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 June 30, 2026 compared to December 31, 2025, and the consolidated results of operations for the three and six months ended June 30, 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 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; 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) • 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; • 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, as supplemented by the disclosure under "Item 1A. Risk Factors" of Part II of the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026. 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 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) aggregate net proceeds from the offering were approximately $75.7 million, after deducting $608 of direct expenses and the underwriting discount of $4.2 million. The net proceeds from the offering were initially used to pay-down short-term FHLB advances, but the long-term strategic plan is to use the net proceeds for general corporate purposes, which may include supporting organic growth opportunities and future strategic transactions. Financial Condition Total assets of the Company at June 30, 2026 were $4,294,298 compared to $4,336,453 at December 31, 2025, a decrease of $42,155, or 1.0%. The decrease was mainly due to decreases in net loans of $14,835, securities available-for-sale of $14,594, and cash and due from financial institutions of $15,577. These decreases were slightly offset by increases in investments in time deposits of $2,960 and other securities of $3,015. Total liabilities at June 30, 2026 were $3,727,513 compared to $3,792,979 at December 31, 2025, a decrease of $65,466, or 1.7%. The decrease in total liabilities was primarily attributable to decreases in short-term FHLB advances of $51,500 and total deposits of $8,221. Loans outstanding as of June 30, 2026 and December 31, 2025 were as follows: June 30, 2026 December 31, 2025 $ Change % Change Commercial & Agriculture $ 315,479 $ 308,692 $ 6,787 2.2 % Commercial Real Estate—Owner Occupied 389,434 385,547 3,887 1.0 % Commercial Real Estate—Non-Owner Occupied 1,229,731 1,239,017 (9,286 ) (0.7 %) Residential Real Estate 957,960 944,328 13,632 1.4 % Real Estate Construction 265,488 285,137 (19,649 ) (6.9 %) Farm Real Estate 32,440 37,775 (5,335 ) (14.1 %) Lease Financing Receivables 32,665 35,103 (2,438 ) (6.9 %) Consumer and Other 31,707 34,447 (2,740 ) (8.0 %) Total loans 3,254,904 3,270,046 (15,142 ) (0.5 %) Allowance for credit losses (41,713 ) (42,020 ) 307 (0.7 %) Net loans $ 3,213,191 $ 3,228,026 $ (14,835 ) (0.5 %) Loans held for sale increased $1,328 since December 31, 2025. The increase was due to an increase in average loan balances held for sale as well as the timing of selling the loans. At June 30, 2026, 28 loans totaling $8,508 were held for sale as compared to 27 loans totaling $7,180 at December 31, 2025. Net loans decreased $14,835, or 0.5%, since December 31, 2025. The decrease at June 30, 2026 was mainly attributed to decreases in Real Estate Construction, Commercial Real Estate - Non-Owner Occupied, and Farm Real Estate loans, partially offset by increases in Residential Real Estate, Commercial & Agriculture, and Commercial Real Estate - Owner Occupied loans. At June 30, 2026, the loan to deposit ratio was 94.1% compared to 94.3% at December 31, 2025. During the first six months of 2026, provisions and recoveries made to the allowances for credit losses and off-balance sheet credit exposures resulted in a net expense of $1,141 to the provision for credit losses, compared to an expense of $2,592 during the same period in 2025. The decrease in the provision expense for the first six months of 2026 was the result of loan balances decreasing $15,142 in addition to favorable changes in economic factors for the six months ended June 30, 2026. Reserves on the Lease Financing Receivables portfolio decreased at June 30, 2026, primarily related to lower balance growth in 2026 as CLF has experienced lower origination for leases. Total delinquencies on Lease Financing Receivables decreased from December 31, 2025 to June 30, 2026. Lease Financing Receivables 30-59 days past due and 60-89 days past due combined decreased from $2,541 to $675, and the balance of 90 days or greater past due also decreased from $454 to $103. Nonaccrual Lease Financing Receivables decreased from $291 at December 31, 2025 to $28 at June 30, 2026. Net charge-offs for the first six months ended June 30, 2026 totaled $790, compared to net charge-offs of $1,633 for the same period of 2025. For the six months ended June 30, 