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

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. ~~(check one):~~

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 ~~November 3, 2018—15,401,530~~May 6, 2019—15,624,113 shares

	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
Cash and due from financial institutions	$	64,754		$	40,519		$	164,094		$	42,779
Securities available for sale		316,966			230,230			349,934			346,294
Equity securities		1,146			832			1,072			1,070
Loans held for sale		4,025			2,197			1,444			1,391
Loans, net of allowance of $13,331 and $13,134		1,502,313			1,151,527
Loans, net of allowance of $13,822 and $13,679								1,559,371			1,548,262
Other securities		17,774			14,247			20,280			21,021
Premises and equipment, net		22,518			17,611			21,772			22,021
Accrued interest receivable		6,878			4,488			7,304			6,723
Goodwill		76,316			27,095			76,851			76,851
Other intangible assets		9,648			1,279			9,104			9,352
Bank owned life insurance		42,750			25,125			44,239			43,037
Other assets		20,447			10,707			22,237			20,153
Total assets	$	2,085,535		$	1,525,857		$	2,277,702		$	2,138,954
LIABILITIES
Deposits
Noninterest-bearing	$	466,527		$	361,964		$	657,510		$	468,083
Interest-bearing		1,111,228			842,959			1,108,291			1,111,810
Total deposits		1,577,755			1,204,923			1,765,801			1,579,893
Federal Home Loan Bank advances		145,100			71,900			127,100			193,600
Securities sold under agreements to repurchase		18,515			21,755			21,970			22,199
Subordinated debentures		29,427			29,427			29,427			29,427
Accrued expenses and other liabilities		25,350			13,391			21,347			14,937
Total liabilities		1,796,147			1,341,396			1,965,645			1,840,056
SHAREHOLDERS’ EQUITY
Preferred shares, no par value, 200,000 shares authorized, Series B Preferred shares, $1,000 liquidation preference, 11,756 shares issued at September 30, 2018 and 18,760 shares issued at December 31, 2017, net of issuance costs		10,878			17,358
Common shares, no par value, 20,000,000 shares authorized, 16,143,028 shares issued at September 30, 2018 and 10,946,439 shares issued at December 31, 2017		265,324			153,810
Preferred shares, no par value, 200,000 shares authorized, Series B Preferred shares, $1,000 liquidation preference, 10,120 shares issued at March 31, 2019 and 10,120 shares issued at December 31, 2018, net of issuance costs								9,364			9,364
Common shares, no par value, 20,000,000 shares authorized, 16,372,077 shares issued at March 31, 2019 and 16,351,463 shares issued at December 31, 2018								266,990			266,901
Retained earnings		35,302			31,652			49,421			41,320
Treasury shares, 747,964 common shares at cost		(17,235	)		(17,235	)		(17,235	)		(17,235	)
Accumulated other comprehensive loss		(4,881	)		(1,124	)
Accumulated other comprehensive income (loss)								3,517			(1,452	)
Total shareholders’ equity		289,388			184,461			312,057			298,898
Total liabilities and shareholders’ equity	$	2,085,535		$	1,525,857		$	2,277,702		$	2,138,954

	Three months ended						Nine Months Ended						Three months ended
	September 30,						September 30,						March 31,
	2018			2017			2018			2017			2019		2018
Interest and dividend income
Loans, including fees	$	15,833		$	13,022		$	43,615		$	37,211		$	20,963	$	13,639
Taxable securities		1,042			977			3,069			2,764			1,748		986
Tax-exempt securities		908			812			2,672			2,307			1,351		878
Federal funds sold and other		103			25			614			473			522		421
Total interest and dividend income		17,886			14,836			49,970			42,755			24,584		15,924
Interest expense
Deposits		783			607			2,060			1,500			1,891		707
Federal Home Loan Bank advances		925			276			1,560			534			597		152
Subordinated debentures		349			268			975			766			372		288
Securities sold under agreements to repurchase and other		5			5			13			16			5		5
Total interest expense		2,062			1,156			4,608			2,816			2,865		1,152
Net interest income		15,824			13,680			45,362			39,939			21,719		14,772
Provision for loan losses		390			—			390			—			—		—
Net interest income after provision for loan losses		15,434			13,680			44,972			39,939			21,719		14,772
Noninterest income
Service charges		1,219			1,177			3,712			3,609			1,456		1,134
Net loss on sale of securities		(392	)		(9	)		(386	)		(9	)
Net gain on sale of securities														4		—
Net gain on equity securities		27			—			102			—			2		40
Net gain on sale of loans		428			472			1,235			1,207			331		333
ATM/Interchange fees		622			567			1,764			1,643			906		554
Wealth management fees		873			787			2,561			2,233			847		852
Bank owned life insurance		147			142			432			429			247		142
Tax refund processing fees		—			—			2,750			2,750			2,200		2,200
Other		364			329			1,123			842			291		361
Total noninterest income		3,288			3,465			13,293			12,704			6,284		5,616
Noninterest expense
Compensation expense		12,054			7,389			26,812			21,313			9,805		7,374
Net occupancy expense		751			690			2,375			2,002			1,040		761
Equipment expense		371			350			1,069			1,097			463		374
Contracted data processing		3,150			357			6,237			1,174			419		348
FDIC assessment		121			115			388			414			192		151
State franchise tax		351			255			1,031			767			401		318
Professional services		2,198			534			4,233			1,718			694		552
Amortization of intangible assets		26			158			85			483			240		33
ATM expense		286			233			712			700			378		218
Marketing		350			240			988			768			340		318
Other operating expenses		2,498			1,846			6,358			5,781			2,477		1,758
Total noninterest expense		22,156			12,167			50,288			36,217			16,449		12,205
Income (loss) before taxes		(3,434	)		4,978			7,977			16,426
Income tax expense (benefit)		(1	)		1,318			1,407			4,534
Net Income (loss)		(3,433	)		3,660			6,570			11,892
Income before taxes														11,554		8,183
Income tax expense														1,885		1,194
Net Income														9,669		6,989
Preferred stock dividends		192			308			794			935			164		303
Net income (loss) available to common shareholders	$	(3,625	)	$	3,352		$	5,776		$	10,957
Earnings (loss) per common share, basic	$	(0.31	)	$	0.33		$	0.54		$	1.12
Earnings (loss) per common share, diluted	$	(0.31	)	$	0.29		$	0.51		$	0.97
Net income available to common shareholders													$	9,505	$	6,686
Earnings per common share, basic													$	0.61	$	0.65
Earnings per common share, diluted													$	0.57	$	0.55

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2018			2017			2018			2017			2019			2018
Net income (loss)	$	(3,433	)	$	3,660		$	6,570		$	11,892
Net income													$	9,669		$	6,989
Other comprehensive income (loss), net of reclassification adjustment:
Unrealized holding gains (losses) on available for sale securities		(935	)		86			(4,833	)		1,993			6,142			(3,214	)
Tax effect		197			(29	)		1,015			(678	)		(1,289	)		675
Pension liability adjustment		143			426			429			946			147			143
Tax effect		(30	)		(144	)		(90	)		(321	)		(31	)		(30	)
Total other comprehensive income (loss)		(625	)		339			(3,479	)		1,940			4,969			(2,426	)
Comprehensive income (loss)	$	(4,058	)	$	3,999		$	3,091		$	13,832
Comprehensive income													$	14,638		$	4,563

Condensed Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

Preferred Shares

Common Shares

Accumulated
Other

Total

Outstanding
Shares

Amount

Outstanding
Shares

Amount

Retained
Earnings

Treasury
Shares

Comprehensive
Loss

Shareholders’
Equity

Balance, December 31, 2017

18,760

$
17,358

10,198,475

$
153,810

$
31,652

$
(17,235
)

$
(1,124
)

$
184,461

Change in accounting principle for adoption
   of ASU 2016-01

—

—

—

—

278

—

(278
)

—

Net Income

—

—

—

—

6,570

—

—

6,570

Other comprehensive loss

—

—

—

—

—

—

(3,479
)

(3,479
)
Conversion of Series B preferred shares to
   common shares

(7,004
)

(6,480
)

895,578

6,480

—

—

—

—

UCB acquisition

—

—

4,277,430

104,669

—

—

—

104,669

Stock-based compensation

—

—

23,581

365

—

—

—

365

Common stock dividends
   ($0.23 per share)

—

—

—

—

(2,404
)

—

—

(2,404
)
Preferred stock dividend

—

—

—

—

(794
)

—

—

(794
)
Balance, September 30, 2018

11,756

$
10,878

15,395,064

$
265,324

$
35,302

$
(17,235
)

$
(4,881
)

$
289,388

	Preferred Shares						Common Shares										Accumulated Other			Total
	Outstanding Shares			Amount			Outstanding Shares		Amount		Retained Earnings			Treasury Shares			Comprehensive Income (loss)			Shareholders’ Equity
Balance, December 31, 2018		10,120		$	9,364			15,603,499	$	266,901	$	41,320		$	(17,235	)	$	(1,452	)	$	298,898
Net Income		—			—			—		—		9,669			—			—			9,669
Other comprehensive income		—			—			—		—		—			—			4,969			4,969
Stock-based compensation		—			—			20,614		89		—			—			—			89
Common stock dividends ($0.09 per share)		—			—			—		—		(1,404	)		—			—			(1,404	)
Preferred stock dividends ($16.25 per share)		—			—			—		—		(164	)		—			—			(164	)
Balance, March 31, 2019		10,120		$	9,364			15,624,113	$	266,990	$	49,421		$	(17,235	)	$	3,517		$	312,057

	Preferred Shares						Common Shares										Accumulated Other			Total
	Outstanding Shares			Amount			Outstanding Shares		Amount		Retained Earnings			Treasury Shares			Comprehensive Loss			Shareholders’ Equity
Balance, December 31, 2017		18,760		$	17,358			10,198,475	$	153,810	$	31,652		$	(17,235	)	$	(1,124	)	$	184,461
Change in accounting principle for adoption of ASU 2016-01		—			—			—		—		278			—			(278	)		—
Net Income		—			—			—		—		6,989			—			—			6,989
Other comprehensive loss		—			—			—		—		—			—			(2,426	)		(2,426	)
Conversion of Series B preferred shares to common shares		(351	)		(324	)		44,799		324		—			—			—			—
Stock-based compensation		—			—			—		36		—			—			—			36
Common stock dividends ($0.07 per share)		—			—			—		—		(714	)		—			—			(714	)
Preferred stock dividends ($16.25 per share)		—			—			—		—		(303	)		—			—			(303	)
Balance, March 31, 2018		18,409		$	17,034			10,243,274	$	154,170	$	37,902		$	(17,235	)	$	(3,828	)	$	188,043

Nine Months Ended September 30,

2018

2017

Net cash from operating activities

$
19,488

$
11,821

Cash flows used for investing activities:

Maturities and calls of securities, available-for-sale

22,417

23,529

Purchases of securities, available-for-sale

(84,121
)

(57,005
)
Sale of securities available for sale

12,063

953

Purchases of other securities

—

(192
)
Net loan originations

(52,807
)

(86,678
)
Proceeds from sale of other real estate owned properties

34

72

Proceeds from sale of premises and equipment

238

139

Acquisition, net of cash acquired

143,797

—

Premises and equipment purchases

(524
)

(755
)
Net cash provided by (used for) investing activities

41,097

(119,937
)
Cash flows from financing activities:

Repayment of long-term FHLB advances

(10,000
)

(2,500
)
Net change in short-term FHLB advances

83,200

10,750

Increase (decrease) in deposits

(103,112
)

80,186

Decrease in securities sold under repurchase agreements

(3,240
)

(13,777
)
Net proceeds from common stock issuance

—

32,821

Cash payment for retirement of common stock

—

(4
)
Common dividends paid

(2,404
)

(1,726
)
Preferred dividends paid

(794
)

(935
)
Net cash provided by (used for) financing activities

(36,350
)

104,815

Increase (decrease) in cash and due from financial institutions

24,235

(3,301
)
Cash and due from financial institutions at beginning of period

40,519

36,695

Cash and due from financial institutions at end of period

$
64,754

$
33,394

Cash paid during the period for:

Interest

$
4,835

$
2,753

Income taxes

1,600

4,300

Supplemental cash flow information:

Transfer of loans from portfolio to other real estate owned

—

78

Transfer of premises to held-for-sale

—

3

Transfer of loans held for sale to portfolio

85

419

Conversion of preferred shares to common shares

6,480

1,393

Securities purchased not settled

12,707

1,609

Acquisition of UCB

Consideration paid

$
117,344

Noncash assets acquired:

Securities available for sale

43,214

Equity securities

212

Loans held for sale

492

Loans receivable

298,319

FHLB Stock

3,527

Accrued interest receivable

950

Premises and equipment, net

5,291

Goodwill

49,221

Core deposit intangible

7,518

Bank owned life insurance

17,193

Other assets

10,896

Total non cash assets acquired

436,833

Liabilities assumed:

Deposits

475,944

Other liabilities

17

Total liabilities assumed

475,961

Net noncash assets acquired

(39,128
)

Cash acquired

156,472

	Three Months Ended March 31,
	2019			2018
Net cash from operating activities	$	12,905		$	6,613
Cash flows used for investing activities:
Maturities and calls of securities, available-for-sale		12,396			3,563
Purchases of securities, available-for-sale		(27,749	)		(10,898	)
Sale of securities available for sale		17,570			—
Redemption of other securities		741			—
Purchase of bank owned life insurance		(955	)		—
Net loan repayments (originations)		(10,988	)		10,743
Proceeds from sale of other real estate owned properties		—			6
Proceeds from sale of premises and equipment		—			1
Premises and equipment purchases		(216	)		(105	)
Net cash provided by (used for) investing activities		(9,201	)		3,310
Cash flows from financing activities:
Repayment of long-term FHLB advances		—			(10,000	)
Net change in short-term FHLB advances		(66,500	)		(1,900	)
Increase in deposits		185,908			85,748
Decrease in securities sold under repurchase agreements		(229	)		(4,303	)
Common dividends paid		(1,404	)		(714	)
Preferred dividends paid		(164	)		(303	)
Net cash provided by financing activities		117,611			68,528
Increase in cash and due from financial institutions		121,315			78,451
Cash and due from financial institutions at beginning of period		42,779			40,519
Cash and due from financial institutions at end of period	$	164,094		$	118,970
Cash paid during the period for:
Interest	$	2,834		$	1,462
Supplemental cash flow information:
Transfer of loans held for sale to portfolio		—			85
Conversion of preferred shares to common shares		—			324
Securities purchased not settled		1,061			1,264
Increase in right-of-use asset on leases		(2,201	)		—
Increase in lease liability		2,201			—

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.), FC Refund Solutions, Inc. (FCRS) and CIVB Risk Management, Inc. (CRMI). FCRS was formed to facilitate payment of individual state and federal income tax refunds. CRMI is a wholly-owned captive insurance company which allows the Company to insure against certain risks unique to ~~its~~the operations of CBI and its subsidiaries. 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. Insurance commission revenue was less than 1.0% of total revenue through ~~September 30, 2018.~~March 31, 2019. Water Street Properties was formed to hold properties repossessed by CBI subsidiaries. Revenue from Water St. was less than 1.0% of total revenue through ~~September 30, 2018.~~March 31, 2019. 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 ~~September 30, 2018~~March 31, 2019 and its results of operations and changes in cash flows for the periods ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ have been made. The accompanying 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 ~~September 30, 2018~~March 31, 2019 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 ~~2017~~2018 annual report. The Company has consistently followed these policies in preparing this Form 10-Q.

