CIVISTA BANCSHARES, INC. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction The following discussion reviews the consolidated financial condition of the Company at March 31, 2026 compared to December 31, 2025, and the consolidated results of operations for the three months ended March 31, 2026, compared to the same period in 2025. This discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and Notes included in this Quarterly Report on Form 10-Q. Forward-Looking Statements This Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, relating to such matters as financial condition, anticipated operating results, cash flows, business line results, credit quality expectations, prospects for new lines of business, economic trends (including interest rates) and similar matters. Forward-looking statements reflect our expectations, estimates or projections concerning future results or events. These statements are generally identified by the use of forward-looking words or phrases such as “believe,” “belief,” “expect,” “anticipate,” “may,” “could,” “intend,” “intent,” “estimate,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results, performance or achievements to differ materially from those expressed in or implied by the forward-looking statements. Such forward-looking statements could include, but are not limited to: • current and future economic and financial market conditions, including the effects of inflation, recession, unemployment, supply chain issues or labor shortages, changes in interest rates, fiscal and monetary policy, government shutdowns, an increasing federal government budget deficit, slowing gross domestic product, potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations, 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 and possible future acquisitions; Page 39 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 recent FSB Merger, including, without limitation, that we may be unable to integrate the business of Civista and FSB successfully or realize the anticipated benefits of the FSB Merger or that the synergies attributable to the FSB Merger may vary from expectations; • 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 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; • the impact on our businesses, and the risks described above, of various domestic or international widespread natural or other disasters including severe weather events, pandemics, cybersecurity attacks, system failures, civil unrest, military or terrorist activities or international conflicts, including Russia’s ongoing war on Ukraine and the conflicts in Iran (and the resulting disruptions in oil, energy and other commodity markets and supply chains, which can affect our earnings and capital as well as the ability of our customers to repay loans; • 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, 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. Acquisition of The Farmers Savings Bank ("FSB") At the close of business on November 6, 2025, Civista closed its previously announced acquisition of FSB. The acquisition added approximately $268.1 million of total assets, $106.2 million of total loans and leases, $236.1 million of total deposits, and two branches. The 2025 results reflect inclusion of FSB since November 7, 2025. Upon the closing of the acquisition, FSB was merged with and into Civista Bank. In addition, the management and organization structure was updated to reflect the combined organization. On-boarding of former FSB colleagues and their initial training was completed in the first quarter of 2026. Certain of Civista's products and services have been introduced across the legacy FSB customer base, and customer-facing colleagues are focused on both growing and retaining customers. Technology conversions were completed in mid-February 2026, as scheduled. Offering of Common Shares On July 10, 2025, CBI announced an underwritten public offering of up to a maximum of 3,788,238 of its common shares. CBI subsequently closed on the sale of 3,294,120 common shares on July 14, 2025, and the sale of an additional 494,118 common shares on July 16, 2025 pursuant to the underwriters' exercise of their overallotment option, at the public offering price of $21.25 per share. The aggregate net proceeds from the offering were approximately $75.7 million, after deducting $608 of direct