2026, the Company charged off a total of 21 loans and leases, consisting of three Commercial & Agriculture loans totaling $98, seven Lease Financing Receivables totaling $348, one Commercial Real Estate - Non-Owner Occupied 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) loan totaling $484, seven Consumer and Other loans totaling $20 and three Residential Real Estate loan totaling $30. In addition, during the six months ended June 30, 2026, the Company had recoveries on previously charged-off Commercial & Agriculture loans of $96, Commercial Real Estate - Owner Occupied loans of $3, Commercial Real Estate - Non-Owner Occupied loans of $2, Residential Real Estate loans of $34, Lease Financing Receivables of $44 and Consumer and Other loans of $11. 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 $13,853 at June 30, 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 June 30, 2026, which is why total loans past due did not experience the same trend, decreasing slightly from December 31, 2025 to June 30, 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 June 30, 2026, the loan remains on nonaccrual and continues to be individually evaluated with a $2,000 specific reserve. For this reason, nonaccrual loans did not move consistently with the increase in 90 days or more past due, decreasing slightly from $30,834 at December 31, 2025 to $29,865 at June 30, 2026 and the increase in 90 days or more past due did not result in an increase to our estimated allowance, because the related risk was already accounted for in both the December 31, 2025 and June 30, 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 1.28% at both June 30, 2026 and December 31, 2025. Cash and due from financial institutions decreased by $15,577, from $77,320 at December 31, 2025 to $61,743 at June 30, 2026. The decrease is mainly due to a decrease in overnight investments at the Federal Reserve. The available-for-sale securities portfolio decreased by $14,594, from $681,908 at December 31, 2025 to $667,314 at June 30, 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 June 30, 2026, the Company was in compliance with all pledging requirements. Total deposits as of June 30, 2026 and December 31, 2025 were as follows: June 30, 2026 December 31, 2025 $ Change % Change Noninterest-bearing demand $ 695,142 $ 702,032 $ (6,890 ) (1.0 %) Interest-bearing demand 380,752 400,403 (19,651 ) (4.9 %) Savings and money market 1,271,089 1,234,593 36,496 3.0 % Time deposits 761,117 727,294 33,823 4.7 % Brokered deposits 350,143 402,142 (51,999 ) (12.9 %) Total Deposits $ 3,458,243 $ 3,466,464 $ (8,221 ) (0.2 %) 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) The Company had approximately $638,065 and $647,472 of uninsured deposits as of June 30, 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 June 30, 2026 decreased $8,221 from December 31, 2025. Time deposits and savings and money markets increased $33,823 and $36,496, respectively, from December 31, 2025, while brokered deposits, interest-bearing demand deposits, and noninterest-bearing demand deposits decreased $51,999, $19,651, and $6,890, respectively, from December 31, 2025. The increase in time deposits was mainly due to an increase in jumbo time deposits of $26.5 million and retail certificates of deposit of $8.8 million, respectively. The increase in savings and money markets was due to increases of $34,150 and $10,555 in business money market deposits and public fund money market accounts, respectively, partially offset by a decrease in Insured Cash Sweep (ICS) money market deposits of $5,132. Brokered deposits decreased $51,999 as the Company continues its strategy to reduce brokered deposits and replace them with core deposits. The decrease in interest-bearing demand deposits was primarily due to decreases of $12,448 and $10,441 in retail interest-bearing demand deposits and interest-bearing public fund accounts, respectively, partially offset by an increase of $4,566 in business interest-bearing demand deposits. The decrease in noninterest-bearing demand deposits was mainly due to a decrease in business commercial deposits. The year-to-date average balance of total deposits increased $273,096, compared to the average balance for the same period in 2025 due to increases of $127,663, $107,559, and $37,874 in the average balance of time deposits, demand and savings deposits, and noninterest-bearing deposits, respectively. Short-term FHLB advances decreased $51,500 from December 31, 2025 to June 30, 2026, due to liquidity generated from reductions in loans and in our securities portfolio, together with operating cash flows, which