, penalties, injunctions or other relief.
We may incur substantial costs to expand, and we can give no assurance that such expansion will result in the levels of profits we expect. Neither can we assure that integration efforts for any future acquisitions will be successful. We may issue equity securities in connection with acquisitions, which could dilute the economic and voting interests of our existing shareholders.
We may incur substantial costs to expand, and we can give no assurance that such expansion will result in the levels of profits we expect. Neither can we assure that integration efforts for any future acquisitions will be successful.
We may be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control, which may include, for example, computer viruses, cyber-attacks, spikes in transaction volume and/or customer activity, electrical or telecommunications outages, or natural disasters.
Any failure, interruption or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan and other systems. 19 We may be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control, which may include, for example, computer viruses, cyber-attacks, spikes in transaction volume and/or customer activity, electrical or telecommunications outages, or natural disasters.
Interest rates are highly sensitive to many factors that are beyond our control. Some of these factors include: • inflation; • recession; • unemployment; • money supply; • international disorders; and • instability in domestic and foreign financial markets.
Some of these factors include: • inflation; • recession; • unemployment; • money supply; • international disorders; and • instability in domestic and foreign financial markets.
We may not be able to prevent employee errors or misconduct, and the precautions we take to detect this type of activity might not be effective in all cases. Employee errors or misconduct could subject us to civil claims for negligence or regulatory enforcement actions, including fines and restrictions on our business.
We may not be able to prevent employee errors or misconduct, and the precautions we take to detect this type of activity might not be effective in all cases.
Changes in interest rates may affect the level of voluntary prepayments on our loans and may also affect the level of financing or refinancing by customers. Changes in interest rates may also negatively affect the ability of the Company’s borrowers to repay their loans, particularly as interest rates rise and adjustable rate loans become more expensive.
Changes in interest rates may also negatively affect the ability of the Company’s borrowers to repay their loans, particularly as interest rates rise and adjustable rate loans become more expensive. 18 Interest rates are highly sensitive to many factors that are beyond our control.
At December 31, 2023, approximately 23.1% and 53.8%, respectively, of our loan portfolio was comprised of residential and commercial real estate loans. Adverse changes in economic conditions both nationally and in the communities we serve may cause deterioration to the value of real estate Civista uses to secure its loans.
Adverse changes in economic conditions both nationally and in the communities we serve may cause deterioration to the value of real estate Civista uses to secure its loans.
Certain of these third parties may have limited indemnification obligations to us in the event of a cybersecurity event or operational disruption, or may not have the financial capacity to satisfy their indemnification obligations.
Certain of these third parties may have limited indemnification obligations to us in the event of a cybersecurity event or operational disruption, or may not have the financial capacity to satisfy their indemnification obligations. Financial or operational difficulties of a third-party provider could also impair our operations if those difficulties interfere with such third party’s ability to serve the Company.
From time to time, we may be subject to claims or legal action from customers, employees or others. Financial institutions like CBI and Civista are facing a growing number of significant class actions, including those based on the manner of calculation of interest on loans and the assessment of overdraft fees.
Financial institutions like CBI and Civista are facing a growing number of significant class actions, including those based on the manner of calculation of interest on loans and the assessment of overdraft fees. Future litigation could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages.
While such changes are generally intended to lessen the regulatory burden on financial institutions, the impact of any changes to laws and regulations or other actions by regulatory agencies could adversely affect our business.
Regulations affecting banks and financial services businesses are undergoing continuous change and management cannot predict the effect of those changes. The impact of any changes to laws and regulations or other actions by regulatory agencies could adversely affect our business.
In addition, there have been instances where financial institutions have been victims of fraudulent activity in which criminals pose as customers to initiate wire and automated clearinghouse transactions out of customer accounts. Although we have policies and procedures in place to verify the authenticity of our customers, we cannot assure that such policies and procedures will prevent all fraudulent transfers.
Although we have policies and procedures in place to verify the authenticity of our customers, we cannot assure that such policies and procedures will prevent all fraudulent transfers. Such activity can result in financial liability and harm to our reputation.
We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations.
RISKS RELATED TO OUR CAPITAL AND STOCK WE MAY ELECT OR NEED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE, BUT CAPITAL MAY NOT BE AVAILABLE WHEN IT IS NEEDED. We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations.
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. 17 ADVERSE CHANGES IN THE REAL ESTATE MARKET COULD CAUSE INCREASES IN DELINQUENCIES AND NON-PERFORMING ASSETS, INCLUDING ADDITIONAL LOAN CHARGE-OFFS, AND COULD DEPRESS OUR INCOME, EARNINGS AND CAPITAL.
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. WE ARE SUBJECT TO LIQUIDITY RISK. Our banking operations require liquidity to meet our deposit and debt obligations as they come due.
These laws and regulations are primarily intended for the protection of consumers, depositors, borrowers and the deposit insurance fund, not to benefit our shareholders. Regulations affecting banks and financial services businesses are undergoing continuous change and management cannot predict the effect of those changes.
We are subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of our operations. These laws and regulations are primarily intended for the protection of consumers, depositors, borrowers and the deposit insurance fund, not to benefit our shareholders.
ASU 2016-13 implementation poses operational risk, including the failure to properly transition internal processes or systems, which could lead to call report errors, financial misstatements, or operational losses. WE MAY BE THE SUBJECT OF LITIGATION WHICH COULD RESULT IN LEGAL LIABILITY AND DAMAGE TO OUR BUSINESS AND REPUTATION.
WE MAY BE THE SUBJECT OF LITIGATION WHICH COULD RESULT IN LEGAL LIABILITY AND DAMAGE TO OUR BUSINESS AND REPUTATION. From time to time, we may be subject to claims or legal action from customers, employees or others.
LEGISLATIVE, LEGAL AND REGULATORY RISKS LEGISLATIVE OR REGULATORY CHANGES OR ACTIONS COULD ADVERSELY IMPACT OUR BUSINESS. The financial services industry is extensively regulated. We are subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of our operations.
We 24 may issue equity securities in connection with acquisitions, which could dilute the economic and voting interests of our existing shareholders. LEGISLATIVE, LEGAL AND REGULATORY RISKS LEGISLATIVE OR REGULATORY CHANGES OR ACTIONS COULD ADVERSELY IMPACT OUR BUSINESS. The financial services industry is extensively regulated.
We rely heavily on communications and information systems to conduct our business. Any failure, interruption or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan and other systems.
We rely heavily on communications and information systems to conduct our business.
Removed
Financial or operational difficulties of a third party provider could also impair our operations if those difficulties interfere with such third party’s ability to serve the Company.
Added
There are many potential factors that could reduce our access to liquidity sources, including higher interest rate environments, tightening fiscal policy, a downturn in the U.S. economy, difficult credit markets or adverse regulatory actions. Our 17 access to deposits may also be affected by the liquidity needs of our depositors.
Removed
The new CECL accounting guidance is effective for annual reporting periods and interim reporting periods within those annual periods, beginning after December 15, 2019.
Added
A substantial majority of our liabilities are demand, savings, interest checking and money market deposits, which are payable on demand or upon several days' notice, while by comparison, a substantial portion of our assets are loans, which cannot be called or sold in the same time frame.
Removed
However, the FASB deferred the effective date for this ASU for smaller reporting companies, such as the Company, at the time, to annual reporting periods and interim 22 reporting periods within those annual periods, beginning after December 15, 2022.
Added
We may not be able to replace maturing deposits and advances as necessary in the future, especially if a large number of our depositors sought to withdraw their accounts, regardless of the reason.
Removed
WE COULD FACE LEGAL AND REGULATORY RISK ARISING OUT OF OUR RESIDENTIAL MORTGAGE BUSINESS. Numerous federal and state governmental, legislative and regulatory authorities are investigating practices in the business of mortgage and home equity loan lending and servicing and in the mortgage-related insurance and reinsurance industries.
Added
Our access to deposits may be negatively impacted by, among other factors, periods of low interest rates or higher interest rates which could promote increased competition for deposits, including from new financial technology competitors, or provide customers with alternative investment options.
Removed
We could face the risk of class actions, other litigation and claims from: the owners of or purchasers of such loans originated or serviced by us, homeowners involved in foreclosure proceedings or various mortgage-related insurance programs, downstream purchasers of homes sold after foreclosure, title insurers, and other potential claimants.
Added
Additionally, negative news about us or the banking industry in general could negatively impact market and/or customer perceptions of our company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits.
Removed
Included among these claims are claims from purchasers of mortgage and home equity loans seeking the repurchase of loans where the loans allegedly breached origination covenants and representations and warranties made to the purchasers in the purchase and sale agreements. The CFPB has issued new rules for mortgage origination and mortgage servicing.
Added
Furthermore, as we and other regional banking organizations experienced in 2023, the failure of other financial institutions may cause deposit outflows as customers spread deposits among several different banks so as to maximize their amount of FDIC insurance, move deposits to banks deemed "too big to fail" or remove deposits from the banking system entirely.
Removed
Both the origination and servicing rules create new private rights of action for consumers against lenders and servicers in the event of certain violations. RISKS RELATED TO OUR CAPITAL AND STOCK WE MAY ELECT OR NEED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE, BUT CAPITAL MAY NOT BE AVAILABLE WHEN IT IS NEEDED.
Added
As of December 31, 2024, approximately 15% of our deposits were uninsured, and we rely on these deposits for liquidity. A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition and results of operations.
Added
ADVERSE CHANGES IN THE REAL ESTATE MARKET COULD CAUSE INCREASES IN DELINQUENCIES AND NON-PERFORMING ASSETS, INCLUDING ADDITIONAL LOAN CHARGE-OFFS, AND COULD DEPRESS OUR INCOME, EARNINGS AND CAPITAL. At December 31, 2024, approximately 24.8% and 51.9%, respectively, of our loan portfolio was comprised of residential and commercial real estate loans.
Added
Changes in interest rates may affect the level of voluntary prepayments on our loans and may also affect the level of financing or refinancing by customers.
Added
Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, social media and other marketing activities, the implementation of environmental, social and governance (ESG) practices, and from actions taken by governmental regulators and community organizations in response to any of the foregoing activities.
Added
Employee errors or misconduct could subject us to civil claims for negligence or regulatory enforcement actions, including fines and restrictions on our business. 20 In addition, there have been instances where financial institutions have been victims of fraudulent activity in which criminals pose as customers to initiate wire and automated clearinghouse transactions out of customer accounts.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeItem 1C. Cybersecurity The Corporation understands the security of our banking operations is critical to protecting our customers, maintaining our reputation and preserving the value of the Corporation. The Corporation is focused on addressing cybersecurity risks on confidentiality, integrity, and the availability of the information the Corporation collects, transmits and stores 28 by identifying, preventing, and mitigating cybersecurity risks.
