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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended - March 31, 2022 

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-36192

 

Civista Bancshares, Inc.

(Exact name of registrant as specified in its charter)

 

 

Ohio

 

34-1558688

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

100 East Water Street, Sandusky, Ohio

 

44870

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (419) 625-4121

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common

 

CIVB

 

NASDAQ Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

☐

 

 

Accelerated filer

 

☒

Non-accelerated filer

 

☐

 

 

Smaller reporting company

 

☐

Emerging growth company

 

☐

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Shares, no par value, outstanding at May 4, 2022—14,586,651 shares

 

 

 

 

 

CIVISTA BANCSHARES, INC.

Index

 

PART I.

 

Financial Information

  

 

2

 

Item 1.

 

Financial Statements:

  

 

2

 

 

 

Consolidated Balance Sheets (Unaudited) March 31, 2022 and December 31, 2021

  

 

2

 

 

 

Consolidated Statements of Operations (Unaudited) Three-months ended March 31, 2022 and 2021

  

 

3

 

 

 

Consolidated Statements of Comprehensive Income (Unaudited)
Three-months ended March 31, 2022 and 2021

  

 

4

 

 

 

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)
Three-months ended March 31, 2022 and 2021

  

 

5

 

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited)
Three months ended March 31, 2022 and 2021

  

 

6

 

 

 

Notes to Interim Consolidated Financial Statements (Unaudited)

  

 

7-32

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

 

33-42

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

  

 

43-44

 

Item 4.

 

Controls and Procedures

  

 

45

 

 

 

 

PART II.

 

Other Information

  

 

46

 

Item 1.

 

Legal Proceedings

  

 

46

 

Item 1A.

 

Risk Factors

  

 

46

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

  

 

46

 

Item 3.

 

Defaults Upon Senior Securities

  

 

46

 

Item 4.

 

Mine Safety Disclosures

  

 

46

 

Item 5.

 

Other Information

  

 

46

 

Item 6.

 

Exhibits

  

 

47

 

Signatures

 

 

  

 

48

 

 

 

 

 

 

Part I – Financial Information

ITEM 1.

Financial Statements

CIVISTA BANCSHARES, INC.

Consolidated Balance Sheets

(In thousands, except share data)

 

 

 

March 31, 2022

 

 

 

 

 

 

 

(Unaudited)

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from financial institutions

 

$

411,858

 

 

$

253,459

 

Restricted cash

 

 

840

 

 

 

10,780

 

Cash and cash equivalents

 

 

412,698

 

 

 

264,239

 

Investments in time deposits

 

 

1,728

 

 

 

1,730

 

Securities available for sale

 

 

552,377

 

 

 

559,874

 

Equity securities

 

 

1,122

 

 

 

1,072

 

Loans held for sale

 

 

4,794

 

 

 

1,972

 

Loans, net of allowance of $27,033 and $26,641

 

 

1,991,155

 

 

 

1,971,238

 

Other securities

 

 

18,511

 

 

 

17,011

 

Premises and equipment, net

 

 

22,110

 

 

 

22,445

 

Accrued interest receivable

 

 

7,738

 

 

 

7,385

 

Goodwill

 

 

76,851

 

 

 

76,851

 

Other intangible assets, net

 

 

7,400

 

 

 

7,581

 

Bank owned life insurance

 

 

46,885

 

 

 

46,641

 

Swap assets

 

 

6,852

 

 

 

11,072

 

Other assets

 

 

34,136

 

 

 

23,794

 

Total assets

 

$

3,184,357

 

 

$

3,012,905

 

LIABILITIES

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

987,347

 

 

$

788,906

 

Interest-bearing

 

 

1,627,790

 

 

 

1,627,795

 

Total deposits

 

 

2,615,137

 

 

 

2,416,701

 

Long-term Federal Home Loan Bank advances

 

 

75,000

 

 

 

75,000

 

Securities sold under agreements to repurchase

 

 

23,931

 

 

 

25,495

 

Subordinated debentures

 

 

103,704

 

 

 

103,735

 

Swap liabilities

 

 

6,852

 

 

 

11,072

 

Accrued expenses and other liabilities

 

 

32,041

 

 

 

25,690

 

Total liabilities

 

 

2,856,665

 

 

 

2,657,693

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Common shares, no par value, 40,000,000 shares authorized, 17,741,358 shares issued at March 31, 2022 and 17,709,584 shares issued at December 31, 2021, including Treasury shares

 

 

277,919

 

 

 

277,741

 

Retained earnings

 

 

131,934

 

 

 

125,558

 

Treasury shares, 2,944,144 common shares at March 31, 2022 and 2,755,384 common shares at December 31, 2021, at cost

 

 

(61,472

)

 

 

(56,907

)

Accumulated other comprehensive income (loss)

 

 

(20,689

)

 

 

8,820

 

Total shareholders’ equity

 

 

327,692

 

 

 

355,212

 

Total liabilities and shareholders’ equity

 

$

3,184,357

 

 

$

3,012,905

 

 

See notes to interim unaudited consolidated financial statements

Page 2

 

CIVISTA BANCSHARES, INC.

