Core Viewpoint - Civista Bancshares, Inc. has promoted Robert L. Katitus to Senior Vice President and Chief Lending Officer, reflecting the company's commitment to internal talent development and leadership continuity [1][3]. Group 1: Leadership Changes - Robert L. Katitus has been appointed as Senior Vice President and Chief Lending Officer, succeeding Charles A. Parcher, who has become the President of Civista Bank [1]. - Katitus will be part of Civista's Executive Leadership Team and will report directly to the President of Civista Bank [1]. Group 2: Experience and Background - Katitus brings over 25 years of banking and commercial lending experience, having joined Civista in 2010 [2]. - Prior to his current role, he served as Senior Vice President, Regional Market Executive for Northeast Ohio and oversaw commercial banking in Northwest Ohio after Civista's acquisition of The Henry County Bank in 2022 [2][3]. - His previous experience includes leadership roles in commercial lending at Park View Federal Savings Bank and starting his banking career at National City Corporation in 1998 [3]. Group 3: Company Overview - Civista Bancshares, Inc. is a $4.2 billion financial holding company headquartered in Sandusky, Ohio, with its primary subsidiary being Civista Bank, founded in 1884 [4]. - Civista Bank operates 42 locations across Ohio, Southeastern Indiana, and Northern Kentucky, providing full-service banking, commercial lending, mortgage, and wealth management services [4]. - The company also offers commercial equipment leasing services nationwide through its Civista Leasing and Finance Division [4].

Group 1 - Civista Bancshares (NASDAQ: CIVB) was rated a "Strong Buy" in June 2023 amid significant market turbulence in the banking sector due to recent banking collapses [1] - The investment service focuses on cash flow and companies that generate it, highlighting value and growth prospects in the oil and natural gas sector [1] Group 2 - Subscribers have access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2] - A two-week free trial is available for new subscribers to explore opportunities in the oil and gas industry [3]

PART I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated balance sheets, statements of operations, and cash flows for the period ended June 30, 2025 Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$4,185,869** | **$4,098,469** | | Loans, net | $3,110,669 | $3,041,561 | | Securities available-for-sale | $642,910 | $648,067 | | Goodwill | $125,520 | $125,520 | | **Total Liabilities** | **$3,781,732** | **$3,709,967** | | Total Deposits | $3,196,207 | $3,211,870 | | Short-term FHLB advances | $433,500 | $339,000 | | **Total Shareholders' Equity** | **$404,137** | **$388,502** | Consolidated Statements of Operations Highlights (Unaudited) | Metric ($ in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $34,814 | $27,751 | $67,587 | $56,123 | | Provision for Credit Losses - Loans | $1,171 | $1,800 | $2,419 | $3,842 | | Noninterest Income | $6,589 | $10,377 | $14,449 | $18,634 | | Noninterest Expense | $27,482 | $28,389 | $54,608 | $55,831 | | **Net Income** | **$11,015** | **$7,064** | **$21,183** | **$13,424** | | **Earnings per share, diluted** | **$0.71** | **$0.45** | **$1.37** | **$0.85** | Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,693 | $12,945 | | Net cash used for investing activities | ($76,078) | ($164,247) | | Net cash provided by financing activities | $72,088 | $146,656 | | **Increase (Decrease) in cash and cash equivalents** | **$10,703** | **($4,646)** | [Notes to Interim Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Interim%20Consolidated%20Financial%20Statements%20(Unaudited)) Details accounting policies, securities, loans, credit loss allowances, and significant subsequent events like a planned merger - The Company operates primarily in one reportable segment, banking, providing financial services in Ohio, Indiana, and Kentucky[18](index=18&type=chunk)[19](index=19&type=chunk) - Total nonaccrual loans **decreased to $22.7 million** at June 30, 2025, from $31.0 million at December 31, 2024[61](index=61&type=chunk)[62](index=62&type=chunk) - On July 10, 2025, the Company announced an agreement to merge with The Farmers Savings Bank for an aggregate deal value of **approximately $70.4 million**[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - On July 10, 2025, the Company announced an underwritten public offering of common shares, raising aggregate **net proceeds of approximately $76.0 million**[145](index=145&type=chunk) Loan Portfolio Composition ($ in thousands) | Loan Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial & Agriculture | $338,598 | $328,488 | | Commercial Real Estate- Owner Occupied | $378,248 | $374,367 | | Commercial Real Estate- Non-Owner Occupied | $1,263,612 | $1,225,991 | | Residential Real Estate | $815,408 | $763,869 | | Real Estate Construction | $277,643 | $305,992 | | **Total Loans** | **$3,151,124** | **$3,081,230** | Allowance for Credit Losses (ACL) Roll-Forward - Six Months Ended June 30, 2025 ($ in thousands) | Category | Beginning Balance (Dec 31, 2024) | Charge-offs | Recoveries | Provision | Ending Balance (June 30, 