Biggest changeItem 1C. Cybersecurity The Company understands that security of our banking operations is critical to protecting our customers, maintaining our reputation and preserving the value of the Company. The Company is focused on addressing cybersecurity risks on confidentiality, integrity, and the availability of the information the Company collects, transmits and stores by 28 identifying, preventing, and mitigating cybersecurity risks.
These programs establish policies (including vendor management), procedures, risk assessments, systems, monitoring, reporting, strategies, and training to effectively manage cybersecurity risks. Specifically, the Corporation deploys multiple layers of controls, including embedding security into our technology investments, designed to identify, protect, detect, respond to and recover from information security and cybersecurity incidents.
These programs establish policies (including vendor management), procedures, risk assessments, systems, monitoring, reporting, strategies, and training to effectively manage cybersecurity risks. Specifically, the Company deploys multiple layers of controls, including embedding security into our technology investments, designed to identify, protect, detect, respond to and recover from information security and cybersecurity incidents.
The Corporation also performs simulations and drills to further ensure our readiness and preparedness for potential threats. In addition, the Corporation employs a nationally recognized firm with information security experts to annually perform audits that extensively test our program and controls, which are reviewed by the Board Audit Committee.
The Company also performs simulations and drills to further ensure our readiness and preparedness for potential threats. In addition, the Company employs a nationally recognized firm with information security experts to annually perform audits that extensively test our program and controls, which are reviewed by the Board Audit Committee.
The Chief Information Officer and the Chief Risk Officer oversee these programs to accomplish the following: • assure the confidentiality, integrity and availability of our information and information systems; • protect against any anticipated threats or hazards to the confidentiality, integrity or availability of such information and information systems; and • protect against unauthorized access to or use of such information or information systems that could result in substantial harm or inconvenience to us, our clients and the value of the Corporation.
The Chief Information Officer and the Chief Risk Officer oversee these programs to accomplish the following: • assure the confidentiality, integrity and availability of our information and information systems; • protect against any anticipated threats or hazards to the confidentiality, integrity or availability of such information and information systems; and • protect against unauthorized access to or use of such information or information systems that could result in substantial harm or inconvenience to us, our clients and the value of the Company.
The Corporation, as well as our customers, colleagues, regulators, service providers and other third parties, have seen an increase in information security and cybersecurity risk in recent years.
The Company, as well as our customers, colleagues, regulators, service providers and other third parties , have seen an increase in information security and cybersecurity risk in recent years.
The Board of Directors, through the Board Risk and Audit Committees, and Enterprise Risk Management Committee, provide direction and oversight of the enterprise-wide risk management program of the Corporation, which includes the Information Security Program.
The Board of Directors, through the Board Risk and Audit Committees, and the Company's Enterprise Risk Management Committee provide direction and oversight of the enterprise-wide risk management program of the Company, which includes the Information Security Program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeCivista leases branch banking offices in the Ohio communities of Akron, Huron, West Liberty, Dayton, Bowling Green and Beachwood. Civista also leases loan production offices in Westlake, Ohio and Fort Mitchell, Kentucky. The CLF division of Civista offices for its equipment leasing and financing business in Pittsburgh, Pennsylvania, Franklin, Tennessee and Dover, New Hampshire.
Biggest changeCivista leases branch banking offices in the Ohio communities of Akron, Huron, West Liberty, Dayton, Bowling Green and Beachwood. Civista also leases loan production offices in Westlake, Ohio and Fort Mitchell, Kentucky. The CLF division of Civista leases its offices located in Pittsburgh, Pennsylvania and Dover, New Hampshire.
Civista also owns branch banking offices in the following Ohio and Indiana communities: Sandusky (2), Norwalk (2), Berlin Heights, Willard, Castalia, Port Clinton, New Washington, Shelby (2), Greenwich, Plymouth, Shiloh, Dublin, Plain City, Russells Point, Urbana (2), Dayton (2), Quincy, Napoleon (3), Malinta, Holgate, Liberty Center, Lawrenceburg (3), Aurora, West Harrison, Milan, Osgood and Versailles.
Civista also owns branch banking offices in the following Ohio and Indiana communities: Sandusky (2), Norwalk (2), Berlin Heights, Willard, Castalia, Port Clinton, New Washington, Shelby (2), Greenwich, Plymouth, Shiloh, Dublin, Plain City, Russells Point, Urbana (2), Dayton (2), Quincy, Napoleon (2), Malinta, Holgate, Liberty Center, Lawrenceburg (3), Aurora, West Harrison, Milan, Osgood and Versailles.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2023 - October 31, 2023 - $ - $ - $ 12,003,223 November 1, 2023 - November 30, 2023 - - - - December 1, 2023 - December 31, 2023 573 18.44 - - Total 573 $ 18.44 — $ 12,003,223 On May 8, 2023, the Company announced a new common share repurchase program pursuant to which the Company is authorized to repurchase a maximum aggregate value of $13,500,000 of its outstanding common shares through May 2, 2024.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2024 - October 31, 2024 — $ — $ — $ 12,003,223 November 1, 2024 - November 30, 2024 — — — — December 1, 2024 - December 31, 2024 — — — — Total — $ — — $ 12,003,223 On April 18, 2023, the Company announced a common share repurchase program pursuant to which the Company is authorized to repurchase a maximum aggregate value of $13,500,000 of its outstanding common shares through April 25, 2025.
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 fourth quarter of 2023.
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 fourth quarter of 2024.
(ticker symbol CIVB), based on an initial investment of $100 on December 31, 2018 and assuming reinvestment of dividends, with the cumulative return of the Standard & Poor’s 500 Index, and the S&P U.S. BMI Banks Index.
(ticker symbol CIVB), based on an initial investment of $100 on December 31, 2019, and assuming reinvestment of dividends, with the cumulative return of the Standard & Poor’s 500 Index, and the S&P U.S. BMI Banks Index.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities As of February 20, 2024, there were approximately 1,733 shareholders of record (not including the number of persons or entities holding stock in nominee or street name through various brokerage firms) of the Company’s common shares.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities As of February 18, 2025, there were approximately 1,651 shareholders of record (not including the number of persons or entities holding stock in nominee or street name through various brokerage firms) of the Company’s common shares.
As of December 31, 2023, a total of 90,423 common shares had been repurchased for an aggregate purchase price of $1,628,205 under this repurchase program. Shareholder Return Performance Set forth below is a line graph comparing the five-year cumulative return of the common shares of Civista Bancshares, Inc.
As of December 31, 2024, a total of 84,230 common shares had been repurchased for an aggregate purchase price of $1,496,777 under this repurchase program. Shareholder Return Performance Set forth below is a line graph comparing the five-year cumulative return of the common shares of Civista Bancshares, Inc.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeComparison of Results of Operations for the Years Ended December 31, 2022 and December 31, 2021 A discussion regarding our financial condition and results of operations for the year ended December 31, 2022 and year-to-year comparisons between 2022 and 2021, which are not included in this Annual Report on Form 10-K, can be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and are incorporated by reference herein. 40 Changes in Interest Income and Interest Expense Resulting from Changes in Volume and Changes in Rate The following table sets forth, for the periods indicated, a summary of the changes in interest income and interest expense resulting from changes in volume and changes in rate (Amounts in thousands): Increase (decrease) due to: Volume (1) Rate (1) Net 2023 compared to 2022 Interest income: Loans $ 22,820 $ 29,882 $ 52,702 Taxable securities 1,106 1,489 2,595 Nontaxable securities 896 527 1,423 Interest-bearing deposits in other banks (1,651 ) 1,510 (141 ) Total interest income $ 23,171 $ 33,408 $ 56,579 Interest expense: Savings and interest-bearing demand accounts $ (70 ) $ 6,317 $ 6,247 Certificates of deposit 6,014 17,654 23,668 Short-term Federal Home Loan Bank advances 10,767 1,160 11,927 Long-term Federal Home Loan Bank advances (710 ) 266 (444 ) Securities sold under repurchase agreements (6 ) (1 ) (7 ) Federal funds purchased — — — Other borrowings 5 1,063 1,068 Subordinated debentures (978 ) (194 ) (1,172 ) Total interest expense $ 15,022 $ 26,265 $ 41,287 Net interest income $ 8,149 $ 7,143 $ 15,292 2022 compared to 2021 Interest income: Loans $ 7,250 $ 7,921 $ 15,171 Taxable securities 3,457 193 3,650 Nontaxable securities 2,295 (686 ) 1,609 Interest-bearing deposits in other banks (393 ) 1,064 671 Total interest income $ 12,609 $ 8,492 $ 21,101 Interest expense: Savings and interest-bearing demand accounts $ 104 $ 119 $ 223 Certificates of deposit (128 ) (430 ) (558 ) Short-term Federal Home Loan Bank advances 2,566 — 2,566 Long-term Federal Home Loan Bank advances (556 ) (97 ) (653 ) Securities sold under repurchase agreements (3 ) (9 ) (12 ) Federal funds purchased — 5 5 Other borrowings (298 ) 2,223 1,925 Subordinated debentures 2,313 513 2,826 Total interest expense $ 3,998 $ 2,324 $ 6,322 Net interest income $ 8,611 $ 6,168 $ 14,779 (1) The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate. 41 Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential The following table sets forth, for the years ended December 31, 2023, 2022 and 2021, the distribution of assets, including interest amounts and average rates of major categories of interest-earning assets and noninterest-earning assets (Amounts in thousands): 2023 2022 2021 Assets Average balance Interest Yield/ rate Average balance Interest Yield/ rate Average balance Interest Yield/ rate Interest-earning assets: Loans (1)(2)(3)(5) $ 2,722,797 $ 160,755 5.90 % $ 2,286,928 $ 108,053 4.72 % $ 2,127,157 $ 92,882 4.37 % Taxable securities (4) 363,972 11,718 2.88 % 341,600 9,123 2.49 % 232,813 5,473 2.41 % Non-taxable securities (4)(5) 282,678 9,282 3.79 % 263,981 7,859 3.56 % 217,786 6,250 3.96 % Interest-bearing deposits in other banks 21,551 979 4.54 % 146,849 1,120 0.76 % 347,573 449 0.13 % Total interest earning assets 3,390,998 182,734 5.35 % 3,039,358 126,155 4.16 % 2,925,329 105,054 3.68 % Noninterest-earning assets: Cash and due from financial institutions 39,219 84,777 35,404 Premises and equipment, net 58,456 34,577 22,617 Accrued interest receivable 11,499 8,650 8,010 Intangible assets 133,626 96,492 84,747 Other assets 63,152 50,765 37,378 Bank owned life insurance 54,211 50,076 46,435 Less allowance for loan losses (33,814 ) (27,721 ) (26,366 ) Total $ 3,717,347 $ 3,336,974 $ 3,133,554 (1) For purposes of these computations, the daily average loan amounts outstanding are net of unearned income and include loans held for sale.