expenses and the underwriting discount of $4.2 million. The net proceeds from the offering were initially used to pay-down short-term FHLB advances, but the 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) long-term strategic plan is to use the net proceeds for general corporate purposes, which may include supporting organic growth opportunities and future strategic transactions. Financial Condition Total assets of the Company at March 31, 2026 were $4,298,322 compared to $4,336,453 at December 31, 2025, a decrease of $38,131, or 0.9%. The decline was mainly due to a decrease in net loans of $38,895 and a decrease in securities available-for-sale of $2,171. These decreases were slightly offset by increases in cash and due from financial institutions of $6,205 and investments in time deposits of $1,715. Total liabilities at March 31, 2026 were $3,746,079 compared to $3,792,979 at December 31, 2025, a decrease of $46,900, or 1.2%. The decrease in total liabilities was primarily attributable to a decrease in short-term FHLB advances of $75,000 coupled with a decrease in accrued incentives of $3,571, partially offset by an increase in total deposits of $35,426. Loans outstanding as of March 31, 2026 and December 31, 2025 were as follows: March 31, 2026 December 31, 2025 $ Change % Change Commercial & Agriculture $ 310,400 $ 308,692 $ 1,708 0.6 % Commercial Real Estate—Owner Occupied 390,786 385,547 5,239 1.4 % Commercial Real Estate—Non-Owner Occupied 1,232,781 1,239,017 (6,236 ) (0.5 %) Residential Real Estate 943,425 944,328 (903 ) (0.1 %) Real Estate Construction 254,254 285,137 (30,883 ) (10.8 %) Farm Real Estate 32,700 37,775 (5,075 ) (13.4 %) Lease Financing Receivables 32,693 35,103 (2,410 ) (6.9 %) Consumer and Other 32,628 34,447 (1,819 ) (5.3 %) Total loans 3,229,667 3,270,046 (40,379 ) (1.2 %) Allowance for credit losses (40,536 ) (42,020 ) 1,484 (3.5 %) Net loans $ 3,189,131 $ 3,228,026 $ (38,895 ) (1.2 %) Loans held for sale decreased $240 since December 31, 2025. The decrease was due to a decrease in average loan balances held for sale. At March 31, 2026, 32 loans totaling $6,940 were held for sale as compared to 27 loans totaling $7,180 at December 31, 2025. Net loans decreased $38,895, or 1.2%, since December 31, 2025. The decrease at March 31, 2026 was mainly attributed to decreases in Real Estate Construction, Commercial Real Estate - Non-Owner Occupied, and Farm Real Estate, partially offset by increases in Commercial Real Estate - Owner Occupied and Commercial & Agriculture. At March 31, 2026, the loan to deposit ratio was 92.2% compared to 94.3% at December 31, 2025. During the first three months of 2026, provisions and recoveries made to the allowances for credit losses and off-balance sheet credit exposures resulted in a net credit of $629 to the provision for credit losses, compared to an expense of $1,567 during the same period in 2025. The decrease in the provision for the first three months of 2026 was primarily the result of loan balances decreasing $40,379 for the three months ended March 31, 2026, coupled with an improvement in the historical loss rates in the majority of our loan segments. Reserves on the Lease Financing Receivables portfolio decreased at March 31, 2026, primarily related to lower balance growth in 2026 as the first quarters are historically a lower origination period for leases. Total delinquencies on Lease Financing Receivables decreased from December 31, 2025 to March 31, 2026. Lease Financing Receivables 30-59 days past due and 60-89 days past due combined decreased from $2,541 to $770, and the balance of 90 days or greater past due also decreased from $454 to $105. Nonaccrual Lease Financing Receivables decreased from $291 at December 31, 2025 to $105 at March 31, 2026. Net charge-offs for the first three months ended March 31, 2026 totaled $716, compared to net charge-offs of $633 for the same period of 2025. For the first three months ended March 31, 2026, the Company charged off a total of 12 loans and leases, consisting of two Commercial & Agriculture loans totaling $96, four Lease Financing Receivables totaling $210, one Commercial Real Estate - Non-Owner Occupied loan totaling $484, four Consumer and Other loans totaling $13 and one Residential Real Estate loan totaling $3. In addition, during the three months ended March 31, 2026, the Company had