CIVISTA BANCSHARES, INC. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction The following discussion focuses on the consolidated financial condition of the Company at September 30, 2025 compared to December 31, 2024, and the consolidated results of operations for the three and nine months ended September 30, 2025, compared to the same period in 2024. This discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and Notes included in this Quarterly Report on Form 10-Q. Forward-Looking Statements This Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, relating to such matters as financial condition, anticipated operating results, cash flows, business line results, credit quality expectations, prospects for new lines of business, economic trends (including interest rates) and similar matters. Forward-looking statements reflect our expectations, estimates or projections concerning future results or events. These statements are generally identified by the use of forward-looking words or phrases such as “believe,” “belief,” “expect,” “anticipate,” “may,” “could,” “intend,” “intent,” “estimate,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results, performance or achievements to differ materially from those expressed in or implied by the forward-looking statements. Such forward-looking statements could include, but are not limited to: • current and future economic and financial market conditions, including the effects of inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy, current or future government shutdown, an increasing federal government budget deficit, slowing gross domestic product, tariffs, trade wars, and other factors beyond our control, any of which may result in adverse impacts on our deposit levels and composition, the quality of investment securities available for purchase, demand for loans, the ability of our borrowers to repay their loans, and the value of the collateral securing loans made by Civista; • significant changes to the size, structure, powers and operations of the federal government, changes to U.S. economic policies, and uncertainties regarding the potential for these changes may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial condition; • recent and future bank failures may reduce customer confidence, affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets and/or have a negative reputational impact on the banking industry as a whole, any of which could adversely affect the Company’s business, financial condition and results of operations; • adverse changes in the real estate market, which could cause increases in delinquencies and non-performing assets, including additional loan charge-offs, and could depress our income, earnings and capital; • changes in interest rates resulting from national and local economic conditions and the policies of regulatory authorities, including monetary policies of the Board of Governors of the Federal Reserve System, which may adversely affect interest rates, interest margins, loan demand and interest rate sensitivity; • operational risks, reputational risks, legal and compliance risks, and other risks related to potential fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, or failures, disruptions or breaches in security of our systems, including those resulting from computer viruses or cyber-attacks; • our ability to secure sensitive or confidential client information against unauthorized disclosure or access through computer systems and telecommunication networks, including those of our third-party vendors and other service providers, which may prove inadequate; • a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber-attacks; • competitive pressures and factors among financial services organizations could increase significantly, including product and pricing pressures, changes to third-party relationships and our ability to recruit and retain qualified management and banking personnel; • unexpected losses of services of our key management personnel, or the inability to recruit and retain qualified personnel in the future; • risks inherent in pursuing strategic growth initiatives, including integration and other risks involved in past, pending, and possible future acquisitions; Page 40 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) • risks related to the pending FSB Merger, including, without limitation, that we may not consummate the FSB Merger on the terms currently contemplated or at all; that the failure to complete the FSB Merger could negatively impact the price of our common shares and have a material adverse effect on our results of operations, cash flows and financial position; that, following the FSB Merger, we may be unable to integrate the business of Civista and FSB successfully or realize the anticipated benefits of the FSB Merger; that the synergies attributable to the FSB Merger may vary from expectations; and that the market price for our common shares following the closing of the FSB Merger may be affected by factors different from those that have historically affected or currently affect our common shares; • uncertainty regarding the nature, timing, cost and effect of legislative or regulatory changes in the banking industry or otherwise affecting the Company, including major reform of the regulatory oversight structure of the financial services industry; • changes in federal, state and/or local tax laws; • the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board (FASB), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, may adversely affect our reported financial condition or results of operations; • a failure to appropriately maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, which could result in our inability to accurately report our financial results and adversely affect the market price of our common shares; • litigation and regulatory compliance exposure, including the costs and effects of any adverse developments in legal proceedings or other claims and the costs and effects of unfavorable resolution of regulatory and other governmental examinations or inquiries; • continued availability of earnings and dividends from Civista and excess capital sufficient for us to service our debt and pay dividends to our shareholders in compliance with applicable legal and regulatory requirements; • our ability to raise additional capital in the future if and when needed and/or on terms acceptable to us; • our ability to appropriately maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, as necessary to ensure the accurate reporting of our financial results; • our ability to conform and comply with regulatory requirements and increasing scrutiny and evolving expectations from customers, regulatory authorities, shareholders, investors and other stakeholders with regard to our environmental, social and governance (ESG) policies and practices, which could affect our reputation and business and operating results; • our ability to anticipate and successfully keep pace with technological changes affecting the financial services industry; and • other risks identified from time-to-time in the Company’s other