were used to repay short-term FHLB advances. Shareholders’ equity at June 30, 2026 was $566,785, or 13.2% 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 $29,304 and a decrease in accumulated other comprehensive loss of $645 resulting from the change in the unrealized loss on available-for-sale securities and derivatives, in addition to an increase of $1,153 in stock compensation , partially offset by dividends paid on common shares of $7,473. Total outstanding common shares at June 30, 2026 were 20,794,238, which increased slightly from 20,746,474 common shares outstanding at December 31, 2025. Common shares outstanding increased due to the grant of 10,890 common shares to Civista directors as payment for their service on the Civista Board of Directors and 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 June 30, 2026 and 2025 The Company had net income of $14,315 for the three months ended June 30, 2026, an increase of $3,300 from net income of $11,015 for the same period of 2025. Basic and diluted earnings per common share were $0.69 for the quarter ended June 30, 2026, compared to $0.71 for the same period of 2025. In the second quarter of 2025, net income was increased by $757 from non-recurring adjustments resulting from the Civista Leasing and Finance ("CLF") division's core system conversion. The primary reasons for the changes in net income are explained below. Net interest income for the three months ended June 30, 2026 was $38,593, an increase of $3,779 from $34,814 for the same period of 2025. In the second quarter of 2025, net interest income was increased by $1,621 resulting from the non-recurring adjustments from the CLF core system conversion. The quarterly increase was a result of an increase of $276 in total interest and dividend income, coupled with a $3,503 decrease in total interest expense. Total interest-earning assets averaged $3,992,950 during the three months ended June 30, 2026, an increase of $151,581 from $3,841,369 for the same period of 2025. The Company’s total average interest-bearing liabilities decreased from $3,062,324 during the three months ended June 30, 2025 to $2,997,826 during the three months ended June 30, 2026. The Company’s fully tax equivalent net interest margin for the three months ended June 30, 2026 and 2025 was 3.89% and 3.64%, respectively. Total interest and dividend income was $56,547 for the three months ended June 30, 2026, an increase of $276 from $56,271 for the same period of 2025. The increase in interest and dividend income is mainly attributable to increases of $156 and $264 in taxable securities and deposits in other banks, respectively, partially offset by a decrease in interest and fees on loans of $84 which was impacted by the non-recurring adjustment mentioned above in the second quarter of 2025. The average balance of loans increased by $107,864, or 3.4%, to $3,243,955 for the three months ended June 30, 2026, as compared to $3,136,091 for the same period of 2025. 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) Interest on taxable securities increased $156 to $3,907 for the three months ended June 30, 2026, compared to $3,751 for the same period of 2025. The average balance of taxable securities increased $13,820 to $417,924 for the three months ended June 30, 2026, as compared to $404,104 for the same period of 2025. The yield on taxable securities increased 9 basis points to 3.51% for the three months ended June 30, 2026, compared to 3.42% 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 $60 to $2,278 for the three months ended June 30, 2026, compared to $2,338 for the same period of 2025. Interest on deposits in other banks increased $264 to $474 for the three months ended June 30, 2026, compared to $210 for the same period of 2025. The average balance of interest-bearing deposits in other banks increased $29,676 to $52,919 for the three month period ended June 30, 2026, compared to $23,243 for the same period of 2025. The yield on interest-bearing deposits in other banks decreased 2 basis points to 3.59% for the three months ended June 30, 2026, compared to 3.61% for the same period of 2025. Total interest expense decreased $3,503, or 16.3%, to $17,954 for the three months ended June 30, 2026, compared to $21,457 for the same period of 2025. For the three months ended June 30, 2026, the average balance of interest-bearing liabilities decreased $64,498 to $2,997,826, as compared to $3,062,324 for the same period of 2025. Interest incurred on deposits increased by $336 to $15,894 for the three months ended June 30, 2026, compared to $15,558 for the same period of 2025. The