The Company 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. Civista has two concentrations, one is to Lessors of Non-Residential Buildings and Dwellings totaling ~~$385,149,~~$410,192, or ~~25.3%~~26.0% of total loans, as of ~~September 30, 2018~~March 31, 2019, and the other is to Lessors of Residential Buildings and Dwellings totaling ~~$155,690,~~$164,613, or ~~10.2%~~10.5% of total loans, as of ~~September 30, 2018.~~March 31, 2019. These segments of the portfolio are stable and have been conservatively underwritten, monitored and managed by experienced commercial bankers. However, the customers’ ability to repay their loans is dependent on the real estate market and general economic conditions in the area. Other financial instruments that potentially represent concentrations of credit risk include Federal Funds sold and deposit accounts in other financial institutions that are in excess of federally insured limits.

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.

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, impairment of goodwill, fair values of financial instruments, deferred taxes and pension obligations are particularly subject to change.

Income Taxes: Income tax expense is based on the effective tax rate expected to be applicable for the entire year. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

Business Combinations: At the date of acquisition the Company records the assets and liabilities of acquired companies on the Consolidated Balance Sheet at their fair value. The results of operations for acquired companies are included in the Company’s Consolidated Statements of Operations beginning at the acquisition date. Expenses arising from acquisition activities are recorded in the Consolidated Statements of Operations during the period incurred.

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation. Such reclassifications had no effect on net income or shareholders’ equity.

Derivative Instruments and Hedging Activities: The Company enters into interest rate swap agreements to facilitate the risk management strategies of a small number of commercial banking customers. All derivatives are accounted for in accordance with ASC-815, Derivatives and Hedging. The Company mitigates the risk of entering into these agreements by entering into equal and offsetting swap agreements with highly rated third party financial institutions. The swap agreements are free-standing derivatives and are recorded at fair value in the Company’s consolidated balance sheets. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes because the Company does not currently intend to execute a setoff with its counterparties. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral, usually in the form of marketable securities, is posted by the counterparty with net liability positions in accordance with contract thresholds.

In ~~January 2016,~~March 2017, the Financial Accounting Standards Board ~~(FASB)~~('FASB') issued Accounting Standards Update ~~(ASU) 2016-01,~~('ASU') 2017-08, ~~Financial Instruments~~Receivables – ~~Overall~~Nonrefundable Fees and Other Costs (Subtopic ~~825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~310-20).~~. This~~These amendments shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting ~~standard (a) requires separate presentation of equity investments (except those accounted~~change for ~~under~~securities held at a discount; the ~~equity method of accounting or those that result in consolidation of the investee)~~discount continues to be amortized to maturity. We adopted ASU 2017-08, effective January 1, 2019, which did not have a material impact on the balance sheet and measured at fair value with changes in fair value recognized in net income; (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (d) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (e) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (f) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (g) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.

The Company adopted ASU 2016-01 during the reporting period. The adoption resulted in the Company recognizing a one-time cumulative effect adjustment of $278 on January 1, 2018 between accumulated other comprehensive loss and retained earnings on the consolidated balance sheet for the fair value of the equity securities included in accumulated other comprehensive loss as of the beginning of the period. The adjustment had no impact on net income for any periods presented.

Effective January 1, 2019, the Company ~~implemented changes~~adopted FASB ASU 2016-02, Leases, which requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The original guidance required application on a modified retrospective basis with the earliest period presented. In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842, which included an option to not restate comparative periods in transition and elect to use the effective date of ASC 842, Leases, as the date of initial application of transition, which we elected. As a result of the adoption of ASC 842 on January 1, 2019, we recorded both operating lease right-of-use ('ROU') assets of $2,210 and lease liabilities of $2,210. The adoption of ASC 842 had an immaterial impact on our Condensed Consolidated Statement of Earnings and Condensed Consolidated Statement of Cash Flows for the three-month period ended March 31, 2019. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard which allowed us to carry forward the historical lease classification. There was no cumulative effect adjustment to the ~~measurement~~opening balance of ~~the fair value of financial instruments using an exit price notion for disclosure purposes~~retained earnings required.

Additional information and disclosures required by this new standard are contained in Note 13 to the financial statements. The December 31, 2017, fair value of each class of financial instruments disclosure did not utilize the exit price notion when measuring fair value and, therefore, would not be comparable to the September 30, 2018 disclosure. The Company estimated the fair value based on guidance from ASC 820-10, 17, 'Leases'~~Fair Value Measurements~~, which defines fair value as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is no active observable market for sale information on community bank loans and, thus, Level 3 fair value procedures were utilized, primarily in the use of present value techniques incorporating assumptions that market participants would use in estimating fair values. The fair value of loans held for investment, excluding impaired loans measured at fair value on a non-recurring basis, is estimated using discounted cash flow analyses. The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit and nonperformance risk of the loans. Loans are considered a Level 3 classification..

In ~~March~~July 2017, the FASB issued ASU ~~No. 2017-07,~~2017-11, ~~“Improving~~Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivative and Hedging (Topic 815). The amendments in Part I of this Update change the ~~Presentation~~classification analysis of ~~Net Periodic Pension Cost~~certain equity-linked financial instruments (or embedded features) with down-round features. The amendments also clarify existing disclosure requirements for equity-classified instruments. The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Accounting Standards Codification, to a scope exception. Those amendments do not have an accounting effect. We adopted ASU 2017-11, effective January 1, 2019, which did not have a material impact on the Company’s Consolidated Financial Statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and ~~Net Periodic Postretirement Benefit Cost.”~~Hedging (Topic 850) ~~Under~~, the ~~new guidance, employers are required~~objective of which is to ~~present~~improve the ~~service cost component~~financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the amendments in this Update make certain targeted improvements to simplify the application and disclosure of the ~~net periodic benefit cost~~hedge accounting guidance in the same income statement line item (e.g., Salaries and Benefits) as other employee compensation costs arising from services rendered during the period. In addition, only the service cost component will be eligible for capitalization in assets. Employers will present the other components of net periodic benefit cost separately (e.g., Other Noninterest Expense) from the line item that includes the service cost. ASU No. 2017-07 is effective for interim and annual reporting periods beginning after December 15, 2017. Employers will apply the guidance on the presentation of the components of net periodic benefit cost in the income statement retrospectively. The guidance limiting the capitalization of net periodic benefit cost in assets to the service cost component will be applied prospectively. The Companycurrent general accepted accounting principles. We adopted ASU ~~No. 2017-07 on~~2017-12, effective January 1, 2018 and has retrospectively applied the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the consolidated statement of income. Adoption of ASU No. 2017-072019, which did not have a material impact on the Company’s Consolidated Financial Statements.

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718), which simplified the accounting for nonemployee share-based payment transactions. The amendments in this Update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this Update improve the following areas of nonemployee share-based payment accounting; (a) the overall measurement objective, (b) the measurement date, (c) awards with performance conditions, (d) classification reassessment of certain equity-classified awards, (e) calculated value (nonpublic entities only), and (f) intrinsic value (nonpublic entities only). We adopted ASU 2018-07, effective January 1, 2019, which did not have a material impact on the Company’s financial statements.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~. The standard in this Update requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. A short-term lease is defined as one in which: (a) the lease term is 12 months or less, and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis. For public business entities, such as the Company, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the practical expedients it may elect at adoption, but does not anticipate the amendments will have a significant impact to the financial statements. Based on the Company’s preliminary analysis of its current portfolio, the impact to the Company’s balance sheet is estimated to result in less than a 1% increase in assets and liabilities. The Company also anticipates additional disclosures to be provided at adoption.

In June 2016, the FASB issued 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. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. ~~We expect to recognize a one-time cumulative effect adjustment to~~Management is in the ~~allowance for loan losses as~~process of evaluating the ~~beginning~~impact adoption of ~~the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance~~this update will have on the Company’s ~~consolidated financial statements.~~Consolidated Financial Statements. This process has engaged multiple area’s of the bank 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 affect this ASU will have on the Company’s Consolidated Financial Statements. Management plans on running parallel calculations during the year and finalizing a method or methods of adoption in time for the effective date.

In January 2017, the FASB issued ASU 2017-04, 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 a U.S. Securities and Exchange Commission (“SEC”) filer, such as the Company, should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

~~In March 2017, the FASB issued ASU 2017-08,~~ ~~Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20).~~ The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, such as the Company, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

~~In July 2017, the FASB issued ASU 2017-11,~~ ~~Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivative and Hedging (Topic 815)~~. The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down-round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down-round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down-round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (“EPS”) in accordance with Topic 260 to recognize the effect of the down-round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down- round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, ~~Debt—Debt with Conversion and Other Options~~ ), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Accounting Standards Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, such as the Company, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part I of this Update should be applied either retrospectively to outstanding financial instruments with a down-round feature by means of a cumulative-effect adjustment to the statement of financial position as of the beginning of the first fiscal year and interim period(s) in which the pending content that links to this paragraph is effective or retrospectively to outstanding financial instruments with a down-round feature for each prior reporting period presented in accordance with the guidance on accounting changes in paragraphs 250-10-45-5 through 45-10. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 850)~~, the objective of which is to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the amendments in this Update make certain targeted improvements to simplify the application and disclosure of the hedge accounting guidance in current general accepted accounting principles. For public business entities, such as the Company, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any period after issuance. For cash flow and net investment hedges existing at the date of adoption, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this Update. The amended presentation and disclosure guidance is required only prospectively. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

~~In January 2018, the FASB issued ASU 2018-01,~~ ~~Leases (Topic 842)~~, which provides an optional transition practical expedient to not evaluate under Topic 842 existing or expired land easements that were not previously accounted for as leases under the current lease guidance in Topic 840. An entity that elects this practical expedient should evaluate new or modified land easements under Topic 842 beginning at the date the entity adopts Topic 842; otherwise, an entity should evaluate all existing or expired land easements in connection with the adoption of the new lease requirements in Topic 842 to assess whether they meet the definition of a lease. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in ASU 2016-02. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

~~In February 2018, the FASB issued ASU 2018-03,~~ ~~Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10)~~, to clarify certain aspects of the guidance issued in ASU 2016-01. (1) An entity measuring an equity security using the measurement alternative may change its measurement approach to a fair value method in accordance with Topic 820, ~~Fair Value Measurement~~, through an irrevocable election that would apply to that security and all identical or similar investments of the same issuer. Once an entity makes this election, the entity should measure all future purchases of identical or similar investments of the same issuer using a fair value method in accordance with Topic 820. (2) Adjustments made under the measurement alternative are intended to reflect the fair value of the security as of the date that the observable transaction for a similar security took place. (3) Remeasuring the entire value of forward contracts and purchased options is required when observable transactions occur on the underlying equity securities. (4) When the fair value option is elected for a financial liability, the guidance in paragraph 825-10- 45-5 should be applied, regardless of whether the fair value option was elected under either Subtopic 815-15, ~~Derivatives and Hedging—Embedded Derivatives, or 825-10,~~ ~~Financial Instruments—Overall~~. (5) Financial liabilities for which the fair value option is elected, the amount of change in fair value that relates to the instrument specific credit risk should first be measured in the currency of denomination when presented separately from the total change in fair value of the financial liability. Then, both components of the change in the fair value of the liability should be remeasured into the functional currency of the reporting entity using end-of-period spot rates. (6) The prospective transition approach for equity securities without a readily determinable fair value in the amendments in Update 2016-01 is meant only for instances in which the measurement alternative is applied. For public business entities, such as the Company, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. Public business entities with fiscal years beginning between December 15, 2017, and June 15, 2018, are not required to adopt these amendments until the interim period beginning after June 15, 2018, and public business entities with fiscal years beginning between June 15, 2018, and December 15, 2018, are not required to adopt these amendments before adopting the amendments in Update 2016-01. All entities may early adopt these amendments for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, as long as they have adopted Update 2016-01. This Update did not have a significant impact on the Company’s financial statements.