public documents on file with the SEC, including those risks identified in “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as supplement by "Item 1A. Risk Factors” of Part II of the Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2025 and June 30, 2025. The Company does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law. Agreement and Plan of Merger with The Farmers Savings Bank On July 10, 2025, CBI and Civista entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Farmers Savings Bank, an Ohio-chartered bank headquartered in Spencer, Ohio (“Farmers”). Upon the terms and subject to the conditions of the Merger Agreement, at the effective time of the merger (the “Effective Time”), Farmers will merge with and into Civista, with Civista being the surviving bank in the merger (the “FSB Merger”). The acquisition of Farmers will add two branches in Medina and Lorain Counties in Northeast Ohio. As of September 30, 2025, Farmers reported total assets of $293 million, net loans of $106 million, and total deposits of $236 million. Under the terms and subject to the conditions of the Merger Agreement, which has been unanimously approved by the Boards of Directors of both companies, CBI agreed to pay $34.925 million in cash and issue 1,434,491 common shares, in aggregate, for all of the outstanding Farmers shares, subject to potential adjustment based on Farmers’ equity prior to closing being $56.0 million. This implies an aggregate deal value of approximately $66.7 million based on the closing price of CBI’s common shares on October 24, 2025 of $22.18. Civista has received all required regulatory approvals for the FSB merger, which is expected to close in November 2025, pending approval by Farmer's shareholders and satisfaction of other customary closing conditions. Page 41 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) Offering of Common Shares On July 10, 2025, CBI announced an underwritten public offering of up to a maximum of 3,788,238 of its common shares. CBI subsequently closed on the sale of 3,294,120 common shares on July 14, 2025, and the sale of an additional 494,118 common shares on July 16, 2025 pursuant to the underwriters’ exercise of their overallotment option, at the public offering price of $21.25 per share. The aggregate net proceeds from the Offering to CBI were approximately $75.7 million, after deducting $608 of direct expenses and the underwriting discount of $4.2 million. As of September 30, 2025, the net proceeds from the offering was used to pay-down short-term FHLB advances, but the long-term strategic plan is to use the net proceeds for general corporate purposes, which may include supporting organic growth opportunities and future strategic transactions. Financial Condition Total assets of the Company at September 30, 2025 were $4,113,334 compared to $4,098,469 at December 31, 2024, an increase of $14,865, or 0.4%. The increase in total assets was mainly due to increases in net loans of $14,179, loans held for sale of $7,347, and securities available-for-sale of $6,549. These increases were partially offset by decreases in premises and equipment of $6,256, other securities of $2,451, deferred taxes of $2,178, and swap assets of $1,624. Total liabilities at September 30, 2025 were $3,614,306 compared to $3,709,967 at December 31, 2024, a decrease of $95,661, or 2.6%. The decrease in total liabilities was primarily attributable to a decrease in short-term FHLB advances of $107,000, partially offset by an increase in total deposits of $18,593. Loans outstanding as of September 30, 2025 and December 31, 2024 were as follows: September 30, 2025 December 31, 2024 $ Change % Change Commercial & Agriculture $ 302,407 $ 328,488 $ (26,081 ) -7.9 % Commercial Real Estate—Owner Occupied 384,176 374,367 9,809 2.6 % Commercial Real Estate—Non-Owner Occupied 1,216,031 1,225,991 (9,960 ) -0.8 % Residential Real Estate 842,362 763,869 78,493 10.3 % Real Estate Construction 278,163 305,992 (27,829 ) -9.1 % Farm Real Estate 23,713 23,035 678 2.9 % Lease Financing Receivables 38,960 46,900 (7,940 ) -16.9 % Consumer and Other 10,182 12,588 (2,406 ) -19.1 % Total loans 3,095,994 3,081,230 14,764 0.5 % Allowance for credit losses (40,254 ) (39,669 ) (585 ) 1.5 % Net loans $ 3,055,740 $ 3,041,561 $ 14,179 0.5 % Loans held for sale increased $7,347 since December 31, 2024. The increase was due to increases in both the number of loans and average loan balances held for sale. At September 30, 2025, 25 loans totaling $8,012 were held for sale as compared to 6 loans totaling $665 at December 31, 2024. Net loans have increased $14,179, or 0.5%, since December 31, 2024. The increase at September 30, 2025 was mainly attributed to increases in one category, Residential Real Estate, partially offset by decreases in Real Estate Construction and Commercial & Agriculture. At September 30, 2025, the loan to deposit ratio was 95.8% compared to 95.9% at December 31, 2024. During the first nine months of 2025, provisions made to the allowances for credit losses and off-balance sheet credit exposures totaled $2,792, compared to provisions of $4,668 during the same period in 2024. The decrease in the provision for the first nine months of 2025 was primarily the result of a decrease in specific reserves related to one large credit that made a significant paydown during the nine months ended September 30, 2025, in addition to lower net loan growth compared to 2024 and an improvement in delinquencies. CRE non-owner occupied 60 to 89 days past due category decreased from $8,000 to $654 during the nine months ended September 30, 2025. Commercial & Agriculture loan delinquencies decreased during the first nine months of 2025, primarily in the 30-59 days past due category, which decreased from $825 at December 31, 2024 to $112 at September 30, 2025. Residential Real Estate loans past due decreased from $9,411 at December 31, 2024 to $3,929 at September 30, 2025, mainly due to a decrease in delinquencies in 1-4 family first lien loans. Page 42 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) Reserves on the Lease Financing Receivables portfolio decreased at September 30, 2025, primarily related to lower balance growth in 2025 as the leasing division transitioned and focused on converting to a new core operating system. Total delinquencies on Lease Financing Receivables decreased from December 31, 2024 to September 30, 2025. Lease Financing Receivables 30-59 days past due and 60-89 days past due combined decreased from $926 to $327, and the balance of 90 days or greater past due also decreased from $909 to $449. Nonaccrual Lease Financing Receivables decreased from $1,238 at December 31, 2024 to $807 at September 30, 2025. Net charge-offs for the first nine months ended September 30, 2025 totaled $2,212, compared to net charge-offs of $1,080 for the same period of 2024. For the first nine months ended September 30, 2025, the Company charged off a total of 45 loans and leases, consisting of 16 Commercial & Agriculture loans totaling $684, ten Lease Financing Receivables totaling $546, two Commercial Real Estate – Non-Owner Occupied loans