Biggest changeComparison of Results of Operations for the Years Ended December 31, 2023 and December 31, 2022 A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 and year-to-year comparisons between 2023 and 2022, which are not included in this Annual Report on Form 10-K, can be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and are incorporated by reference herein. 40 Changes in Interest Income and Interest Expense Resulting from Changes in Volume and Changes in Rate The following table sets forth, for the periods indicated, a summary of the changes in interest income and interest expense resulting from changes in volume and changes in rate (Amounts in thousands): Increase (decrease) due to: Volume (1) Rate (1) Net 2024 compared to 2023 Interest income: Loans $ 15,926 $ 6,897 $ 22,823 Taxable securities (308 ) 1,229 921 Nontaxable securities 40 151 191 Interest-bearing deposits in other banks (45 ) 71 26 Total interest income $ 15,613 $ 8,348 $ 23,961 Interest expense: Savings and interest-bearing demand accounts $ 413 $ 13,751 $ 14,164 Certificates of deposit 17,450 432 17,882 Short-term Federal Home Loan Bank advances 3,258 700 3,958 Long-term Federal Home Loan Bank advances (23 ) (1 ) (24 ) Securities sold under repurchase agreements (4 ) — (4 ) Federal funds purchased (5 ) (1 ) (6 ) Other borrowings (5,033 ) 1,728 (3,305 ) Subordinated debentures 7 75 82 Total interest expense $ 16,063 $ 16,684 $ 32,747 Net interest income $ (450 ) $ (8,336 ) $ (8,786 ) 2023 compared to 2022 Interest income: Loans $ 22,820 $ 29,882 $ 52,702 Taxable securities 1,106 1,489 2,595 Nontaxable securities 896 527 1,423 Interest-bearing deposits in other banks (1,651 ) 1,510 (141 ) Total interest income $ 23,171 $ 33,408 $ 56,579 Interest expense: Savings and interest-bearing demand accounts $ (70 ) $ 6,317 $ 6,247 Certificates of deposit 6,014 17,654 23,668 Short-term Federal Home Loan Bank advances 10,767 1,160 11,927 Long-term Federal Home Loan Bank advances (710 ) 266 (444 ) Securities sold under repurchase agreements (6 ) (1 ) (7 ) Federal funds purchased — — — Other borrowings 5 1,063 1,068 Subordinated debentures (978 ) (194 ) (1,172 ) Total interest expense $ 15,022 $ 26,265 $ 41,287 Net interest income $ 8,149 $ 7,143 $ 15,292 (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. 41 Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential The following table sets forth, for the years ended December 31, 2024, 2023 and 2022, the distribution of assets, including interest amounts and average rates of major categories of interest-earning assets and noninterest-earning assets (Amounts in thousands): 2024 2023 2022 Assets Average balance Interest Yield/ rate Average balance Interest Yield/ rate Average balance Interest Yield/ rate Interest-earning assets: Loans (1)(2)(3)(5) $ 2,984,912 $ 183,578 6.15 % $ 2,722,797 $ 160,755 5.90 % $ 2,286,928 $ 108,053 4.72 % Taxable securities (4) 357,255 12,639 3.18 % 363,972 11,718 2.88 % 341,600 9,123 2.49 % Non-taxable securities (4)(5) 291,833 9,473 3.85 % 282,678 9,282 3.79 % 263,981 7,859 3.56 % Interest-bearing deposits in other banks 20,580 1,005 4.87 % 21,551 979 4.54 % 146,849 1,120 0.76 % Total interest earning assets 3,654,580 206,695 5.62 % 3,390,998 182,734 5.35 % 3,039,358 126,155 4.16 % Noninterest-earning assets: Cash and due from financial institutions 34,494 39,219 84,777 Premises and equipment, net 52,230 58,456 34,577 Accrued interest receivable 13,349 11,499 8,650 Intangible assets 134,273 133,626 96,492 Other assets 57,879 63,152 50,765 Bank owned life insurance 62,349 54,211 50,076 Less allowance for credit losses (39,498 ) (33,814 ) (27,721 ) Total $ 3,969,656 $ 3,717,347 $ 3,336,974 (1) For purposes of these computations, the daily average loan amounts outstanding are net of unearned income and include loans held for sale.
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 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 34 securities and other receivables at the time the financial asset is originated or acquired.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in thousands, except per share data) General The following paragraphs more fully discuss the significant highlights, changes and trends as they relate to the Company’s financial condition, results of operations, liquidity and capital resources as of December 31, 2023 and 2022, and during the three-year period ended December 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in thousands, except per share data) General The following paragraphs more fully discuss the significant highlights, changes and trends as they relate to the Company’s financial condition, results of operations, liquidity and capital resources as of December 31, 2024 and 2023, and during the three-year period ended December 31, 2024.
Maturities and Sensitivities of Loans to Changes in Interest Rates The following table shows the amount of Commercial and Agriculture, Commercial Real Estate, Residential Real Estate, Real Estate Construction, Farm Real Estate and Consumer and Other Loans and Lease financing receivables outstanding as of December 31, 2023, which, based on the contract terms for repayments of principal, are due in the periods indicated.
Maturities and Sensitivities of Loans to Changes in Interest Rates The following table shows the amount of Commercial and Agriculture, Commercial Real Estate, Residential Real Estate, Real Estate Construction, Farm Real Estate, Lease financing receivables and Consumer and Other Loans outstanding as of December 31, 2024, which, based on the contract terms for repayments of principal, are due in the periods indicated.
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 34 management’s judgment, the CECL methodology produces a result that is adequate to provide for probable credit losses.
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 composition and overall level of the loan portfolio and charge-off activity are also factors used to determine the amount of the allowance for loan losses.
The composition and overall level of the loan portfolio and charge-off activity are also factors used to determine the amount of the allowance for credit losses.
Uninsured deposits as of December 31, 2023 and 2022 are based on estimates and include portions of FDIC-insured deposit accounts that exceed the insurance limit of $250,000 per separately insured depositor. Maturities of certificates of deposits and individual retirement accounts (IRAs) of more than $250,000 outstanding at December 31, 2023 are summarized as follows.
Uninsured deposits as of December 31, 2024 and 2023 are based on estimates and include portions of FDIC-insured deposit accounts that exceed the insurance limit of $250,000 per separately insured depositor. Maturities of certificates of deposits and individual retirement accounts (IRAs) of more than $250,000 outstanding at December 31, 2024 are summarized as follows.
Refer to “Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential” and “Changes in Interest Income and Interest Expense Resulting from Changes in Volume and Changes in Rate” on pages 43 through 45 for further analysis of the impact of changes in interest-bearing assets and liabilities on the Company’s net interest income.
Refer to “Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential” and “Changes in Interest Income and Interest Expense Resulting from Changes in Volume and Changes in Rate” on pages 43 through 44 for further analysis of the impact of changes in interest-bearing assets and liabilities on the Company’s net interest income.
Management analyzes each impaired commercial and commercial real estate loan relationship with a balance of $350 or larger, on an individual basis and 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.
Management analyzes each individually evaluated commercial and commercial real estate loan relationship with a balance of $350 or larger, on an individual basis and 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.
The following table sets forth the maturities of securities at December 31, 2023 and the weighted average yields of such debt securities. Maturities are reported based on stated maturities and do not reflect principal prepayment assumptions.
The following table sets forth the maturities of securities at December 31, 2024 and the weighted average yields of such debt securities. Maturities are reported based on stated maturities and do not reflect principal prepayment assumptions.
Efforts are continually made to analyze each segment of the loan portfolio and quantify risk to assure that reserves are appropriate for each segment and the overall portfolio. Management specifically evaluates loans that are impaired, which includes restructured loans, to estimate potential loss.
Efforts are continually made to analyze each segment of the loan portfolio and quantify risk to assure that reserves are appropriate for each segment and the overall portfolio. Management specifically evaluates loans that are indivdually evaluated, which includes restructured loans, to estimate potential loss.
(2) Included in loan interest income are loan fees of $2,960 in 2023, $2,024 in 2022 and $1,661 in 2021. (3) Non-accrual loans are included in loan totals and do not have a material impact on the analysis presented. (4) Average balance is computed using the carrying value of securities.
(2) Included in loan interest income are loan fees of $2,952 in 2024, $2,960 in 2023 and $2,024 in 2022. (3) Non-accrual loans are included in loan totals and do not have a material impact on the analysis presented. (4) Average balance is computed using the carrying value of securities.
The Company repurchased 84,230 common shares pursuant to a stock repurchase program announced on May 8, 2023, pursuant to which the Company is authorized to repurchase a maximum aggregate value of $13,500 of the Company’s common shares until May 2, 2024.
The Company repurchased 8,262 common shares pursuant to its stock repurchase program announced on May 8, 2023, pursuant to which the Company is authorized to repurchase a maximum aggregate value of $13,500 of the Company’s common shares until May 2, 2024.
Fair Value of Financial Instruments The Company has disclosed the fair value of its financial instruments at December 31, 2023 and 2022 in Note 17 to the Consolidated Financial Statements. The fair value of loans at December 31, 2023 was 94.9% of the carrying value compared to 96.5% at December 31, 2022.
Fair Value of Financial Instruments The Company has disclosed the fair value of its financial instruments at December 31, 2024 and 2023 in Note 17 to the Consolidated Financial Statements. The fair value of loans at December 31, 2024 was 96.0% of the carrying value compared to 94.9% at December 31, 2023.
Income tax expense as a percentage of pre-tax income was 15.1% in 2023 compared to 16.2% in 2022. A lower federal effective tax rate than the statutory rate of 21% in 2023 and 2022 is primarily due to tax-exempt interest income from state and municipal investments, municipal loans, income from BOLI and low income housing credits.
Income tax expense as a percentage of pre-tax income was 13.4% in 2024 compared to 15.1% in 2023. A lower federal effective tax rate than the statutory rate of 21% in 2024 and 2023 is primarily due to tax-exempt interest income from state and municipal investments, municipal loans, income from BOLI and low income housing tax credits.
Comparison of Results of Operations for the Years Ended December 31, 2023 and December 31, 2022 Net Income The Company’s net income for the year ended December 31, 2023 was $42,964, compared to $39,427 for the year ended December 31, 2022. The change in net income was the result of the items discussed in the following sections.