~~In June 2018, the FASB issued ASU 2018-07,~~ ~~Compensation – Stock Compensation (Topic 718)~~, which simplified the accounting for nonemployee share-based payment transactions. The amendments in this Update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this Update improve the following areas of nonemployee share-based payment accounting; (a) the overall measurement objective, (b) the measurement date, (c) awards with performance conditions, (d) classification reassessment of certain equity-classified awards, (e) calculated value (nonpublic entities only), and (f) intrinsic value (nonpublic entities only). The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. This Update is not expected to have a significant impact on the Company’s financial statements.

~~ASU 2018-10,~~ ~~Codification Improvements to Topic 842, Leases~~, represents changes to clarify, correct errors in, or make minor improvements to the Codification. The amendments in this ASU affect the amendments in ASU 2016-02, which are not yet effective, but for which early adoption upon issuance is permitted. For entities that early adopted Topic 842, the amendments are effective upon issuance of this ASU, and the transition requirements are the same as those in Topic 842. For entities that have not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition requirements in Topic 842. This Update is not expected to have a significant impact on the Company’s financial statements.

~~In July 2018, the FASB issued ASU 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements~~. This Update provides another transition method which allows entities to initially apply ASC 842 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Entities that elect this approach should report comparative periods in accordance with ASC 840, ~~Leases~~. In addition, this Update provides a practical expedient under which lessors may elect, by class of underlying assets, to not separate nonlease components from the associated lease component, similar to the expedient provided for lessees. However, the lessor practical expedient is limited to circumstances in which the nonlease component or components otherwise would be accounted for under the new revenue guidance and both (a) the timing and pattern of transfer are the same for the nonlease component(s) and associated lease component and (b) the lease component, if accounted for separately, would be classified as an operating lease. If the nonlease component or components associated with the lease component are the predominant component of the combined component, an entity should account for the combined component in accordance with ASC 606, ~~Revenue from Contracts with Customers. Otherwise, the entity should account for the combined component as an~~

operating lease in accordance with ASC 842. If a lessor elects the practical expedient, certain disclosures are required. This Update is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. This Update is not expected to have a significant impact on the Company’s financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes the Disclosure Requirements for Fair Value Measurements. The Update removes the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level III fair value measurements. The Update requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level III fair value measurements. This Update is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. This Update is not expected to have a significant impact on the Company’s financial statements.

In October, 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), which made improvements in 1) applying the variable interest entity (VIE) guidance to private companies under common control and 2) considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. Under the amendments in this Update, a private company may elect not to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities. In addition, indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. For entities other than private companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments in this Update are effective for a private company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

In November, 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808), which made the following targeted improvements to generally accepted accounting principles (GAAP) for collaborative arrangements (1) clarified that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account, (2) add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606, and (3) require that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. For public business entities, such as the Company, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

The amortized cost and fair market value of available for sale securities and the related gross unrealized gains and losses recognized ~~in accumulated other comprehensive loss~~ were as follows:

The amortized cost and fair value of securities at ~~September 30, 2018,~~March 31, 2019, by contractual maturity, is shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Securities not due at a single maturity date, primarily mortgage-backed securities and equity securities, are shown separately.

Available for sale	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	15,294	$	15,226	$	10,927	$	10,877
Due after one year through five years		16,910		16,856		16,275		16,469
Due after five years through ten years		30,844		31,729		24,424		25,631
Due after ten years		119,306		119,034		146,335		152,517
Mortgage-backed securities		135,764		134,121		142,860		144,440
Total securities available for sale	$	318,118	$	316,966	$	340,821	$	349,934

Proceeds from sales of securities, gross realized gains and gross realized losses were as follows:

	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
	2018		2017			2018		2017			2019		2018
Sale proceeds	$	12,063	$	953		$	12,063	$	953		$	17,570	$	—
Gross realized gains		—		—			—		—			47		—
Gross realized losses		392		—			392		—			43		—
Gains (losses) from securities called or settled by the issuer		—		(9	)		6		(9	)

Securities were pledged to secure public deposits, other deposits and liabilities as required by law. The carrying value of pledged securities was approximately ~~$124,687~~$134,315 and ~~$122,862~~$114,145 as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

Securities with unrealized losses at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 not recognized in income are as follows:

September 30, 2018	12 Months or less					More than 12 months					Total
March 31, 2019																12 Months or less				More than 12 months					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury securities and obligations of U.S. government agencies	$	7,156	$	(107	)	$	13,774	$	(126	)	$	20,930	$	(233	)	$	—	$	—	$	11,486	$	(76	)	$	11,486	$	(76	)
Obligations of states and political subdivisions		58,768		(967	)		7,374		(310	)		66,142		(1,277	)		—		—		5,907		(81	)		5,907		(81	)
Mortgage-backed securities in gov’t sponsored entities		59,325		(714	)		33,218		(1,245	)		92,543		(1,959	)		—		—		37,584		(619	)		37,584		(619	)
Total temporarily impaired	$	125,249	$	(1,788	)	$	54,366	$	(1,681	)	$	179,615	$	(3,469	)	$	—	$	—	$	54,977	$	(776	)	$	54,977	$	(776	)

December 31, 2017	12 Months or less					More than 12 months					Total
December 31, 2018																12 Months or less					More than 12 months					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury securities and obligations of U.S. government agencies	$	20,449	$	(100	)	$	6,617	$	(92	)	$	27,066	$	(192	)	$	—	$	—		$	16,469	$	(140	)	$	16,469	$	(140	)
Obligations of states and political subdivisions		4,057		(41	)		7,309		(131	)		11,366		(172	)		8,008		(71	)		25,890		(531	)		33,898		(602	)
Mortgage-backed securities in gov’t sponsored entities		29,534		(195	)		22,199		(495	)		51,733		(690	)		6,630		(90	)		40,333		(1,103	)		46,963		(1,193	)
Total temporarily impaired	$	54,040	$	(336	)	$	36,125	$	(718	)	$	90,165	$	(1,054	)	$	14,638	$	(161	)	$	82,692	$	(1,774	)	$	97,330	$	(1,935	)

At ~~September 30, 2018,~~March 31, 2019, there were ~~185~~fifty-nine securities in the portfolio with unrealized losses mainly due to higher market rates when compared to the time of purchase. Unrealized losses on securities have not been recognized into income because the issuers’ securities are of high credit quality, management has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to market yields increasing. The fair value is expected to recover as the securities approach their maturity date or reset date. The Company does not intend to sell until recovery and does not believe selling will be required before recovery.

The following table presents the net gains and losses on equity investments recognized in earnings for the ~~three~~three-months ended March 31, 2019 and ~~nine-months ended September 30,~~ 2018, and the portion of unrealized gains and losses for the period that relates to equity investments held at ~~September 30,~~March 31, 2019 and 2018:

	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Commercial & Agriculture	$	169,686		$	152,473		$	179,200		$	177,101
Commercial Real Estate- Owner Occupied		203,087			164,099			217,030			210,121
Commercial Real Estate- Non-Owner Occupied		499,240			425,623			539,420			523,598
Residential Real Estate		459,021			268,735			461,340			457,850
Real Estate Construction		126,288			97,531			123,905			135,195
Farm Real Estate		38,038			39,461			35,645			38,513
Consumer and Other		20,284			16,739			16,653			19,563
Total loans		1,515,644			1,164,661			1,573,193			1,561,941
Allowance for loan losses		(13,331	)		(13,134	)		(13,822	)		(13,679	)
Net loans	$	1,502,313		$	1,151,527		$	1,559,371		$	1,548,262

Included in total loans above are net deferred loan fees of ~~$258~~$267 and $389 at ~~September 30, 2018~~March 31, 2019 and ~~$223 at~~ December 31, ~~2017.~~2018, respectively.

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 and lease 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 ~~$13,331~~$13,822 adequate to cover loan losses inherent in the loan portfolio, at ~~September 30, 2018.~~March 31, 2019. The following tables present, by portfolio segment, the changes in the allowance for loan losses for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018.

For the nine months ended September 30, 2018	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
March 31, 2019													Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,562	$	(248	)	$	168	$	149		$	1,631	$	1,747	$	—		$	1	$	86		$	1,834
Commercial Real Estate:
Owner Occupied		2,043		(193	)		148		45			2,043		1,962		(60	)		223		(146	)		1,979
Non-Owner Occupied		5,307		(121	)		23		236			5,445		5,803		—			14		172			5,989
Residential Real Estate		1,910		(74	)		181		(218	)		1,799		1,531		(98	)		124		(123	)		1,434
Real Estate Construction		834		—			—		147			981		1,046		(24	)		—		(51	)		971
Farm Real Estate		430		—			4		(41	)		393		397		—			1		(32	)		366
Consumer and Other		290		(148	)		67		106			315		284		(57	)		19		5			251
Unallocated		758		—			—		(34	)		724		909		—			—		89			998
Total	$	13,134	$	(784	)	$	591	$	390		$	13,331	$	13,679	$	(239	)	$	382	$	—		$	13,822

For the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the allowance for Commercial & Agriculture loans increased due to an increase in general reserves required for this type as a result of higher loan ~~balances and higher loss rates.~~balances. 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 as a result of higher loan balances, offset by lower loss rates and recoveries on previously charged off amounts. This 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 higher loan balances. This was represented as an increase in the provision. The allowance for Residential Real Estate loans was reduced by a decrease in general reserves required for this type as a result of a decrease in loss rates and recoveries on previously charged off amounts, represented by a decrease in the provision. The allowance for Real Estate Construction loans ~~increased~~decreased due to ~~an increase~~a decrease in general reserves required as a result of ~~higher~~lower loan balances. The allowance for Farm Real Estate loans was reduced by a decrease in general reserves required for this type as a result of lower outstanding loan balances. The result was represented as a decrease 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.~~portfolio at March 31, 2019.

For the nine months ended September 30, 2017	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
March 31, 2018													Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	2,018	$	(11	)	$	134	$	(530	)	$	1,611	$	1,562	$	(125	)	$	19	$	(97	)	$	1,359
Commercial Real Estate:
Owner Occupied		2,171		(301	)		26		177			2,073		2,043		(193	)		9		171			2,030
Non-Owner Occupied		4,606		(38	)		42		663			5,273		5,307		(44	)		14		393			5,670
Residential Real Estate		3,089		(312	)		164		(462	)		2,479		1,910		(22	)		58		(196	)		1,750
Real Estate Construction		420		—			32		215			667		834		—			—		(14	)		820
Farm Real Estate		442		—			2		(20	)		424		430		—			1		(20	)		411
Consumer and Other		314		(135	)		38		108			325		290		(41	)		4		(6	)		247
Unallocated		245		—			—		(151	)		94		758		—			—		(231	)		527
Total	$	13,305	$	(797	)	$	438	$	—		$	12,946	$	13,134	$	(425	)	$	105	$	—		$	12,814

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, the allowance for Commercial & Agriculture loans was reduced by a decrease in general reserves as a result of lower outstanding balances and lower loss rates. The result was represented as a decrease in the provision. The allowance for Commercial Real Estate – Owner Occupied loans was reduced by a decrease in general reserves and charge-offs. The allowance for Commercial Real Estate – Non-Owner Occupied loans increased due to an increase in general reserves required for this type as a result of higher loan balances. The allowance for Residential Real Estate loans was reduced by a decrease in general reserves required for this type as a result of a decrease in outstanding loan balances and loss rates, represented by a decrease in the provision. The allowance for Real Estate Construction loans ~~increased~~decreased due to ~~higher~~lower outstanding loan balances for this type of loan. The result was represented as a decrease in the provision. The allowance for Farm Real Estate loans was reduced by a decrease in general reserves required for this type as a result of lower outstanding loan balances. The result was represented as a decrease in the provision. The allowance for Consumer and Other loans ~~increased~~decreased due to ~~an increase~~a decrease in general reserves required for this type as a result of ~~higher~~lower loss ~~rates. Management feels that~~rates, lower outstanding balances and net charge-offs. The result was represented as a decrease in the ~~unallocated amount is appropriate and within~~provision.

The following tables present, by portfolio segment, the ~~relevant range for~~allocation of the allowance ~~that is reflective~~for loan losses and related loan balances as of ~~the risk in the portfolio.~~March 31, 2019 and December 31, 2018.

March 31, 2019	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	53	$	1,781	$	1,834
Commercial Real Estate:
Owner Occupied		—		10		1,969		1,979
Non-Owner Occupied		—		—		5,989		5,989
Residential Real Estate		—		124		1,310		1,434
Real Estate Construction		—		—		971		971
Farm Real Estate		—		7		359		366
Consumer and Other		—		—		251		251
Unallocated		—		—		998		998
Total	$	—	$	194	$	13,628	$	13,822
Outstanding loan balances:
Commercial & Agriculture	$	35	$	367	$	178,798	$	179,200
Commercial Real Estate:
Owner Occupied		—		472		216,558		217,030
Non-Owner Occupied		—		382		539,038		539,420
Residential Real Estate		823		1,148		459,369		461,340
Real Estate Construction		—		—		123,905		123,905
Farm Real Estate		—		692		34,953		35,645
Consumer and Other		—		—		16,653		16,653
Total	$	858	$	3,061	$	1,569,274	$	1,573,193

December 31, 2018	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	—	$	1,747	$	1,747
Commercial Real Estate:
Owner Occupied		—		12		1,950		1,962
Non-Owner Occupied		—		—		5,803		5,803
Residential Real Estate		8		122		1,401		1,531
Real Estate Construction		—		—		1,046		1,046
Farm Real Estate		—		7		390		397
Consumer and Other		—		—		284		284
Unallocated		—		—		909		909
Total	$	8	$	141	$	13,530	$	13,679
Outstanding loan balances:
Commercial & Agriculture	$	41	$	367	$	176,693	$	177,101
Commercial Real Estate:
Owner Occupied		—		484		209,637		210,121
Non-Owner Occupied		—		31		523,567		523,598
Residential Real Estate		883		1,279		455,688		457,850
Real Estate Construction		—		—		135,195		135,195
Farm Real Estate		—		696		37,817		38,513
Consumer and Other		—		—		19,563		19,563
Total	$	924	$	2,857	$	1,558,160	$	1,561,941

For the three months ended September 30, 2018, the allowance for Commercial & Agriculture loans increased due to amounts recovered on previously charged off loans offset by a decrease in general reserves required for this type as a result of lower loss rates. 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 lower loan balances and lower 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 for this type as a result of higher loan balances and higher loss rates. The allowance for Residential Real Estate loans increased due to the net recoveries recorded during the quarter for this loan type. The allowance for Real Estate Construction loans increased due to an increase in general reserves required as a result of higher loan balances. The allowance for Farm Real Estate loans was reduced by a decrease in general reserves required for this type as a result of lower outstanding loan balances. The result was represented as a decrease 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.