average balance of interest-bearing deposits increased by $243,145 to $2,781,645 for the three months ended June 30, 2026, as compared to the same period in 2025, which was almost fully offset by the decrease in the rate paid on interest-bearing deposits from 2.46% for the second quarter of 2025 to 2.29% in the second quarter 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 second 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 $304,722 to $107,823 for the three months ended June 30, 2026, as compared to the same period in 2025. The following table presents the condensed average balance sheets for the three months ended June 30, 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 a 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) 21% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities. Three Months Ended June 30, 2026 2025 Assets: Average balance Interest Yield/ rate* Average balance Interest Yield/ rate* Interest-earning assets: Loans, including fees** $ 3,243,955 $ 49,887 6.17 % $ 3,136,091 $ 49,972 6.39 % Taxable securities 417,924 3,908 3.51 % 404,104 3,751 3.42 % Tax-exempt securities 278,152 2,278 3.90 % 277,931 2,338 3.88 % Interest-bearing deposits in other banks 52,919 474 3.59 % 23,243 210 3.61 % Total interest-earning assets $ 3,992,950 $ 56,547 5.67 % $ 3,841,369 $ 56,271 5.84 % Noninterest-earning assets: Cash and due from financial institutions 34,901 40,329 Premises and equipment, net 38,277 44,687 Accrued interest receivable 14,267 13,919 Intangible assets 142,469 132,887 Bank owned life insurance 63,680 63,302 Other assets 52,725 59,948 Less allowance for loan losses (40,734 ) (40,546 ) Total Assets $ 4,298,535 $ 4,155,895 Liabilities and Shareholders Equity: Interest-bearing liabilities: Demand and savings $ 1,690,167 $ 5,997 1.42 % $ 1,551,856 $ 5,632 1.46 % Time 1,091,478 9,897 3.64 % 986,644 9,926 4.04 % Short-term FHLB advances 107,823 838 3.12 % 412,545 4,603 4.48 % Long-term FHLB advances 644 5 2.85 % 1,260 8 2.57 % Other borrowings 3,421 97 11.38 % 5,874 123 8.40 % Subordinated debentures 104,293 1,120 4.31 % 104,145 1,165 4.49 % Total interest-bearing liabilities $ 2,997,826 $ 17,954 2.40 % $ 3,062,324 $ 21,457 2.81 % Noninterest-bearing deposits 703,040 652,092 Other liabilities 36,568 40,564 Shareholders’ Equity 561,101 400,915 Total Liabilities and Shareholders’ Equity $ 4,298,535 $ 4,155,895 Net interest income and interest rate spread (1) $ 38,593 3.27 % $ 34,814 3.03 % Net interest margin (2) 3.89 % 3.64 % (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 $606 and $622 for the three months ended June 30, 2026 and 2025, respectively. **Average balance includes nonaccrual loans. 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) 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 June 30, 2026 and 2025. Increase (decrease) due to: Volume (1) Rate (1) Net (Dollars in thousands) Interest income: Loans, including fees $ 1,689 $ (1,774 ) $ (85 ) Taxable securities 57 99 156 Tax-exempt securities (77 ) 17 (60 ) Interest-bearing deposits in other banks 266 (1 ) 264 Total interest income $ 1,935 $ (1,659 ) $ 276 Interest expense: Demand and savings $ 493 $ (128 ) $ 365 Time 1,001 (1,030 ) (29 ) Short-term FHLB advances (2,669 ) (1,096 ) (3,765 ) Long-term FHLB advances (5 ) 2 (3 ) Other borrowings (61 ) 35 (26 ) Subordinated debentures 2 (47 ) (45 ) Total interest expense $ (1,239 ) $ (2,264 ) $ (3,503 ) Net interest income $ 3,174 $ 605 $ 3,779 (1) The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate. The Company provides for credit losses through regular provisions to the allowance for credit losses. During the three months ended June 30, 2026, the Company recorded a provision for credit losses for loans and off-balance sheet credit exposures of $1,770, an increase of $745, from an expense of $1,025 during the three months ended June 30, 2025. Noninterest income for the three month periods ended June 30, 2026 and 2025 was as follows: Three Months Ended June 30, 2026 2025 $ Change % Change Service charges $ 1,889 $ 1,564 $ 325 20.8 % Net gain (loss) on equity securities 140 (74 ) 214 289.2 % Net gain on sale of loans and leases 1,501 841 660 78.5 % ATM/Interchange fees 1,555 1,418 137 9.7 % Wealth management fees 1,459 1,325 134 10.1 % Lease revenue and residual income 1,404 525 879 167.4 % Bank owned life insurance 399 386 13 3.4 % Swap fees 3 53 (50 ) (94.3 %) Other 657 551 106 19.2 % Total noninterest income $ 9,007 $ 6,589 $ 2,418 36.7 % Total noninterest income for the three months ended June 30, 2026 was $9,007, an increase of $2,418, or 36.7%, from $6,589 for the same period of 2025. Noninterest