recoveries on previously charged-off Commercial & Agriculture loans of $62, Commercial Real Estate - Owner Occupied loans of $2, Commercial Real Estate - Non-Owner Occupied loans 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) of $1, Residential Real Estate loans of $13, Lease Financing Receivables of $4 and Consumer and Other loans of $8. For each loan category, as well as in total, the percentage of net charge-offs to loans was less than one percent. Each of these factors was considered by management as part of the examination of both the level and mix of the allowance by credit type as well as the overall level of the allowance. Management specifically evaluates loans that do not share common risk characteristics for estimates of loss. To evaluate the adequacy of the allowance for credit losses to cover probable losses in the loan portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for delinquencies and historical reserve allocations. Loss migration rates are calculated over a three-year period for all portfolio segments. Management also considers certain economic factors for trends that management uses to account for the qualitative and environmental changes in risk, which affects the level of the reserve. Larger (greater than $350) Commercial & Agricultural and Commercial Real Estate loan relationships, as well as Residential Real Estate and Consumer loans and Lease Financing Receivables that are part of a larger relationship are individually evaluated on a quarterly basis, when they do not share similar risk characteristics with the collectively evaluated pools. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the value of the loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. The Company’s policy for recognizing interest income on individually evaluated loans does not differ from its overall policy for interest recognition. Loans held for sale are excluded from consideration as individually evaluated. Loans are generally moved to nonaccrual status when 90 days or more past due or at an earlier date when full collection of principal and interest is in doubt. Total loans 90 days or more past due increased from $4,109 at December 31, 2025 to $10,688 at March 31, 2026; however, this increase can be attributed to one Commercial Real Estate - Non-Owner Occupied loan with a balance of approximately $7,900 that was 30-59 days past due as of December 31, 2025 and became greater than 90 days past due by March 31, 2026, which is why total loans past due did not experience the same trend, decreasing slightly from December 31, 2025 to March 31, 2026. Further, this loan was already moved to nonaccrual as of December 31, 2025 and was individually evaluated for purpose of the December 31, 2025 allowance calculation, resulting in a specific reserve of $3,000. As of March 31, 2026, the loan remains on nonaccrual and continues to be individually evaluated with a $3,000 specific reserve. This is why nonaccrual loans did not move consistently with the increase in 90 days or more past due, decreasing slightly from $30,384 at December 31, 2025 to $29,400 at March 31, 2026. This is also why the increase in 90 days or more past due did not result in an increase to our estimate allowance, because the related risk was already accounted for with the $3,000 specific reserve included in both the December 31, 2025 and March 31, 2026 allowance for credit loss estimate. Loans, or portions thereof, are charged-off when deemed uncollectible. The allowance for credit losses as a percent of total loans was 1.26% at March 31, 2026 and 1.28% at December 31, 2025. Cash and due from financial institutions increased by $6,205, from $77,320 at December 31, 2025 to $83,525 at March 31, 2026. The increase is mainly due to an increase in overnight investments at the Federal Reserve. The available-for-sale securities portfolio decreased by $2,171, from $681,908 at December 31, 2025 to $679,737 at March 31, 2026. Management continually evaluates our securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, and the level of interest rate risk to which the Company is exposed. These evaluations may cause the Company to change the level of funds it deploys into investment securities and change the composition of its investment securities portfolio. As of March 31, 2026, the Company was in compliance with all pledging requirements. Premises and equipment, net, decreased $1,556 from December 31, 2025 to March 31, 2026. The decrease was mainly the result of depreciation expenses of $1,902 coupled with maturing operating leases, partially offset by purchases. The depreciation expense was mainly attributable to leasing operations as operating leases matured. Since mid-2024, new lease originations have primarily consisted of finance leases which are recorded in Loans on the Consolidated Balance Sheets. 