Comparison of Results of Operations for the Years Ended December 31, 2024 and December 31, 2023 Net Income The Company’s net income for the year ended December 31, 2024 was $31,683, compared to $42,964 for the year ended December 31, 2023. The change in net income was the result of the items discussed in the following sections.
As of December 31, 2023, the Company was in compliance with all applicable pledging requirements. 35 Mortgage-backed securities totaled $212,015 at December 31, 2023 and none were considered unusual or “high risk” securities as defined by regulatory authorities.
As of December 31, 2024, the Company was in compliance with all applicable pledging requirements. 35 Mortgage-backed securities totaled $225,561 at December 31, 2024 and none were considered unusual or “high risk” securities as defined by regulatory authorities.
This discussion should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements, which are included elsewhere in this report. Financial Condition At December 31, 2023, the Company’s total assets were $3,861,418, compared to $3,639,445 at December 31, 2022.
This discussion should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements, which are included elsewhere in this report. Financial Condition At December 31, 2024, the Company’s total assets were $4,098,469, compared to $3,861,418 at December 31, 2023.
Net unrealized losses totaled $54,620 on December 31, 2023 compared to net unrealized losses of $66,949 on December 31, 2022. The change in unrealized gains is primarily due to changes in market interest rates. Note 3 to the Consolidated Financial Statements provides additional information on unrealized gains and losses.
Net unrealized losses totaled $61,991 at December 31, 2024 compared to net unrealized losses of $54,620 at December 31, 2023. The change in unrealized losses is primarily due to changes in market interest rates. Note 3 to the Consolidated Financial Statements provides additional information on unrealized gains and losses.
Of this total, $210,108 consisted of pass-through securities issued by the Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Government National Mortgage Association (“GNMA”), and the remaining $1,907 of these securities were collateralized by mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA.
Of this total, $192,035 consisted of pass-through securities issued by the Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Government National Mortgage Association (“GNMA”), and the remaining $33,526 of these securities were collateralized by mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA.
Quantitative and Qualitative Disclosures about Market Risk” section below. Capital Adequacy Shareholders’ equity totaled $372,002 at December 31, 2023 compared to $334,835 at December 31, 2022.
Quantitative and Qualitative Disclosures about Market Risk” section below. Capital Adequacy Shareholders’ equity totaled $388,502 at December 31, 2024 compared to $372,002 at December 31, 2023.
Provision and Allowance for Credit Losses The Company’s policy is to maintain the allowance for credit losses at a level sufficient to provide for probable losses incurred in the current portfolio. Management believes the analysis of the allowance for credit losses supported a reserve of $37,160 at December 31, 2023.
Provision and Allowance for Credit Losses The Company’s policy is to maintain the allowance for credit losses at a level sufficient to provide for probable future losses in the current portfolio. Management believes the analysis of the allowance for credit losses supported a reserve of $39,669 at December 31, 2024.
The fair value of deposits at December 31, 2023 was 100.0% of the carrying value compared to 100.0% at December 31, 2022. Changes in fair value were primarily due to changes in the discount values used to measure fair value. 45
The fair value of time deposits at December 31, 2024 was 100.4% of the carrying value compared to 99.8% at December 31, 2023. Changes in fair value were primarily due to changes in the discount values used to measure fair value. 45
At December 31, 2023, Civista was able to pay approximately $56,886 of dividends to CBI without obtaining regulatory approval. During 2023, Civista paid dividends totaling $28,100 to CBI. This represented approximately 65 percent of Civista’s earnings for the year. The Company manages its liquidity and capital through quarterly Asset/Liability Management Committee (ALCO) meetings.
At December 31, 2024, Civista was able to pay approximately $51,007 of dividends to CBI without obtaining regulatory approval. During 2024, Civista paid dividends totaling $20,300 to CBI. This represented approximately 57 percent of Civista’s earnings for the year. The Company manages its liquidity and capital through quarterly Asset/Liability Management Committee ("ALCO") meetings.
The increase in deposit expense was due to a increase in the average rate paid, as the average rate paid on demand and savings accounts increased from 0.15% in 2022 to 1.15% in 2023 and the average rate paid on time deposits increased from 0.95% in 2022 to 4.125% in 2023, which was coupled with an increase in the average balance of interest-bearing deposits of $258,499 for the year ended December 31, 2023 as compared to the same period in 2022.
The increase in deposit expense was due to a increase in the average rate paid, as the average rate paid on demand and savings accounts increased from 0.57% in 2023 to 1.53% in 2024 and the average rate paid on time deposits increased from 4.51% in 2023 to 4.58% in 2024, which was coupled with an increase in the average balance of interest-bearing deposits of $450,532 for the year ended December 31, 2024 as compared to the same period in 2023.
Allocation of Allowance for Loan Losses The following tables allocate the allowance for loan losses at December 31 to each loan category.
Allocation of Allowance for Credit Losses The following tables allocate the allowance for credit losses at December 31, 2024, 2023, and 2022, to each loan category.
The allowance has been allocated according to the amount deemed to be reasonably necessary to provide for expected lifetime credit losses. within the following categories of loans at the dates indicated. 2023 2022 Allowance Percentage of loans to total loans Allowance Percentage of loans to total loans (Dollars in thousands) Commercial & Agriculture $ 7,884 10.6 % $ 3,011 10.9 % Commercial Real Estate—Owner Occupied 4,686 13.2 4,565 14.5 Commercial Real Estate—Non-Owner Occupied 11,788 40.6 14,138 40.0 Real Estate Mortgage 8,489 23.1 3,145 21.7 Real Estate Construction 3,388 9.1 2,293 9.6 Farm Real Estate 260 0.9 291 1.0 Lease financing receivables 306 1.9 429 1.5 Consumer and Other 340 0.6 98 0.8 Unallocated 19 — 541 — $ 37,160 100.0 % $ 28,511 100.0 % 2021 Allowance Percentage of loans to total loans (Dollars in thousands) Commercial & Agriculture $ 2,600 12.3 % Commercial Real Estate—Owner Occupied 4,464 14.9 Commercial Real Estate—Non-Owner Occupied 13,860 41.5 Real Estate Mortgage 2,597 21.5 Real Estate Construction 1,810 7.9 Farm Real Estate 287 1.4 Consumer and Other 176 0.5 Unallocated 847 — $ 26,641 100 % Civista measures the adequacy of the allowance for loan losses by using 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 allowance has been allocated according to the amount deemed to be reasonably necessary to provide for expected lifetime credit losses within the following categories of loans at the dates indicated. 2024 2023 Allowance Percentage of loans to total loans Allowance Percentage of loans to total loans (Dollars in thousands) Commercial & Agriculture $ 6,586 10.8 % $ 7,587 10.6 % Commercial Real Estate—Owner Occupied 4,327 12.1 % 4,723 13.2 % Commercial Real Estate—Non-Owner Occupied 11,404 39.8 % 12,056 40.6 % Real Estate Mortgage 11,866 24.8 % 8,489 23.1 % Real Estate Construction 3,708 9.9 % 3,388 9.1 % Farm Real Estate 226 0.7 % 260 0.9 % Lease financing receivables 1,361 1.5 % 297 1.9 % Consumer and Other 191 0.4 % 341 0.6 % Unallocated — — 19 — $ 39,669 100.0 % $ 37,160 100.0 % 2022 Allowance Percentage of loans to total loans (Dollars in thousands) Commercial & Agriculture $ 3,011 10.9 % Commercial Real Estate—Owner Occupied 4,565 14.5 % Commercial Real Estate—Non-Owner Occupied 14,138 40.0 % Real Estate Mortgage 3,145 21.7 % Real Estate Construction 2,293 9.6 % Farm Real Estate 291 1.0 % Lease financing receivables 429 1.5 % Consumer and Other 98 0.8 % Unallocated 541 — $ 28,511 100.0 % Civista measures the adequacy of the allowance for credit losses by using 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 increase in interest expense can be attributed to an increase in the average rate paid, accompanied by an increase in the average balance of interest-bearing liabilities. For the year ended December 31, 2023, the average balance of interest-bearing liabilities increased $398,903 to $2,405,655 , as compared to $2,006,752 for the year ended December 31, 2022.
The increase in interest expense can be attributed to an increase in the average rate paid, accompanied by an increase in the average balance of interest-bearing liabilities. For the year ended December 31, 2024, the average balance of interest-bearing liabilities increased $435,723 to $2,841,378, as compared to $2,405,655 for the year ended December 31, 2023.
Evaluation of such requests includes a review of the borrower’s credit history, the collateral securing the loan and the purpose for such request. 33 Analysis of the Allowance for Credit Losses The following table shows the daily average loan balances and changes in the allowance for credit losses for the years indicated. 2023 2022 2021 (Dollars in thousands) Total loans outstanding $ 2,861,727 $ 2,648,281 $ 2,087,258 Allowance for credit losses at year end 37,160 28,511 26,641 Loans accounted for on a nonaccrual basis 12,467 6,507 3,673 Allowance for credit losses to total loans outstanding 1.30 % 1.08 % 1.28 % Nonaccrual loans to total loans outstanding 0.44 % 0.25 % 0.18 % Allowance for credit losses to nonaccrual loans 298.07 % 438.16 % 725.32 % Average loans outstanding: Commercial & Agriculture 276,438 236,315 338,916 Commercial Real Estate—Owner Occupied 372,214 322,132 278,777 Commercial Real Estate—Non-Owner Occupied 1,086,895 896,562 755,578 Real Estate Mortgage 588,739 511,973 433,351 Real Estate Construction 254,429 179,183 176,775 Farm Real Estate 24,250 24,388 28,968 Lease financing receivables 44,014 8,382 — Consumer and Other 10,651 20,147 14,542 Loan participations sold, reflected as secured borrowings 65,167 87,846 100,250 Total average loans outstanding 2,722,797 2,286,928 2,127,157 Net charge-offs (recoveries): Commercial & Agriculture 1,122 (2 ) (150 ) Commercial Real Estate—Owner Occupied (15 ) (42 ) (7 ) Commercial Real Estate—Non-Owner Occupied (46 ) (74 ) (395 ) Real Estate Mortgage (116 ) (66 ) (182 ) Real Estate Construction (37 ) (4 ) (1 ) Farm Real Estate — (6 ) (12 ) Lease financing receivables — 23 — Consumer and Other 72 53 (36 ) Total net charge-offs (recoveries) 980 (118 ) (783 ) Ratio of net charge-offs (recoveries) during the year to average loans outstanding: Commercial & Agriculture 0.41 % (0.00 )% (0.04 )% Commercial Real Estate—Owner Occupied (0.00 )% (0.01 )% (0.00 )% Commercial Real Estate—Non-Owner Occupied (0.00 )% (0.01 )% (0.05 )% Real Estate Mortgage (0.02 )% (0.01 )% (0.04 )% Real Estate Construction (0.01 )% (0.00 )% (0.00 )% Farm Real Estate — (0.02 )% (0.04 )% Lease financing receivables — — Consumer and Other 0.11 % 0.06 % (0.04 )% Total net recoveries (charge-offs) 0.04 % (0.01 )% (0.04 )% The amount of net charge-offs fluctuates from year to year due to factors relating to the condition of the general economy, decline in market values of collateral and deterioration of specific businesses.