income was reduced by $1,044 in the second quarter of 2025 from non-recurring adjustments resulting from the CLF core system conversion. Service charges increased $325 for the three months ended June 30, 2026, compared to the same period of 2025, primarily from higher business service charges and retail overdrafts. Net gain on sale of loans and leases increased $660 for the three months ended June 30, 2026, compared to the same period of 2025, resulting from favorable secondary market conditions resulting in higher sales volumes for both loans and leases. Lease revenue and residual income increased $879 for the three months ended June 30, 2026, compared to the same period of 2025, mainly due to the non-recurring adjustment noted above. 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) Noninterest expense for the three month periods ended June 30, 2026 and 2025 was as follows: Three Months Ended June 30, 2026 2025 $ Change % Change Compensation expense $ 15,737 $ 15,011 $ 726 4.8 % Net occupancy expense 1,583 1,419 164 11.6 % Contracted data processing 582 536 46 8.6 % FDIC Assessment 420 689 (269 ) (39.0 %) State franchise tax 599 634 (35 ) (5.5 %) Professional services 1,221 1,798 (577 ) (32.1 %) Equipment expense 1,720 1,764 (44 ) (2.5 %) ATM/Interchange expense 743 683 60 8.8 % Marketing 542 289 253 87.5 % Amortization of core deposit intangibles 696 338 358 105.9 % Software maintenance expense 1,235 1,294 (59 ) (4.6 %) Other 3,575 $ 3,027 548 18.1 % Total noninterest expense $ 28,653 $ 27,482 $ 1,171 4.3 % Total noninterest expense for the three months ended June 30, 2026 was $28,653, an increase of $1,171 or 4.3%, from $27,482 compared to the same period of 2025. Noninterest expenses were reduced by $311 in the second quarter of 2025 from non-recurring adjustments resulting from the CLF core system conversion. The increase in total noninterest expense was primarily due to increases in compensation, amortization of core deposit intangibles, 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 with operating with higher average full-time equivalent (FTE) employees year-over-year. The average number of FTEs for the three months ended June 30, 2026 was 549, compared to 526 for the same period of 2025. The increase in amortization of core deposit intangibles is related to the FSB merger. The increase in other expense is mainly related to the non-recurring adjustment mentioned above in the second quarter of 2025. The decrease in FDIC assessment is mainly due to an improvement in Civista's risk-based assessment rate, reflecting favorable trends in regulatory ratios and supervisory metrics used in the FDIC's pricing methodology. The decrease in professional fees is primarily due to higher consulting expenses in 2025 related to CLF's core system conversion. Income tax expense for the three months ended June 30, 2026 totaled $2,862, up $981 compared to the same period of 2025. The effective tax rates for the three month periods ended June 30, 2026 and 2025 were 16.7% and 14.6%, respectively. The increase in the effective tax rate for the three month period ended June 30, 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. Six Months Ended June 30, 2026 and 2025 The Company had net income of $29,304 for the six months ended June 30, 2026, an increase of $8,121 from $21,183 for the same period of 2025. Basic and diluted earnings per common share were $1.41 for the six months ended June 30, 2026, compared to $1.37 for the same period of 2025. For the six months ended June 30, 2026, net income was reduced by $374 from non-recurring adjustments related to acquisition-related expenses associated with the FSB merger. For the six months ended June 30, 2025, net income was increased by $757 from non-recurring adjustments resulting from the CLF core system conversion. The primary reasons for the changes in net income are explained below. Net interest income for the six months ended June 30, 2026 was $76,416, an increase of $8,829 from $67,587 for the same period of 2025. For the six months ended June 30, 2025, net interest income was increased by $1,621 resulting from the non-recurring adjustments from the CLF core system conversion. The year-to-date increase was a result of an increase of $2,352 in total interest and dividend income, coupled with a $6,477 decrease in total interest expense. Total interest-earning assets averaged $3,998,020 during the six months ended June 30, 2026, an increase of $176,371 from $3,821,649 for the same period of 2025. The Company’s total average interest-bearing liabilities decreased from $3,010,528 during the six months ended June 30, 2025 