For the three months ended September 30, 2017, the allowance for Commercial & Agriculture loans increased due to an increase in general reserves as a result of higher loan balances, offset by net recoveries. The result was represented as a decrease in the provision. The allowance for Commercial Real Estate – Owner Occupied loans increased due to an increase in general reserves as a result of higher outstanding loan balances and 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 for this type as a result of higher loan balances and by higher loss rates. The allowance for Residential Real Estate loans was reduced by a decrease in general reserves required for this type as a result of a decrease in loss rates, represented by a decrease in the provision. The allowance for Real Estate Construction loans increased due to higher outstanding loan balances for this type of loan and recoveries. 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.

~~The following tables present, by portfolio segment, the allocation of the allowance for loan losses and related loan balances as of September 30, 2018 and December 31, 2017.~~

September 30, 2018

Loans acquired
with credit
deterioration

Loans individually
evaluated for
impairment

Loans collectively
evaluated for
impairment

Total

Allowance for loan losses:

Commercial & Agriculture

$
—

$
—

$
1,631

$
1,631

Commercial Real Estate:

Owner Occupied

—

10

2,033

2,043

Non-Owner Occupied

—

—

5,445

5,445

Residential Real Estate

30

350

1,419

1,799

Real Estate Construction

—

—

981

981

Farm Real Estate

—

6

387

393

Consumer and Other

—

—

315

315

Unallocated

—

—

724

724

Total

$
30

$
366

$
12,935

$
13,331

Outstanding loan balances:

Commercial & Agriculture

$
47

$
390

$
169,249

$
169,686

Commercial Real Estate:

Owner Occupied

—

505

202,582

203,087

Non-Owner Occupied

—

36

499,204

499,240

Residential Real Estate

968

2,315

455,738

459,021

Real Estate Construction

—

—

126,288

126,288

Farm Real Estate

—

707

37,331

38,038

Consumer and Other

—

—

20,284

20,284

Total

$
1,015

$
3,953

$
1,510,676

$
1,515,644

December 31, 2017

Loans acquired
with credit
deterioration

Loans individually
evaluated for
impairment

Loans collectively
evaluated for
impairment

Total

Allowance for loan losses:

Commercial & Agriculture

$
82

$
4

$
1,476

$
1,562

Commercial Real Estate:

Owner Occupied

—

6

2,037

2,043

Non-Owner Occupied

—

—

5,307

5,307

Residential Real Estate

44

109

1,757

1,910

Real Estate Construction

—

—

834

834

Farm Real Estate

—

6

424

430

Consumer and Other

—

—

290

290

Unallocated

—

—

758

758

Total

$
126

$
125

$
12,883

$
13,134

Outstanding loan balances:

Commercial & Agriculture

$
87

$
438

$
151,948

$
152,473

Commercial Real Estate:

Owner Occupied

—

1,010

163,089

164,099

Non-Owner Occupied

—

44

425,579

425,623

Residential Real Estate

128

1,360

267,247

268,735

Real Estate Construction

—

—

97,531

97,531

Farm Real Estate

—

608

38,853

39,461

Consumer and Other

—

—

16,739

16,739

Total

$
215

$
3,460

$
1,160,986

$
1,164,661

The following tables present credit exposures by internally assigned risk grades as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018. 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.

September 30, 2018	Pass		Special Mention		Substandard		Doubtful		Ending Balance
March 31, 2019											Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	165,691	$	1,999	$	1,996	$	—	$	169,686	$	174,339	$	2,978	$	1,883	$	—	$	179,200
Commercial Real Estate:
Owner Occupied		194,192		3,458		5,437		—		203,087		208,242		3,532		5,256		—		217,030
Non-Owner Occupied		496,495		1,860		885		—		499,240		536,178		2,384		858		—		539,420
Residential Real Estate		67,053		598		8,110		—		75,761		73,163		490		6,143		—		79,796
Real Estate Construction		115,419		13		43		—		115,475		115,899		12		12		—		115,923
Farm Real Estate		31,758		3,731		2,549		—		38,038		31,218		1,955		2,472		—		35,645
Consumer and Other		1,254		—		29		—		1,283		776		—		24		—		800
Total	$	1,071,862	$	11,659	$	19,049	$	—	$	1,102,570	$	1,139,815	$	11,351	$	16,648	$	—	$	1,167,814

December 31, 2017	Pass		Special Mention		Substandard		Doubtful		Ending Balance
December 31, 2018											Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	140,842	$	8,412	$	3,219	$	—	$	152,473	$	173,783	$	1,509	$	1,809	$	—	$	177,101
Commercial Real Estate:
Owner Occupied		155,756		1,166		7,177		—		164,099		201,228		3,512		5,381		—		210,121
Non-Owner Occupied		422,363		2,321		939		—		425,623		520,487		2,023		1,088		—		523,598
Residential Real Estate		62,628		1,997		5,873		—		70,498		70,908		580		7,363		—		78,851
Real Estate Construction		91,545		15		27		—		91,587		124,769		13		41		—		124,823
Farm Real Estate		25,228		11,236		2,997		—		39,461		32,908		3,096		2,509		—		38,513
Consumer and Other		1,312		—		70		—		1,382		1,713		—		20		—		1,733
Total	$	899,674	$	25,147	$	20,302	$	—	$	945,123	$	1,125,796	$	10,733	$	18,211	$	—	$	1,154,740

The following tables present performing and nonperforming loans based solely on payment activity for the periods ended ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 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 or if management thinks 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.

September 30, 2018	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
March 31, 2019									Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	383,260	$	10,813	$	18,986	$	413,059	$	381,544	$	7,982	$	15,843	$	405,369
Nonperforming		—		—		15		15		—		—		10		10
Total	$	383,260	$	10,813	$	19,001	$	413,074	$	381,544	$	7,982	$	15,853	$	405,379

December 31, 2017	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
December 31, 2018									Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	198,237	$	5,944	$	15,341	$	219,522	$	378,999	$	10,372	$	17,830	$	407,201
Nonperforming		—		—		16		16		—		—		—		—
Total	$	198,237	$	5,944	$	15,357	$	219,538	$	378,999	$	10,372	$	17,830	$	407,201

The following tables include an aging analysis of the recorded investment of past due loans outstanding as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

September 30, 2018	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
March 31, 2019																	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	$	152	$	—	$	285	$	437	$	169,202	$	47	$	169,686	$	—	$	80	$	13	$	107	$	200	$	178,965	$	35	$	179,200	$	—
Commercial Real Estate:
Owner Occupied		327		159		506		992		202,095		—		203,087		—		862		336		534		1,732		215,298		—		217,030		—
Non-Owner Occupied		293		—		68		361		498,879		—		499,240		—		72		—		159		231		539,189		—		539,420		—
Residential Real Estate		681		728		902		2,311		455,742		968		459,021		—		3,031		201		758		3,990		456,527		823		461,340		—
Real Estate Construction		—		—		39		39		126,249		—		126,288		—		11		—		—		11		123,894		—		123,905		—
Farm Real Estate		17		75		149		241		37,797		—		38,038		—		—		70		152		222		35,423		—		35,645		—
Consumer and Other		101		30		15		146		20,138		—		20,284		15		118		42		25		185		16,468		—		16,653		10
Total	$	1,571	$	992	$	1,964	$	4,527	$	1,510,102	$	1,015	$	1,515,644	$	15	$	4,174	$	662	$	1,735	$	6,571	$	1,565,764	$	858	$	1,573,193	$	10

December 31, 2017	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
December 31, 2018																	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	$	575	$	2	$	685	$	1,262	$	151,124	$	87	$	152,473	$	—	$	225	$	—	$	92	$	317	$	176,743	$	41	$	177,101	$	—
Commercial Real Estate:
Owner Occupied		897		104		484		1,485		162,614		—		164,099		—		547		413		564		1,524		208,597		—		210,121		—
Non-Owner Occupied		133		—		470		603		425,020		—		425,623		—		288		290		372		950		522,648		—		523,598		—
Residential Real Estate		1,613		229		785		2,627		265,980		128		268,735		—		7,118		677		806		8,601		448,366		883		457,850		—
Real Estate Construction		—		—		27		27		97,504		—		97,531		—		—		12		27		39		135,156		—		135,195		—
Farm Real Estate		27		—		186		213		39,248		—		39,461		—		33		—		158		191		38,322		—		38,513		—
Consumer and Other		92		96		16		204		16,535		—		16,739		16		117		57		9		183		19,380		—		19,563		—
Total	$	3,337	$	431	$	2,653	$	6,421	$	1,158,025	$	215	$	1,164,661	$	16	$	8,328	$	1,449	$	2,028	$	11,805	$	1,549,212	$	924	$	1,561,941	$	—

The following table presents loans on nonaccrual status, excluding purchased credit-impaired (PCI) loans, as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Commercial & Agriculture	$	285	$	887	$	333	$	270
Commercial Real Estate:
Owner Occupied		891		1,476		917		942
Non-Owner Occupied		159		711		160		374
Residential Real Estate		3,945		2,778		3,240		3,886
Real Estate Construction		43		27		12		41
Farm Real Estate		334		186		329		338
Consumer and Other		27		67		21		18
Total	$	5,684	$	6,132	$	5,012	$	5,869

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. 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 ~~September 30, 2018,~~March 31, 2019, TDRs accounted for ~~$171~~$194 of the allowance for loan losses. As of December 31, ~~2017,~~2018, TDRs accounted for ~~$169~~$143 of the allowance for loan losses.

Loan modifications that are considered TDRs completed during the periods ended ~~September 30,~~March 31, 2019 and March 31, 2018 ~~and September 30, 2017~~ were as follows:

	For the Nine-Month Period Ended						For the three months ended
	September 30, 2018						March 31, 2019
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial & Agriculture		—	$	—	$	—		—	$	—	$	—
Commercial Real Estate—Owner Occupied		—		—		—		—		—		—
Commercial Real Estate—Non-Owner Occupied		—		—		—		1		382		382
Residential Real Estate		1		23		23		—		—		—
Real Estate Construction		—		—		—		—		—		—
Farm Real Estate		1		110		110		—		—		—
Consumer and Other		—		—		—		—		—		—
Total Loan Modifications		2	$	133	$	133		1	$	382	$	382

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 ~~both~~ the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2019 and March 31, 2018, ~~and September 30, 2017,~~ there were no defaults on loans that were modified and considered TDRs during the respective previous twelve ~~previous~~ 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 following table includes the recorded investment and unpaid principal balances for impaired ~~financing receivables,~~loans, excluding PCI loans, with the associated allowance amount, if applicable, as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

	September 30, 2018						December 31, 2017						March 31, 2019						December 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial & Agriculture	$	390	$	390			$	—	$	—			$	168	$	168			$	367	$	367
Commercial Real Estate:
Owner Occupied		198		198				693		913				187		187				193		193
Non-Owner Occupied		36		39				44		48				382		382				31		34
Residential Real Estate		1,220		1,292				977		1,049				892		964				1,017		1,089
Farm Real Estate		257		257				148		148				252		252				256		256
Total		2,101		2,176				1,862		2,158				1,881		1,953				1,864		1,939
With an allowance recorded:
Commercial & Agriculture		—		—	$	—		438		438	$	4		199		199	$	53		—		—	$	—
Commercial Real Estate:
Owner Occupied		307		307		10		317		317		6		285		285		10		291		291		12
Residential Real Estate		1,095		1,099		350		383		387		109		256		260		124		262		265		122
Farm Real Estate		450		450		6		460		460		6		440		440		7		440		440		7
Total		1,852		1,856		366		1,598		1,602		125		1,180		1,184		194		993		996		141
Total:
Commercial & Agriculture		390		390		—		438		438		4		367		367		53		367		367		—
Commercial Real Estate:
Owner Occupied		505		505		10		1,010		1,230		6		472		472		10		484		484		12
Non-Owner Occupied		36		39		—		44		48		—		382		382		—		31		34		—
Residential Real Estate		2,315		2,391		350		1,360		1,436		109		1,148		1,224		124		1,279		1,354		122
Farm Real Estate		707		707		6		608		608		6		692		692		7		696		696		7
Total	$	3,953	$	4,032	$	366	$	3,460	$	3,760	$	125	$	3,061	$	3,137	$	194	$	2,857	$	2,935	$	141

The following table includes the average recorded investment and interest income recognized for impaired financing receivables for the ~~three- and nine-month~~three-month periods ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018.