2025) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total** | **$39,669** | **($2,068)** | **$435** | **$2,419** | **$40,455** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses financial condition and operational results, highlighting asset growth, increased net income, and recent strategic actions [Financial Condition](index=54&type=section&id=Financial%20Condition) Total assets grew 2.1% to $4.19 billion, driven by loan growth funded by FHLB advances as deposits slightly decreased - Total assets **increased by $87.4 million (2.1%)** to $4.19 billion at June 30, 2025, from $4.10 billion at December 31, 2024[157](index=157&type=chunk) Loan Portfolio Change ($ in thousands) | Loan Category | Change from Dec 31, 2024 | % Change | | :--- | :--- | :--- | | Residential Real Estate | $51,539 | 6.7% | | Commercial Real Estate—Non Owner Occupied | $37,621 | 3.1% | | Real Estate Construction | ($28,349) | -9.3% | | **Total Loans** | **$69,894** | **2.3%** | Deposit Composition Change ($ in thousands) | Deposit Category | Change from Dec 31, 2024 | % Change | | :--- | :--- | :--- | | Time deposits | $90,748 | 19.3% | | Brokered deposits | ($46,118) | -9.2% | | Noninterest-bearing demand | ($47,485) | -6.8% | | **Total Deposits** | **($15,663)** | **-0.5%** | [Results of Operations](index=58&type=section&id=Results%20of%20Operations) Net income increased significantly for Q2 and YTD 2025, driven by higher net interest income and an expanded net interest margin - The fully tax equivalent net interest margin for the six months ended June 30, 2025, was **3.57%**, an increase from 3.16% for the same period in 2024[188](index=188&type=chunk) Q2 2025 vs Q2 2024 Performance ($ in thousands) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $11,015 | $7,064 | $3,951 | | Net Interest Income | $34,814 | $27,751 | $7,063 | | Noninterest Income | $6,589 | $10,377 | ($3,788) | | Noninterest Expense | $27,482 | $28,389 | ($907) | YTD 2025 vs YTD 2024 Performance ($ in thousands) | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $21,183 | $13,424 | $7,759 | | Net Interest Income | $67,587 | $56,123 | $11,464 | | Noninterest Income | $14,449 | $18,634 | ($4,185) | | Noninterest Expense | $54,608 | $55,831 | ($1,223) | [Capital Resources and Liquidity](index=67&type=section&id=Capital%20Resources%20and%20Liquidity) The Company maintains a strong capital position with all regulatory ratios exceeding 'well-capitalized' minimums and has significant liquidity - As of June 30, 2025, Civista had a remaining borrowing capacity of **approximately $331.8 million** with the FHLB, plus other credit lines[205](index=205&type=chunk) Regulatory Capital Ratios | Ratio | June 30, 2025 | December 31, 2024 | Well-Capitalized Minimum | | :--- | :--- | :--- | :--- | | CET1 Risk Based Capital | 10.3% | 9.5% | 6.5% | | Tier I Risk Based Capital | 11.2% | 10.4% | 8.0% | | Total Risk Based Capital | 14.7% | 13.9% | 10.0% | | Leverage Ratio | 8.8% | 8.6% | 5.0% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company's primary market risk is interest-rate risk, with analysis showing a slightly asset-sensitive position - The company's primary technique for managing interest-rate risk is the measurement of its asset/liability gap[212](index=212&type=chunk) Net Portfolio Value Sensitivity Analysis (June 30, 2025) | Change in Rates (basis points) | Dollar Change ($ in thousands) | Percent Change | | :--- | :--- | :--- | | +400bp | $34,022 | 5.4% | | +200bp | $17,280 | 2.7% | | +100bp | $8,026 | 1.3% | | **Base** | **—** | **0.0%** | | -100bp | ($6,861) | (1.1%) | | -200bp | ($29,396) | (4.7%) | [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls during the quarter - Management, including the CEO and CFO, concluded that the Company's **disclosure controls and procedures were effective** as of June 30, 2025[218](index=218&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter[219](index=219&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=73&type=section&id=Item%201.%20Legal%20Proceedings) Management believes pending legal proceedings in the ordinary course of business will not have a material adverse effect - Management believes that any pending legal proceedings **will not have a material adverse effect** on the company's financial position or operations[221](index=221&type=chunk) [Item 1A. Risk Factors](index=73&type=section&id=Item%201A.%20Risk%20Factors) Updates risk factors, focusing on the pending merger with The Farmers Savings Bank and challenges in maintaining internal controls - The consummation of the FSB Merger is subject to customary closing conditions, and **there is no assurance it will be completed**[224](index=224&type=chunk) - The company may face challenges in integrating FSB's business, which could prevent the **realization of anticipated benefits and synergies**[227](index=227&type=chunk)[231](index=231&type=chunk) - A new risk factor highlights the importance of maintaining effective internal control over financial reporting due to recent staff turnover and acquisitions[233](index=233&type=chunk)[235](index=235&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) A new $13.5 million share repurchase program was authorized, though no shares were repurchased in the second quarter of 2025 - On April 15, 2025, the Company announced a new common share repurchase program authorizing up to **$13.5 million** in repurchases[238](index=238&type=chunk) - **No shares were repurchased** during the three months ended June 30, 2025[237](index=237&type=chunk)