to $3,034,362 during the six months ended 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) June 30, 2026. The Company’s fully tax equivalent net interest margin for the six months ended June 30, 2026 and 2025 was 3.87% and 3.57%, respectively. Total interest and dividend income was $112,356 for the six months ended June 30, 2026, an increase of $2,352 from $110,004 for the same period of 2025. The increase in interest and dividend income is mainly attributable to increases of $1,500, $555 and $394 in interest and fees on loans, taxable securities and deposits in other banks, respectively, partially offset by a decrease in tax-exempt securities of $97. The average balance of loans increased by $130,259, or 4.2%, to $3,248,126 for the six months ended June 30, 2026, as compared to $3,117,867 for the same period of 2025. Interest on taxable securities increased $555 to $7,861 for the six months ended June 30, 2026, compared to $7,306 for the same period of 2025. The average balance of taxable securities increased $24,783 to $425,301 for the six months ended June 30, 2026, as compared to $400,518 for the same period of 2025. The yield on taxable securities increased 13 basis points to 3.50% for the six months ended June 30, 2026, compared to 3.37% 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 deposits in other banks increased $394 to $796 for the six months ended June 30, 2026, compared to $402 for the same period of 2025. The average balance of interest-bearing deposits in other banks increased $21,817 to $42,898 for the six months ended June 30, 2026, compared to $21,081 for the same period of 2025. The yield on interest-bearing deposits in other banks decreased 13 basis points to 3.71% for the six months ended June 30, 2026, compared to 3.84% for the same period of 2025. Total interest expense decreased $6,477, or 15.3%, to $35,940 for the six months ended June 30, 2026, compared to $42,417 for the same period of 2025. For the six months ended June 30, 2026, the average balance of interest-bearing liabilities decreased $23,834 to $3,010,528, as compared to $3,034,362 for the same period of 2025. Interest incurred on deposits were basically flat at $31,347 for the six months ended June 30, 2026, compared to $31,274 for the same period of 2025. The average balance of interest-bearing deposits increased by $235,222 to $2,773,752 for the six months ended June 30, 2026, as compared to the same period in 2025, which was fully offset by the decrease in the rate paid on interest-bearing deposits from 2.48% for the six months ended June 30, 2025 to 2.28% for the six months ended June 30, 2026. The decrease in rates was mainly driven by paying lower rates on retail and brokered CDs due to the lower rate environment in the first six month 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 $256,097 to $128,127 for the six months ended June 30, 2026, as compared to the same period in 2025. The following table presents the condensed average balance sheets for the six months ended June 30, 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 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 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) Six Months Ended June 30, 2026 2025 Assets: Average balance Interest Yield/ rate* Average balance Interest Yield/ rate* Interest-earning assets: Loans, including fees** $ 3,248,126 $ 99,117 6.15 % 3,117,867 97,618 6.31 % Taxable securities 425,301 7,862 3.50 % 400,518 7,306 3.37 % Tax-exempt securities 281,695 4,581 3.92 % 282,183 4,678 3.90 % Interest-bearing deposits in other banks 42,898 796 3.71 % 21,081 402 3.84 % Total interest-earning assets $ 3,998,020 $ 112,356 5.67 % $ 3,821,649 $ 110,004 5.77 % Noninterest-earning assets: Cash and due from financial institutions 37,004 41,758 Premises and equipment, net 39,128 45,541 Accrued interest receivable 14,232 13,744 Intangible assets 142,868 133,076 Bank owned life insurance 63,484 63,110 Other assets 52,206 59,271 Less allowance for loan losses (41,196 ) (40,252 ) Total Assets $ 4,305,746 $ 4,137,897 Liabilities and Shareholders Equity: Interest-bearing liabilities: Demand and savings $ 1,672,887 $ 11,428 1.38 % $ 1,565,328 $ 11,360 1.46 % Time 1,100,865 19,919 3.65 % 973,202 19,914 4.13 % Short-term FHLB advance 128,127 2,186 3.44 % 384,224 8,532 4.48 % Long-term FHLB advance 712 10 2.78 % 1,334 17 2.57 % Other borrowings 3,666 169 9.32 % 6,150 268 8.78 % Subordinated debentures 104,271 2,228 4.32 % 104,124 2,326 4.50 % Total interest-bearing liabilities $ 3,010,528 $ 35,940 2.41 % $ 3,034,362 $ 42,417 2.82 % Noninterest-bearing deposits 699,256 661,382 Other liabilities 38,422 43,174 Shareholders’ Equity 557,540 398,979 Total Liabilities and Shareholders’ Equity $ 4,305,746 $ 4,137,897 Net interest income and interest rate spread (1) $ 76,416 3.26 % $ 67,587 2.95 % Net interest margin (2) 3.87 % 3.57 % (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 $1.2 million and $1.2 million for the six month periods ended June 30, 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 six months ended June 30, 2026 and 2025. The table is presented on a fully tax-equivalent basis. 