totaling $1,350, 12 Consumer and Other loans totaling $20 and five Residential Real Estate totaling $130. The Commercial Real Estate - Non-Owner Occupied charge-offs of $1,350 are related to two loans that were previously identified and actively monitored by management, classified as nonaccrual and individually evaluated as of both December 31, 2024 and September 30, 2025. In addition, during the nine months ended September 30, 2025, the Company had recoveries on previously charged-off Commercial & Agriculture loans of $375, Commercial Real Estate – Non-Owner Occupied loans of $3, Residential Real Estate loans of $76, Leasing Financing Receivables of $43 and Consumer and Other loans of $21. For each loan category, as well as in total, the percentage of net charge-offs to loans was less than one percent. Each of these factors was considered by management as part of the examination of both the level and mix of the allowance by credit type as well as the overall level of the allowance. Management specifically evaluates loans that do not share common risk characteristics for estimates of loss. To evaluate the adequacy of the allowance for credit losses to cover probable losses in the loan portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for delinquencies and historical reserve allocations. Loss migration rates are calculated over a three-year period for all portfolio segments. Management also considers certain economic factors for trends that management uses to account for the qualitative and environmental changes in risk, which affects the level of the reserve. Larger (greater than $350) Commercial & Agricultural and Commercial Real Estate loan relationships, as well as Residential Real Estate and Consumer loans and Lease Financing Receivables that are part of a larger relationship are individually evaluated on a quarterly basis, when they do not share similar risk characteristics with the collectively evaluated pools. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the value of the loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. The Company’s policy for recognizing interest income on individually evaluated loans does not differ from its overall policy for interest recognition. Loans held for sale are excluded from consideration as individually evaluated. Loans are generally moved to nonaccrual status when 90 days or more past due. Loans, or portions thereof, are charged-off when deemed uncollectible. The allowance for credit losses as a percent of total loans was 1.30% at September 30, 2025 and 1.29% at December 31, 2024. The available-for-sale securities portfolio increased by $6,549, from $648,067 at December 31, 2024 to $654,616 at September 30, 2025. Management continually evaluates our securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, and the level of interest rate risk to which the Company is exposed. These evaluations may cause the Company to change the level of funds it deploys into investment securities and change the composition of its investment securities portfolio. As of September 30, 2025, the Company was in compliance with all pledging requirements. Premises and equipment, net, decreased $6,256 from December 31, 2024 to September 30, 2025. The decrease was mainly the result of depreciation expenses of $5,201 coupled with maturing operating leases, partially offset by purchases. The decrease in depreciation was mainly attributable to leasing operations as operating leases matured. Since mid-2024, new lease originations have primarily consisted of finance leases which are recorded in Loans on the Consolidated Balance Sheets. Swap assets decreased $1,624 from December 31, 2024 to September 30, 2025. The decrease was primarily the result of a decline in market value. Total deposits as of September 30, 2025 and December 31, 2024 were as follows: Page 43 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) September 30, 2025 December 31, 2024 $ Change % Change Noninterest-bearing demand $ 651,934 $ 695,094 $ (43,160 ) -6.2 % Interest-bearing demand 415,620 419,583 (3,963 ) -0.9 % Savings and money market 1,129,985 1,126,974 3,011 0.3 % Time deposits 601,757 469,954 131,803 28.0 % Brokered deposits 431,167 500,265 (69,098 ) -13.8 % Total Deposits $ 3,230,463 $ 3,211,870 $ 18,593 0.6 % The Company had approximately $512,458 and $431,713 of uninsured deposits as of September 30, 2025 and December 31, 2024, respectively. Uninsured deposit amounts are estimated based on the portions of customer account balances that exceed the FDIC insurance limit of $250. Total deposits at September 30, 2025 increased $18,593 from December 31, 2024. Noninterest-bearing deposits, brokered deposits, and interest-bearing demand deposits decreased $43,160, $69,098, and $3,963, respectively, from December 31, 2024, while time deposits and savings and money markets increased $131,803 and $3,011, respectively, from December 31, 2024. The decrease in noninterest-bearing deposits was primarily due to a $46,104 decrease in noninterest-bearing business accounts, partially offset by an increase of $5,883 in noninterest-bearing public funds accounts. The decrease in interest-bearing demand deposits was primarily due to a decrease of $16,586 in Jumbo NOW and interest-bearing checking accounts, mostly offset by an increase in interest-bearing public funds accounts of $14,067. The $131,803 increase in time deposits was due to increases of $94,622 in jumbo time deposits and a $43,113 increase in retail time deposits, which were slightly offset by a decrease of $6,779 in reciprocal time deposits. The $3,011 increase in savings and money market accounts was primarily due to a $51,994 increase in business money market accounts, mostly offset by decreases of $36,493 in ICS demand and money market, $724 in retail money market savings, $7,110 in retail statement savings, and $3,958 in business savings accounts. The year-to-date average balance of total deposits increased $190,335, compared to the average balance for the same period in 2024, mainly due to increases of $162,887 in the average balance of demand and savings deposits and $67,482 in time deposits, partially offset by a $40,034 decrease in the average balance of noninterest-bearing deposits. Short-term FHLB advances decreased $107,000 from December 31, 2024 to September 30, 2025, primarily as a result of the cash received from the capital raise that was completed in the third quarter of 2025. Swap liabilities decreased $5,416 from December 31, 2024 to September 30, 2025. The decrease was the result of a decrease in fair value of swap liabilities. Shareholders’ equity at September 30, 2025 was $499,028, or 12.1% of total assets, compared to $388,502, or 9.5% of total assets, at December 31, 2024. The increase was a result of net income of $33,943 coupled with $75,666 resulting from the capital raise completed in the third quarter of 2025, partially offset by dividends paid on common shares of $8,553. Total outstanding common shares at September 30, 2025 were 19,312,726, which increased from 15,487,667 common shares outstanding at December 31, 2024. Common shares outstanding increased