Core Insights - The company reported a net income of $11.0 million, or $0.71 per share, representing a 56% increase year-over-year and an $847,000 increase over the prior quarter [5][17] - A follow-on capital raise generated $76.3 million net, which will be used to reduce overnight borrowings and fund new loans over time [8][22] - The company announced the acquisition of Farmers Savings Bank, expected to close in the fourth quarter, which will enhance core deposit funding and improve capital ratios [8][20] Financial Performance - Net interest income increased to $34.8 million, up $2.0 million or 6.2% sequentially, driven by a rise in earning asset yields [6][18] - Pre-provision net revenue rose by $3.3 million, or 37.5%, year-over-year, and by $770,000, or 6.7%, over the linked quarter [5][17] - Noninterest income decreased by $1.3 million, or 16.2%, from the previous quarter, primarily due to reduced leasing and residential fee revenues [3][22] Loan and Deposit Metrics - The loan-to-deposit ratio increased to 98.6%, higher than desired, with expectations for reduction following deposit initiatives and the Farmers acquisition [4][31] - Total loans and leases grew by $47.1 million, representing an annualized growth rate of 6.1%, with residential loans being the largest segment increase [6][26] - Total deposits declined by $42.7 million, or 1.3%, mainly due to the exit of a single municipal customer [7][29] Capital and Credit Quality - Pro forma capital ratios are projected to improve, with the tangible common equity ratio rising to 8.6% and the tier one leverage ratio to 10.6% post-capital raise and acquisition [9][33] - The allowance for credit losses to total loans was 1.28%, with an allowance for credit losses to nonperforming loans at 175%, up from 122% at the end of 2024 [9][35] - Criticized credits decreased by $2 million, indicating stable credit quality metrics [9][34] Strategic Initiatives - The company launched a new digital account opening platform aimed at attracting customers outside current branch locations [10][30] - Management aims to reduce the loan-to-deposit ratio to a target range of 90-95% through various deposit initiatives [31] - The acquisition of Farmers Savings Bank is seen as a strategic move to leverage their low-cost core deposits and enhance loan growth opportunities [20][21]

Core Viewpoint - Civista Bancshares reported mixed Q2 2025 earnings, with GAAP EPS of $0.71 slightly exceeding analyst expectations, but net interest income fell short of estimates, highlighting challenges in core revenue growth and deposit trends [1][5][10] Financial Performance - GAAP EPS for Q2 2025 was $0.71, up 58% from $0.45 in Q2 2024, and above the estimate of $0.70 [2] - Net income reached $11.0 million, a 55.6% increase from $7.1 million in Q2 2024 [2] - Net interest income was $34.8 million, falling short of the $42.77 million estimate but up 25.2% year-over-year [2][5] - Noninterest income dropped 36.5% to $6.6 million from $10.4 million in Q2 2024 [2][6] - Efficiency ratio improved to 64.5% from 72.6% year-over-year, indicating better expense management [2][9] Company Overview and Strategy - Civista Bancshares operates 42 branches in Ohio, southeastern Indiana, and northern Kentucky, focusing on retail and commercial banking, mortgage origination, and wealth management [3] - The company aims to grow its loan portfolio, expand core deposits, leverage its mortgage banking platform, and maintain strong capital ratios [4] Notable Events - The bank announced the acquisition of The Farmers Savings Bank, expected to add $233 million in low-cost deposits [10] - An $80.5 million common equity capital raise was completed to strengthen capital position [10] - A new digital deposit account system, Mantle, was launched to attract online customers [10] Future Outlook - Management projects a slight dip in core net interest margin in Q3 2025, with expectations for recovery in Q4 2025 [12] - Loan growth is anticipated in the mid-single digit range for the remainder of fiscal 2025, with plans for high-single digit growth in 2026 [12] - Noninterest income streams are expected to stabilize and potentially rebound in the second half of 2025 [13]