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) Increase (decrease) due to: Volume (1) Rate (1) Net (Dollars in thousands) Interest income: Loans, including fees $ 4,013 $ (2,514 ) $ 1,499 Taxable securities 256 300 556 Tax-exempt securities (129 ) 32 (97 ) Federal funds purchased 6 — 6 Interest-bearing deposits in other banks 403 (15 ) 388 Total interest income $ 4,549 $ (2,197 ) $ 2,352 Interest expense: Demand and savings $ 757 $ (689 ) $ 68 Time 2,452 (2,447 ) 5 Short-term FHLB advance (4,709 ) (1,637 ) (6,346 ) Long-term FHLB advance (9 ) 2 (7 ) Other borrowings (114 ) 15 (99 ) Subordinated debentures 2 (100 ) (98 ) Total interest expense $ (1,621 ) $ (4,856 ) $ (6,477 ) Net interest income $ 6,170 $ 2,659 $ 8,829 (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 six months ended June 30, 2026, the Company recorded a provision for credit losses of $1,141, a decrease of $1,451, from $2,592 during the six months ended June 30, 2025. Noninterest income for the six months ended June 30, 2026 and 2025 was as follows: Six Months Ended June 30, 2026 2025 $ Change % Change Service charges $ 3,603 $ 3,088 $ 515 16.7 % Net gain (loss) on equity securities 173 (103 ) 276 268.0 % Net gain on sale of loans and leases 3,106 1,445 1,661 114.9 % ATM/Interchange fees 2,941 2,744 197 7.2 % Wealth management fees 2,892 2,665 227 8.5 % Lease revenue and residual income 3,034 2,421 613 25.3 % Bank owned life insurance 789 773 16 2.1 % Swap fees 59 125 (66 ) -52.8 % Other 1,841 1,291 550 42.6 % Total noninterest income $ 18,438 $ 14,449 $ 3,989 27.6 % Total noninterest income for the six months ended June 30, 2026 was $18,438, an increase of $3,989, or 27.6%, from $14,449 for the same period of 2025. Noninterest income was reduced by $1,044 for the six months ended June 30, 2025, from non-recurring adjustments resulting from the CLF core system conversion. Service charges increased $515 for the six months ended June 30, 2026, compared to the same period of 2025, primarily from higher business service charges and retail overdrafts. Net gain on sale of loans and leases increased $1,661 for the six months ended June 30, 2026, compared to the same period of 2025, resulting from favorable secondary market conditions resulting in higher sales volumes for both loans and leases, coupled with disciplined pricing strategies on both the loan and lease gain on sale margins. Lease revenue and residual income increased $613 for the six months ended June 30, 2026, compared to the same period of 2025, mainly due to the non-recurring adjustment noted above. Page 53 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 six month periods ended June 30, 2026 and 2025 are as follows: Six Months Ended June 30, 2026 2025 $ Change % Change Compensation expense $ 31,966 $ 29,054 $ 2,912 10.0 % Net occupancy expense 3,206 3,053 153 5.0 % Contracted data processing 1,312 1,103 209 18.9 % FDIC Assessment 843 1,562 (719 ) -46.0 % State franchise tax 1,153 1,160 (7 ) -0.6 % Professional services 2,806 3,888 (1,082 ) -27.8 % Equipment expense 3,809 3,867 (58 ) -1.5 % ATM/Interchange expense 1,475 1,263 212 16.8 % Marketing 1,020 585 435 74.4 % Amortization of core deposit intangibles 1,392 670 722 107.8 % Software maintenance expense 2,710 2,571 139 5.4 % Other 6,834 5,832 1,002 17.2 % Total noninterest expense $ 58,526 $ 54,608 $ 3,918 7.2 % Total noninterest expense for the six months ended June 30, 2026 was $58,526, an increase of $3,918, or 7.2%, from $54,608 compared to the same period of 2025. Noninterest expenses were reduced by $311 for the six months ended June 30, 2025 from non-recurring adjustments resulting from the CLF core system conversion. The increase in total noninterest expense was primarily due to increases in compensation, marketing, amortization of core deposit intangibles, software maintenance, 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 resulting from operating with higher average full-time equivalent (FTE) employees year-over-year. The average number of FTEs for the six months ended June 30, 2026 was 548, compared to 523 for the same period of 2025. The increase