due to the issuance of 3,788,238 shares in the capital raise and the grant of 49,857 restricted common shares to certain officers under the Company’s 2024 Incentive Plan, partially offset by 8,716 common shares surrendered by officers to the Company to pay taxes upon vesting of restricted shares and 4,320 forfeited shares. Results of Operations Three Months Ended September 30, 2025 and 2024 The Company had net income of $12,760 for the three months ended September 30, 2025, an increase of $4,394 from net income of $8,366 for the same period of 2024. Basic and diluted earnings per common share were $0.68 for the quarter ended September 30, 2025, compared to $0.53 for the same period of 2024. In the third quarter of 2025, net income was decreased by $554 from non-recurring adjustments resulting from acquisition-related expenses from the previously announced merger with FSB that is expected to close in November 2025. The primary reasons for the changes in net income are explained below. Page 44 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) Net interest income for the three months ended September 30, 2025 was $34,545, an increase of $5,312 from $29,233 for the same period of 2024. This increase was a result of an increase of $2,499 in total interest and dividend income, coupled with a $2,813 decrease in total interest expense. Total interest-earning assets averaged $3,829,484 during the three months ended September 30, 2025, an increase of $123,618 from $3,705,866 for the same period of 2024. The Company’s total average interest-bearing liabilities increased from $2,898,978 during the three months ended September 30, 2024 to $2,957,458 during the three months ended September 30, 2025. The Company’s fully tax equivalent net interest margin for the three months ended September 30, 2025 and 2024 was 3.58% and 3.16%, respectively. Total interest and dividend income was $55,240 for the three months ended September 30, 2025, an increase of $2,499 from $52,741 for the same period of 2024. The increase in interest and dividend income is attributable to a $1,820 increase in interest and fees on loans and a $664 increase in interest income on taxable securities. The $1,820 increase in interest and fees on loans is attributable to an increase in the average balance of loans. The average balance of loans increased by $96,149, or 3.2%, to $3,128,033 for the three months ended September 30, 2025, as compared to $3,031,884 for the same period of 2024. Interest on taxable securities increased $664 to $3,922 for the three months ended September 30, 2025, compared to $3,258 for the same period of 2024. The average balance of taxable securities increased $38,632 to $402,216 for the three months ended September 30, 2025, as compared to $363,584 for the same period of 2024. The yield on taxable securities increased 33 basis points to 3.57% for the three months ended September 30, 2025, compared to 3.24% for the same period of 2024, resulting from the purchase of similar securities to replace matured securities with the new securities having higher rates than when the matured securities were originally purchased. Interest on tax-exempt securities decreased $45 to $2,324 for the three months ended September 30, 2025, compared to $2,369 for the same period of 2024. The average balance of tax-exempt securities decreased $16,532 to $274,722 for the three months ended September 30, 2025, as compared to $291,254 for the same period of 2024. The yield on tax-exempt securities increased 1 basis point to 3.84% for the three months ended September 30, 2025, compared to 3.83% for the same period of 2024. Total interest expense decreased $2,813, or 12.0%, to $20,695 for the three months ended September 30, 2025, compared to $23,508 for the same period of 2024. For the three months ended September 30, 2025, the average balance of interest-bearing liabilities increased $58,480 to $2,957,458, as compared to $2,898,978 for the same period of 2024. Interest incurred on deposits decreased by $579 to $16,347 for the three months ended September 30, 2025, compared to $16,926 for the same period of 2024. The average balance of interest-bearing deposits increased by $168,934 to $2,574,153 for the three months ended September 30, 2025, as compared to the same period in 2024, slightly offset by a decrease in the rate paid on time deposits from 5.37% in 2024 to 4.01% in 2025. The decrease in rates on time deposits was primarily related to paying lower rates on retail and brokered CDs due to the lower rate environment in the third quarter of 2025 compared to the same period of 2024. Interest expense incurred on short-term FHLB advances decreased mainly due to the cash received from the capital raise which subsequently paid down short-term FHLB advances in the third quarter of 2025 and a decrease in rate paid because of the yield curve shifting downwards in 2025 compared to the same period of 2024. The following table presents the condensed average balance sheets for the three months ended September 30, 2025 and 2024. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using Page 45 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) a 21% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities. Three Months Ended September 30, 2025 2024 Assets: Average balance Interest Yield/ rate* Average balance Interest Yield/ rate* Interest-earning assets: Loans, including fees** $ 3,128,033 $ 48,718 6.18 % $ 3,031,884 $ 46,898 6.15 % Taxable securities 402,216 3,922 3.57 % 363,584 3,258 3.24 % Tax-exempt securities 274,722 2,324 3.84 % 291,254 2,369 3.83 % Interest-bearing deposits in other banks 24,513 276 4.47 % 19,144 216 4.47 % Total interest-earning assets $ 3,829,484 $ 55,240 5.69 % $ 3,705,866 $ 52,741 5.64 % Noninterest-earning assets: Cash and due from financial institutions 34,261 36,868 Premises and equipment, net 42,638 51,342 Accrued interest receivable 14,230 13,802 Intangible assets 132,503 134,083 Bank owned life insurance 63,289 63,190 Other assets 59,667 57,856 Less allowance for loan losses (40,380 ) (40,068 ) Total Assets $ 4,135,692 $ 4,022,939 Liabilities and Shareholders Equity: Interest-bearing liabilities: Demand and savings $ 1,536,897 $ 5,856 1.51 % $ 1,452,850 $ 4,074 1.12 % Time 1,037,256 10,491 4.01 % 952,369 12,852 5.37 % Short-term FHLB advances 272,985 3,063 4.45 % 388,022 5,328 5.46 % Long-term FHLB advances 1,011 7 2.59 % 1,697 10 2.34 % Other borrowings 5,123 108 8.39 % — — 0.00 % Subordinated debentures 104,186 1,170 4.46 % 104,040 1,244 4.75 % Total interest-bearing liabilities $ 2,957,458 $ 20,695 2.78 % $ 2,898,978 $ 23,508 3.23 % Noninterest-bearing deposits 662,872 687,364 Other liabilities 42,369 55,205 Shareholders’ Equity 472,993 381,392 Total Liabilities and Shareholders’ Equity $ 4,135,692 $ 4,022,939 Net interest income and interest rate spread (1) $ 34,545 2.91 % $ 29,233 2.41 % Net interest margin (2) 3.58 % 3.16 % (1) Net interest spread represents the difference between the yield on average interest-earning assets and the cost of interest-bearing liabilities. (2) Net interest margin represents net interest income divided by average interest-earning assets. *Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $618 and $630 for the periods ended September 30, 2025 and 2024, respectively. **Average balance includes nonaccrual loans. Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the three months ended September 30, 2025 and 2024. Page 46 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) Increase (decrease) due to: Volume (1) Rate (1) Net (Dollars in thousands) Interest income: Loans, including fees $ 1,496 $ 324 $ 1,820 Taxable securities 300 364 664 Tax-exempt securities (56 ) 11 (45 ) Interest-bearing deposits in other banks 60 — 60 Total interest income $ 1,800 $ 699 $ 2,499 Interest expense: Demand and savings $ 247 $ 1,535 $ 1,782 Time 1,070 (3,431 ) (2,361 ) Short-term FHLB advances (1,401 ) (864 ) (2,265 ) Long-term FHLB advances (5 ) 2 (3 ) Other borrowings 108 — 108 Subordinated debentures 2 (76 ) (74 ) Total interest expense $ 21 $ (2,834 ) $ (2,813 ) Net interest income $ 1,779 $ 3,533 $ 5,312 (1) The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate. The Company provides for credit losses through regular provisions to the allowance for credit losses. During the three months ended September 30, 2025, the Company recorded a provision for credit losses for loans and off-balance sheet credit exposures of $200, a decrease of $821, from $1,021 during the three months ended September 30, 2024. Noninterest income for the three month periods ended September 30, 2025 and 2024 was as follows: Three Months Ended September 30, 2025 2024 $ Change % Change Service charges $ 1,667 $ 1,595 $ 72 4.5 % Net gain (loss) on equity securities 255 223 32 14.3 % Net gain on sale of loans and leases 1,450 1,427 23 1.6 % ATM/Interchange fees 1,435 1,402 33 2.4 % Wealth management fees 1,402 1,443 (41 ) -2.8 % Lease revenue and residual income 1,934 2,428 (494 ) -20.3 % Bank owned life insurance 666 717 (51 ) -7.1 % Swap fees — 43 (43 ) -100.0 % Other 824 821 3 0.3 % Total noninterest income $ 9,633 $ 10,099 $ (466 ) -4.6 % Total noninterest income for the three months ended September 30, 2025 was $9,633, a decrease of $466, or 4.6%, from $10,099 for the same period of 2024. Lease revenue and residual income decreased $494 for the three months ended September 30, 2025, compared Page 47 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) to the same period of 2024, mainly due to leasing originations being strategically curtailed in 2025 resulting from the CLF core system conversion. The core system conversion was completed late in the second quarter of 2025. Noninterest expense for the three month periods ended September 30, 2025 and 2024 was as follows: Three Months Ended September 30, 2025 2024 $ Change % Change Compensation expense $ 15,161 $ 15,726 $ (565 ) -3.6 % Net occupancy expense 1,466 1,293 173 13.4 % Contracted data processing 559 636 (77 ) -12.1 % FDIC Assessment 627 560 67 12.0 % State franchise tax 536 480 56 11.7 % Professional services 1,225 1,134 91 8.0 % Equipment expense 2,205 2,345 (140 ) -6.0 % ATM/Interchange expense 755 616 139 22.6 % Marketing 391 716 (325 ) -45.4 % Amortization of core deposit intangibles 318 363 (45 ) -12.4 % Software maintenance expense 1,480 $ 1,203 277 23.0 % Other 3,604 $ 3,323 281 8.5 % Total noninterest expense $ 28,327 $ 28,395 $ (68 ) -0.2 % Total noninterest expense for the three months ended September 30, 2025 was $28,327, a decrease of $68, or 0.2%, from $28,395 reported for the same period of 2024. The decrease in total noninterest expense was primarily due to decreases in compensation and marketing expenses, mostly offset by increases in software maintenance and other expenses. The decrease in compensation expense was primarily due to an increase in the deferral of salaries and wages related to the loan originations in the third quarter of 2025. The decrease in marketing expense was mainly due to lower marketing and promotional expenses related to advertising and product marketing. The increase in software maintenance expenses was primarily a function of the renewal of current contracts at higher levels as we continue to enhance our systems and products to meet customer demand as well as create efficiencies for our employees. The increase in other expenses are mainly related to the non-recurring acquisition-related expense for the FSB Merger. Income tax expense for the three months ended September 30, 2025 totaled $2,891, up $1,340 compared to the same period of 2024. The effective tax rates for the three month periods ended September 30, 2025 and 2024 were 18.5% and 15.6%, respectively. The increase in the effective tax rate for the three month period ended September 30, 2025, was primarily due to an increase in the forecasted pre-tax income outpacing the permanent differences for 2025, thus, creating more taxable income at the statutory tax rate of 21% and increasing the Company's effective tax rate. The difference between the statutory federal income tax rate and the Company’s effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low-income housing tax credits, tax-deductible captive insurance premiums and bank owned life insurance income. Nine Months Ended September 30, 2025 and 2024 The Company had net income of $33,943 for the nine months ended September 30, 2025, an increase of $12,153 from net income of $21,790 for the same nine months of 2024. Basic and diluted earnings per common share were $2.04 for the nine months ended September 30, 2025, compared to $1.39 for the same period in 2024. The primary reasons for the changes in net income are explained below. Net interest income for the nine months ended September 30, 2025 was $102,132, an increase of $16,776, from $85,356 for the same nine months of 2024. This increase was a result of an increase of $11,782 in total interest and dividend income, coupled with a $4,994 decrease in total interest expense. Total interest-earning assets averaged $3,824,289 during the nine months ended September 30, 2025, an increase of $197,921 from $3,626,368 for the same period of 2024. The Company’s total average interest-bearing liabilities increased from $2,811,188 during the nine months ended September 30, 2024 to $3,007,668 during the nine months ended September 30, 2025. The Company’s fully tax equivalent net interest margin for the nine months ended September 30, 2025 and 2024 was 3.58% and 3.16%, respectively. Net interest income was increased $1,621 in the nine months ended September 30, 2025, as a result of the non-recurring adjustments from the CLF core system conversion. Page 48 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) Total interest and dividend income increased $11,782 to $165,244 for the nine months ended September 30, 2025. 