Financial Data and Key Metrics Changes - The company reported net income for Q2 2025 of $11 million, or $0.71 per diluted share, representing a 56% increase from Q2 2024 and an increase of $847,000 from the linked quarter [4] - Pre-provision net revenue increased by $3.3 million, or 37.5%, compared to Q2 2024, and by $770,000, or 6.7%, from the linked quarter [5] - Net interest income for the quarter was $34.8 million, an increase of $2 million, or 6.2%, compared to the linked quarter [5] - Non-interest income declined by $1.3 million, or 16.2%, from the first quarter and by $3.8 million from Q2 2024 [11] Business Line Data and Key Metrics Changes - The loan and lease portfolio grew at an annualized rate of 6.8% during the quarter, with significant growth in residential loans, which increased by $42 million [6][14] - Non-interest expense for the quarter was $27.5 million, a 1.3% increase over the first quarter, primarily due to merit increases in compensation [12] - The efficiency ratio improved to 64.5% compared to 64.9% for the linked quarter and 72.6% for the prior year [13] Market Data and Key Metrics Changes - Total deposits declined by $42.7 million, or 1.3%, primarily due to a municipal customer transferring funds out [17] - The loan-to-deposit ratio was 98.6%, higher than desired, with plans to reduce it to a targeted range of 90% to 95% [19] - The company launched a new digital deposit account opening platform to attract new customers [18] Company Strategy and Development Direction - The company announced a definitive agreement to acquire a former Savings Bank in Spencer, Ohio, and an $88.5 million follow-on capital offering [7][8] - The acquisition is expected to enhance the company's capital ratios and support organic growth [10][22] - The company aims to leverage the acquired low-cost core deposits and security portfolio to fund loan growth [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth, particularly in Ohio, which is becoming more business-friendly [40] - The company anticipates loan growth to remain in the mid-single digits for the remainder of 2025 and accelerate into high single digits in 2026 [24] - Credit quality remains strong, with criticized credits declining by $2 million during the quarter [23] Other Important Information - The company successfully raised $76.3 million in additional capital through a follow-on offering [11] - The effective tax rate for the quarter was 14.6% [13] - Unrealized losses in the securities portfolio increased to $63.1 million as of June 30 [20] Q&A Session Summary Question: Core margin trends for the second half - Management expects the core margin to improve, projecting a range of 3.52% to 3.53% for Q3, with further expansion in Q4 [31] Question: Competitive environment for lending and funding - The competitive landscape is intensifying, with larger regional banks becoming more aggressive in both lending and deposits [33] Question: Specific markets driving loan growth - Loan growth was primarily in residential loans, with a focus on Ohio's expanding job market and business investments [40] Question: Deposit growth strategy and initiatives - Previous initiatives are nearing capacity, but new initiatives, including a digital account opening system, are expected to enhance deposit growth [44] Question: Leasing recovery impact on loan balances - The leasing side is expected to rebound, positively impacting loan balances as well [66]

Group 1: Earnings Performance - Civista Bancshares reported quarterly earnings of $0.66 per share, missing the Zacks Consensus Estimate of $0.69 per share, but showing an increase from $0.45 per share a year ago, representing an earnings surprise of -4.35% [1] - The company posted revenues of $41.4 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 2.37%, compared to year-ago revenues of $38.29 million [2] Group 2: Stock Performance and Outlook - Civista Bancshares shares have increased by approximately 1.7% since the beginning of the year, while the S&P 500 has gained 8.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.75 on revenues of $43.66 million, and for the current fiscal year, it is $2.81 on revenues of $170.47 million [7] Group 3: Industry Context - The Zacks Industry Rank for Banks - Midwest is currently in the top 29% of over 250 Zacks industries, indicating that the industry is performing relatively well [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the outlook for the industry can significantly impact stock performance [5][8]

Preamble and Recitals [Recitals](index=8&type=section&id=Recitals) The agreement outlines the strategic merger of Farmers into Civista Bank, intended to qualify as a tax-free reorganization - The agreement is dated **July 10, 2025**, among Civista Bancshares, Inc, Civista Bank, and The Farmers Savings Bank[26](index=26&type=chunk) - The transaction is a strategic merger where Farmers will merge into Civista Bank, with **Civista Bank as the surviving entity**[28](index=28&type=chunk) - The merger is intended to qualify as a **tax-free "reorganization"** under Section 368(a) of the Internal Revenue Code[29](index=29&type=chunk) The Merger [The Merger](index=8&type=section&id=1.1%20The%20Merger) The Farmers Savings Bank will legally merge into Civista Bank, which will be the surviving entity under Ohio law - At the Effective Time, Farmers will merge with and into Civista Bank, with **Civista Bank continuing as the surviving bank**[31](index=31&type=chunk) - Civista may change the method of the combination if it does not alter the merger consideration, adversely affect tax consequences, or materially delay regulatory approvals[32](index=32&type=chunk)[33](index=33&type=chunk) [Closing and Effective Time](index=9&type=section&id=1.2%20Closing%20and%20Effective%20Time) The merger's closing will occur within 30 days of satisfying all conditions, becoming effective upon filing with the