in marketing expenses is related to an increase in digital marketing campaigns. The increase in amortization of core deposit intangibles is related to the FSB merger. The increase in software maintenance expense is primarily related to year-over-year maintenance increases as well as having more users increasing licensing costs. The increase in other expense is mainly related to the non-recurring adjustments related to the FSB merger for the six months ended June 30, 2026 and the non-recurring adjustment mentioned above related to the CLF core system conversion for the six months ended June 30, 2025. The decrease in FDIC assessment is mainly due to an improvement in Civista's risk-based assessment rate, reflecting favorable trends in regulatory ratios and supervisory metrics used in the FDIC's pricing methodology. The decrease in professional fees is primarily due to lower consulting expenses related to CLF's core system conversion. Income tax expense for the six months ended June 30, 2026 totaled $5,883, up $2,230 compared to the same period of 2025. The effective tax rates for the six month periods ended June 30, 2026 and 2025 were 16.7% and 14.7%, respectively. The increase in the effective tax rate for the six month period ended June 30, 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 June 30, 2026 was $566,785, or 13.2% 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 $29,304 and a decrease in accumulated other comprehensive loss of $645 resulting from the change in the unrealized loss on available-for-sale securities and derivatives, in addition to an increase of $1,153 in stock compensation, partially offset by dividends paid on common shares of $7,473. Page 54 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 June 30, 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—June 30, 2026 18.9 % 15.3 % 14.4 % 11.9 % 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 % 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 $7,748, or 1.2% of the total securities portfolio, at June 30, 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 $29,286 and $14,693 for the six months ended June 30, 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 $23,912 and $(76,078) for the six months ended June 30, 2026 and 2025, respectively, principally reflecting our loan and investment security activities. Net cash (used)/provided by financing activities was $(68,775) and $72,088 for the six months ended June 30, 2026 and 2025, respectively. The primary changes in financing activities is the decrease in short-term FHLB advances, payment of common dividends, and change 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 June 30, 2026, Civista had total credit availability with the FHLB of $1,050,078 with standby letters of credit totaling $132,700 and a remaining borrowing capacity of approximately $793,317. In addition, CBI maintains a credit line with a third party lender totaling $10,000. No borrowings were outstanding by CBI under this credit line as of June 30, 2026. Page 55 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 decrease 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 56 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. During the second quarter of 2026, the Company enhanced its interest rate risk disclosure to focus on net interest income sensitivity rather than economic value of equity. Management believes that net interest income sensitivity better reflects the Company's near-term earnings exposure to changes in interest rates and aligns more closely with how interest rate risk is managed internally. The following table provides information about the Company’s earnings at risk that were sensitive to changes in interest rates as of and June 30, 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 interest income (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 June 30, 2026 and December 31, 2025. Net Interest Income June 30, 2026 December 31, 2025 Change in Rates Dollar Amount Dollar Change Percent Change Dollar Amount Dollar Change Percent Change +400bp 164,844 6,309 3.98 % 168,153 6,879 4.27 % +300bp 164,295 5,760 3.63 % 167,915 6,641 4.12 % +200bp 163,027 4,492 2.83 % 166,289 5,015 3.11 % +100bp 161,174 2,639 1.66 % 164,007 2,733 1.69 % Base 158,535 — 0.00 % 161,274 — 0.00 % -100bp 153,637 (4,898 ) (3.09 %) 157,104 (4,170 ) (2.59 %) -200bp 146,835 (11,700 ) (7.38 %) 153,092 (8,182 ) (5.07 %) -300bp 139,952 (18,583 ) (11.72 %) 149,323 (11,951 ) (7.41 %) -400bp 136,014 (22,521 ) (14.21 %) 146,296 (14,978 ) (9.29 %) Page 57 Civista Bancshares, Inc. Controls and Procedures Form 10-Q (Amounts in thousands, except share data)