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) Total deposits as of March 31, 2026 and December 31, 2025 were as follows: March 31, 2026 December 31, 2025 $ Change % Change Noninterest-bearing demand $ 703,778 $ 702,032 $ 1,746 0.2 % Interest-bearing demand 419,295 400,403 18,892 4.7 % Savings and money market 1,291,253 1,234,593 56,660 4.6 % Time deposits 710,423 727,294 (16,871 ) (2.3 %) Brokered deposits 377,141 402,142 (25,001 ) (6.2 %) Total Deposits $ 3,501,890 $ 3,466,464 $ 35,426 1.0 % The Company had approximately $636,183 and $647,472 of uninsured deposits as of March 31, 2026 and December 31, 2025, respectively. Uninsured deposit amounts are estimated based on the portions of customer account balances that exceed the FDIC insurance limit of $250. Total deposits at March 31, 2026 increased $35,426 from December 31, 2025. Noninterest-bearing deposits, interest-bearing demand deposits, and savings and money market accounts increased $1,746, $18,892, and $56,660, respectively, from December 31, 2025, while time deposits and brokered deposits decreased $16,871 and $25,001, respectively, from December 31, 2025. The increase in interest-bearing demand deposits was primarily due to an $18,568 increase in interest-bearing public fund accounts and a $4,987 increase in business interest-bearing demand deposits, slightly offset by decreases of $4,589 and $2,795 in jumbo demand deposits and retail interest-bearing demand deposits, respectively. The increase in savings and money markets was due to increases of $27,030, $13,308, $8,814, $6,130, and $4,222 in business money market deposits, public fund money market accounts, Insured Cash Sweep (ICS) money market deposits, retail money market accounts, and statement savings, respectively. The $16,871 decrease in time deposits was due to a decrease of $15,378 in jumbo time deposits. Brokered deposits decreased $25,001 as the Company continues its strategy to reduce brokered deposits and replace them with core deposits. The year-to-date average balance of total deposits increased $251,868, compared to the average balance for the same period in 2025, mainly due to increases of $150,746, $76,467, and $24,655 in the average balance of time deposits, demand and savings deposits, and noninterest-bearing deposits, respectively. Short-term FHLB advances decreased $75,000 from December 31, 2025 to March 31, 2026, due to an increase in available liquidity, primarily as a result of deposit growth coupled with the net decrease in outstanding loans and leases in the first quarter of 2026. Shareholders’ equity at March 31, 2026 was $552,243, or 12.8% of total assets, compared to $543,474, or 12.5% of total assets, at December 31, 2025. The increase was a result of net income of $14,989, partially offset by dividends paid on common shares of $3,732 and an increase in accumulated other comprehensive loss of $2,889 resulting from the change in the unrealized loss on available-for-sale securities. Total outstanding common shares at March 31, 2026 were 20,783,348, which increased slightly from 20,746,474 common shares outstanding at December 31, 2025. Common shares outstanding increased due to the grant of 51,378 restricted common shares to certain officers under the Company’s 2024 Incentive Plan, partially offset by 14,504 common shares surrendered by officers to the Company to pay taxes upon vesting of restricted shares. Results of Operations Three Months Ended March 31, 2026 and 2025 The Company had net income of $14,989 for the three months ended March 31, 2026, an increase of $4,821 from net income of $10,168 for the same period of 2025. Basic and diluted earnings per common share were $0.72 for the quarter ended March 31, 2026, compared to $0.66 for the same period of 2025. In the first quarter of 2026, net income was decreased by $358 from non-recurring adjustments resulting from acquisition-related