Evaluation of such requests includes a review of the borrower’s credit history, the collateral securing the loan and the purpose for such request. 33 Analysis of the Allowance for Credit Losses The following table shows the daily average loan balances and changes in the allowance for credit losses for the years indicated. 2024 2023 2022 (Dollars in thousands) Total loans outstanding $ 3,081,230 $ 2,861,727 $ 2,648,281 Allowance for credit losses at year end 39,669 37,160 28,511 Loans accounted for on a nonaccrual basis 30,950 12,467 6,507 Allowance for credit losses to total loans outstanding 1.29 % 1.30 % 1.08 % Nonaccrual loans to total loans outstanding 1.00 % 0.44 % 0.25 % Allowance for credit losses to nonaccrual loans 128.17 % 298.07 % 438.16 % Average loans outstanding: Commercial & Agriculture 310,770 276,438 236,315 Commercial Real Estate—Owner Occupied 374,965 372,214 322,132 Commercial Real Estate—Non-Owner Occupied 1,198,569 1,086,895 896,562 Real Estate Mortgage 721,379 588,739 511,973 Real Estate Construction 286,264 254,429 179,183 Farm Real Estate 24,279 24,250 24,388 Lease financing receivables 53,392 44,014 8,382 Consumer and Other 15,294 10,651 20,147 Loan participations sold, reflected as secured borrowings — 65,167 87,846 Total average loans outstanding 2,984,912 2,722,797 2,286,928 Net charge-offs (recoveries): Commercial & Agriculture 1,942 1,122 (2 ) Commercial Real Estate—Owner Occupied — (15 ) (42 ) Commercial Real Estate—Non-Owner Occupied 654 (46 ) (74 ) Real Estate Mortgage (114 ) (116 ) (66 ) Real Estate Construction (12 ) (37 ) (4 ) Farm Real Estate — — (6 ) Lease financing receivables 861 — 23 Consumer and Other 45 72 53 Total net charge-offs (recoveries) 3,376 980 (118 ) Ratio of net charge-offs (recoveries) during the year to average loans outstanding: Commercial & Agriculture 0.62 % 0.41 % (0.00 )% Commercial Real Estate—Owner Occupied — (0.00 )% (0.01 )% Commercial Real Estate—Non-Owner Occupied 0.05 % (0.00 )% (0.01 )% Real Estate Mortgage (0.02 )% (0.02 )% (0.01 )% Real Estate Construction (0.00 )% (0.01 )% (0.00 )% Farm Real Estate — — (0.02 )% Lease financing receivables 1.61 % — 0.27 % Consumer and Other 0.29 % 0.11 % 0.06 % Total net charge-offs (recoveries) 0.11 % 0.04 % (0.01 )% The amount of net charge-offs fluctuates from year to year due to factors relating to the condition of the general economy, decline in market values of collateral and deterioration of specific businesses.
Net cash used for investing activities was $311,784, $410,364, and $130,496 in 2023, 2022 and 2021, respectively, principally reflecting our loan and investment security activities. Deposits and borrowings comprised most of our financing activities, which resulted in net cash provided of $266,131, $164,303, and $216,925 in 2023, 2022 and 2021, respectively.
Net cash used for investing activities was $258,801, $311,784 and $410,364 in 2024, 2023 and 2022, respectively, principally reflecting our loan and investment security activities. Deposits, borrowings, and cash dividends paid to shareholders' comprised most of our financing activities, which resulted in net cash provided of $213,304, $266,131 and $164,303 in 2024, 2023 and 2022, respectively.
(5) Yield/Rate is calculated using the tax-equivalent adjustment of 21% for 2023, 2022 and 2021. 42 Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential (Continued) The following table sets forth, for the years ended December 31, 2023, 2022 and 2021, the distribution of liabilities, including interest amounts and average rates of major categories of interest-bearing liabilities and shareholders’ equity (Amounts in thousands): 2023 2022 2021 Liabilities and Shareholders’ Equity Average balance Interest Yield/ rate Average balance Interest Yield/ rate Average balance Interest Yield/ rate Interest-bearing liabilities: Savings and interest-bearing demand accounts $ 1,356,789 $ 7,689 0.57 % $ 1,423,134 $ 1,442 0.01 % $ 1,315,220 $ 1,219 0.09 % Certificates of deposit 578,243 26,066 4.51 % 253,399 2,398 0.95 % 265,294 2,956 1.11 % Short-term Federal Home Loan Bank advances 280,887 14,493 5.16 % 66,875 2,566 3.84 % — — — Long-term Federal Home Loan Bank advances 2,909 66 2.27 % 45,325 510 1.13 % 94,041 1,163 1.24 % Other borrowings 74,025 4,058 5.48 % 91,848 5,243 5.70 % 100,250 3,312 3.30 % Securities sold under repurchase agreements 8,685 4 0.05 % 22,293 11 0.05 % 26,165 23 0.09 % Federal funds purchased 244 13 5.33 % 137 6 4.38 % 137 1 0.73 % Subordinated debentures 103,873 4,849 4.67 % 103,741 3,781 3.64 % 36,785 955 2.66 % Total interest-bearing liabilities 2,405,655 57,238 2.38 % 2,006,752 15,957 0.79 % 1,837,892 9,629 0.53 % Noninterest-bearing liabilities: Demand deposits 917,005 937,890 907,591 Other liabilities 50,963 76,189 38,868 967,968 1,014,079 946,459 Shareholders’ equity 343,724 316,143 349,203 Total $ 3,717,347 $ 3,336,974 $ 3,133,554 Net interest income and interest rate spread (1) $ 125,496 2.97 % $ 110,198 3.37 % $ 95,425 3.15 % Net interest margin (2) 3.70 % 3.65 % 3.35 % (1) Interest rate spread is calculated by subtracting the rate on average interest-bearing liabilities from the yield on average interest-earning assets.
(5) Yield/Rate is calculated using the tax-equivalent adjustment of 21% for 2024, 2023 and 2022. 42 Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential (Continued) The following table sets forth, for the years ended December 31, 2024, 2023 and 2022, the distribution of liabilities, including interest amounts and average rates of major categories of interest-bearing liabilities and shareholders’ equity (Amounts in thousands): 2024 2023 2022 Liabilities and Shareholders’ Equity Average balance Interest Yield/ rate Average balance Interest Yield/ rate Average balance Interest Yield/ rate Interest-bearing liabilities: Savings and interest-bearing demand accounts $ 1,426,288 $ 21,853 1.53 % $ 1,356,789 $ 7,689 0.57 % $ 1,423,134 $ 1,442 0.01 % Time deposits 959,276 43,948 4.58 % 578,243 26,066 4.51 % 253,399 2,398 0.95 % Short-term Federal Home Loan Bank advances 341,692 18,451 5.39 % 280,887 14,493 5.16 % 66,875 2,566 3.84 % Long-term Federal Home Loan Bank advances 1,892 42 2.22 % 2,909 66 2.27 % 45,325 510 1.13 % Other borrowings 8,076 753 9.32 % 74,025 4,058 5.48 % 91,848 5,243 5.70 % Securities sold under repurchase agreements — — — 8,685 4 0.05 % 22,293 11 0.05 % Federal funds purchased 137 7 5.11 % 244 13 5.33 % 137 6 4.38 % Subordinated debentures 104,017 4,931 4.74 % 103,873 4,849 4.67 % 103,741 3,781 3.64 % Total interest-bearing liabilities 2,841,378 89,985 3.17 % 2,405,655 57,238 2.38 % 2,006,752 15,957 0.79 % Noninterest-bearing liabilities: Demand deposits 701,397 917,005 937,890 Other liabilities 49,522 50,963 76,189 750,919 967,968 1,014,079 Shareholders’ equity 377,359 343,724 316,143 Total $ 3,969,656 $ 3,717,347 $ 3,336,974 Net interest income and interest rate spread (1) $ 116,710 2.45 % $ 125,496 2.97 % $ 110,198 3.37 % Net interest margin (2) 3.21 % 3.70 % 3.65 % (1) Interest rate spread is calculated by subtracting the rate on average interest-bearing liabilities from the yield on average interest-earning assets.
This change was the result of an increase in the average balance of loans, accompanied by a higher yield on the portfolio. The average balance of loans increased by $523,715, or 23.8%, to $2,722,797 for the year ended December 31, 2023, as compared to $2,199,082 for the year ended December 31, 2022.
This change was the result of an increase in the average balance of loans, accompanied by a higher yield on the portfolio. The average balance of loans increased by $262,115, or 9.6%, to $2,984,912 for the year ended December 31, 2024, as compared to $2,722,797 for the year ended December 31, 2023.
(2) The weighted average yield has been computed using the historical amortized cost for available-for-sale securities. Premises and equipment, net of accumulated depreciation, decreased $7,249 from December 31, 2022 to December 31, 2023. The decrease is the result of new purchases of $3,218, offset by depreciation of $10,760.
(2) The weighted average yield has been computed using the historical amortized cost for available-for-sale securities. Premises and equipment, net of accumulated depreciation, decreased $9,603 from December 31, 2023 to December 31, 2024. The decrease is the result of depreciation of $9,545 and net disposals exceeding new purchases by $58.
The Company continually examines its rate structure to ensure that its interest rates are competitive and reflective of the current rate environment in which it competes. Total interest income increased $56,579 to $182,734 for the year ended December 31, 2023, which is attributable to an increase of $52,702 in interest and fees on loans.
The Company continually examines its rate structure to ensure that its interest rates are competitive and reflective of the current rate environment in which it competes. Total interest income increased $23,961 to $206,695 for the year ended December 31, 2024, which was attributable to an increase of $22,823 in interest and fees on loans.
Loans held for sale and leases 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. Noninterest Income Noninterest income increased $8,087, or 27.8%, to $37,164 for the year ended December 31, 2023, from $29,076 for the comparable 2022 period.
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. Individually evaluated loans or portions thereof are charged-off when deemed uncollectible. Noninterest Income Noninterest income increased $585, or 1.6%, to $37,748 for the year ended December 31, 2024, from $37,163 for the comparable 2023 period.