Consolidated Statements of Operations (Unaudited)

(In thousands, except per share data)

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Interest and dividend income

 

 

 

 

 

 

 

 

Loans, including fees

 

$

21,038

 

 

$

22,783

 

Taxable securities

 

 

1,720

 

 

 

1,275

 

Tax-exempt securities

 

 

1,789

 

 

 

1,518

 

Deposits in other banks

 

 

119

 

 

 

149

 

Total interest and dividend income

 

 

24,666

 

 

 

25,725

 

Interest expense

 

 

 

 

 

 

 

 

Deposits

 

 

705

 

 

 

1,260

 

Federal Home Loan Bank advances

 

 

190

 

 

 

443

 

Subordinated debentures

 

 

836

 

 

 

186

 

Securities sold under agreements to repurchase and other

 

 

3

 

 

 

8

 

Total interest expense

 

 

1,734

 

 

 

1,897

 

Net interest income

 

 

22,932

 

 

 

23,828

 

Provision for loan losses

 

 

300

 

 

 

830

 

Net interest income after provision for loan losses

 

 

22,632

 

 

 

22,998

 

Noninterest income

 

 

 

 

 

 

 

 

Service charges

 

 

1,579

 

 

 

1,256

 

Net loss on sale of securities

 

 

—

 

 

 

(1

)

Net gain on equity securities

 

 

50

 

 

 

88

 

Net gain on sale of loans

 

 

936

 

 

 

2,745

 

ATM/Interchange fees

 

 

1,241

 

 

 

1,248

 

Wealth management fees

 

 

1,277

 

 

 

1,146

 

Bank owned life insurance

 

 

244

 

 

 

243

 

Tax refund processing fees

 

 

1,900

 

 

 

1,900

 

Swap fees

 

 

—

 

 

 

76

 

Other

 

 

416

 

 

 

489

 

Total noninterest income

 

 

7,643

 

 

 

9,190

 

Noninterest expense

 

 

 

 

 

 

 

 

Compensation expense

 

 

12,223

 

 

 

11,782

 

Net occupancy expense

 

 

1,150

 

 

 

1,224

 

Equipment expense

 

 

495

 

 

 

414

 

Contracted data processing

 

 

620

 

 

 

443

 

FDIC assessment

 

 

203

 

 

 

259

 

State franchise tax

 

 

591

 

 

 

625

 

Professional services

 

 

1,049

 

 

 

738

 

Amortization of intangible assets

 

 

217

 

 

 

223

 

ATM/Interchange expense

 

 

513

 

 

 

593

 

Marketing

 

 

317

 

 

 

299

 

Software maintenance expense

 

 

708

 

 

 

508

 

Other operating expenses

 

 

2,172

 

 

 

2,079

 

Total noninterest expense

 

 

20,258

 

 

 

19,187

 

Income before taxes

 

 

10,017

 

 

 

13,001

 

Income tax expense

 

 

1,551

 

 

 

2,243

 

Net Income

 

$

8,466

 

 

$

10,758

 

Earnings per common share, basic

 

$

0.57

 

 

$

0.68

 

Earnings per common share, diluted

 

$

0.57

 

 

$

0.68

 

Weighted average common shares, basic

 

 

14,853,287

 

 

 

15,820,301

 

Weighted average common shares, diluted

 

 

14,853,287

 

 

 

15,820,301

 

See notes to interim unaudited consolidated financial statements

Page 3

 

CIVISTA BANCSHARES, INC.

Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Net income

 

$

8,466

 

 

$

10,758

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Unrealized holding losses on available for sale securities

 

 

(37,446

)

 

 

(6,476

)

Tax effect

 

 

7,882

 

 

 

1,360

 

Reclassification of gains recognized in net income

 

 

—

 

 

 

1

 

Tax effect

 

 

—

 

 

 

—

 

Pension liability adjustment

 

 

69

 

 

 

82

 

Tax effect

 

 

(14

)

 

 

(17

)

Total other comprehensive loss

 

 

(29,509

)

 

 

(5,050

)

Comprehensive income (loss)

 

$

(21,043

)

 

$

5,708

 

 

See notes to interim unaudited consolidated financial statements

Page 4

 

CIVISTA BANCSHARES, INC.

