Management has an established methodology for determining the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Company has segmented certain loans in the portfolio by product type. Loss migration rates for each risk category are calculated and used as the basis for calculating loan loss allowance 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.

The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of $26,133 adequate to cover loan losses inherent in the loan portfolio, at March 31, 2021. The following tables present, by portfolio segment, the changes in the allowance for loan losses for the three months ended March 31, 2021 and March 31, 2020.

For the three months ended March 31, 2021	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	2,810	$	—		$	145	$	(595	)	$	2,360
Commercial Real Estate:
Owner Occupied		4,057		—			6		(14	)		4,049
Non-Owner Occupied		12,451		—			7		751			13,209
Residential Real Estate		2,484		(37	)		142		(80	)		2,509
Real Estate Construction		2,439		—			1		462			2,902
Farm Real Estate		338		—			3		(58	)		283
Consumer and Other		209		(9	)		17		(47	)		170
Unallocated		240		—			—		411			651
Total	$	25,028	$	(46	)	$	321	$	830		$	26,133

For the three months ended March 31, 2021, the Company provided $830 to the allowance for loan losses. The decrease in the provision in the first quarter of 2021 was due to the stability of our metrics coupled with the stabilization and, in some cases, improvement of international, national, regional and local economic conditions that were adversely impacted by the 2020 economic shutdown and restrictions in response to the ongoing COVID-19 pandemic. While vaccinations in the first quarter have created some level of optimism in the business community, we remain cautious given the level of classified loans in the portfolio, particularly hotels. Economic impacts related to the COVID-19 pandemic since March 2020 include the loss of revenue experienced by our business clients, disruption of supply chains, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large number of customers requesting payment relief. In addition, the allowance for Commercial & Agriculture loans decreased due to a decrease in general reserves required for this type as a result of a decrease in loss rates. While loan balances increased, they increased in balances mainly from Civista’s participated in the PPP loan program. The result was represented as a decrease in the provision. The allowance for Commercial Real Estate – Owner Occupied loans decreased due to a decrease in general reserves required for this type as a result of decreased loan balances and loss rates. The result was represented as a decrease in the provision. The allowance for Commercial Real Estate –

Non-Owner Occupied loans increased due to an increase in general reserves required as a result of an increase in loan balances and by an increase in loss rates. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in recoveries for this type of loan. The result was represented by a decrease in the provision. The allowance for Real Estate Construction loans increased due to an increase in balances of substandard classified loan balances, represented by an increase in the provision. Management feels that the unallocated amount is appropriate and within the relevant range for the allowance that is reflective of the risk in the portfolio at March 31, 2021.

For the three months ended March 31, 2020	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	2,219	$	—		$	1	$	180		$	2,400
Commercial Real Estate:
Owner Occupied		2,541		—			7		262			2,810
Non-Owner Occupied		6,584		—			3		1,030			7,617
Residential Real Estate		1,582		(23	)		48		343			1,950
Real Estate Construction		1,250		—			1		355			1,606
Farm Real Estate		344		—			2		(36	)		310
Consumer and Other		247		(1	)		17		(17	)		246
Unallocated		—		—			—		9			9
Total	$	14,767	$	(24	)	$	79	$	2,126		$	16,948

For the three months ended March 31, 2020, the Company provided $2,126 to the allowance for loan losses. The provision was the result of an increase in the bank’s qualitative factors related to the economic shutdown driven by the COVID-19 pandemic. Economic impacts included the loss of revenue experience by our business clients, additional employee costs for businesses due to the pandemic, higher unemployment rates throughout our footprint and a large percentage of customers requesting payment relief. In addition, the allowance for Commercial & Agriculture loans increased due to an increase in general reserves required for this type as a result of an increase in loss rates. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Owner Occupied loans increased due to an increase in general reserves required for this type as a result of higher loan balances and an increase in loss rates. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Non-Owner Occupied loans increased due to an increase in general reserves required as a result of an increase in loan balances and loss rates. This was represented as an increase in the provision. The allowance for Residential Real Estate loans increased due to an increase in general reserves required for this type as a result of an increase in loss rates, represented by an increase in the provision. The allowance for Real Estate Construction loans increased due to an increase in general reserves required as a result of an increase in loan balances and loss rates, represented by an increase in the provision. The allowance for Farm Real Estate loans decreased due to a decrease in general reserves required as a result of a decrease in loan balances and loss rates. The result was represented as a decrease in the provision. The allowance for Consumer and Other loans decreased due to a decrease in loss rates. The result was represented as a decrease in the provision. Management determined that the unallocated amount was appropriate and within the relevant range for the allowance that was reflective of the risk in the portfolio at March 31, 2020.