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 $162,261, or 5.5%, to $3,121,292 for the nine months ended September 30, 2025, as compared to $2,959,031 for the nine months ended September 30, 2024. The loan yield increased to 6.27% for 2025, from 6.15% in 2024. Interest on taxable securities increased $1,966 to $11,228 for the nine months ended September 30, 2025, compared to $9,262 for the same period in 2024. The average balance of taxable securities increased $45,762 to $401,091 for the nine months ended September 30, 2025, as compared to $355,329 for the nine months ended September 30, 2024. The yield on taxable securities increased 31 basis points to 3.43% for 2025, compared to 3.12% for 2024. Interest on tax-exempt securities decreased $114 to $7,002 for the nine months ended September 30, 2025, compared to $7,116 for the same period in 2024. The average balance of tax-exempt securities decreased $11,921 to $279,668 for the nine months ended September 30, 2025, as compared to $291,589 for the nine months ended September 30, 2024. The yield on tax-exempt securities increased 3 basis points to 3.88% for 2025, compared to 3.85% for 2024. Total interest expense decreased $4,994, or 7.3%, to $63,112 for the nine months ended September 30, 2025, compared to $68,106 for the same period in 2024. The change in interest expense can be attributed to a decrease in rate, mostly offset by an increase in the average balance of interest-bearing liabilities. For the nine months ended September 30, 2025, the average balance of interest-bearing liabilities increased $196,480 to $3,007,668, compared to $2,811,188 for the nine months ended September 30, 2024. Interest incurred on deposits decreased $797 to $47,621 for the nine months ended September 30, 2025, compared to $48,418 for the same period in 2024. The average balance of interest-bearing deposits increased by $230,369 for the nine months ended September 30, 2025, as compared to the same period in 2024. The rate paid on demand and savings accounts increased from 1.07% in 2024 to 1.48% in 2025, while the rate paid on time deposits decreased from 5.37% in 2024 to 4.09% in 2025. In addition, for the nine months ended September 30, 2025, the average balance of short-term FHLB balances decreased $39,064 to $346,737 from $385,801 compared to the same period in 2024, resulting from the aforementioned cash generated from the capital raise. The rate paid on subordinated debentures decreased 30 basis points for the nine months ended September 30, 2025, as compared to the same period in 2024. The following table presents the condensed average balance sheets for the nine months ended September 30, 2025 and 2024. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a 21% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities. Page 49 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) Nine Months Ended September 30, 2025 2024 Assets: Average balance Interest Yield/ rate* Average balance Interest Yield/ rate* Interest-earning assets: Loans, including fees** $ 3,121,292 $ 146,336 6.27 % 2,959,031 136,328 6.15 % Taxable securities 401,091 11,228 3.43 % 355,329 9,262 3.12 % Tax-exempt securities 279,668 7,002 3.88 % 291,589 7,116 3.85 % Interest-bearing deposits in other banks 22,238 678 4.07 % 20,419 756 4.93 % Total interest-earning assets $ 3,824,289 $ 165,244 5.75 % $ 3,626,368 $ 153,462 5.61 % Noninterest-earning assets: Cash and due from financial institutions 39,232 34,807 Premises and equipment, net 44,563 53,318 Accrued interest receivable 13,908 13,254 Intangible assets 132,883 134,474 Bank owned life insurance 63,171 62,176 Other assets 59,410 61,225 Less allowance for loan losses (40,295 ) (38,876 ) Total Assets $ 4,137,161 $ 3,946,746 Liabilities and Shareholders Equity: Interest-bearing liabilities: Demand and savings $ 1,554,969 $ 17,216 1.48 % $ 1,392,082 $ 11,113 1.07 % Time 994,788 30,405 4.09 % 927,306 37,305 5.37 % Short-term FHLB advance 346,737 11,595 4.47 % 385,801 15,921 5.51 % Long-term FHLB advance 1,225 24 2.57 % 2,000 35 2.34 % Other borrowings 5,804 376 8.67 % — — — Subordinated debentures 104,145 3,496 4.49 % 103,999 3,732 4.79 % Total interest-bearing liabilities $ 3,007,668 $ 63,112 2.81 % $ 2,811,188 $ 68,106 3.24 % Noninterest-bearing deposits 662,662 702,696 Other liabilities 42,910 60,282 Shareholders’ Equity 423,921 372,580 Total Liabilities and Shareholders’ Equity $ 4,137,161 $ 3,946,746 Net interest income and interest rate spread (1) $ 102,132 2.94 % $ 85,356 2.37 % Net interest margin (2) 3.58 % 3.16 % (1) Net interest spread represents the difference between the yield on average interest-earning assets and the cost of interest-bearing liabilities. (2) Net interest margin represents net interest income divided by average interest-earning assets. *Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1.9 million and $1.9 million for the periods ended September 30, 2025 and 2024, respectively. **Average balance includes nonaccrual loans. Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the nine months ended September 30, 2025 and 2024. The table is presented on a fully tax-equivalent basis. Page 50 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) Increase (decrease) due to: Volume (1) Rate (1) Net (Dollars in thousands) Interest income: Loans, including fees $ 7,575 $ 2,433 $ 10,008 Taxable securities 998 968 1,966 Tax-exempt securities (152 ) 38 (114 ) Interest-bearing deposits in other banks 63 (141 ) (78 ) Total interest income $ 8,484 $ 3,298 $ 11,782 Interest expense: Demand and savings $ 1,417 $ 4,686 $ 6,103 Time 2,563 (9,463 ) (6,900 ) Short-term FHLB advance (1,506 ) (2,820 ) (4,326 ) Long-term FHLB advance (15 ) 4 (11 ) Other borrowings 376 — 376 Subordinated debentures 5 (241 ) (236 ) Repurchase agreements — — — Total interest expense $ 2,840 $ (7,834 ) $ (4,994 ) Net interest income $ 5,644 $ 11,132 $ 16,776 (1) The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate. The Company provides for credit losses through regular provisions to the allowance for credit losses. During the nine months ended September 30, 2025, the Company recorded a provision for credit losses and off-balance sheet credit exposures of $2,792, a decrease of $1,876, from $4,668 during the nine months ended September 30, 2024. Noninterest income for the nine months ended September 30, 2025 and 2024 was as follows: Nine Months Ended September 30, 2025 2024 $ Change % Change Service charges $ 4,756 $ 4,523 $ 233 5.2 % Net gain (loss) on equity securities 152 156 (4 ) 2.6 % Net gain on sale of loans and leases 2,895 3,179 (284 ) -8.9 % ATM/Interchange fees 4,179 4,201 (22 ) -0.5 % Wealth management fees 4,067 4,055 12 0.3 % Lease revenue and residual income 4,356 7,630 (3,274 ) -42.9 % Bank owned life insurance 1,438 1,434 4 0.3 % Swap fees 125 165 (40 ) -24.2 % Other 2,114 3,390 (1,276 ) -37.6 % Total noninterest income $ 24,082 $ 28,733 $ (4,651 ) -16.2 % Total noninterest income for the nine months ended September 30, 2025 was $24,082, a decrease of $4,651, or 16.2%, from $28,733 for the same period of 2024. Lease revenue and residual income decreased $3,274 for the nine months ended September 30, 2025, compared to the same period of 2024, mainly due to curtailing lease originations in 2025 while CLF implemented a new core operating system coupled with stronger lease originations in 2024, and a one-time non-recurring adjustment decreasing leasing revenue by $1,044 associated with CLF's core system conversion. Other income decreased $1,276 for the nine months ended September 