	September 30, 2018				September 30, 2017				March 31, 2019				March 31, 2018
For the nine months ended	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
For the three months ended									Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	704	$	19	$	1,609	$	27	$	367	$	6	$	732	$	7
Commercial Real Estate—Owner Occupied		641		26		1,632		66		478		8		771		9
Commercial Real Estate—Non-Owner Occupied		41		4		280		5		206		4		43		1
Residential Real Estate		1,580		51		1,554		56		1,213		16		1,348		17
Farm Real Estate		721		22		614		21		694		7		701		7
Total	$	3,687	$	122	$	5,689	$	175	$	2,958	$	41	$	3,595	$	41

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

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

Loans acquired with credit deterioration of $878 and accounted for in accordance with ASC 310-30 were individually evaluated to estimate credit losses and a net recovery amount for each loan. The net cash flows for each loan were then discounted to present value using a risk-adjusted market rate. The table below presents the components of the purchase accounting adjustments.

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

	At September 30, 2018		At December 31, 2017		At March 31, 2019		At December 31, 2018
	Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)
	(In Thousands)				(In Thousands)
Outstanding balance	$	1,898	$	775	$	1,693	$	1,805
Carrying amount		1,015		215		858		924

There has been ~~$30~~$0 and ~~$126~~$8 in allowance for loan losses recorded for acquired loans with or without specific evidence of deterioration in credit quality as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

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 ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017, a total of $0 and $16,~~2018, respectively, of foreclosed assets ~~were~~ included in other ~~assets.~~assets totaled $0. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the Company had initiated formal foreclosure procedures on ~~$286~~$365 and ~~$239,~~$311, respectively, of consumer residential mortgages.

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax.

	For the Nine-Month Period Ended									For the Nine-Month Period Ended								For the Three-Month Period Ended								For the Three-Month Period Ended
	September 30, 2018(a)									September 30, 2017(a)								March 31, 2019(a)								March 31, 2018(a)
	Unrealized Gains and Losses on Available-for- Sale Securities			Defined Benefit Pension Items			Total			Unrealized Gains and Losses on Available-for- Sale Securities		Defined Benefit Pension Items			Total			Unrealized Gains and Losses on Available-for- Sale Securities		Defined Benefit Pension Items			Total			Unrealized Gains and Losses on Available-for- Sale Securities			Defined Benefit Pension Items			Total
Beginning balance	$	3,185		$	(4,309	)	$	(1,124	)	$	2,008	$	(4,345	)	$	(2,337	)	$	2,347	$	(3,799	)	$	(1,452	)	$	3,185		$	(4,309	)	$	(1,124	)
Other comprehensive income before reclassifications		(4,123	)		—			(4,123	)		1,309		—			1,309			4,850		—			4,850			(2,539	)		—			(2,539	)
Amounts reclassified from accumulated other comprehensive loss		305			339			644			6		625			631			3		116			119			—			113			113
Net current-period other comprehensive income		(3,818	)		339			(3,479	)		1,315		625			1,940			4,853		116			4,969			(2,539	)		113			(2,426	)
Reclassification of equity securities from accumulated other comprehensive loss		(278	)		—			(278	)		—		—			—			—		—			—			(278	)		—			(278	)
Ending balance	$	(911	)	$	(3,970	)	$	(4,881	)	$	3,323	$	(3,720	)	$	(397	)	$	7,200	$	(3,683	)	$	3,517		$	368		$	(4,196	)	$	(3,828	)

~~The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss).~~

~~The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax.~~

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss).

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a)							Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a)
Details about Accumulated Other Comprehensive Loss Components	For the Three months ended September 30, 2018			For the Three months ended September 30, 2017			Affected Line Item in the Statement Where Net Income is Presented	For the Three months ended March 31, 2019			For the Three months ended March 31, 2018			Affected Line Item in the Statement Where Net Income is Presented
Unrealized losses on available-for-sale securities	$	(392	)	$	(9	)	Net loss on securities available for sale
Unrealized gains on available-for-sale securities								$	(4	)	$	—		Net gain on securities available for sale
Tax effect		82			3		Income tax expense		1			—		Income tax expense
		(310	)		(6	)	Net of tax		(3	)		—		Net of tax
Amortization of defined benefit pension items
Actuarial gains/(losses) (b)		(143	)		(426	)	Other operating expenses		(147	)		(143	)	Other operating expenses
Tax effect		30			144		Income tax expense		31			30		Income tax expense
		(113	)		(282	)	Net of tax		(116	)		(113	)	Net of tax
Total reclassifications for the period	$	(423	)	$	(288	)	Net of tax	$	(119	)	$	(113	)	Net of tax

~~The~~There has been no change in the carrying amount of goodwill ~~has increased $49,221 since December~~of $76,851 for the periods ended March 31, ~~2017 as a result of the UCB acquisition, discussed in Note 17. The balance of goodwill was $76,316 at September 30, 2018~~2019 and ~~$27,095 at December 31, 2017.~~2018. Goodwill is not amortized, however, management performs an evaluation of goodwill for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Management last performed an evaluation of the Company’s goodwill during the fourth quarter of ~~2017~~2018 and concluded that the Company’s goodwill was not impaired at December 31, ~~2017.~~2018.

Acquired intangible assets, other than goodwill, as of March 31, 2019 and December 31, 2018 were as follows:

Aggregate core deposit intangible amortization expense was $240 and $33 for the three-months ended March 31, 2019 and 2018, respectively.

Aggregate mortgage servicing rights amortization was $39 and $16 for the three-months ended March 31, 2019 and 2018, respectively.

The increase in the gross carrying amount of core deposit intangibles relates to the UCB acquisition. Acquired intangible assets, other than goodwill, as of September 30, 2018 and December 31, 2017 were as follows:

~~Aggregate core deposit intangible amortization expense was $26, $158, $85 and $483 for the three and nine-months ended September 30, 2018 and 2017, respectively.~~

~~Aggregate mortgage servicing rights amortization was $22, $23, $65 and $51 for the three and nine-months ended September 30, 2018 and 2017, respectively.~~

Estimated amortization expense for each of the next five years and thereafter is as follows:

	MSRs		Core deposit intangibles		Total		MSRs		Core deposit intangibles		Total
2018	$	22	$	281	$	303
2019		88		945		1,033	$	66	$	705	$	771
2020		88		914		1,002		88		913		1,001
2021		87		891		978		87		891		978
2022		87		868		955		88		868		956
2023								86		841		927
Thereafter		1,307		4,070		5,377		1,241		3,230		4,471
	$	1,679	$	7,969	$	9,648	$	1,656	$	7,448	$	9,104

Short-term borrowings, which consist of federal funds purchased and other short-term borrowings are included in Federal Home Loan Bank advances on the Consolidated Balance Sheets and are summarized as follows:

	At September 30, 2018					At December 31, 2017						At March 31, 2019					At December 31, 2018
	Federal Funds Purchased		Short-term Borrowings			Federal Funds Purchased			Short-term Borrowings			Federal Funds Purchased		Short-term Borrowings			Federal Funds Purchased			Short-term Borrowings
Outstanding balance	$	—	$	140,100		$	—		$	56,900		$	—	$	122,100		$	—		$	188,600
Maximum indebtedness		—		225,300			20,000			115,050			—		192,700			20,000			225,300
Average balance		—		101,010			119			38,825			—		92,267			116			113,520
Average rate paid		—		1.94	%		1.68	%		1.12	%		—		2.51	%		2.58	%		2.07	%
Interest rate on balance		—		2.21	%		—			1.42	%		—		2.51	%		—			2.45	%

Average balance during the period represents daily averages. Average rate paid represents interest expense divided by the related average balances.

These borrowing transactions can range from overnight to six months in maturity. The average maturity was one day at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

Securities sold under agreements to repurchase are used to facilitate the needs of our customers as well as to facilitate our short-term funding needs. Securities sold under repurchase agreements are carried at the amount of cash received in association with the agreement. We continuously monitor the collateral levels and may be required, from time to time, to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents.

The following table presents detail regarding the securities pledged as collateral under repurchase agreements as of March 31, 2019 and December 31, 2018. All of the repurchase agreements are overnight agreements.

The following table presents detail regarding the securities pledged as collateral under repurchase agreements as of September 30, 2018 and December 31, 2017. All of the repurchase agreements are overnight agreements.

Basic earnings per common share are computed as net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect, if any, of additional potential common shares issuable under the Company’s equity incentive plan, computed using the treasury stock method, and the impact of the Company’s convertible preferred ~~stock~~shares using the “if converted” method.

	Three Months Ended					Nine Months Ended				Three Months Ended
	September 30,					September 30,				March 31,
	2018			2017		2018		2017		2019		2018
Basic
Net income (loss)	$	(3,433	)	$	3,660	$	6,570	$	11,892
Net income										$	9,669	$	6,989
Preferred stock dividends		192			308		794		935		164		303
Net income (loss) available to common shareholders—basic	$	(3,625	)	$	3,352	$	5,776	$	10,957
Net income available to common shareholders—basic										$	9,505	$	6,686
Weighted average common shares outstanding—basic		11,627,093			10,170,734		10,775,577		9,815,118		15,607,655		10,213,264
Basic earnings (loss) per common share	$	(0.31	)	$	0.33	$	0.54	$	1.12
Basic earnings per common share										$	0.61	$	0.65
Diluted
Net income (loss) available to common shareholders—basic	$	(3,625	)	$	3,352	$	5,776	$	10,957
Net income available to common shareholders—basic										$	9,505	$	6,686
Preferred stock dividends		192			308		794		935		164		303
Net income (loss) available to common shareholders—diluted	$	(3,433	)	$	3,660	$	6,570	$	11,892
Net income available to common shareholders—diluted										$	9,669	$	6,989
Weighted average common shares outstanding for basic earnings per common share		11,627,093			10,170,734		10,775,577		9,815,118		15,607,655		10,213,264
Add: Dilutive effects of convertible preferred shares		1,643,980			2,426,565		2,054,825		2,455,008		1,294,175		2,384,130
Average shares and dilutive potential common shares outstanding—diluted		13,271,073			12,597,299		12,830,402		12,270,126		16,901,830		12,597,394
Diluted earnings (loss) per common share	$	(0.31	)	$	0.29	$	0.51	$	0.97
Diluted earnings per common share										$	0.57	$	0.55

For the ~~three-~~quarters ended March 31, 2019 and ~~nine-month period ended September 30,~~March 31, 2018, there were ~~1,643,980~~1,294,175 and ~~2,054,825~~2,384,130, respectively, of average dilutive shares related to the Company’s convertible preferred ~~stock. For the three- and nine-month period ended September 30, 2017 there were 2,426,565 and 2,455,008 dilutive shares related to the Company’s convertible preferred stock.~~shares. Under the “if converted” method, all convertible preferred shares are assumed to be converted into common shares at the corresponding conversion rate. These additional shares are then added to the common shares outstanding to calculate diluted earnings per share.

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customers’ financing needs. These are agreements to provide credit or to support the credit of others, as long as the conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk of credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of commitment. The contractual amounts of financial instruments with off-balance-sheet risk were as follows for ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017:~~2018:

	Contract Amount								Contract Amount
	September 30, 2018				December 31, 2017				March 31, 2019				December 31, 2018
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate		Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitment to extend credit:
Lines of credit and construction loans	$	10,068	$	327,453	$	4,982	$	286,925	$	14,051	$	360,954	$	14,984	$	359,220
Overdraft protection		2		37,614		7		33,353		4		47,276		3		37,201
Letters of credit		624		2,396		624		2,637		624		921		624		850
	$	10,694	$	367,463	$	5,613	$	322,915	$	14,679	$	409,151	$	15,611	$	397,271

Commitments to make loans are generally made for a period of one year or less. Fixed rate loan commitments included in the table above had interest rates ranging from 2.88% to ~~8.00%~~8.50% at ~~September 30, 2018~~March 31, 2019 and ~~from 2.88% to 10.25% at~~ December 31, ~~2017.~~2018, respectively. Maturities extend up to 30 years.

Civista is required to maintain certain reserve balances on hand in accordance with the Federal Reserve Board requirements. The reserve balance maintained in accordance with such requirements was ~~$3,283~~$87,310 on ~~September 30, 2018~~March 31, 2019 and ~~$4,112~~$8,891 on December 31, ~~2017.~~2018.

The Company sponsors a pension plan which is a noncontributory defined benefit retirement plan. Annual payments, subject to the maximum amount deductible for federal income tax purposes, are made to a pension trust fund. In 2006, the Company amended the pension plan to provide that no employee could be added as a participant to the pension plan after December 31, 2006. In 2014, the Company amended the pension plan again to provide that no additional benefits would accrue beyond April 30, 2014.

	Three months ended						Nine Months Ended						Three months ended
	September 30,						September 30,						March 31,
	2018			2017			2018			2017			2019			2018
Service cost	$	—		$	—		$	—		$	—		$	—		$	—
Interest cost		125			171			375			509			128			125
Expected return on plan assets		(273	)		(283	)		(819	)		(844	)		(256	)		(273	)
Other components		143			426			429			946			147			143
Net periodic pension benefit	$	(5	)	$	314		$	(15	)	$	611
Net periodic pension cost (benefit)													$	19		$	(5	)

The Company does not expect to make any contribution to its pension plan in ~~2018.~~2019. The Company ~~contributed $2,000~~made no contribution to its pension plan in ~~2017.~~2018.

At the Company’s 2014 annual meeting, the shareholders adopted the Company’s 2014 Incentive Plan (“2014 Incentive Plan”). The 2014 Incentive Plan authorizes the Company to grant options, stock awards, stock units and other awards for up to 375,000 common shares of the Company. There were ~~268,628~~248,736 shares available for future grants under this plan at ~~September 30,~~March 31, 2019.

No options had been granted under the 2014 Incentive Plan as of March 31, 2019 and 2018.

Each year, the Board of Directors has awarded restricted common shares to senior officers of the Company. The restricted shares vest ratably over a three-year period following the grant date. The product of the number of restricted shares granted and the grant date market price of the Company’s common shares determines the fair value of restricted shares awarded under the Company’s 2014 Incentive Plan. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period for the entire award.