expenses from the FSB merger relating to the core system conversion that was completed in February 2026. The primary reasons for the changes in net income are explained below. Net interest income for the three months ended March 31, 2026 was $37,823, an increase of $5,050 from $32,773 for the same period of 2025. This increase was a result of an increase of $2,076 in total interest and dividend income, coupled with a $2,974 decrease in total interest expense. Total interest-earning assets averaged $4,003,144 during the three months ended March 31, 2026, an increase of $201,435 from $3,801,709 for the same period of 2025. The Company’s total average interest-bearing liabilities increased from 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) $3,006,090 during the three months ended March 31, 2025 to $3,023,372 during the three months ended March 31, 2026. The Company’s fully tax equivalent net interest margin for the three months ended March 31, 2026 and 2025 was 3.85% and 3.51%, respectively. Total interest and dividend income was $55,809 for the three months ended March 31, 2026, an increase of $2,076 from $53,733 for the same period of 2025. The increase in interest and dividend income is mainly attributable to a $1,584 increase in interest and fees on loans and a $399 increase in interest income on taxable securities. The $1,584 increase in interest and fees on loans is attributable to an increase in the average balance of loans. The average balance of loans increased by $152,902, or 4.9%, to $3,252,342 for the three months ended March 31, 2026, as compared to $3,099,440 for the same period of 2025. Interest on taxable securities increased $399 to $3,954 for the three months ended March 31, 2026, compared to $3,555 for the same period of 2025. The average balance of taxable securities increased $35,867 to $432,760 for the three months ended March 31, 2026, as compared to $396,893 for the same period of 2025. The yield on taxable securities increased 18 basis points to 3.49% for the three months ended March 31, 2026, compared to 3.31% for the same period of 2025, resulting from the purchase of similar securities to replace matured securities with the new securities having higher rates than when the matured securities were originally purchased. Interest on tax-exempt securities decreased $37 to $2,303 for the three months ended March 31, 2026, compared to $2,340 for the same period of 2025. The average balance of tax-exempt securities decreased $1,204 to $285,277 for the three months ended March 31, 2026, as compared to $286,481 for the same period of 2025. The yield on tax-exempt securities increased 3 basis points to 3.94% for the three months ended March 31, 2026, compared to 3.91% for the same period of 2025. Interest on deposits in other banks increased $130 to $322 for the three months ended March 31, 2026, compared to $192 for the same period of 2025. The average balance of interest-bearing deposits in other banks increased $13,870 to $32,765 for the three month period ended March 31, 2026, compared to $18,895 for the same period of 2025. The yield on interest-bearing deposits in other banks decreased 22 basis points to 3.91% for the three months ended March 31, 2026, compared to 4.13% for the same period of 2025. Total interest expense decreased $2,974, or 14.2%, to $17,986 for the three months ended March 31, 2026, compared to $20,960 for the same period of 2025. For the three months ended March 31, 2026, the average balance of interest-bearing liabilities increased $17,282 to $3,023,372, as compared to $3,006,090 for the same period of 2025. Interest incurred on deposits decreased by $263 to $15,453 for the three months ended March 31, 2026, compared to $15,716 for the same period of 2025. The average balance of interest-bearing deposits increased by $227,213 to $2,765,773 for the three months ended March 31, 2026, as compared to the same period in 2025, which was more than offset by a decrease in the rate paid on interest-bearing deposits from 2.51% for the first three months ended March 31, 2025 to 2.27% in the first three months of 2026. The decrease in rates was mainly driven by time deposits related to paying lower rates on retail and brokered CDs due to the lower rate environment in the first quarter of 2026 compared to the same period of 2025. Interest expense incurred on short-term FHLB advances decreased mainly due to the average balance of short-term FHLB advances decreasing by $206,933 to $148,656 for the three months ended March 31, 2026, as compared to the same period in 2025. The following table presents the condensed average balance sheets for the three months ended March 31, 2026 and 2025. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using Page 44 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 March 31, 2026 2025 Assets: Average balance Interest Yield/ rate* Average balance Interest Yield/ rate* Interest-earning assets: Loans, including fees** $ 3,252,342 $ 49,230 6.14 % $ 3,099,440 $ 47,646 6.23 % Taxable securities 432,760 3,954 3.49 % 396,893 3,555 3.31 % Tax-exempt securities 285,277 2,303 3.94 % 286,481 2,340 3.91 % Interest-bearing deposits in other banks 32,765 322 3.91 % 18,895 192 4.13 % Total interest-earning assets $ 4,003,144 $ 55,809 5.66 % $ 3,801,709 $ 53,733 5.71 % Noninterest-earning assets: Cash and due from financial institutions 39,130 43,203 Premises and equipment, net 39,989 46,404 Accrued interest receivable 14,196 13,567 Intangible assets 143,272 133,268 Bank owned life insurance 63,287 62,916 Other assets 51,682 58,588 Less allowance for loan losses (41,663 ) (39,956 ) Total Assets $ 4,313,037 $ 4,119,699 Liabilities and Shareholders Equity: Interest-bearing liabilities: Demand and savings $ 1,655,416 $ 5,431 1.33 % $ 1,578,949 $ 5,729 1.47 % Time 1,110,357 10,022 3.66 % 959,611 9,987 4.22 % Short-term FHLB advances 148,656 1,348 3.68 % 355,589 3,929 4.48 % Long-term FHLB advances 781 5 2.73 % 1,408 9 2.56 % Other borrowings 3,913 72 7.50 % 6,430 145 9.14 % Subordinated debentures 104,249 1,108 4.31 % 104,103 1,161 4.52 % Total interest-bearing liabilities $ 3,023,372 $ 17,986 2.41 % $ 3,006,090 $ 20,960 2.83 % Noninterest-bearing deposits 695,429 670,774 Other liabilities 40,296 45,814 Shareholders’ Equity 553,940 397,021 Total Liabilities and Shareholders’ Equity $ 4,313,037 $ 4,119,699 Net interest income and interest rate spread (1) $ 37,823 3.25 % $ 32,773 2.88 % Net interest margin (2) 3.85 % 3.51 % (1) Net interest spread represents the difference between the yield on average interest-earning assets and the cost of interest-bearing liabilities. (2) Net interest margin represents net interest income divided by average interest-earning assets. *Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $612 and $622 for the periods ended March 31, 2026 and 2025, respectively. **Average balance includes nonaccrual loans. Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the three months ended March 31, 2026 and 2025. 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) Increase (decrease) due to: Volume (1) Rate (1) Net (Dollars in thousands) Interest income: Loans, including fees $ 2,323 $ (739 ) $ 1,584 Taxable securities 198 201 399 Tax-exempt securities (52 ) 15 (37 ) Interest-bearing deposits in other banks 137 (7 ) 130 Total interest income $ 2,606 $ (530 ) $ 2,076 Interest expense: Demand and savings $ 269 $ (567 ) $ (298 ) Time 1,456 (1,421 ) 35 Short-term FHLB advances (1,973 ) (608 ) (2,581 ) Long-term FHLB advances (4 ) — (4 ) Other borrowings (50 ) (23 ) (73 ) Subordinated debentures 2 (55 ) (53 ) Total interest expense $ (300 ) $ (2,674 ) $ (2,974 ) Net interest income $ 2,906 $ 2,144 $ 5,050 (1)The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate. The Company provides for credit losses through regular provisions to the allowance for credit losses. During the three months ended March 31, 2026, the Company recorded a credit to the provision for credit losses for loans and off-balance sheet credit exposures of $629, a decrease of $2,196, from an expense of $1,567 during the three months ended March 31, 2026. Noninterest income for the three month periods ended March 31, 2026 and 2025 was as follows: Three Months Ended March 31, 2026 2025 $ Change % Change Service charges $ 1,714 $ 1,524 $ 190 12.5 % Net gain (loss) on equity securities 33 (29 ) 62 213.8 % Net gain on sale of loans and leases 1,605 604 1,001 165.7 % ATM/Interchange fees 1,386 1,326 60 4.5 % Wealth management fees 1,433 1,340 93 6.9 % Lease revenue and residual income 1,630 1,896 (266 ) (14.0 %) Bank owned life insurance 390 387 3 0.8 % Swap fees 56 72 (16 ) (22.2 %) Other 1,184 740 444 60.0 % Total noninterest income $ 9,431 $ 7,860 $ 1,571 20.0 % Total