30, 2025, compared to the same period of 2024, mostly related to lower fee revenue from CLF. Page 51 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) The components of noninterest expense for the nine month periods ended September 30, 2025 and 2024 are as follows: Nine Months Ended September 30, 2025 2024 $ Change % Change Compensation expense $ 44,216 $ 46,922 $ (2,706 ) -5.8 % Net occupancy expense 4,519 3,959 560 14.1 % Contracted data processing 1,662 1,740 (78 ) -4.5 % FDIC Assessment 2,189 1,592 597 37.5 % State franchise tax 1,696 1,444 252 17.5 % Professional services 5,113 3,532 1,581 44.8 % Equipment expense 6,072 7,314 (1,242 ) -17.0 % ATM/Interchange expense 2,018 1,873 145 7.7 % Marketing 976 1,640 (664 ) -40.5 % Amortization of core deposit intangibles 988 1,120 (132 ) -11.8 % Software maintenance expense 4,051 3,568 483 13.5 % Other 9,435 9,521 (86 ) -0.9 % Total noninterest expense $ 82,935 $ 84,225 $ (1,290 ) -1.5 % Total noninterest expense for the nine months ended September 30, 2025 was $82,935, a decrease of $1,290, or 1.5%, from $84,225 reported for the same period of 2024. The decrease in total noninterest expense was primarily due to decreases in compensation expense and equipment expense, somewhat offset by increases in professional services. The decrease in compensation expense was primarily due to an increase in the deferral of salaries and wages related to loan originations in the first nine months of 2025 coupled with a decrease in the average number of full-time equivalent employees to 523 at September 30, 2025, compared to 531 for the same period of 2024, resulting in lower compensation and benefits costs. The decrease in equipment expense was primarily due to the $1,616 decrease in expenses related to operating lease contracts, which was partially offset by $737 in depreciation expense recorded to write down the net book value of certain assets identified as no longer in use. The increase in professional fees was attributable to utilizing consultants to assist in the transitioning of the new core operating system at CLF. Income tax expense for the nine months ended September 30, 2025 totaled $6,544, up $3,138 compared to the same period of 2024. The effective tax rates for the nine months ended September 30, 2025 and 2024 were 16.2% and 13.5%, respectively. The increase in the effective tax rate for the nine month period ended September 30, 2025, was primarily due to an increase in the forecasted pre-tax income outpacing the permanent differences for 2025, thus, creating more taxable income at the statutory tax rate of 21% and increasing the Company's effective tax rate. The difference between the statutory federal income tax rate and the Company’s effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low-income housing tax credits, tax-deductible captive insurance premiums and bank owned life insurance income. Capital Resources Shareholders’ equity totaled $499,028 at September 30, 2025, compared to $388,502 at December 31, 2024. Shareholders’ equity increased during the first nine months of 2025 as a result of net income of $33,943 coupled with $75,666 resulting from the capital raise completed in the third quarter of 2025, partially offset by dividends on common shares of $8,553. Page 52 Civista Bancshares, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) All of the Company’s capital ratios exceeded the regulatory minimum guidelines as of September 30, 2025 and December 31, 2024 as identified in the following table: Total Risk Based Capital Tier I Risk Based Capital CET1 Risk Based Capital Leverage Ratio Company Ratios—September 30, 2025 17.8 % 14.2 % 13.3 % 11.0 % Company Ratios—December 31, 2024 13.9 % 10.4 % 9.5 % 8.6 % For Capital Adequacy Purposes 8.0 % 6.0 % 4.5 % 4.0 % To Be Well Capitalized Under Prompt Corrective Action Provisions 10.0 % 8.0 % 6.5 % 5.0 % Liquidity The Company maintains a conservative liquidity position. All securities, with the exception of equity securities, are classified as available-for-sale. Securities, with maturities of one year or less, totaled $29,753, or 4.55% of the total securities portfolio, at September 30, 2025. The available-for-sale securities portfolio helps to provide the Company with the ability to meet its funding needs. The Condensed Consolidated Statements of Cash Flows (Unaudited) contained in the Consolidated Financial Statements detail the Company’s cash flows from operating activities resulting from net earnings. As reported in the Condensed Consolidated Statements of Cash Flows (Unaudited), our cash flows are classified for financial reporting purposes as operating, investing or financing cash flows. Net cash provided by operating activities was $33,661 and $25,850 for the nine months ended September 30, 2025 and 2024, respectively. The primary additions to cash from operating activities are from proceeds from the sale of loans. The primary use of cash from operating activities is from loans originated for sale. Net cash used for investing activities was $10,457 and $187,303 for the nine months ended September 30, 2025 and 2024, respectively, principally reflecting our loan and investment security activities. Cash (used)/provided by financing activities was ($23,593) and $175,709 for the nine months ended September 30, 2025 and 2024, respectively. The primary changes in financing activities is the decrease in short-term FHLB advances and the payment of common dividends, mostly offset by cash provided by proceeds from the capital raise as well as an increase in deposits. Future loan demand of Civista may be funded by increases in deposit accounts, proceeds from payments on existing loans, the maturity of securities, and the sale of securities classified as available-for-sale. Additional sources of funds may also come from borrowing in the Federal Funds market and/or borrowing from the FHLB. Through its correspondent banks, Civista maintains federal funds borrowing lines totaling $50,000. As of September 30, 2025, Civista had total credit availability with the FHLB of $966,116 with standby letters of credit totaling $115,000 and a remaining borrowing capacity of approximately $618,147. In addition, CBI maintains a credit line with a third party lender totaling $10,000. No borrowings were outstanding by CBI under this credit line as of September 30, 2025. Page 53 Civista Bancshares, Inc. Quantitative and Qualitative Disclosures About Market Risk Form 10-Q (Amounts in thousands, except share data) ITEM 3. Quantitative and Qualitat ive Disclosures About Market Risk The Company’s primary market risk exposure is interest-rate risk and, to a lesser extent, liquidity risk. All of the Company’s transactions are denominated in U.S. dollars with no specific foreign exchange exposure. Interest-rate risk is the exposure of a banking organization’s financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value. However, excessive levels of interest-rate risk can pose a significant threat to the Company’s earnings and capital base. Accordingly, effective risk management that maintains interest-rate risk at prudent levels is essential to the