Ohio Secretary of State - The closing will take place within **thirty (30) days** following the satisfaction or waiver of all conditions[34](index=34&type=chunk) - The merger becomes effective upon the filing of the Certificate of Merger with the **Ohio Secretary of State**[34](index=34&type=chunk) [Conversion of Shares](index=9&type=section&id=1.4%20Conversion%20of%20Shares) Each Farmers Common Share will be converted into a mix of cash and Civista common stock, with adjustments for fractional shares Merger Consideration per Farmers Common Share | Consideration Type | Formula / Amount | | :--- | :--- | | **Cash Consideration** | $34,925,000 divided by the number of outstanding Farmers Common Shares | | **Stock Consideration** | 1,434,491 Civista Common Shares divided by the number of outstanding Farmers Common Shares (the "Exchange Ratio") | - No fractional Civista Common Shares will be issued; instead, shareholders will receive cash based on the **5-day average closing price** of Civista stock[41](index=41&type=chunk) - The stock consideration can be increased and cash consideration decreased to the minimum extent necessary to ensure the merger qualifies as a **tax-free reorganization**[42](index=42&type=chunk) [Farmers Adjusted Shareholders' Equity](index=11&type=section&id=1.5%20Farmers%20Adjusted%20Shareholders'%20Equity) The cash consideration is subject to an adjustment based on Farmers' final Adjusted Shareholders' Equity relative to a $56 million threshold Equity Adjustment Mechanism | Condition | Adjustment to Cash Consideration per Share | | :--- | :--- | | Adjusted Shareholders' Equity < $56,000,000 (Equity Minimum) | Reduced by the shortfall amount, divided by total shares | | Adjusted Shareholders' Equity > $56,000,000 (Equity Minimum) | Increased by 50% of the excess amount, divided by total shares | - Adjusted Shareholders' Equity is calculated based on GAAP as of the month-end prior to closing, excluding certain transaction expenses and including adjustments for investment portfolio valuation[44](index=44&type=chunk) [Dissenters' Rights](index=11&type=section&id=1.6%20Dissenters'%20Rights) Farmers shareholders who properly exercise dissenters' rights under Ohio law will receive fair value payment instead of merger consideration - Shareholders who properly dissent under Section 1701.85 of the OGCL will **not receive the Merger Consideration**[47](index=47&type=chunk) - Dissenting shareholders are entitled to receive payment for the fair value of their shares, but if they fail to perfect or withdraw their rights, they will receive the standard Merger Consideration[48](index=48&type=chunk) [Directors and Officers of the Surviving Bank](index=12&type=section&id=1.8%20Directors%20and%20Officers%20of%20the%20Surviving%20Bank) The existing directors and officers of Civista Bank will continue to lead the surviving bank after the merger - The directors of the Surviving Bank will be the directors of **Civista Bank** immediately prior to the Effective Time[50](index=50&type=chunk) - The officers of the Surviving Bank will be the officers of **Civista Bank** immediately prior to the Effective Time[51](index=51&type=chunk) Delivery of Merger Consideration [Exchange Agent](index=12&type=section&id=2.1%20Exchange%20Agent) Civista will appoint Equiniti Trust Co as the exchange agent to manage the distribution of merger consideration - Civista will appoint **Equiniti Trust Co.** as the exchange agent for the merger[54](index=54&type=chunk) [Exchange Procedures](index=13&type=section&id=2.3%20Exchange%20Procedures) Shareholders will receive instructions to exchange their shares for merger consideration, with unclaimed funds reverting to Civista after one year - Within **five business days** after the Effective Time, the Exchange Agent will mail a Letter of Transmittal to each Farmers shareholder[57](index=57&type=chunk) - Shareholders will receive their merger consideration, including cash for fractional shares and any owed dividends, after surrendering their certificates or book-entry shares with a completed Letter of Transmittal[57](index=57&type=chunk) - Any portion of the Exchange Fund unclaimed after **one year** will be returned to Civista, and shareholders must then look to Civista for payment[63](index=63&type=chunk) Representations and Warranties of Farmers [Capitalization](index=16&type=section&id=3.2%20Capitalization) Farmers represents it has 500 common shares authorized and outstanding, with no other equity rights or repurchase obligations - Farmers' authorized capital stock consists of **500 common shares**, all of which are issued and outstanding[70](index=70&type=chunk) - Farmers has **no outstanding options, warrants**, or other commitments to issue additional equity securities[70](index=70&type=chunk) [Financial Statements](index=18&type=section&id=3.6%20Financial%20Statements) Farmers affirms its provided financial statements conform to GAAP, fairly present its financial position, and contain no undisclosed material liabilities - Farmers has provided unaudited financial statements for fiscal years **2022, 2023, 2024** and the interim period ended **May 31, 2025**[79](index=79&type=chunk) - The financial statements