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

(In thousands, except share data)

 

 

 

Common Shares

 

 

 

 

 

 

 

 

 

 

Accumulated

Other

 

 

Total

 

 

 

Outstanding

Shares

 

 

Amount

 

 

Retained

Earnings

 

 

Treasury

Shares

 

 

Comprehensive

Income (Loss)

 

 

Shareholders’

Equity

 

Balance, December 31, 2021

 

 

14,954,200

 

 

$

277,741

 

 

$

125,558

 

 

$

(56,907

)

 

$

8,820

 

 

$

355,212

 

Net Income

 

 

—

 

 

 

—

 

 

 

8,466

 

 

 

—

 

 

 

—

 

 

 

8,466

 

Other comprehensive loss

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(29,509

)

 

 

(29,509

)

Stock-based compensation

 

 

31,774

 

 

 

178

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

178

 

Common stock dividends

   ($0.14 per share)

 

 

—

 

 

 

—

 

 

 

(2,090

)

 

 

—

 

 

 

—

 

 

 

(2,090

)

Purchase of common stock

 

 

(188,760

)

 

 

—

 

 

 

—

 

 

 

(4,565

)

 

 

—

 

 

 

(4,565

)

Balance, March 31, 2022

 

 

14,797,214

 

 

$

277,919

 

 

$

131,934

 

 

$

(61,472

)

 

$

(20,689

)

 

$

327,692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares

 

 

 

 

 

 

 

 

 

 

Accumulated

Other

 

 

Total

 

 

 

Outstanding

Shares

 

 

Amount

 

 

Retained

Earnings

 

 

Treasury

Shares

 

 

Comprehensive

Income

 

 

Shareholders’

Equity

 

Balance, December 31, 2020

 

 

15,898,032

 

 

$

277,039

 

 

$

93,048

 

 

$

(34,598

)

 

$

14,619

 

 

$

350,108

 

Net Income

 

 

—

 

 

 

—

 

 

 

10,758

 

 

 

—

 

 

 

—

 

 

 

10,758

 

Other comprehensive loss

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,050

)

 

 

(5,050

)

Stock-based compensation

 

 

39,139

 

 

 

125

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

125

 

Common stock dividends

   ($0.12 per share)

 

 

—

 

 

 

—

 

 

 

(1,907

)

 

 

—

 

 

 

—

 

 

 

(1,907

)

Purchase of common stock

 

 

(186,692

)

 

 

—

 

 

 

—

 

 

 

(3,976

)

 

 

—

 

 

 

(3,976

)

Balance, March 31, 2021

 

 

15,750,479

 

 

$

277,164

 

 

$

101,899

 

 

$

(38,574

)

 

$

9,569

 

 

$

350,058

 

 

See notes to interim unaudited consolidated financial statements

Page 5

 

   CIVISTA BANCSHARES, INC.  

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Net cash from operating activities

 

$

9,114

 

 

$

15,910

 

Cash flows used for investing activities:

 

 

 

 

 

 

 

 

Maturities, paydowns and calls of securities, available-for-sale

 

 

16,731

 

 

 

18,055

 

Purchases of securities, available-for-sale

 

 

(47,156

)

 

 

(18,149

)

Purchase of other securities

 

 

(1,500

)

 

 

—

 

Net change in loans

 

 

(18,809

)

 

 

722

 

Proceeds from sale of other real estate owned properties

 

 

—

 

 

 

118

 

Premises and equipment purchases

 

 

(138

)

 

 

(163

)

Net cash (used for) provided by investing activities

 

 

(50,872

)

 

 

583

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Increase in deposits

 

 

198,436

 

 

 

286,509

 

Increase (decrease) in securities sold under repurchase agreements

 

 

(1,564

)

 

 

599

 

Purchase of treasury shares

 

 

(4,565

)

 

 

(3,976

)

Common dividends paid

 

 

(2,090

)

 

 

(1,907

)

Net cash provided by financing activities

 

 

190,217

 

 

 

281,225

 

Increase in cash and cash equivalents

 

 

148,459

 

 

 

297,718

 

Cash and cash equivalents at beginning of period

 

 

264,239

 

 

 

137,049

 

Cash and cash equivalents at end of period

 

$

412,698

 

 

$

434,767

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

570

 

 

$

1,923

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Transfer of premises to held-for-sale

 

 

—

 

 

 

46

 

Change in fair value of swap asset

 

 

4,220

 

 

 

9,091

 

Change in fair value of swap liability

 

 

(4,220

)

 

 

(9,111

)

Securities purchased not settled

 

 

1,876

 

 

 

1,967

 

 

See notes to interim unaudited consolidated financial statements

 

 

Page 6

 

 

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(1) Consolidated Financial Statements