(2) Net interest margin is calculated by dividing tax-equivalent adjusted net interest income by average interest-earning assets. 43 Liquidity and Capital Resources Civista maintains a conservative liquidity position. All securities are classified as available for sale. At December 31, 2023, securities with maturities of one year or less totaled $2,652, or 0.4% of the total securities portfolio.
(2) Net interest margin is calculated by dividing tax-equivalent adjusted net interest income by average interest-earning assets. 43 Liquidity and Capital Resources Civista maintains a conservative liquidity position. All securities, with the exception of equity securities, are classified as available for sale.
The average daily amount of deposits (all in domestic offices) and average rates paid on such deposits is summarized for the years indicated. 2023 2022 Average balance Average rate paid Average balance Average rate paid (Dollars in thousands) Noninterest-bearing demand deposits $ 900,124 N/A $ 937,890 N/A Interest-bearing demand deposits 497,512 0.03 % 544,351 0.03 % Savings, including Money Market deposit accounts 858,551 1.15 % 878,783 0.15 % Certificates of deposit, including IRA’s 578,032 4.12 % 253,399 0.95 % $ 2,834,219 $ 2,614,423 Uninsured deposits at December 31, 2023 and 2022 were $499,429 and $563,092, respectively.
The average daily amount of deposits (all in domestic offices) and average rates paid on such deposits is summarized for the years indicated. 2024 2023 Average balance Average rate paid Average balance Average rate paid (Dollars in thousands) Noninterest-bearing demand deposits $ 701,397 N/A $ 900,124 N/A Interest-bearing demand deposits 425,423 0.67 % 497,512 0.03 % Savings, including Money Market deposit accounts 1,000,865 1.90 % 858,551 1.15 % Certificates of deposit, including IRAs 959,276 4.58 % 578,032 4.12 % $ 3,086,961 $ 2,834,219 Uninsured deposits at December 31, 2024 and 2023 were $431,713 and $499,429, respectively.
The average interest rate of the mortgage-backed securities portfolio at December 31, 2023 was 2.56%. The average maturity at December 31, 2022 was approximately 14.8 years. Securities available for sale had a fair value at December 31, 2023 of $618,272. This fair value includes unrealized gains of approximately $3,059 and unrealized losses of approximately $57,679.
The average interest rate of the mortgage-backed securities portfolio at December 31, 2024 was 3.08%. The average maturity at December 31, 2024 was approximately 14.8 years. Securities available for sale had a fair value at December 31, 2024 of $648,067. This fair value includes unrealized gains of approximately $882 and unrealized losses of approximately $62,873.
Interest incurred on deposits increased by $29,915 to $33,755 for the year ended December 31, 2023, compared to $3,840 for the same period in 2022.
Interest incurred on deposits increased by $32,046 to $65,801 for the year ended December 31, 2024, compared to $33,755 for the same period in 2023.
The loan yield increased to 5.90% for 2023, from 4.69% in 2022. Interest on taxable securities increased $2,595 to $11,718 for the year ended December 31, 2023, compared to $9,123 for the same period in 2022.
The loan yield increased to 6.15% for 2024, from 5.90% in 2023. Interest on taxable securities increased $921 to $12,639 for the year ended December 31, 2024, compared to $11,718 for the same period in 2023.
As of December 31, 2023, Civista had total credit availability with the FHLB of $791,637, of which $364,792 was outstanding, including standby letters of credit of $24,400. On a separate entity basis, CBI’s primary source of funds is dividends paid by its subsidiaries, primarily by Civista.
As of December 31, 2024, Civista had total credit availability with the FHLB of $839,034, of which $370,133 was available. On a separate entity basis, CBI’s primary source of funds is dividends paid by its subsidiaries, primarily by Civista.
Interest on tax-exempt securities increased $1,423 to $9,282 for the year ended December 31, 2023, compared to $7,859 for the same period in 2022. The average balance of tax-exempt securities increased $18,697 to $282,678 for the year ended December 31, 2023 as compared to $263,981 for the year ended December 31, 2022.
Interest on tax-exempt securities increased $191 to $9,473 for the year ended December 31, 2024, compared to $9,282 for the same period in 2023. The average balance of tax-exempt securities increased $9,155 to $291,833 for the year ended December 31, 2024 as compared to $282,678 for the year ended December 31, 2023.
Civista no longer offers repurchase agreements in the form of sweep accounts to commercial checking account customers, as of July 2023. These repurchase agreements totaled $0 at December 31, 2023 compared to $25,143 at December 31, 2022. U.S. Treasury securities and obligations of U.S. government agencies maintained under Civista’s control were pledged as collateral for the repurchase agreements.
Other borrowings decreased due to lower borrowings at the CLF division. Civista no longer offers repurchase agreements in the form of sweep accounts to commercial checking account customers, as of July 2023. These repurchase agreements totaled $0 at December 31, 2024 compared to $0 at December 31, 2023 and $25,143 at December 31, 2022. U.S.
The available for sale portfolio helps to provide Civista with the ability to meet its funding needs. The Consolidated Statements of Cash Flows contained in the Consolidated Financial Statements detail the Company’s cash flows from operating activities resulting from net earnings. Net cash provided by operating activities was $62,698, $25,183, and $40,761 for 2023, 2022 and 2021, respectively.
The Consolidated Statements of Cash Flows contained in the Consolidated Financial Statements detail the Company’s cash flows from operating activities resulting from net earnings. Net cash provided by operating activities was $48,246, $62,698 and $25,183 for 2024, 2023 and 2022, respectively.
The average balance of taxable securities increased $22,372 to $363,972 for the year ended December 31, 2023, as compared to $341,600 for the year ended December 31, 2022. The yield on taxable securities increased 39 basis points to 2.88% for 2023, compared to 2.49% for 2022.
The average balance of taxable securities decreased $6,717 to $357,255 for the year ended December 31, 2024, as compared to $363,972 for the year ended December 31, 2023. The yield on taxable securities increased 30 basis points to 3.18% for 2024, compared to 2.88% for 2023.
The deductions from CET1 capital include goodwill and other intangibles, certain deferred tax assets, mortgage-servicing assets above certain levels, gains on sale in connection with a securitization, investments in a banking organization’s own capital instruments and investments in the capital of unconsolidated financial institutions (above certain levels).
Tier 2 capital, which can be included in the total capital ratio, includes certain capital instruments (such as subordinated debt) and limited amounts of the allowance for credit losses, subject to certain eligibility criteria, less applicable deductions. 44 The deductions from CET1 capital include goodwill and other intangibles, certain deferred tax assets, mortgage-servicing assets above certain levels, gains on sale in connection with a securitization, investments in a banking organization’s own capital instruments and investments in the capital of unconsolidated financial institutions (above certain levels).
Provisions for credit losses totaled $4,435 in 2023, $1,752 in 2022 and $830 in 2021. The Company’s provision for credit losses increased $2,683 during 2023, as compared to 2022, primarily to support strong organic loan growth in the portfolio. In addition, a one-time CECL adoption adjustment of $5,964 was incurred in the first quarter of 2023.
Provisions for credit losses totaled $5,364 in 2024, $4,435 in 2023 and $1,752 in 2022. The Company’s provision for credit losses increased $929 during 2024, as compared to 2023, primarily to support organic loan growth in the portfolio.
Interest expense incurred on FHLB advances and subordinated debentures increased 93.9% from 2022. The increase was due to an increase in the average balance of short-term FHLB balances and subordinated debentures to $280,887 and $66,875, respectively, accompanied by an increase in rates. The average balance of other borrowings decreased $17,823 for the period ended December 31, 2023.
Interest expense incurred on FHLB advances and subordinated debentures increased 20.7% from 2023. The increase was due to an increase in the average balance of short-term FHLB balances and subordinated debentures to $341,692 and $104,017, respectively, accompanied by an increase in rates.
The yield on tax-exempt securities increased 23 basis points to 3.79% for 2023, compared to 3.56% for 2022. 38 Total interest expense increased $41,287 or 258.8%, to $53,763 for the year ended December 31, 2023, compared with $4,732 for the same period in 2022.
The yield on tax-exempt securities increased 6 basis points to 3.85% for 2024 compared to 3.79% for 2023. 38 Total interest expense increased $32,747, or 57.2%, to $89,985 for the year ended December 31, 2024, compared to $57,238 for the same period in 2023.
The increase in compensation expense was due to increased payroll, payroll taxes, employee insurance and commissions and incentives. The average full time equivalent (FTE) employees were 531 at December 31, 2023, an increase of 50 FTEs over 2022 due to a full year of the additional employees resulting from the prior year acquisitions of Comunibanc and VFG.
The increase in compensation expense was due to increased payroll and payroll taxes, both related to merit increases, and an increase in employee insurance. The average full time equivalent ("FTE") employees was 531 at December 31, 2024, relatively flat from 2023.
During the twelve-months ended December 31, 2023, 349 loans were sold, totaling $103,036. During the twelve-months ended December 31, 2022, 692 loans were sold, totaling $131,193. Service charges increased due to increased ATM fees of $381. Lease revenue and residual income increased due to a full year of operations for CLF.
During the twelve-months ended December 31, 2024, 530 loans were sold, totaling $123,670. During the twelve-months ended December 31, 2023, 349 loans were sold, totaling $103,036. Lease revenue and residual income increased due to higher income from leasing operations at CLF.
Net loans and securities available for sale increased $204,798 and $2,870, respectively, cash and due from financial institutions increased $17,045 from December 31, 2022 to December 31, 2023. Other factors contributing to the change in assets are discussed in the following sections.
Net loans and securities available for sale increased $216,993 and $29,795 from December 31, 2023, to December 31, 2024, respectively. Other factors contributing to the change in assets are discussed in the following sections. Loans held for sale decreased $1,060, from $1,725 at December 31, 2023 to $665 at December 31, 2024.
Obligations of states and political subdivisions available for sale increased by $21,351 from 2022 to 2023. Mortgage-backed securities decreased by $25,110 to total $212,015 at December 31, 2023. The Company continues to utilize letters of credit from the Federal Home Loan Bank (FHLB) to replace maturing securities that were pledged for public entities.
The Company continues to utilize letters of credit from the Federal Home Loan Bank ("FHLB") to replace maturing securities that were pledged for public entities.
Total shareholders’ equity increased $37,166, or 11.1%, during 2023 to $372,002. Shareholders' equity increased due to net income of $42,964, partially offset by $9,599 of dividends on common shares and a one-time CECL adoption adjustment of $5,193. Additionally, $984 was recognized as stock-based compensation in 2023 in connection with the grant of restricted common shares.