were prepared in conformity with **GAAP** and fairly present the financial position of Farmers[79](index=79&type=chunk) - Farmers has **no material liabilities** other than those reflected in its financial statements, incurred in the ordinary course of business, or related to this agreement[80](index=80&type=chunk) [Farmers Benefit Plans](index=20&type=section&id=3.11%20Farmers%20Benefit%20Plans) Farmers represents its employee benefit plans are compliant and confirms the merger will not trigger excess parachute payments or tax gross-ups - A list of all material employee benefit plans (Farmers Benefit Plans) is provided in **Section 3.11(a)** of the Farmers Disclosure Schedule[89](index=89&type=chunk) - The execution of the merger agreement will not result in an **"excess parachute payment"** within the meaning of Section 280G of the Code[99](index=99&type=chunk) - No Farmers Benefit Plan provides for the gross-up or reimbursement of taxes under **Section 4999 or 409A** of the Code[99](index=99&type=chunk) [Opinion](index=23&type=section&id=3.13%20Opinion) Farmers' board received a fairness opinion from Janney Montgomery Scott LLC confirming the merger consideration is financially fair to its shareholders - The Board of Directors of Farmers received a fairness opinion from **Janney Montgomery Scott LLC**[109](index=109&type=chunk) - The opinion concludes that the Merger Consideration is **fair from a financial point of view** to Farmers' shareholders[109](index=109&type=chunk) Representations and Warranties of Civista and Civista Bank [Capitalization](index=34&type=section&id=4.2%20Capitalization) Civista represents its capital structure and confirms the shares issued in the merger will be duly authorized and fully paid Civista Capitalization | Security | Amount | | :--- | :--- | | Authorized Common Shares | 40,000,000 | | Outstanding Common Shares | 15,519,072 | | Treasury Shares | 3,860,536 | | Authorized Preferred Shares | 200,000 | | Outstanding Preferred Shares | 0 | - The Civista Common Shares to be issued in the Merger will be **duly authorized, validly issued, fully paid, nonassessable**, and free of preemptive rights[161](index=161&type=chunk) [Reports](index=35&type=section&id=4.5%20Reports) Civista affirms it has timely filed all required regulatory reports since December 31, 2021, without material misstatements or omissions - Since **December 31, 2021**, Civista has timely filed all required reports with Regulatory Agencies and other Governmental Entities[167](index=167&type=chunk) - Civista SEC Reports complied in all material respects with applicable law and did **not contain material misstatements or omissions**[168](index=168&type=chunk) Covenants Relating to Conduct of Business [Farmers Forbearances](index=37&type=section&id=5.2%20Farmers%20Forbearances) Farmers is prohibited from taking certain actions before closing without Civista's consent to preserve its business operations and value - Farmers shall not issue additional shares, equity rights, or grant equity-based awards[183](index=183&type=chunk) - Farmers is restricted from paying dividends other than quarterly dividends consistent with past practice, not to exceed **$1,500 per share per quarter**[183](index=183&type=chunk) - Farmers cannot, without consent, make or acquire any loan or commitment that results in a total credit exposure to a single borrower exceeding **$750,000**[185](index=185&type=chunk) - Farmers cannot increase compensation or benefits for directors, officers, or employees, except for ordinary course salary increases and specified annual bonuses[183](index=183&type=chunk) [Civista and Civista Bank Forbearances](index=40&type=section&id=5.3%20Civista%20and%20Civista%20Bank%20Forbearances) Civista is restricted from actions that could jeopardize the merger's tax-free status or adversely affect Farmers' shareholders - Civista shall not take any action that would prevent the merger from qualifying as a **tax-free reorganization**[187](index=187&type=chunk) - Civista shall not effect any **Change in Capitalization** (e.g., stock split, reverse stock split)[187](index=187&type=chunk) - Civista cannot amend its articles or regulations in a manner that would **materially and adversely affect** Farmers' shareholders relative to existing Civista shareholders[187](index=187&type=chunk) Additional Agreements [Regulatory Matters](index=41&type=section&id=6.1%20Regulatory%20Matters) Both parties will cooperate on all regulatory filings, including the Form S-4 registration statement, to secure necessary approvals promptly - Civista and Farmers will cooperate to prepare the **Proxy Statement and Form S-4** to be filed with the SEC[189](index=189&type=chunk) - The parties will use **commercially reasonable efforts** to promptly file all necessary applications to obtain all required permits, consents, and approvals from governmental entities[190](index=190&type=chunk) [Shareholder Approval](index=43&type=section&id=6.3%20Shareholder%20Approval) Farmers' board must recommend the merger to its shareholders and hold a vote, regardless of any alternative acquisition proposals - Farmers' Board of Directors will recommend that its shareholders approve the merger