noninterest income for the three months ended March 31, 2026 was $9,431, an increase of $1,571, or 20.0%, from $7,860 for the same period of 2025. Net gain on sale of loans and leases increased $1,001 for the three months ended March 31, 2026, compared to the same period of 2025, resulting from changes in the rate environment at the time of sale that resulted in higher sales volume. Lease revenue and residual income decreased $266 for the three months ended March 31, 2026, compared to the same period of 2025, mainly due to a decrease in operating lease originations as the Company continues to shift towards finance leases. Other income increased $444 for the three months ended March 31, 2026, compared to the same period of 2025, due to income from the Company's captive insurance subsidiary, CIVB Risk Management, recording $487 of income related to the resolution of three prior period claims that were closed without payment, resulting in a reduction of ceded reserves in the first quarter of 2026. 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) Noninterest expense for the three month periods ended March 31, 2026 and 2025 was as follows: Three Months Ended March 31, 2026 2025 $ Change % Change Compensation expense $ 16,229 $ 14,043 $ 2,186 15.6 % Net occupancy expense 1,623 1,634 (11 ) (0.7 %) Contracted data processing 730 567 163 28.7 % FDIC Assessment 423 873 (450 ) (51.5 %) State franchise tax 554 526 28 5.3 % Professional services 1,585 2,090 (505 ) (24.2 %) Equipment expense 2,089 2,103 (14 ) (0.7 %) ATM/Interchange expense 732 580 152 26.2 % Marketing 478 296 182 61.5 % Amortization of core deposit intangibles 696 332 364 109.6 % Software maintenance expense 1,475 1,277 198 15.5 % Other 3,259 $ 2,805 454 16.2 % Total noninterest expense $ 29,873 $ 27,126 $ 2,747 10.1 % Total noninterest expense for the three months ended March 31, 2026 was $29,873, an increase of $2,747 or 10.1%, from $27,126 compared to the same period of 2025. The increase in total noninterest expense was primarily due to increases in compensation and other expenses, partially offset by decreases in FDIC assessment and professional fees. The increase in compensation expense was primarily due to increases in salaries, commissions, and medical expenses associated from operating with higher full-time equivalent (FTE) employees year-over-year. The number of FTEs at March 31, 2026 was 535, compared to 520 for the same period of 2025. The increase in other expense is mainly related to acquisition-related expenses in the first quarter of 2026 of $427 for the FSB merger. The decrease in FDIC assessment is related to better credit ratings lowering the Company's overall quarterly assessment in the first quarter of 2026 compared to the same period of 2025. The decrease in professional fees is primarily due to lower consulting expenses related to CLF's core system conversion. Income tax expense for the three months ended March 31, 2026 totaled $3,021, up $1,249 compared to the same period of 2025. The effective tax rates for the three month periods ended March 31, 2026 and 2025 were 16.8% and 14.8%, respectively. The increase in the effective tax rate for the three month period ended March 31, 2026, was primarily due to an increase in the forecasted pre-tax income outpacing the permanent differences for 2026, thus, creating more taxable income at the statutory tax rate of 21% and increasing the Company's effective tax rate. The difference between the statutory federal income tax rate and the Company’s effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low-income housing tax credits, tax-deductible captive insurance premiums and bank owned life insurance income. Capital Resources Shareholders’ equity at March 31, 2026 was $552,243, or 12.8% of total assets, compared to $543,474, or 12.5% of total assets, at December 31, 2025. The increase was a result of net income of $14,989, partially offset by dividends paid on common shares of $3,732 and an increase in accumulated other comprehensive loss of $2,889 resulting from the change in the unrealized loss on available-for-sale securities. All of the Company’s capital ratios exceeded the regulatory minimum guidelines as of March 31, 2026 and December 31, 2025 as identified in the following table: Total Risk Based Capital Tier I Risk Based Capital CET1 Risk Based Capital Leverage Ratio Company