Company’s safety and soundness. Evaluating a financial institution’s exposure to changes in interest rates includes assessing both the adequacy of the management process used to control interest-rate risk and the organization’s quantitative level of exposure. When assessing the interest-rate risk management process, the Company seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest-rate risk at prudent levels with consistency and continuity. Evaluating the quantitative level of interest rate risk exposure requires the Company to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity and, where appropriate, asset quality. The Federal Reserve Board, together with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, issue policy statements and guidance on sound practices for managing interest-rate risk, which form the basis for ongoing evaluation of the adequacy of interest-rate risk management at supervised institutions. The guidance also outlines fundamental elements of sound management and discusses the importance of these elements in the context of managing interest-rate risk. The guidance emphasizes the need for active board of director and senior management oversight and a comprehensive risk-management process that effectively identifies, measures, and controls interest-rate risk. Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institution’s assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institution’s interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution’s profits could decrease on existing assets because the institution will have either lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment. Several techniques may be used by an institution to minimize interest-rate risk. One approach used by the Company is to periodically analyze its assets and liabilities and make future financing and investment decisions based on payment streams, interest rates, contractual maturities, and estimated sensitivity to actual or potential changes in market interest rates. Such activities fall under the broad definition of asset/liability management. The Company’s primary asset/liability management technique is the measurement of the Company’s asset/liability gap, that is, the difference between the cash flow amounts of interest sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year, or longer period, the institution is in an asset sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. If, alternatively, more liabilities than assets will reprice, the institution is in a liability sensitive position. Accordingly, net interest income would decline when rates rose and increase when rates fell. Also, these examples assume that interest rate changes for assets and liabilities are of the same magnitude, whereas actual interest rate changes generally differ in magnitude for assets and liabilities. Page 54 Civista Bancshares, Inc. Quantitative and Qualitative Disclosures About Market Risk Form 10-Q (Amounts in thousands, except share data) Several ways an institution can manage interest-rate risk include selling existing assets or repaying certain liabilities; matching repricing periods for new assets and liabilities, for example, by shortening terms of new loans or securities; and hedging existing assets, liabilities, or anticipated transactions. An institution might also invest in more complex financial instruments intended to hedge or otherwise change interest-rate risk. Interest rate swaps, futures contracts, options on futures, and other such derivative financial instruments often are used for this purpose. Because these instruments are sensitive to interest rate changes, they require management expertise to be effective. Financial institutions are also subject to prepayment risk in falling rate environments. For example, mortgage loans and other financial assets may be prepaid by a debtor so that the debtor may refinance its obligations at new, lower rates. Prepayments of assets carrying higher rates reduce the Company’s interest income and overall asset yields. A large portion of an institution’s liabilities may be short-term or due on demand, while most of its assets may be invested in long-term loans or securities. Accordingly, the Company seeks to have in place, sources of cash to meet short-term demands. These funds can be obtained by increasing deposits, borrowing, or selling assets. FHLB advances and wholesale borrowings may also be used as important sources of liquidity for the Company. The following table provides information about the Company’s financial instruments that were sensitive to changes in interest rates as of December 31, 2024 and September 30, 2025, based on certain prepayment and account decay assumptions that management believes are reasonable. The table shows the changes in the Company’s net portfolio value (in amount and percent) that would result from hypothetical interest rate increases of up to 400 basis points from 100 basis points and interest rate decreases of 100 basis points and up to 400 basis points at September 30, 2025 and December 31, 2024. Net Portfolio Value September 30, 2025 December 31, 2024 Change in Rates Dollar Amount Dollar Change Percent Change Dollar Amount Dollar Change Percent Change +400bp 783,947 63,867 8.9 % 649,236 46,009 7.6 % +300bp 772,004 51,924 7.2 % 640,723 37,496 6.2 % +200bp 758,117 38,037 5.3 % 630,945 27,718 4.6 % +100bp 742,189 22,109 3.1 % 620,021 16,794 2.8 % Base 720,080 — 0.0 % 603,227 — 0.0 % -100bp 704,692 (15,388 ) (2.1 %) 584,528 (18,699 ) (3.1 %) -200bp 686,262 (33,818 ) (4.7 %) 556,163 (47,064 ) (7.8 %) -300bp 710,907 (9,173 ) (1.3 %) 530,688 (72,539 ) (12.0 %) -400bp 803,744 83,664 11.6 % 593,087 (10,140 ) (1.7 %) The change in net portfolio value from December 31, 2024 to September 30, 2025, can be attributed to a couple of factors. The volume of assets and funding sources has changed, but the asset mix remains centered on loan and deposits. The volume of loans and deposits has increased, while the volume of short-term FHLB advances has decreased. The volume shifts from the end of the year contributed to an increase in the base net portfolio value. Additionally, the Company completed its underwritten public offering of common shares in the third quarter of 2025 resulting in aggregate net proceeds of approximately $75.7 million. Beyond the change in the base level of net portfolio value, projected movements in rates, up or down, would also lead to changes in market values. The change in the rates up scenarios for the 100, 200, 300 and 400 basis point movements would lead to a slightly larger increase in the market value of liabilities than assets. Accordingly, the Company sees an increase in the net portfolio value. The change in the rates down scenarios for the 100 and 200 basis point movements would lead to a larger decrease in the market value of liabilities than in assets, leading to a decrease in the net portfolio value with the exception of the down 300 and 400 basis point which has a higher market value of assets then liabilities. Page 55 Civista Bancshares, Inc. Controls and Procedures Form 10-Q (Amounts in thousands, except share data)