Nature of Operations and Principles of Consolidation: Civista Bancshares, Inc. (CBI) is an Ohio corporation and a registered financial holding company. The Consolidated Financial Statements include the accounts of CBI and its wholly-owned subsidiaries: Civista Bank (Civista), First Citizens Insurance Agency, Inc. (FCIA), Water Street Properties, Inc. (Water St.) and CIVB Risk Management, Inc. (CRMI). CRMI is a wholly-owned captive insurance company which allows CBI and its subsidiaries to insure against certain risks unique to their operations. The operations of CRMI are located in Wilmington, Delaware. First Citizens Capital LLC (FCC) is wholly-owned by Civista and holds inter-company debt. The operations of FCC are located in Wilmington, Delaware. First Citizens Investments, Inc. (FCI) is wholly-owned by Civista and holds and manages its securities portfolio. The operations of FCI are located in Wilmington, Delaware. FCIA was formed to allow the Company to participate in commission revenue generated through its third-party insurance agreement. Water St. was formed to hold properties repossessed by CBI subsidiaries.  The above companies together are referred to as the “Company.” Intercompany balances and transactions are eliminated in consolidation. Management considers the Company to operate primarily in one reportable segment, banking.

The Consolidated Financial Statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Company’s financial position as of March 31, 2022 and its results of operations and changes in cash flows for the periods ended March 31, 2022 and 2021 have been made. The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with instructions of Form 10-Q, and therefore certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted. The results of operations for the period ended March 31, 2022 are not necessarily indicative of the operating results for the full year. Reference is made to the accounting policies of the Company described in the notes to the audited financial statements contained in the Company’s 2021 annual report. The Company has consistently followed these policies in preparing this Form 10-Q.

Civista provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Franklin, Logan, Madison, Summit, Huron, Ottawa, Richland, Montgomery and Cuyahoga, in the Indiana counties of Dearborn and Ripley and in the Kentucky county of Kenton. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions that are in excess of federally insured limits.

(2) Significant Accounting Policies

Allowance for Loan Losses:  The allowance for loan losses is regularly reviewed by management to determine that the amount is considered adequate to absorb probable losses in the loan portfolio.  If not, an additional provision is made to increase the allowance.  This evaluation includes specific loss estimates on certain individually reviewed impaired loans, the pooling of commercial credits risk graded as special mention and substandard that are not individually analyzed, and general loss estimates that are based upon the size, quality, and concentration characteristics of the various loan portfolios, adverse situations that may affect a borrower’s ability to repay, and current economic and industry conditions, among other items.

Those judgments and assumptions that are most critical to the application of this accounting policy are assessing the initial and on-going credit-worthiness of the borrower, the amount and timing of future cash flows of the borrower that are available for repayment of the loan, the sufficiency of underlying collateral, the enforceability of third-party guarantees, the frequency and subjectivity of loan reviews and risk ratings, emerging or changing trends that might not be fully captured in the historical loss experience, and charges against the allowance for actual losses that are greater than previously estimated. These judgments and assumptions are dependent upon or can be influenced by a variety of factors, including the breadth and depth of experience of lending officers, credit administration and the corporate loan review staff that periodically review the status of the loan, changing economic and industry conditions, changes in the financial condition of the borrower and changes in the value and availability of the underlying collateral and guarantees.  

 

Page 7

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

 

 

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, consideration of impairment of goodwill, fair values of financial instruments, deferred taxes, swap assets/liabilities and pension obligations are particularly subject to change.

Effect of Newly Issued but Not Yet Effective Accounting Standards:

 

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of ASU 2016-13 is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. ASU 2016-13 was to be effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted for annual and interim periods beginning after December 15, 2018. In November 2019, however, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update deferred the effective date of ASU 2016-13 for U.S. Securities and Exchange Commission (“SEC”) filers that were eligible to be smaller reporting companies as of November 15, 2019, such as the Company, to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.  Management is in the process of evaluating the impact adoption of ASU 2016-13 will have on the Company’s Consolidated Financial Statements. This process has engaged multiple areas of the Company in evaluating loss estimation methods and application of these methods to specific segments of the loan portfolio. Management has been actively monitoring FASB developments and evaluating the use of different methods allowed.  Due to continuing development of our methodology, additional time is required to quantify the effect this ASU will have on the Company’s Consolidated Financial Statements. Management plans on running parallel calculations and finalizing a method or methods of adoption in time for the effective date.

 

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. A public business entity that is an SEC filer, such as the Company, was to adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. In November 2019, however, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), which deferred the effective date for ASC 350, Intangibles – Goodwill and Other, for SEC filers that were eligible to be smaller reporting companies as of November 15, 2019, such as the Company, to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

 

Page 8

Civista Bancshares, Inc.

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q