Total shareholders’ equity increased $16,500, or 4.4%, during 2024 to $388,502. Shareholders' equity increased due to net income of $31,683, partially offset by $10,063 of dividends on common shares and $164 of repurchases of common shares as treasury shares. Additionally, $871 was recognized as stock-based compensation in 2024 in connection with the grant of restricted common shares.
This increase in deposits at December 31, 2023 compared to December 31, 2022 included increases in certificate of deposit accounts of $585,401, or 214%, offset by decreases in noninterest bearing demand deposits of $124,634, or 13.9% in interest bearing demand accounts of $78,430, or 14.9%, in savings and money market accounts 36 of $20,129, or 2.3% and in individual retirement accounts of $3,933, or 8.5%.
This increase in deposits at December 31, 2024 compared to December 31, 2023 included increases in savings and money market accounts of $289,172, or 33.5%, and certificate of deposit accounts of $44,085, or 5.1%, partially offset by decreases in noninterest bearing demand deposits of $76,605, or 9.9% and interest bearing demand accounts of $29,866 or 6.6%.
The increase in shareholders’ equity resulted primarily from net income of $42,964, which was partially offset by a $768 net increase in the Company’s pension liability and an increase in the fair value of securities available for sale, net of tax, of $9,747, together with dividends on common shares of $9,599 and repurchase of common shares totaling $1,628 during 2023 pursuant to the Company’s publicly-announced share purchase programs.
The increase in shareholders’ equity resulted primarily from net income of $31,683, which was partially offset by dividends on common shares of $10,063 and a decrease in the fair value of securities available for sale, net of tax, of $5,827.
Total outstanding common shares at December 31, 2023 were 15,695,424, which decreased from 15,728,234 common shares outstanding at December 31, 2022. Common shares outstanding was impacted by the Company’s repurchase of 90,423 common shares during 2023 at an average repurchase price of $18.01.
Common shares outstanding was impacted by the Company’s repurchase of 8,956 common shares during 2024 at an average repurchase price of $18.31.
The Company’s cost of funds is influenced by interest rates on competing investments and general market rates of interest.
Results of Operations The operating results of the Company are affected by general economic conditions, the monetary and fiscal policies of federal agencies and the regulatory policies of agencies that regulate financial institutions. The Company’s cost of funds is influenced by interest rates on competing investments and general market rates of interest.
Loans held for sale increased $1,042, or 152.6%, from $683 at December 31, 2022 to $1,725 at December 31, 2023. The increase is due to higher balances of held loans. At December 31, 2023, nine loans totaling $1,725 were held for sale as compared to seven loans totaling $683 at December 31, 2022.
The decrease is due to lower balances of held loans. At December 31, 2024, six loans totaling $665 were held for sale as compared to nine loans totaling $1,725 at December 31, 2023. At December 31, 2024, the Company’s net loans totaled $3,041,561 and increased by 7.7% from $2,824,568 at December 31, 2023.
Goodwill decreased by $175, from $125,695 at December 31, 2022 to $125,520 at December 31, 2023. The decrease is due to an adjustment of goodwill related to the acquisition of VFG in October 2022. Other intangible assets decreased $1,251 from year-end 2022. The decrease includes $1,580 of core deposit intangibles offset by an increase of $329 of mortgage servicing rights.
Goodwill remained unchanged from December 31, 2023 to December 31, 2024 at $125,520. Other intangible assets decreased $1,625 from year-end 2023. The decrease includes $1,484 of amortization on core deposit intangibles and a decrease of $141 of mortgage servicing rights. Swap assets decreased $7,173 from December 31, 2023 to December 31, 2024.
The increase in FDIC assessments was attributable to higher assessment multipliers charged to Civista. The increase in amortization expense is related to the a full year of amortization of assets acquired in the acquisition of Comunibanc Corp in July 2022. Software expense increase due to a general increase in legacy software maintenance contracts.
Software expense increased due to a general increase in legacy software maintenance contracts as well as new software contracts aimed at improving our ability to detect, deter, and mitigate fraud and fraud related losses. The increase in FDIC assessments was attributable to higher assessment multipliers charged to Civista.
Under the BASEL III rules, the Company elected to opt-out of including accumulated other comprehensive income in regulatory capital.
Under the BASEL III rules, the Company elected to opt-out of including accumulated other comprehensive income in regulatory capital. Common equity for the CET1 risk-based capital ratio includes common stock (plus related surplus) and retained earnings, plus limited amounts of minority interests in the form of common stock, less the majority of certain regulatory deductions.
The remaining difference is the result of increases in the cash surrender value of the underlying insurance policies. Deferred taxes decreased $92 from December 31, 2022 to December 31, 2023. Year-end deposit balances totaled $2,985,028 in 2023 compared to $2,619,984 in 2022, an increase of $365,044, or 13.9%.
The difference is the result of increases in the cash surrender value of the underlying insurance policies partially offset by death benefits on life insurance policies held on two former employees. 36 Year-end deposit balances totaled $3,211,870 in 2024 compared to $2,985,028 in 2023, an increase of $226,842, or 7.6%.
Swap assets decreased $4,098 from December 31, 2022 to December 31, 2023. The decrease is primarily the result of decreases in the fair value of swap assets as compared to December 31, 2022. Bank owned life insurance (BOLI) increased $7,850 from December 31, 2022 to December 31, 2023. An additional $7 of BOLI was purchased in December 2023.
The decrease is primarily the result of $6,330 in cash collateral posted by counterparties at December 31, 2024 that is netted against the fair value of the swap asset. Bank owned life insurance ("BOLI") increased $1,448 from December 31, 2023 to December 31, 2024.
Securities available for sale increased by $2,870, or 0.5%, from $615,402 at December 31, 2022 to $618,272 at December 31, 2023. U.S. Treasury securities and obligations of U.S. government agencies increased $6,629, or 1.1% from $61,029 at December 31, 2022 to $67,658 at December 31, 2023.
Treasury securities and obligations of U.S. government agencies increased $29,729, or 43.9% from $67,658 at December 31, 2023 to $97,387 at December 31, 2024. Mortgage-backed securities increased $13,546, or 6.4%, from $212,015 at December 31, 2023 to $225,561 at December 31, 2024. Obligations of states and political subdivisions available for sale decreased by $13,480 from 2023 to 2024.
Additional detail related to these repurchase agreements can be found in Note 12 to the Consolidated Financial Statements. Swap liabilities decreased $4,098 from December 31, 2022 to December 31, 2023. The decrease is primarily the result of decreases in the fair value of swap liabilities as compared to December 31, 2022.
Treasury securities and obligations of U.S. government agencies maintained under Civista’s control were pledged as collateral for the repurchase agreements. Swap liabilities decreased $843 from December 31, 2023 to December 31, 2024. The decrease is primarily the result of decreases in the fair value of swap liabilities as compared to December 31, 2023.
Accumulated other comprehensive income increased $9,747 due to an increase in the fair value of securities available for sale, net of tax and a $768 increase in the Company’s pension liability, net of tax. The Company repurchased treasury shares for $1,628.
Accumulated other comprehensive loss decreased $5,827 due to a decrease in the fair value of securities available for sale, net of tax. For further explanation of these items, see Note 1, Note 15 and Note 16 to the Consolidated Financial Statements.
Which were partially offset by decreases in net gain on equity securities of $139, and net gain on sale of loans and leases of $489. 39 Net gain on sale of loans and leases decreased by $489 for 2023, primarily as a result of a decrease in volume of loans sold.
The increase was primarily due to increases in net gain on sale of loans and leases of $1,530, lease revenue and residual income of $1,316, bank owned life insurance of $1,093 and wealth management fees of $752, which were partially offset by decreases in service charges of $1,092 and the discontinuation of the tax refund processing center. 39 Net gain on sale of loans and leases increased by $1,530 for 2024, primarily as a result of an increase in volume of loans sold.
Certificates of Deposits Individual Retirement Accounts Total (Dollars in thousands) 3 months or less $ 26,470 $ 0 $ 26,470 Over 3 through 6 months 25,861 1,080 26,941 Over 6 through 12 months 30,717 1,540 32,257 Over 12 months 12,185 305 12,490 $ 95,233 $ 2,925 $ 98,158 FHLB advances decreased $56,886 from December 31, 2022 to December 31, 2023.
Certificates of Deposits Individual Retirement Accounts Total (Dollars in thousands) 3 months or less $ 42,338 $ 1,064 $ 43,402 Over 3 through 6 months 25,371 1,309 26,680 Over 6 through 12 months 26,420 2,262 28,682 Over 12 months 26,414 690 27,104 $ 120,543 $ 5,325 $ 125,868 Other borrowings decreased $3,566 from December 31, 2023 to December 31, 2024.
An additional 6,193 common shares were surrendered by officers to the Company to pay taxes upon vesting of restricted shares and 1,740 restricted common shares were forfeited. The repurchase of common shares was offset by the grant of 47,536 restricted common shares to certain officers under the Company’s 2014 Incentive Plan.
An additional 694 common shares were surrendered by officers to the Company to pay taxes upon vesting of restricted shares and 1,518 restricted common shares previously issued to officers were forfeited and 250,148 restricted shares issued as contingent consideration in the VFG acquisition were forfeited, as the measurement period expired and required lease thresholds were not met.
Treasury securities and obligations of U.S. government agencies $ 18,005 3.50 % $ 38,397 1.16 % $ 831 3.51 % $ 10,425 0.05 % Obligations of states and political subdivisions (1) 18,500 3.98 134,013 3.18 185,121 2.95 965 4.00 Mortgage-backed securities in government sponsored entities 563 0.93 20,644 2.78 7,164 2.47 183,644 2.54 Total $ 37,068 3.70 % $ 193,054 2.73 % $ 193,116 2.93 % $ 195,034 2.41 % (1) Weighted average yields on nontaxable obligations have been computed based on actual yields stated on the security.
Treasury securities and obligations of U.S. government agencies $ 38,567 3.86 % $ 46,747 1.77 % $ 3,413 3.69 % $ 8,660 6.60 % Obligations of states and political subdivisions (1) 1,210 4.86 32,387 2.36 38,687 3.41 252,835 3.14 Mortgage-backed securities in government sponsored entities 5,616 2.97 16,762 3.24 4,903 3.25 198,280 3.06 Total $ 45,393 3.78 % $ 95,896 2.22 % $ 47,003 3.41 % $ 459,775 3.17 % (1) Weighted average yields on nontaxable obligations have been computed based on actual yields stated on the security.
Removed
At December 31, 2023, the Company’s net loans totaled $2,824,568 and increased by 7.8% from $2,619,770 at December 31, 2022. The increase in net loans was spread across most segments.
