Civista Bancshares, Inc.

Before we begin, I would like to remind you that this conference call may contain forward-looking statements with respect to the future performance and financial condition of Savista Bank Shares, Inc. that involve risk and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements made during the call. Additionally, management may refer to non-GAAP measures, which are intended to supplement but not substitute the most directly comparable GAAP measures. The press release, also available on the company's website, contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures. This call will be recorded and made available on Savista Bankshire's website. at www.civb.com. At the conclusion of Mr. Schaefer's remarks, he and the system management team will take any questions you may have. Now, I will turn the call over to Mr. Schaefer.

Good afternoon.

This is Dennis Schaefer, President and CEO of Savista Bank Shares, Inc. And I would like to thank you for joining us for our second quarter 2022 earnings call. I am joined today by Rich Dutton, SVP of the company and Chief Operating Officer of the bank, and Chuck Parcher, SVP of the company and Chief Lending Officer of the bank, and other members of our executive team. This morning, we reported net income of $7.7 million or 53 cents per diluted share for the second quarter of 2022, which includes approximately two cents per share of expense related to our community bank transaction and that income of $16.2 million or $1.10 per share for the six months ended June 30, 2022, which includes approximately $0.04 per share of expense related to our CommuniBank transaction. While these deal costs contributed to the decline in earnings for the quarter and year to date, the primary reasons for the decline were the normal timing of when we earn our tax program fee income from our first to second quarters, lower mortgage production, and restructuring charges taken in the second quarter of 2021. We were able to sustain the strong loan demand we experienced during the first quarter. Net loans exclusive of PPP grew by $57.9 million during the second quarter or at an annualized growth rate of 11.6%. While demand remains strong in most categories, commercial and industrial, non-owner occupied commercial real estate, and residential construction loans experience the strongest growth. On June 27th, we opened a new branch office in Gahanna, Ohio, located in the northeast portion of Franklin County, which is part of the Columbus MSA. Earlier this year, Intel announced they would be locating two new semiconductor fabrication plants in the nearby area. We continue to be on track with our Communibank transaction, with the legal close taking place on July 1st and the system conversion scheduled for the weekend of October 22nd. We are excited to expand our footprint into Northwest Ohio and the Toledo MSA. The process of welcoming our new shareholders, employees, and customers into the Savista family is well underway. We continue to be active in repurchasing common shares. During the quarter, we repurchased 264,860 shares at an average price of $22.86 per share. Our return on average assets was 1% for the quarter compared to 1.07% for the length quarter, and our return on average equity was 9.86% for the quarter compared to 9.89% for the length quarter. Year-to-date, our return on assets was 1.04%, and our return on equity was 9.87%. As I stated, we are extremely pleased with our loan growth for the quarter. Excluding the impact of PPP loans, our loan portfolio grew at an annualized rate of 11.6%. At the end of the quarter, we only had $3.7 million of the approximate $400 million in PPP loans we originated remaining. Our strategy of originating PPP loans to our customers and those referred to us by no referral sources has resulted in no fraud to date in the PPP loans that we made. Our net interest income increased $1.3 million, or 5.8%, from the linked quarter, fueled by low growth and rising interest rates. Our net interest income for the quarter and year-to-date were comparable to the prior years as increases in volume and rate were primarily offset by lower PPP accretion. Our reported net interest margin was 3.43% for the quarter compared to 3.38% for the linked quarter.