The following tables present, by portfolio segment, the allocation of the allowance for loan losses and related loan balances as of March 31, 2021 and December 31, 2020.

March 31, 2021	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	—	$	2,360	$	2,360
Commercial Real Estate:
Owner Occupied		—		5		4,044		4,049
Non-Owner Occupied		—		—		13,209		13,209
Residential Real Estate		—		29		2,480		2,509
Real Estate Construction		—		—		2,902		2,902
Farm Real Estate		—		—		283		283
Consumer and Other		—		—		170		170
Unallocated		—		—		651		651
Total	$	—	$	34	$	26,099	$	26,133
Outstanding loan balances:
Commercial & Agriculture	$	—	$	—	$	419,666	$	419,666
Commercial Real Estate:
Owner Occupied		—		309		274,438		274,747
Non-Owner Occupied		—		39		723,617		723,656
Residential Real Estate		338		568		430,600		431,506
Real Estate Construction		—		—		171,121		171,121
Farm Real Estate		—		605		27,438		28,043
Consumer and Other		—		—		11,500		11,500
Total	$	338	$	1,521	$	2,058,380	$	2,060,239

December 31, 2020	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	73	$	2,737	$	2,810
Commercial Real Estate:
Owner Occupied		—		5		4,052		4,057
Non-Owner Occupied		—		—		12,451		12,451
Residential Real Estate		—		29		2,455		2,484
Real Estate Construction		—		—		2,439		2,439
Farm Real Estate		—		—		338		338
Consumer and Other		—		—		209		209
Unallocated		—		—		240		240
Total	$	—	$	107	$	24,921	$	25,028
Outstanding loan balances:
Commercial & Agriculture	$	—	$	74	$	409,802	$	409,876
Commercial Real Estate:
Owner Occupied		—		980		277,433		278,413
Non-Owner Occupied		—		48		705,024		705,072
Residential Real Estate		388		946		441,254		442,588
Real Estate Construction		—		—		175,609		175,609
Farm Real Estate		—		618		32,484		33,102
Consumer and Other		—		—		12,842		12,842
Total	$	388	$	2,666	$	2,054,448	$	2,057,502

The following tables present credit exposures by internally assigned risk grades as of March 31, 2021 and December 31, 2020. The risk rating analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans.

Generally, Residential Real Estate, Real Estate Construction and Consumer and Other loans are not risk-graded, except when collateral is used for a business purpose. Only those loans that have been risk rated are included below.

March 31, 2021	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	412,059	$	4,041	$	3,566	$	—	$	419,666
Commercial Real Estate:
Owner Occupied		243,868		20,740		10,139		—		274,747
Non-Owner Occupied		622,125		59,121		42,410		—		723,656
Residential Real Estate		80,306		961		4,865		—		86,132
Real Estate Construction		156,299		282		1,073		—		157,654
Farm Real Estate		25,609		275		2,159		—		28,043
Consumer and Other		690		—		26		—		716
Total	$	1,540,956	$	85,420	$	64,238	$	—	$	1,690,614