agreement (the **"Farmers Recommendation"**)[197](index=197&type=chunk) - Farmers must hold a shareholder meeting to vote on the agreement, even if the Board effects a **"Change in the Farmers Recommendation"**[198](index=198&type=chunk) [Employee Matters](index=44&type=section&id=6.5%20Employee%20Matters) The agreement details post-merger employee benefits, severance, and specific bonus and SEP plan contributions permitted for Farmers - Farmers employees whose employment is terminated without cause within six months of closing will receive a severance payment of **two weeks' base pay per year of service**, with a minimum of 4 weeks and a maximum of 26 weeks[209](index=209&type=chunk) - Farmers may pay annual bonuses for 2025 up to an aggregate amount of **$115,000**[211](index=211&type=chunk) - Farmers may make contributions to the Farmers SEP Plan for 2025 up to an aggregate amount of **$100,000**[211](index=211&type=chunk) - Civista will request that Farmers terminate its Simplified Employee Pension (SEP) Plan immediately prior to the Effective Time, and will permit rollovers into **Civista's 401(k) plan**[205](index=205&type=chunk) [Indemnification; Directors' and Officers' Insurance](index=47&type=section&id=6.6%20Indemnification;%20Directors'%20and%20Officers'%20Insurance) Civista will indemnify Farmers' former directors and officers and purchase a six-year "tail" D&O insurance policy for them - Civista will **indemnify former directors and officers** of Farmers after the Effective Time[213](index=213&type=chunk) - Civista will purchase a **six-year "tail"** Directors' and Officers' Liability Insurance (D&O) policy, with a premium capped at **150%** of the current policy's annual premium[214](index=214&type=chunk) [No Solicitation](index=47&type=section&id=6.7%20No%20Solicitation) Farmers is prohibited from soliciting other offers but may engage with a superior proposal under its fiduciary duties, subject to a matching right for Civista - Farmers is prohibited from soliciting, initiating, or encouraging any alternative **Acquisition Proposal**[215](index=215&type=chunk) - Farmers' board may engage with an unsolicited, bona fide written Acquisition Proposal if it is deemed a **"Superior Proposal"** and failing to do so would likely violate fiduciary duties[217](index=217&type=chunk) - Before changing its recommendation, Farmers must provide Civista with a **three-business-day "Notice Period"** to allow Civista to negotiate and adjust the terms of its offer[220](index=220&type=chunk) [Voting Agreements](index=51&type=section&id=6.13%20Voting%20Agreements) Key Farmers shareholders are required to sign a Voting Agreement, committing their votes in favor of the merger - Key Shareholders of Farmers must deliver a duly executed **Voting Agreement**, committing to vote in favor of the merger[231](index=231&type=chunk) [Deposit Agreement](index=52&type=section&id=6.15%20Deposit%20Agreement) Members of the Lee Family must agree to maintain at least 95% of their deposit balances with the surviving bank for two years post-merger - The Lee Family will enter a Deposit Agreement to retain at least **95% of their aggregate deposit balances** with the Surviving Bank for at least **two years** post-merger[234](index=234&type=chunk) [Lock-Up Agreements](index=52&type=section&id=6.16%20Lock-Up%20Agreements) Key Farmers shareholders must enter lock-up agreements restricting the sale of their newly acquired Civista stock for a defined period - Key Shareholders will be subject to a **six-month lock-up period** where they cannot sell any Civista shares received in the merger[235](index=235&type=chunk) - For 18 months following the lock-up period, Key Shareholders cannot sell more than **20,000 Civista shares** in any 30-day period[235](index=235&type=chunk) Conditions Precedent [Conditions to Each Party's Obligation to Effect the Merger](index=52&type=section&id=7.1%20Conditions%20to%20Each%20Party's%20Obligation%20to%20Effect%20the%20Merger) The merger is contingent upon several mutual conditions, including shareholder approval, regulatory consent, and Nasdaq listing authorization - The merger is conditional upon receiving the **Farmers Shareholder Approval**[237](index=237&type=chunk) - The **Form S-4 must be declared effective** by the SEC and the new Civista shares must be authorized for listing on Nasdaq[238](index=238&type=chunk) - All **requisite regulatory approvals** must be obtained and be in full force and effect[240](index=240&type=chunk) [Conditions to Obligations of Civista and Civista Bank](index=53&type=section&id=7.2%20Conditions%20to%20Obligations%20of%20Civista%20and%20Civista%20Bank) Civista's obligation to close is conditional on the accuracy of Farmers' warranties, receipt of a tax opinion, and limited shareholder dissent - Farmers' representations and warranties must be true and correct, and it must have performed its obligations under the agreement[242](index=242&type=chunk)[243](index=243&type=chunk) - Civista must receive a legal opinion that the merger will qualify as a **tax-free reorganization** under Section 368(a) of the Code[244](index=244&type=chunk) - The holders of **not more than 10%** of the outstanding Farmers