Added
The increase in net loans was spread across most segments. Commercial & Agriculture loans increased $23,695, Commercial Real Estate - Non-Owner Occupied loans increased $64,097, Residential Real Estate loans increased $104,028, and Real Estate Construction loans increased $45,583. The increases in the foregoing loan segments were partially offset by decreases of $17,901 in total for the remaining loan segments.
Removed
Commercial & Agriculture loans increased $29,643, Commercial Real Estate – Owner Occupied loans increased $6,173, Commercial Real Estate - Non-Owner Occupied loans increased $143,158, Residential Real Estate loans increased $107,060, Real Estate Construction loans increased $17,282, Lease financing receivables increased $17,845 and Farm Real Estate loans increased $63.
Added
Maturing Within one year After one but within five years After five but within fifteen years After fifteen years Total (Dollars in thousands) Commercial & Agriculture $ 160,054 $ 128,688 $ 38,634 $ 1,112 $ 328,488 Commercial Real Estate: Owner Occupied 24,000 100,428 219,311 30,628 374,367 Non-Owner Occupied 108,375 526,003 546,735 44,878 1,225,991 Residential Real Estate 9,342 42,181 235,068 477,278 763,869 Real Estate Construction 59,340 110,228 91,406 45,018 305,992 Farm Real Estate 1,783 5,582 13,107 2,563 23,035 Lease financing receivables 3,327 39,907 3,666 — 46,900 Consumer and Other 1,298 9,417 1,465 408 12,588 Total $ 367,519 $ 962,434 $ 1,149,392 $ 601,885 $ 3,081,230 32 Due After One Year Fixed Rate Variable Rate (Dollars in thousands) Commercial & Agriculture $ 96,257 $ 72,177 Commercial Real Estate: Owner Occupied 80,020 270,347 Non-Owner Occupied 280,657 836,959 Residential Real Estate 154,957 599,570 Real Estate Construction 69,262 177,390 Farm Real Estate 5,242 16,010 Lease financing receivables 43,573 — Consumer and Other 11,243 47 Total $ 741,211 $ 1,972,500 The preceding maturity information is based on contract terms at December 31, 2024 and does not include any possible “rollover” at maturity date.
Removed
The increases in the foregoing loan segments were offset by a decrease in Consumer and Other loans of $2,718.
Added
The allowance for credit losses to total loans decreased slightly from 1.30% in 2023 to 1.29% in 2024. Securities available for sale increased by $29,795, or 4.8%, from $618,272 at December 31, 2023 to $648,067 at December 31, 2024. U.S.
Removed
Maturing Within one year After one but within five years After five but within fifteen years After fifteen years Total (Dollars in thousands) Commercial & Agriculture $ 91,306 $ 161,482 $ 50,689 $ 1,316 $ 304,793 Commercial Real Estate: Owner Occupied 6,742 103,779 229,599 37,201 377,321 Non-Owner Occupied 70,159 447,213 595,807 48,715 1,161,894 Residential Real Estate 5,210 30,980 240,938 382,713 659,841 Real Estate Construction 50,596 107,638 63,509 38,666 260,409 Farm Real Estate 1,085 6,938 13,311 3,437 24,771 Lease financing receivables 9,430 34,114 11,098 — 54,642 Consumer and Other 2,154 11,229 4,159 514 18,056 Total $ 236,682 $ 903,373 $ 1,209,110 $ 512,562 $ 2,861,727 32 Due After One Year Fixed Rate Variable Rate (Dollars in thousands) Commercial & Agriculture $ 162,885 $ 50,602 Commercial Real Estate: Owner Occupied 85,003 285,576 Non-Owner Occupied 307,681 784,054 Residential Real Estate 163,414 491,217 Real Estate Construction 68,075 141,738 Farm Real Estate 6,589 17,097 Lease financing receivables 45,212 — Consumer and Other 14,954 948 Total $ 853,813 $ 1,771,232 The preceding maturity information is based on contract terms at December 31, 2023 and does not include any possible “rollover” at maturity date.
Added
Average deposit balances for 2024 were $3,086,961 compared to $2,852,037 for 2023, an increase of 8.2%. Noninterest bearing deposits averaged $701,397 for 2024, compared to $917,005 for 2023, decreasing $215,608, or 23.5%, which is primarily due to the closure of our former tax refund processing program.
Removed
The allowance for credit losses to total loans increased from 1.12% in 2022 to 1.30% in 2023. The unallocated reserve of Civista decreased to $19 in 2023 from $541 in 2022. Management considers both the decrease in the unallocated reserve and the end-of-period reserve number to be insignificant and within the loan policy guidelines.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+0 added−1 removed42 unchanged
Biggest changeNet Portfolio Value December 31, 2023 December 31, 2022 Change in Rates Dollar Amount Dollar Change Percent Change Dollar Amount Dollar Change Percent Change +200bp $ 603,656 $ (4,077 ) (1 )% $ 571,328 $ 14,733 3 % +100bp 608,399 666 0 % 566,596 10,001 2 % Base 607,733 — — 556,595 — — -100bp 605,047 (2,686 ) (0 )% 548,575 (8,020 ) (1 )% -200bp 591,305 (16,428 ) (3 )% 526,702 (29,893 ) (5 )% The change in net portfolio value from December 31, 2022 to December 31, 2023, can be attributed to a couple of factors.
Biggest changeNet Portfolio Value December 31, 2024 December 31, 2023 Change in Rates Dollar Amount Dollar Change Percent Change Dollar Amount Dollar Change Percent Change +400bp $ 649,236 $ 46,009 7.63 % $ 592,847 $ (14,886 ) -2.45 % +300bp 640,723 37,496 6.22 % 598,468 (9,265 ) -1.52 % +200bp 630,945 27,718 4.59 % 603,656 (4,077 ) -0.67 % +100bp 620,021 16,794 2.78 % 608,399 666 0.11 % Base 603,227 — 0.00 % 607,733 — 0.00 % -100bp 584,528 (18,699 ) -3.10 % 605,047 (2,686 ) -0.44 % -200bp 556,163 (47,064 ) -7.80 % 591,305 (16,428 ) -2.70 % -300bp 530,688 (72,539 ) -12.03 % 583,229 (24,504 ) -4.03 % -400bp 593,087 (10,140 ) -1.68 % 653,870 46,137 7.59 % The change in net portfolio value from December 31, 2023 to December 31, 2024, can be attributed to a couple of factors.
This evaluation includes specific loss estimates on certain individually reviewed impaired loans, the pooling of commercial credits risk graded as special mention and substandard that are not individually analyzed, and general loss estimates that are based upon the size, quality, and concentration characteristics of the various loan portfolios, adverse situations that may affect a borrower’s ability to repay, and current economic and industry conditions, among other items.
This evaluation includes specific loss estimates on certain individually evaluated loans, the pooling of commercial credits risk graded as special mention and substandard that are not individually analyzed, and general loss estimates that are based upon the size, quality, and concentration characteristics of the various loan portfolios, adverse situations that may affect a borrower’s ability to repay, and current economic and industry conditions, among other items.
The following table provides information about the Company’s financial instruments that were sensitive to changes in interest rates as of December 31, 2023 and 2022, based on certain prepayment and account decay assumptions that management believes are reasonable.
The following table provides information about the Company’s financial instruments that were sensitive to changes in interest rates as of December 31, 2024 and 2023, based on certain prepayment and account decay assumptions that management believes are reasonable.
Although the Company had derivative financial instruments as of December 31, 2023 and 2022, the changes in fair value of the assets and liabilities of the underlying contracts offset each other. For more information about derivative financial instruments see Note 22 to the Consolidated Financial Statements.
Although the Company had derivative financial instruments as of December 31, 2024 and 2023, the changes in fair value of the assets and liabilities of the underlying contracts offset each other. For more information about derivative financial instruments, see Note 22 to the Consolidated Financial Statements.
The estimated fair value of the Reporting Unit was then compared to the current carrying value to determine if impairment had occurred. It is our opinion that, as of the November 30, 2023 measurement date, the aggregate fair value of the Reporting Unit exceeds the carrying value of the Reporting Unit.
The estimated fair value of the Reporting Unit was then compared to the current carrying value to determine if impairment had occurred. It is our opinion that, as of the November 30, 2024 measurement date, the aggregate fair value of the Reporting Unit exceeds the carrying value of the Reporting Unit.
A 200 basis points change in the rates down scenario would lead to a larger increase in the market value of liabilities than in assets, leading to a decrease in the net portfolio value.
A 400 basis points change in the rates down scenario would lead to a larger increase in the market value of liabilities than in assets, leading to a decrease in the net portfolio value.
A 200 basis point change in the rates up scenario would lead to a slightly larger decrease in the market value of assets than liabilities. Accordingly, we see a decrease in the net portfolio value.
A 400 basis point change in the rates up scenario would lead to a slightly larger decrease in the market value of liabilities than assets. Accordingly, we see an increase in the net portfolio value.
Therefore management concluded that goodwill was not impaired and made no adjustment in 2023.
Therefore management concluded that goodwill was not impaired and made no adjustment in 2024.
The yield remains inverted, and the short end has steepened since the end of the year. Additionally, both the volume and mix of assets and funding sources has changed. The volume of loans has increased, and the asset mix remains centered on loans. The volume of certificates of deposit has increased and both non-maturing deposits and borrowed money have decreased.
The yield curve has steepened since the end of 2023. Additionally, both the volume and mix of assets and funding sources has changed. The volume of loans has increased, and the asset mix remains centered on loans. The volume of certificates of deposit has increased and both non-maturing deposits and borrowed money have increased.
These judgments and assumptions are dependent upon or can be influenced by a variety of factors, including the breadth and depth of experience of lending officers, credit administration and the corporate loan review staff that periodically review the status of the loan, changing economic and industry conditions, changes in the financial condition of the borrower and changes in the value and availability of the underlying collateral and guarantees.
These judgments and assumptions are dependent upon or can be influenced by a variety of factors, including the breadth and depth of experience of lending officers, credit administration and the corporate loan review staff that periodically review the status of the loan, changing economic and industry conditions, changes in the financial condition of the borrower and changes in the value and availability of the underlying collateral and guarantees. 47 Note 1 and Note 5 to the Consolidated Financial Statements provide additional information regarding the Allowance for Credit losses.
Accordingly, the identifiable assets acquired and the liabilities assumed are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value recorded as goodwill.
Goodwill: The Company accounts for business combinations using the acquisition method of accounting. Accordingly, the identifiable assets acquired and the liabilities assumed are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value recorded as goodwill.
Removed
Note 1 and Note 5 to the Consolidated Financial Statements provide additional information regarding the Allowance for Credit losses. 47 Goodwill: The Company accounts for business combinations using the acquisition method of accounting.

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