December 31, 2020	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	401,636	$	4,472	$	3,768	$	—	$	409,876
Commercial Real Estate:
Owner Occupied		248,316		19,429		10,668		—		278,413
Non-Owner Occupied		604,909		58,270		41,893		—		705,072
Residential Real Estate		81,409		668		5,524		—		87,601
Real Estate Construction		158,207		962		492		—		159,661
Farm Real Estate		30,486		216		2,400		—		33,102
Consumer and Other		833		—		33		—		866
Total	$	1,525,796	$	84,017	$	64,778	$	—	$	1,674,591

The following tables present performing and nonperforming loans based solely on payment activity for the periods ended March 31, 2021 and December 31, 2020 that have not been assigned an internal risk grade. The types of loans presented here are not assigned a risk grade unless there is evidence of a problem. Payment activity is reviewed by management on a monthly basis to evaluate performance. Loans are considered to be nonperforming when they become 90 days past due and if management determines that we may not collect all of our principal and interest. Nonperforming loans also include certain loans that have been modified in Troubled Debt Restructurings (TDRs) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions due to economic status. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

The following tables include an aging analysis of the recorded investment of past due loans outstanding as of March 31, 2021 and December 31, 2020.

March 31, 2021	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing
Commercial & Agriculture	$	45	$	15	$	46	$	106	$	419,560	$	—	$	419,666	$	—
Commercial Real Estate:
Owner Occupied		20		19		97		136		274,611		—		274,747		—
Non-Owner Occupied		761		—		5		766		722,890		—		723,656		—
Residential Real Estate		1,140		286		592		2,018		429,150		338		431,506		—
Real Estate Construction		—		—		—		—		171,121		—		171,121		—
Farm Real Estate		—		132		—		132		27,911		—		28,043		—
Consumer and Other		27		—		11		38		11,462		—		11,500		—
Total	$	1,993	$	452	$	751	$	3,196	$	2,056,705	$	338	$	2,060,239	$	—

December 31, 2020	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing
Commercial & Agriculture	$	117	$	25	$	50	$	192	$	409,684	$	—	$	409,876	$	—
Commercial Real Estate:
Owner Occupied		—		4		102		106		278,307		—		278,413		—
Non-Owner Occupied		—		—		6		6		705,066		—		705,072		—
Residential Real Estate		1,059		867		1,314		3,240		438,960		388		442,588		—
Real Estate Construction		—		—		—		—		175,609		—		175,609		—
Farm Real Estate		—		—		4		4		33,098		—		33,102		—
Consumer and Other		59		1		16		76		12,766		—		12,842		—
Total	$	1,235	$	897	$	1,492	$	3,624	$	2,053,490	$	388	$	2,057,502	$	—

The following table presents loans on nonaccrual status, excluding purchased credit-impaired (PCI) loans, as of March 31, 2021 and December 31, 2020.

Nonaccrual Loans: Loans are considered for nonaccrual status upon reaching 90 days delinquency, unless the loan is well secured and in the process of collection, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is deducted from interest income. Payments received on nonaccrual loans are applied to the unpaid principal balance. A loan may be returned to accruing status only if one of three conditions are met: the loan is well-secured and none of the principal and interest has been past due for a minimum of 90 days; the loan is a TDR and has made a minimum of six months payments; or the principal and interest payments are reasonably assured and a sustained period of performance has occurred, generally six months.

Modifications: A modification of a loan constitutes a TDR when the Company for economic or legal reasons related to a borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Exceptions to this policy exist for loan modifications granted as part of the Company’s COVID-19 deferral program, which allows the Company to not classify a modification so long as certain criteria as established in the CARES Act are met at the time of the modification. The Company offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Commercial Real Estate loans modified in a TDR often involve reducing the interest rate lower than the current market rate for new debt with similar risk. Residential Real Estate loans modified in a TDR primarily involve interest rate reductions where monthly payments are lowered to accommodate the borrowers’ financial needs.

Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan. An allowance for impaired loans that have been modified in a TDR are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates. As of March 31, 2021, TDRs accounted for $34 of the allowance for loan losses. As of December 31, 2020, TDRs accounted for $35 of the allowance for loan losses.