Common Shares shall have perfected dissenters' rights[248](index=248&type=chunk) Termination and Amendment [Termination](index=55&type=section&id=8.1%20Termination) The agreement can be terminated by mutual consent, regulatory denial, a material breach, or if the merger is not completed by June 30, 2026 - The agreement can be terminated by **mutual written consent**[253](index=253&type=chunk) - Either party can terminate if the merger is not completed by **June 30, 2026**[253](index=253&type=chunk) - Civista can terminate if the Farmers Board of Directors effects a **Change in the Farmers Recommendation**[253](index=253&type=chunk) - Either party can terminate if the **Farmers Shareholder Approval is not obtained**[254](index=254&type=chunk) [Fees and Expenses](index=56&type=section&id=8.3%20Fees%20and%20Expenses) Each party bears its own costs, but Farmers must pay a $2.5 million termination fee to Civista under specific circumstances - Generally, each party pays its own fees and expenses[256](index=256&type=chunk) Termination Fee | Fee Amount | Payable By | Payable To | Conditions | | :--- | :--- | :--- | :--- | | $2,500,000 | Farmers | Civista | Payable if the agreement is terminated under certain conditions (e.g., Civista terminates due to a change in recommendation by Farmers' board, or Farmers enters into an alternative acquisition agreement within 12 months of certain termination events) | General Provisions [Governing Law; Jurisdiction](index=59&type=section&id=9.6%20Governing%20Law;%20Jurisdiction) The agreement is governed by Ohio law, with legal disputes to be handled exclusively in the courts of Erie County, Ohio - The agreement is governed by the laws of the **State of Ohio**[269](index=269&type=chunk) - Legal disputes will be handled exclusively in federal or state courts in **Erie County, Ohio**[269](index=269&type=chunk) [Waiver of Jury Trial](index=60&type=section&id=9.7%20Waiver%20of%20Jury%20Trial) All parties to the agreement irrevocably waive their right to a jury trial for any litigation related to the agreement - Each party **waives any right to a trial by jury** in respect of any litigation related to the agreement[271](index=271&type=chunk) Exhibit A: Form of Voting Agreement [Voting Agreement](index=63&type=section&id=Voting%20Agreement) Key Farmers shareholders must sign this agreement, committing to vote for the merger and granting Civista an irrevocable proxy - Shareholders agree to **vote their shares in favor** of the merger agreement and against any competing proposal[285](index=285&type=chunk) - Shareholders grant Civista an **irrevocable proxy** to vote their shares in accordance with the agreement[287](index=287&type=chunk) - Shareholders agree **not to sell, pledge, or transfer their shares** without Civista's prior written consent during the term of the agreement[295](index=295&type=chunk)

Core Points - Civista Bancshares, Inc. reported a net income of $11.0 million, or $0.71 per common share, for the quarter ended June 30, 2025, reflecting a 56% increase compared to the same quarter last year [1][8][9] - The company announced a partnership with The Farmers Savings Bank to expand its presence in Northeast Ohio and successfully raised $80.5 million in capital [2][20] - The efficiency ratio improved to 64.5% from 72.6% a year ago, indicating better operational efficiency [8][14] Financial Performance - Total assets increased to $4.2 billion, up $39.2 million or 0.9% from the previous quarter [5] - Total deposits decreased to $3.2 billion, down $42.7 million or 1.32% from the previous quarter [6] - Net interest income rose by $7.1 million or 25.5% year-over-year, totaling $34.8 million for the quarter [7][9] - Noninterest income decreased to $6.6 million, a decline of $3.8 million or 36.5% compared to the same period last year [12][29] Credit Quality - Provision for credit losses decreased to $1.0 million from $1.7 million a year ago, indicating improved credit quality [11] - Non-performing assets decreased by $8.0 million or 25.7% from the previous quarter, with a non-performing assets to assets ratio of 0.55% [11] Capital and Equity - Total shareholders' equity increased to $404.1 million, up $6.7 million from the previous quarter [18] - The company did not repurchase any shares in the second quarter of 2025, with the current repurchase plan set to expire in April 2026 [19] Recent Developments - Civista announced a definitive merger agreement to acquire The Farmers Savings Bank on July 10, 2025 [20] - The company also conducted an underwritten public offering of its common stock, raising approximately $80.5 million [20]

Group 1 - Civista Bancshares, Inc. announced a quarterly dividend of 17 cents per common share, consistent with the prior quarter, to shareholders of record date August 5, 2025, payable August 19, 2025 [1] - The dividend payout amounts to approximately $3.3 million, resulting in an annualized yield of 2.89% based on the closing stock price of $23.20 on June 30, 2025 [2] - Civista Bancshares, Inc. is a $4.1 billion financial holding company headquartered in Sandusky, Ohio, with its primary subsidiary, Civista Bank, providing full-service banking and other financial services [3]