On May 16, 2017, directors of the Company’s banking subsidiary, Civista, were paid a retainer in the form of non-restricted common shares of the Company. The aggregate of 6,804 common shares were issued to Civista directors as payment of their retainer for their service on the Civista Board of Directors covering the period up to the 2018 Annual Meeting. This issuance was expensed in its entirety when the shares were issued in the amount of $144.

On September 11, 2017, a newly appointed director of the Company’s banking subsidiary, Civista, was paid a retainer in the form of non-restricted common shares of the Company. The aggregate of 367 common shares was issued as payment of her retainer for her service on the Civista Board of Directors covering the period up to the 2018 Annual Meeting. This issuance was expensed in its entirety when the shares were issued in the amount of $8.

On May 17, 2018, directors of the Company’s banking subsidiary, Civista, were paid a retainer in the form of non-restricted common shares of the Company. The aggregate of 6,204 common shares were issued to Civista directors as payment of their retainer for their service on the Civista Board of Directors covering the period up to the 2019 Annual Meeting. This issuance was expensed in its entirety when the shares were issued in the amount of $144.

~~Finally, on~~On September 25, 2018, newly appointed directors of the Company’s banking subsidiary, Civista, were paid a retainer onin the form of non-restricted common shares of the Company. The aggregate of 867 common shares were issued for their service on the Civista Board of Directors covering the period up to the 2019 Annual Meeting. This issuance was expensed in its entirety when the shares were issued in the amount of $21.

~~No options had been granted under the 2014 Incentive Plan as of September 30, 2018 and 2017.~~Page 25

The Company classifies share-based compensation for employees with “Compensation expense” in the Consolidated Statements of Operations.

The following is a summary of the ~~status of the~~ Company’s outstanding restricted shares and changes therein for the ~~three- and nine-month periods~~three-month period ended ~~September 30, 2018:~~March 31, 2019:

	Three months ended				Nine Months Ended					Three months ended
	September 30, 2018				September 30, 2018					March 31, 2019
	Number of Restricted Shares		Weighted Average Grant Date Fair Value		Number of Restricted Shares			Weighted Average Grant Date Fair Value		Number of Restricted Shares			Weighted Average Grant Date Fair Value
Nonvested at beginning of period		40,692	$	19.11		42,138		$	15.60		39,970		$	19.10
Granted		—		—		16,510			22.51		21,106			20.65
Vested		—		—		(17,956	)		14.01		(16,557	)		17.31
Forfeited		—		—		—			—		(492	)		22.41
Nonvested at end of period		40,692	$	19.11		40,692		$	19.11		44,027		$	20.48

The following is a summary of the status of the Company’s ~~awarded~~outstanding restricted shares as of ~~September 30, 2018:~~March 31, 2019:

At September 30, 2018
At March 31, 2019							At March 31, 2019
Date of Award	Shares		Remaining Expense		Remaining Vesting Period (Years)			Shares		Remaining Expense		Remaining Vesting Period (Years)
January 15, 2016		6,160	$	48		2.25			4,108	$	37		1.75
March 11, 2016		5,256		8		0.25
March 20, 2017		7,814		67		1.25			3,725		37		0.75
March 20, 2017		4,952		85		3.25			3,581		67		2.75
April 10, 2018		8,294		125		2.25			5,282		86		1.75
April 10, 2018		8,216		153		4.25			6,225		117		3.75
March 14, 2019									10,188		198		2.75
March 14, 2019									10,918		203		4.75
		40,692	$	486		2.33			44,027	$	745		3.00

During the three months ended ~~September 30, 2018,~~March 31, 2019, the Company recorded ~~$71~~$89 of share-based compensation expense and $21 of director retainer fees for shares granted under the 2014 Incentive Plan. During the nine months ended September 30, 2018, the Company recorded $200 of share-based compensation expense and $165 of director retainer fees for shares granted under the 2014 Incentive Plan. At ~~September 30, 2018,~~March 31, 2019, the total compensation cost related to unvested awards not yet recognized is ~~$486,~~$745, which is expected to be recognized over the weighted average remaining life of the grants of ~~2.33~~3.00 years.

The Company uses a fair value hierarchy to measure fair value. This hierarchy describes three levels of inputs that may be used to measure fair value. Level 1: Quoted prices for identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; Level 3: Significant unobservable inputs that reflect the Company’s own view about the assumptions that market participants would use in pricing an asset.

Debt securities: The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Equity securities: The ~~Company’s~~Company has two types of equity securities, ~~are~~one is not actively traded in an open ~~market.~~market, while the other is listed on an exchange and is less frequently traded. The fair ~~values~~value of ~~these~~the equity ~~securities~~security available for sale not actively traded in an open market is determined by using market data inputs for similar securities that are observable (Level 2 inputs). The fair value of the other equity security is determined from third-party pricing services or a computerized pricing model and classified Level 2.

The fair value of the swap asset/liability: The fair value of the swap asset and liability is based on an external derivative model using data inputs as of the valuation date and classified Level 2. The changes in fair value of these assets/liabilities had no impact on net income or comprehensive income.

Impaired loans: The Company has measured impairment on impaired loans generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties. In some cases, management may adjust the appraised value due to the ageof the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property which are also included in the net realizable value. If the fair value of the collateral dependent loan is less than the carrying amount of the loan, a specific reserve for the loan is made in the allowance for loan losses or a charge-off is taken to reduce the loan to the fair value of the collateral (less estimated selling costs) and the loan is included as a Level 3 measurement.

~~Other real estate owned:~~ OREO is carried at the lower of cost or fair value, which is measured at the date of foreclosure. If the fair value of the collateral exceeds the carrying amount of the loan, no charge-off or adjustment is necessary, the loan is not considered to be carried at fair value, and is therefore not included in the table below. If the fair value of the collateral is less than the carrying amount of the loan, management will charge the loan down to its estimated realizable value. Management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. In these cases, the properties are categorized in the below table as Level 3 measurements since these adjustments are considered to be unobservable inputs. Income and expenses from operations are included in other operating expenses. Further declines in the fair value of the collateral subsequent to foreclosure are included in net gain on sale of other real estate owned.

Assets and liabilities measured at fair value are summarized in the table below.

	Fair Value Measurements at September 30, 2018 Using:						Fair Value Measurements at March 31, 2019 Using:
Assets:	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:
Securities available for sale
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	28,975	$	—	$	—	$	22,169	$	—
Obligations of states and political subdivisions		—		153,870		—		—		183,325		—
Mortgage-backed securities in government sponsored entities		—		134,121		—		—		144,440		—
Total securities available for sale		—		316,966		—		—		349,934		—
Equity securities in financial institutions		—		1,146		—
Equity securities								—		1,072		—
Swap asset		—		2,059		—		—		4,910		—
Liabilities measured at fair value on a recurring basis:
Swap liability		—		2,059		—		—		4,910		—
Assets measured at fair value on a nonrecurring basis:
Impaired loans	$	—	$	—	$	2,685	$	—	$	—	$	2,150

	Fair Value Measurements at December 31, 2017 Using:						Fair Value Measurements at December 31, 2018 Using:
Assets:	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:
Securities available for sale
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	30,358	$	—	$	—	$	30,685	$	—
Obligations of states and political subdivisions		—		118,056		—		—		172,071		—
Mortgage-backed securities in government sponsored entities		—		81,816		—		—		143,538		—
Total securities available for sale		—		230,230		—		—		346,294		—
Equity securities in financial institutions		—		832		—
Equity securities								—		1,070		—
Swap asset		—		1,560		—		—		2,837		—
Liabilities measured at fair value on a recurring basis:
Swap liability		—		1,560		—		—		2,837		—
Assets measured at fair value on a nonrecurring basis:
Impaired loans	$	—	$	—	$	1,040	$	—	$	—	$	1,803
Other real estate owned		—		—		16

The following table presents quantitative information about the Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis at ~~September 30, 2018.~~March 31, 2019.

Quantitative Information about Level 3 Fair Value Measurements

September 30, 2018

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average

March 31, 2019

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average

Impaired loans

2,685

Appraisal of collateral

Appraisal adjustments

10% - 100%

26%

2,150

Appraisal of collateral

Appraisal adjustments

10% - 30%

23%

Liquidation expense

0% - 10%

Liquidation expense

0% - 10%

Holding period

0 - 30 months

20 months

Holding period

0 - 30 months

21 months

The methods of determining the fair value of assets and liabilities presented in the note are consistent with our methodologies disclosed in the Company’s 2017 Form 10-K, except for the valuation of loans held for investment which was impacted by the adoption of ASU 2016-01. In accordance with ASU 2016-01, the fair value of loans held for investment, excluding impaired loans measured at fair value on a non-recurring basis, is estimated using discounted cash flow analyses. The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit and nonperformance risk of the loans. Loans are considered a Level 3 classification.

The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at ~~September 30, 2018~~March 31, 2019 are as follows:

September 30, 2018	Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
March 31, 2019											Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from financial institutions	$	64,754	$	64,754	$	64,754	$	—	$	—	$	164,094	$	164,094	$	164,094	$	—	$	—
Other securities		17,774		17,774		17,774		—		—		20,280		20,280		20,280		—		—
Loans, held for sale		4,025		4,025		4,025		—		—		1,444		1,444		1,444		—		—
Loans, net of allowance		1,502,313		1,495,951		—		—		1,495,951		1,559,371		1,517,557		—		—		1,517,557
Bank owned life insurance		42,750		42,750		42,750		—		—		44,239		44,239		44,239		—		—
Accrued interest receivable		6,878		6,878		6,878		—		—		7,304		7,304		7,304		—		—
Financial Liabilities:
Nonmaturing deposits		1,300,365		1,300,365		1,300,365		—		—		1,492,469		1,492,469		1,492,469		—		—
Time deposits		277,390		278,680		—		—		278,680		273,332		273,514		—		—		273,514
Short-term FHLB advances		140,100		140,100		140,100		—		—		122,100		122,100		122,100		—		—
Long-term FHLB advances		5,000		4,985		—		—		4,985		5,000		5,001		—		—		5,001
Securities sold under agreement to repurchase		18,515		18,515		18,515		—		—		21,970		21,970		21,970		—		—
Subordinated debentures		29,427		32,016		—		—		32,016		29,427		35,150		—		—		35,150
Accrued interest payable		184		184		184		—		—		261		261		261		—		—

The carrying amount and fair values of financial instruments not measured at fair value on a recurring or nonrecurring basis at December 31, ~~2017~~2018 are as follows:

December 31, 2017	Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
December 31, 2018											Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from financial institutions	$	40,519	$	40,519	$	40,519	$	—	$	—	$	42,779	$	42,779	$	42,779	$	—	$	—
Other securities												21,021		21,021		21,021		—		—
Loans, held for sale		2,197		2,197		2,197		—		—		1,391		1,391		1,391		—		—
Loans, net of allowance		1,151,527		1,146,969		—		—		1,146,969		1,548,262		1,517,278		—		—		1,517,278
Other securities		14,247		14,247		14,247		—		—
Bank owned life insurance		25,125		25,125		25,125		—		—		43,037		43,037		43,037		—		—
Accrued interest receivable		4,488		4,488		4,488		—		—		6,723		6,723		6,723		—		—
Financial Liabilities:
Nonmaturing deposits		981,021		981,021		981,021		—		—		1,312,207		1,312,207		1,312,207		—		—
Time deposits		223,902		223,626		—		—		223,626		267,686		267,943		—		—		267,943
Short-term FHLB advances		56,900		56,900		56,900		—		—		188,600		188,600		188,600		—		—
Long-term FHLB advances		15,000		14,964		—		—		14,964		5,000		4,983		—		—		4,983
Securities sold under agreement to repurchase		21,755		21,755		21,755		—		—		22,199		22,199		22,199		—		—
Subordinated debentures		29,427		31,052		—		—		31,052		29,427		34,620		—		—		34,620
Accrued interest payable		410		410		410		—		—		230		230		230		—		—

~~Cash and due from financial institutions:~~ ~~The carrying amounts for cash and due from financial institutions approximate fair value because they have original maturities of less than 90 days and do not present unanticipated credit concerns.~~

~~Other securities:~~ ~~The carrying value of regulatory stock approximates fair value based on applicable redemption provisions.~~

~~Loans, held-for-sale:~~ Loans held for sale are priced individually at market rates on the day that the loan is locked for commitment to an investor. Because the holding period of such loans is typically short, the carrying value generally approximates the fair value at the time the commitment is received. All loans in the held-for-sale account conform to Fannie Mae underwriting guidelines, with specific intent of the loan being purchased by an investor at the predetermined rate structure.

~~Loans, net of allowance:~~ Fair values for loans, other than impaired, are estimated for portfolios of loans with similar financial characteristics. The fair value of performing loans has been estimated by discounting expected future cash flows of the underlying portfolios. The discount rates used in these calculations are generally derived from the treasury yield curve and are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate inherent in the loan. The estimated maturity is based on the Company’s historical experience with repayments for each loan classification. Changes in these significant unobservable inputs used in discounted cash flow analysis, such as the discount rate or prepayment speeds, could lead to changes in the underlying fair value.

~~Bank owned life insurance:~~ ~~The carrying value of bank owned life insurance approximates the fair value based on applicable redemption provisions.~~

~~Accrued interest receivable and payable and securities sold under agreements to repurchase:~~ The carrying amounts for accrued interest receivable, accrued interest payable and securities sold under agreements to repurchase approximate fair value because they are generally received or paid in 90 days or less and do not present unanticipated credit concerns.

~~Deposits:~~ ~~The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings and NOW accounts, and money market accounts, is equal to the amount payable on demand.~~

The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the market rates currently offered for deposits of similar remaining maturities.

The deposits’ fair value estimates do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market, commonly referred to as the core deposit intangible.