There were no loans modified as TDRs during the three-month periods ended March 31, 2021 or 2020.

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans.

During the three-month period ended March 31, 2021 and March 31, 2020, there were no defaults on loans that were modified and considered TDRs during the respective previous twelve months.

Impaired Loans: Larger (greater than $350) Commercial & Agricultural and Commercial Real Estate loan relationships, all TDRs and Residential Real Estate and Consumer loans that are part of a larger relationship are tested for impairment on a quarterly basis. 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 impaired 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 impaired loans does not differ from its overall policy for interest recognition.

In the second quarter of 2020, in the initial days of the pandemic, Civista booked 90-day payment modifications on 813 loans totaling $431.3 million. Additional 90-day modifications were extended on 100 loans totaling $124.4 million. Both deferral programs primarily consisting of the deferral of principal and/or interest payments. All such modified loans were performing at December 31, 2019 and comply with the provisions of the CARES Act to not be considered a troubled debt restructuring.

As of March 31, 2021, Civista has 51 loans totaling $70,660 that remain on a CARES Act modification. Details with respect to loan modifications that remain on deferred status are as follows:

	Number of				Percent of
Type of Loan	Loans		Balance		Loans Outstanding
			(In thousands)
Commercial & Agriculture		21	$	4,514		0.22	%
Commercial Real Estate:
Owner Occupied		8		10,876		0.53	%
Non-Owner Occupied		18		48,882		2.37	%
Residential Real Estate		3		5,903		0.29	%
Real Estate Construction		1		485		0.02	%
Total		51	$	70,660		3.43	%

The following table includes the recorded investment and unpaid principal balances for impaired loans, excluding purchased-credit impaired (“PCI”) loans, with the associated allowance amount, if applicable, as of March 31, 2021 and December 31, 2020.

	March 31, 2021						December 31, 2020
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied	$	92	$	92			$	757	$	757
Non-Owner Occupied		39		39				48		48
Residential Real Estate		537		562				915		940
Farm Real Estate		605		605				618		618
Total		1,273		1,298				2,338		2,363
With an allowance recorded:
Commercial & Agriculture		—		—	$	—		74		74	$	73
Commercial Real Estate:
Owner Occupied		217		217		5		223		223		5
Residential Real Estate		31		35		29		31		35		29
Total		248		252		34		328		332		107
Total:
Commercial & Agriculture		—		—		—		74		74		73
Commercial Real Estate:
Owner Occupied		309		309		5		980		980		5
Non-Owner Occupied		39		39		—		48		48		—
Residential Real Estate		568		597		29		946		975		29
Farm Real Estate		605		605		—		618		618		—
Total	$	1,521	$	1,550	$	34	$	2,666	$	2,695	$	107

The following table includes the average recorded investment and interest income recognized for impaired financing receivables for the three-month period ended March 31, 2021 and 2020.

	March 31, 2021				March 31, 2020
For the three months ended	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	37	$	—	$	183	$	4
Commercial Real Estate—Owner Occupied		644		6		421		7
Commercial Real Estate—Non-Owner Occupied		43		1		372		5
Residential Real Estate		758		8		1,753		13
Farm Real Estate		611		6		666		7
Total	$	2,093	$	21	$	3,395	$	36

Changes in the accretable yield for PCI loans were as follows, since acquisition:

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30:

There was no allowance for loan losses recorded for acquired loans with or without specific evidence of deterioration in credit quality as of March 31, 2021 or December 31, 2020.

Foreclosed assets acquired in settlement of loans are carried at fair value less estimated costs to sell and are included in other assets on the Consolidated Balance Sheet. As of March 31, 2021, there were no foreclosed assets included in Other assets. As of December 31, 2020 there were $31 of foreclosed assets included in Other assets. As of March 31, 2021 and December 31, 2020, the Company had initiated formal foreclosure procedures on $371 and $741, respectively, of consumer residential mortgages.