Ratios—March 31, 2026 18.7 % 15.1 % 14.2 % 11.6 % Company Ratios—December 31, 2025 18.0 % 14.5 % 13.6 % 11.3 % For Capital Adequacy Purposes 8.0 % 6.0 % 4.5 % 4.0 % 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) Liquidity The Company maintains a conservative liquidity position. All securities, with the exception of equity securities, are classified as available-for-sale. Securities, with maturities of one year or less, totaled $23,781, or 3.50% of the total securities portfolio, at March 31, 2026. The available-for-sale securities portfolio helps to provide the Company with the ability to meet its funding needs. As reported in the Condensed Consolidated Statements of Cash Flows (Unaudited), our cash flows are classified for financial reporting purposes as operating, investing or financing cash flows. Net cash provided by operating activities was $12,180 and $3,612 for the three months ended March 31, 2026 and 2025, respectively. The primary additions to cash from operating activities are from proceeds from the sale of loans. The primary use of cash from operating activities is from loans originated for sale. Net cash provided/(used) for investing activities was $38,261 and $(21,231) for the three months ended March 31, 2026 and 2025, respectively, principally reflecting our loan and investment security activities. Net cash (used)/provided by financing activities was ($44,236) and $44,920 for the three months ended March 31, 2026 and 2025, respectively. The primary changes in financing activities is the decrease in short-term FHLB advances and the payment of common dividends, somewhat offset by an increase in deposits. Future loan demand of Civista may be funded by increases in deposit accounts, proceeds from payments on existing loans, the maturity of securities, and the sale of securities classified as available-for-sale. Additional sources of funds may also come from borrowing in the Federal Funds market and/or borrowing from the FHLB. Through its correspondent banks, Civista maintains federal funds borrowing lines totaling $50,000. As of March 31, 2026, Civista had total credit availability with the FHLB of $1,022,339 with standby letters of credit totaling $132,700 and a remaining borrowing capacity of approximately $788,900. In addition, CBI maintains a credit line with a third party lender totaling $10,000. No borrowings were outstanding by CBI under this credit line as of March 31, 2026. Page 48 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 49 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 and March 31, 2026 and December 31, 2025, based on certain prepayment and account decay assumptions that management believes are reasonable. The table shows the changes in the Company’s net portfolio value (in amount and percent) that would result from hypothetical interest rate increases of up to 400 basis points from 100 basis points and interest rate decreases of 100 basis points and up to 400 basis points at March 31, 2026 and December 31, 2025. Net Portfolio Value March 31, 2026 December 31, 2025 Change in Rates Dollar Amount Dollar Change Percent Change Dollar Amount Dollar Change Percent Change +400bp 888,422 71,917 8.81 % 863,959 64,730 8.10 % +300bp 875,167 58,662 7.18 % 852,282 53,053 6.64 % +200bp 859,461 42,956 5.26 % 838,444 39,215 4.91 % +100bp 841,319 24,814 3.04 % 822,260 23,031 2.88 % Base 816,505 — 0.00 % 799,229 — 0.00 % -100bp 798,386 (18,119 ) (2.22 %) 783,907 (15,322 ) (1.92 %) -200bp 775,920 (40,585 ) (4.97 %) 762,828 (36,401 ) (4.55 %) -300bp 789,954 (26,551 ) (3.25 %) 794,297 (4,932 ) (0.62 %) -400bp 886,175 69,670 8.53 % 892,836 93,607 11.71 % The change in net portfolio value from December 31, 2025 to March 31, 2026, can be attributed to a couple of factors. The volume of assets and funding sources has changed, but the asset mix remains centered on loan and deposits. The volume of loans decreased while deposits increased, coupled with the volume of short-term FHLB advances has decreased in the first quarter of 2026. The volume shifts from the end of the year contributed to an increase in the base net portfolio value. Beyond the change in the base level of net portfolio value, projected movements in rates, up or down, would also lead to changes in market values. Page 50 Civista Bancshares, Inc. Controls and Procedures Form 10-Q (Amounts in thousands, except share data)