~~Federal Home Loan Bank (“FHLB”) advances:~~ ~~Rates available to the Company for borrowed funds with similar terms and remaining maturities are used to estimate the fair value of borrowed funds.~~

~~Subordinated debentures:~~ The fair value of subordinated debentures is based on the discounted value of contractual cash flows of the underlying debt agreements. The discount rate is estimated using the current rate for the borrowing from the FHLB with the most similar terms.

To accommodate customer need and to support the Company’s asset/liability positioning, on occasion we enter into interest rate swaps with a customer and a bank counterparty. The Company enters into a floating rate loan and a fixed rate swap with our customer. Simultaneously, the Company enters into an offsetting fixed rate swap with a bank counterparty. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay a bank counterparty the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. These transactions allow the Company’s customer to effectively convert variable rate loans to fixed rate loans. Since the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not significantly impact the Company’s results of operations.

The following table summarizes the Company’s interest rate swap positions and the impact of a 1 basis point change in interest rates as of ~~September 30, 2018.~~March 31, 2019.

	Notional Amount			Weighted Average Rate Received/(Paid)			Impact of a 1 basis point change in interest rates			Repricing Frequency	Notional Amount			Weighted Average Rate Received/(Paid)			Impact of a 1 basis point change in interest rates			Repricing Frequency
Derivative Assets	$	95,211			5.29	%	$	55		Monthly	$	125,151			5.19	%	$	76		Monthly
Derivative Liabilities		(95,211	)		-5.29	%		(55	)	Monthly		(125,151	)		-5.19	%		(76	)	Monthly
Net Exposure	$	—					$	—			$	—					$	—

The following table summarizes the Company’s interest rate swap positions and the impact of a 1 basis point change in interest rates as of December 31, ~~2017.~~2018.

	Notional Amount			Weighted Average Rate Received/(Paid)			Impact of a 1 basis point change in interest rates			Repricing Frequency	Notional Amount			Weighted Average Rate Received/(Paid)			Impact of a 1 basis point change in interest rates			Repricing Frequency
Derivative Assets	$	66,227			5.08	%	$	36		Monthly	$	120,131			5.19	%	$	72		Monthly
Derivative Liabilities		(66,227	)		-5.08	%		(36	)	Monthly		(120,131	)		-5.19	%		(72	)	Monthly
Net Exposure	$	—					$	—			$	—					$	—

The Company monitors and controls all derivative products with a comprehensive Board of Director approved commercial loan swap policy. All hedge transactions must be approved in advance by the Lenders Loan Committee or the Directors Loan Committee of the Board of Directors.

The Company invests in certain qualified affordable housing projects. At ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the balance of the investment for qualified affordable housing projects was ~~$4,197~~$4,585 and ~~$3,204,~~$4,276, respectively. These balances are reflected in the other assets line on the Consolidated Balance Sheet. The unfunded commitments related to the investments in qualified affordable housing projects totaled ~~$3,129~~$4,524 and ~~$4,510~~$4,922 at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of ~~$388~~$133 and ~~$247,~~$129, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of ~~$633~~$276 and ~~$414,~~$219, respectively. During the three months ended ~~September 30,~~March 31, 2019 and 2018, and 2017, the Company recognized amortization expense with respect to its investments in qualified affordable housing projects of $130 and $82, respectively, offset by tax credits and other benefits from its investment in affordable housing tax credits of $207 and $138, respectively. During the three and nine months ended September 30, 2018 and 2017, the Company did not incur impairment losses related to its investment in qualified affordable housing projects.

~~On January 1, 2018, the~~The Company ~~adopted ASU No. 2014-09~~ “accounts for revenues from contracts with customers under ASC 606, Revenue from Contracts with ~~Customers” (Topic 606)~~ ~~and all subsequent ASUs that modified Topic 606. As stated in Note 2~~ ~~Significant Accounting Policies~~, the implementation of the new standard did not have a material impact on the measurement or recognition of revenue; as such, a cumulative effect adjustment to opening retained earnings was not deemed necessary. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under Topic 605.

~~Topic 606 does not apply to revenue~~Customers. Revenue associated with financial instruments, including revenue from loans and ~~securities.~~securities are outside the scope of the new standard and accounted for under other existing GAAP. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also not in scope of the new guidance. Topic 606 is applicable to noninterest revenue streams such as trust and asset management income, deposit related fees, interchange fees, merchant income, and annuity and insurance commissions. However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606. Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams in-scope of ~~Topic~~ASC 606 are discussed below.

Service charges consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Fees, exchange, and other service charges are primarily comprised of debit and credit card income, ATM fees and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Wealth management fees are primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received in the following month through a direct charge to customers’ accounts. The Company does not earn performance-based incentives. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

The Company facilitates the payment of federal and state income tax refunds in partnership with a third-party vendor. Refund Transfers (“RTs”) are fee-based products whereby a tax refund is issued to the taxpayer after the Company has received the refund from the federal or state government. As part of this agreement the Company earns fee income, the majority of which is received in the first quarter of the year. The Company’s fee income revenue is recognized based on the estimated percent of business completed by each date.

Other noninterest income consists of other recurring revenue streams such as check order fees, wire transfer fees, safety deposit box rental fees, item processing fees and other miscellaneous revenue streams. Check order income mainly represents fees charged to customers for checks. Wire transfer fees represent revenue from processing wire transfers. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. Item processing fee income represents fees charged to other financial institutions for processing their transactions. Payment is typically received in the following month.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the ~~three-~~three-months ended March 31, 2019 and ~~nine-months ended September 30, 2018 and 2017.~~2018.

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2018		2017		2018		2017		2019		2018
Noninterest Income
In-scope of Topic 606:
Service charges	$	1,219	$	1,177	$	3,712	$	3,609	$	1,456	$	1,134
ATM/Interchange fees		622		567		1,764		1,643		906		554
Wealth management fees		873		787		2,561		2,233		847		852
Tax refund processing fees		—		—		2,750		2,750		2,200		2,200
Other		203		192		650		560		131		220
Noninterest Income (in-scope of Topic 606)		2,917		2,723		11,437		10,795		5,540		4,960
Noninterest Income (out-of-scope of Topic 606)		371		742		1,856		1,909		744		656
Total Noninterest Income	$	3,288	$	3,465	$	13,293	$	12,704	$	6,284	$	5,616

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the Company did not have any significant contract balances.

In connection with the adoption of Topic 606, an entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. Upon adoption of Topic 606, the Company did not capitalize any contract acquisition cost.

We have operating leases for several branch locations and office space. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. We also lease certain office equipment under operating leases. Many of our leases include both lease (e.g., minimum rent payments) and non-lease components (e.g., common-area or other maintenance costs). The Company accounts for each component separately based on the ~~acquisition by merger~~standalone price of ~~United Community Bancorp (“UCB”)~~ each component. In addition, we have several operating leases with lease term of less than one year and therefore, we have elected the practical expedient to exclude these short-term leases from our ROU assets and lease liabilities.

Most leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion. The majority of renewals to extend the lease terms are included in ~~a stock~~our ROU assets and ~~cash transaction for aggregate consideration~~lease liabilities as they are reasonably certain of ~~approximately $117,344.~~ exercise.

As ~~a result~~most of our leases do not provide an implicit rate, we use the fully collateralized FHLB borrowing rate, commensurate with the lease terms based on the information available at the lease commencement date in determining the present value of the acquisition, the Company issued 4,277,430 common shares and paid approximately $12,675 in cash to the former shareholders of UCB. The Company and UCB had first announced that they had entered into an agreement to merge in March of 2018. ~~Immediately following the merger, UCB’s banking subsidiary, United Community Bank, was merged into CBI’s banking subsidiary, Civista Bank.~~

The assets and liabilities of UCB were recorded on CBI’s Balance Sheet at their preliminary estimated fair values as of September 14, 2018, the acquisition date, and UCB’s results of operations have been included in CBI’s Consolidated Statements of Income since that date. Due to the timing of the acquisition relative to the end of the reporting period, the fair values for certain assets and liabilities acquired from UCB on September 14, 2018 represent preliminary estimates. Based on a preliminary purchase price allocation, CBI recorded $49,221 in goodwill and $7,518 in core deposit intangibles, representing the principal change in goodwill and intangibles from December 31, 2017.

At the time of the merger, UCB had total assets of $538,875, including $298,319 in loans, and $481,832 in deposits. The transaction was recorded as a purchase and, accordingly, the operating results of UCB have been included in the Company’s Consolidated Financial Statements since the close of business on September 14, 2018.

Identifiable intangibles are amortized to their estimated residual values over the expected useful lives. Such lives are also periodically reassessed to determine if any amortization period adjustments are required. The identifiable intangible assets consist of core deposit intangible which is being amortized over the estimated useful life. The gross carrying amount of the core deposit intangible at September 30, 2018 was $7,518.

~~As of September 30, 2018, the current year and estimated future amortization expense for the core deposit intangible is as follows:~~lease payments.

~~The following table presents financial information for the former UCB included in the Consolidated Statements of Income from the date of acquisition through September 30, 2018.~~

The ~~following table presents pro forma~~balance sheet information ~~for the nine- and three-month periods ended September 30, 2018 and 2017~~related to our operating leases were as if the acquisition of UCB had occurred on January 1, 2017. This table has been prepared for comparative purposes only and is not indicative of the actual results that would have been attained had the acquisition occurredfollows as of ~~the beginning of the periods presented, nor is it indicative of future results.~~March 31, 2019:

The ~~following table summarizes~~cost components of our operating leases were as follows for the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for UCB. Core deposit intangibles will be amortized over periods of between ten years using an accelerated method. Goodwill will not be amortized, but instead will be evaluated for impairment. Furthermore, the unaudited pro forma information does not reflect management’s estimate of any revenue-enhancing opportunities nor anticipated cost savings as a result of the integration and consolidation of the acquisition. Merger and acquisition integration costs and amortization of fair value adjustments net of the related income tax effects are included in the amounts below.period ended March 31, 2019:

Maturities of our lease liabilities for all operating leases are as follows as of March 31, 2019:

The ~~acquired assets~~weighted average remaining lease terms and ~~liabilities~~discount rates for all of our operating leases were ~~measured at estimated fair values. Management made certain estimates and exercised judgment in accounting for the acquisition. The following is a description~~as follows as of ~~the methods used to determine fair value of significant assets and liabilities at the acquisition date:~~

~~Cash:~~ ~~The Company acquired $156.5 million in cash, which management deemed to reflect fair value based on the short term nature of the asset.~~

~~Loans:~~ The Company acquired $298.3 million in loans receivable with and without evidence of credit quality deterioration. The loans consisted of commercial loans, commercial real estate loans, and residential mortgage loans which included home equity secured lines of credit, real estate construction and consumer and other loans. The fair value of the performing loan portfolio includes separate adjustments to reflect a credit risk and marketability component and a yield component reflecting the differential between portfolio and market yields. Additionally, certain loans were valued based on their observable sales price. Loans acquired with credit deterioration of $1,210 were individually evaluated to estimate credit losses and a net recovery amount for each loan. The net cash flows for each loan was then discounted to present value using a risk-adjusted market rate.

~~Deposits:~~ The Company acquired $475.9 million in deposits. Savings and transaction accounts are variable, have no stated maturity and can be withdrawn on short notice with no penalty. Therefore, the fair value of such deposits is considered equal to the carrying value. The fair value of CD’s consists of comparing the contractual cost of the CD’s to the market rates with corresponding maturities. The valuation adjustment reflects the present value of the difference between the cash flows attributable to the CD’s based on contractual and market rates. The core deposit intangible is determined by the present value difference of the net cost of the core deposit versus the same amount for an alternative funding source.

This acquisition provided the Company with the strategic opportunity to expand into new markets that, while similar to existing markets, are projected to be more vibrant in population growth and business opportunity growth. Additionally, the acquisition will provide exposure to suburbs of larger urban areas without the commitment of operating inside large metropolitan areas dominated by regional and national financial organizations. The acquisition also creates synergies on the operational side of the Company by allowing noninterest expenses to be spread over a larger operating base.

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

The following discussion focuses on the consolidated financial condition of the Company at ~~September 30, 2018~~March 31, 2019 compared to December 31, ~~2017,~~2018, and the consolidated results of operations for the ~~three- and nine-month~~three-month period ended ~~September 30, 2018,~~March 31, 2019, compared to the same period in ~~2017.~~2018. This discussion should be read in conjunction with the consolidated financial statements and footnotes included in this Form 10-Q.

This Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to such matters as the Company’s financial condition, anticipated operating results, cash flows, business line results, credit quality expectations, prospects for new lines of business, economic trends (including interest rates) and similar matters. Forward-looking statements reflect our expectations, estimates or projections concerning future results or events. These statements are generally identified by the use of forward-looking words or phrases such as “believe,” “belief,” “expect,” “anticipate,” “may,” “could,” “intend,” “intent,” “estimate,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results, performance or achievements to differ materially from those expressed in or implied by the forward-looking statements. Factors that could cause actual results, performance or achievements to differ from those discussed in the forward-looking statements include, but are not limited to, changes in financial markets or national or local economic conditions; sustained weakness or deterioration in the real estate market; volatility and direction of market interest rates; credit risks of lending activities; changes in the allowance for loan losses; legislation or regulatory changes or actions; increases in Federal Deposit Insurance Corporation (“FDIC”) insurance premiums and assessments; changes in tax laws; failure of or breach in our information and data processing systems; unforeseen litigation; and other risks identified from time-to-time in the Company’s other public documents on file with the SEC, including those risks identified in “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017, as supplemented by the risks identified in “Item 1A. Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31,~~ 2018. The Company does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.

Total assets of the Company at ~~September 30, 2018~~March 31, 2019 were ~~$2,085,385~~$2,277,702 compared to ~~$1,525,857~~$2,138,954 at December 31, ~~2017,~~2018, an increase of ~~$559,528,~~$138,748, or ~~36.7%~~6.5%. The increase in total assets was due to ~~the Company’s acquisition~~increases in cash and due from financial institutions of $121,315, accompanied by ~~merger of United Community Bancorp (“UCB”) effective September 14, 2018 and~~other increases in securities available for sale, loans, ~~held for sale, loans~~bank owned life insurance and other assets. Total liabilities at ~~September 30, 2018~~March 31, 2019 were ~~$1,796,147~~$1,965,645 compared to ~~$1,341,396~~$1,840,056 at December 31, ~~2017,~~2018, an increase of ~~$454,751,~~$125,589, or ~~33.9%~~6.8%. The increase in total liabilities was mainly attributable to an increase in total deposits, ~~FHLB advances~~mainly due to our participation in the tax refund processing program and accrued expenses and other ~~liabilities.~~liabilities, partially offset by a decrease in FHLB advances of $66,500.

Loans outstanding as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 were as follows:

	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Commercial & Agriculture	$	169,686		$	152,473		$	179,200		$	177,101
Commercial Real Estate—Owner Occupied		203,087			164,099			217,030			210,121
Commercial Real Estate—Non-Owner Occupied		499,240			425,623			539,420			523,598
Residential Real Estate		459,021			268,735			461,340			457,850
Real Estate Construction		126,288			97,531			123,905			135,195
Farm Real Estate		38,038			39,461			35,645			38,513
Consumer and Other		20,284			16,739			16,653			19,563
Total loans		1,515,644			1,164,661			1,573,193			1,561,941
Allowance for loan losses		(13,331	)		(13,134	)		(13,822	)		(13,679	)
Net loans	$	1,502,313		$	1,151,527		$	1,559,371		$	1,548,262

Net loans have increased ~~$350,786~~$11,109 or ~~30.5%~~0.7% since December 31, ~~2017.~~2018. The Commercial & Agriculture, Commercial Real Estate – Owner Occupied, Commercial Real Estate – Non-Owner Occupied and Residential Real Estate ~~Real Estate Construction and Consumer and Other~~ loan portfolios increased ~~$17,213, $38,988, $73,617, $190,286, $28,757~~$2,099, $6,909, $15,822 and ~~$3,545,~~$3,490, respectively since December 31, ~~2017,~~2018, while the Farm Real Estate loan portfolio decreased $1,423 since December 31, 2017. Loans acquired as part of the UCB acquisition for Commercial & Agriculture, Commercial Real Estate – Owner Occupied, Commercial Real Estate – Non-Owner Occupied, Residential Real Estate, Real Estate Construction, Farm Real Estate and Consumer and Other loan portfolios ~~totaled $14,362, $36,945, $52,460, $176,204, $11,360, $1,813~~decreased $11,290, $2,868 and ~~$5,175, respectively.~~$2,910, respectively since December 31, 2018. At ~~September 30, 2018,~~March 31, 2019, the net loan to deposit ratio was ~~95.2%~~88.3% compared to ~~95.6%~~98.0% at December 31, ~~2017.~~2018.

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

Loans held for sale have increased $1,828 or 83.2% since December 31, 2017, due to originations and sales volumes during the first nine months of 2018. In addition, $492 in loans held for sale were acquired in the UCB acquisition.

During the first ~~nine~~three months of 2019 and 2018, ~~$390 was placed into~~there were no provisions made to the allowance for loan losses from ~~earnings, compared to no provision in 2017.~~earnings. Net ~~charge-offs~~recoveries for the first ~~nine~~three months of ~~2018~~2019 totaled ~~$193,~~$143, compared to net charge offs of ~~$359~~$320 in the first ~~nine~~three months of ~~2017.~~2018. For the first ~~nine~~three months of ~~2018,~~2019, the Company charged off a total of 4013 loans. ~~Twelve~~Five Real Estate Mortgage loans totaling ~~$74, eight Commercial and Agriculture loans totaling $248,~~$98, one Commercial Real Estate – Owner Occupied ~~loans~~loan totaling ~~$193, two Commercial~~$60, one Real Estate ~~– Non-Owner Occupied loans~~Construction loan totaling ~~$121~~$24 and ~~seventeen~~six Consumer and Other loans totaling ~~$148~~$57 were charged off in the first ~~nine~~three months of the year. In addition, during the first ~~nine~~three months of ~~2018,~~2019, the Company had recoveries on previously charged-off Commercial and Agriculture loans of ~~$168,~~$1, Commercial Real Estate – Owner Occupied loans of ~~$148,~~$223, Commercial Real Estate – Non-Owner Occupied loans of ~~$23,~~$14, Real Estate Mortgage loans of ~~$181,~~$124, Farm Real Estate loans of $4$1 and Consumer and Other loans of ~~$67.~~$19. For each loan category, as well as in total, the percentage of net charge-offs to loans was less than one percent. Nonperforming loans decreased by ~~$449~~$847 since December 31, ~~2017,~~2018, which was due to a decrease in loans on nonaccrual status of ~~$448 and a decrease~~$857, partially offset by an increase in loans past due 90 days and accruing of ~~$1.~~$10. Each of these factors was considered by management as part of the examination of both the level and mix of the allowance by loan type as well as the overall level of the allowance.

Management specifically evaluates loans that are impaired for estimates of loss. To evaluate the adequacy of the allowance for loan losses to cover probable losses in the portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for delinquencies and historical reserve allocations. Loss migration rates are calculated over a three-year period for all portfolio segments. Management also considers certain economic factors for trends that management uses to account for the qualitative and environmental changes in risk, which affects the level of the reserve.

Management analyzes each impaired Commercial and Commercial Real Estate loan relationship with a balance of $350 or larger, on an individual basis and designates a loan as impaired when it is in nonaccrual status or when an analysis of the borrower’s operating results and financial condition indicate that underlying cash flows are not adequate to meet its debt service requirements. ~~In addition, loans~~Loans held for sale are excluded from consideration as impaired. Loans are generally moved to nonaccrual status when 90 days or more past due. Impaired loans, or portions thereof, are charged-off when deemed uncollectible. The allowance for loan losses as a percent of total loans was 0.88% at ~~September 30, 2018~~March 31, 2019 and ~~1.13% at~~ December 31, ~~2017.~~2018, respectively.

The available for sale security portfolio increased by ~~$86,736,~~$3,640, from ~~$230,230~~$346,294 at December 31, ~~2017~~2018 to ~~$316,966~~$349,934 at ~~September 30, 2018. Securities acquired as part of the acquisition of UCB totaled $43,214, and excess cash from the acquisition was also used to purchase additional securities.~~March 31, 2019. Management continually evaluates our securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability and the level of interest rate risk to which the Company is exposed. These evaluations may cause the Company to change the level of funds it deploys into investment securities and change the composition of its investment securities portfolio. As of ~~September 30, 2018,~~March 31, 2019, the Company was in compliance with all pledging requirements.

Premises and equipment, net, ~~have increased $4,907~~decreased $249 from December 31, ~~2017~~2018 to ~~September 30, 2018.~~March 31, 2019. The ~~increase~~decrease is the result of new purchases of ~~$524,~~$216, offset by depreciation of $908. In addition, the Company sold certain premises and equipment held for sale during the first nine months ended September 30, 2018. Proceeds from the sale totaled $238, resulting in a gain on the sale of $33. Premises and equipment, net acquired from the merger with UCB totaled $5,291.

Goodwill increased by $49,221, from $27,095 at December 31, 2017 to $76,316 at September 30, 2018. The increase is due to the goodwill created from the merger with UCB. Other intangible assets increased $8,369 from year-end 2017. The increase includes $7,518 of core deposit intangibles and $894 of mortgage servicing rights from the merger with UCB.$465.

Bank owned life insurance (BOLI) increased ~~$17,625~~$1,202 from December 31, ~~2017~~2018 to ~~September 30, 2018. BOLI acquired from~~March 31, 2019. The Company purchased additional policies totaling $955 during the ~~merger with UCB totaled $17,193.~~period ended March 31, 2019. The remaining difference is the result of increases in the cash surrender value of the underlying insurance policies.

Other assets increased ~~$9,740~~$2,084 from December 31, ~~2017~~2018 to ~~September 30, 2018.~~March 31, 2019. The increase is the result of increases in the market value of swap assets ~~additional investments in low income housing~~ and right-of-use (ROU) assets. We adopted ASU 2016-02, effective January 1, 2019, which requires the ~~change in deferred tax assets. In addition, other~~recognition of lease assets for those leases classified as operating leases. At March 31, 2019, the ROU assets totaled $2,133.

Total deposits as of March 31, 2019 and December 31, 2018 were ~~acquired in the merger with UCB.~~as follows:

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

~~Total deposits as of September 30, 2018 and December 31, 2017 are as follows:~~

Total deposits at ~~September 30, 2018~~March 31, 2019 increased ~~$372,832~~$185,908 from year-end ~~2017.~~2018. Noninterest-bearing deposits increased ~~$104,563~~$189,427 from year-end ~~2017,~~2018, while interest-bearing deposits, including savings and time deposits, ~~increased $268,269~~decreased $3,519 from December 31, ~~2017.~~2018. The increase in noninterest-bearing deposits was primarily due to increases in cash balances related to the ~~acquisition of UCB,~~Company’s participation in a tax refund processing program, which added noninterest-bearing deposits of ~~$112,787. The interest-bearing deposit~~$187,134. This increase ~~was mainly due~~is temporary as transactions are processed and is expected to return to levels more consistent with December 31, 2018 over the ~~acquisition of UCB, which contributed interest-bearing deposits totaling $363,157.~~ next two quarters. The year-to-date average balance of total deposits increased ~~$14,934~~$426,689 compared to the average balance offor the same period in ~~2017~~2018 mainly due to ~~increases~~the United Community Bancorp (“UCB”) acquisition in ~~savings and money market accounts and interest-bearing demand accounts, offset by decreases in demand deposit accounts and time deposits accounts.~~the third quarter of 2018.

FHLB advances ~~increased $73,200~~decreased $66,500 from December 31, ~~2017~~2018 to ~~September 30, 2018.~~March 31, 2019. The ~~increase~~decrease is due to ~~an increase~~a decrease in overnight funds of ~~$83,200. In addition, on February 15, 2018, an FHLB advance in the amount of $10,000 matured. This advance had terms of forty-two months with a fixed rate of 1.5%. The advance was not replaced.~~$66,500. Securities sold under agreements to repurchase, which tend to fluctuate, have decreased ~~$3,240~~$229 from December 31, ~~2017~~2018 to ~~September 30, 2018.~~March 31, 2019.

Accrued expenses and other liabilities increased ~~$11,959~~$6,410 from December 31, ~~2017~~2018 to ~~September 30, 2018.~~March 31, 2019. The increase is primarily the result of ~~security purchases that will settle~~increases in ~~October.~~lease liabilities of $2,133, swap liabilities of $2,073 and a clearing account related to the tax refund processing program of $2,037.

Shareholders’ equity at ~~September 30, 2018~~March 31, 2019 was ~~$289,388,~~$312,057, or ~~13.9%~~13.7% of total assets, compared to ~~$184,461,~~$298,898, or ~~12.1%~~14.0% of total assets, at December 31, ~~2017.~~2018. The ~~primary reason for the~~ increase was the ~~issuance~~result of ~~common shares as part of the consideration in the acquisition of UCB, which added $104,669 to shareholders’ equity. In addition, the increase in shareholders’ equity included~~ net income of ~~$6,570,~~$9,669, a decrease in the Company’s pension liability, net of tax, of ~~$339, a decrease~~$116, an increase in the fair value of securities available for sale, net of tax, of ~~$3,818~~$4,853 and offset by dividends on preferred shares and common shares of ~~$794~~$164 and ~~$2,404,~~$1,404, respectively. Total outstanding common shares at ~~September 30, 2018~~March 31, 2019 were ~~15,395,064. Total outstanding~~15,624,113, which increased from 15,603,499 common shares outstanding at December 31, ~~2017 were 10,198,475.~~2018. Common shares outstanding increased as ~~the~~a result of the ~~conversion of 7,004 shares of the Company’s previously issued preferred shares into 895,578 common shares and the~~ grant of ~~16,510~~21,106 restricted common shares to certain officers under the Company’s 2014 Incentive Plan, the issuance of 7,071 common shares to Civista directors as a retainer payment for service on the Civista Board of Directors, and the issuance of 4,277,430 common shares to former shareholders of UCB in connection with the acquisition of UCB effective September 14, 2018.Plan.

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~

The Company had a net income of ~~$6,570~~$9,669 for the ~~nine~~three months ended ~~September 30, 2018, a decrease~~March 31, 2019, an increase of ~~$5,322~~$2,680 from net income of ~~$11,892~~$6,989 for the same ~~nine~~three months of ~~2017.~~2018. Basic earnings per common share were ~~$0.54~~$0.61 for the ~~period~~quarter ended ~~September 30, 2018,~~March 31, 2019, compared to ~~$1.12~~$0.65 for the same period in ~~2017.~~2018. Diluted earnings per common share were ~~$0.51~~$0.57 for the ~~period~~quarter ended ~~September 30, 2018,~~March 31, 2019, compared to ~~$0.97~~$0.55 for the same period in ~~2017.~~2018. The primary reasons for the changes in net income are ~~acquisition and integration expenses related to the merger with UCB. Acquisition and integration expenses totaled $11,952 for the nine months ended September 30, 2018. Changes in net income are~~ explained below.

Net interest income for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was ~~$45,362,~~$21,719, an increase of ~~$5,423~~$6,947 from ~~$39,939~~$14,772 in the same ~~nine~~three months of ~~2017.~~ 2018. This increase is the result of an increase of $8,660 in total interest income with only an increase of $1,713 in interest expense. Interest-earning assets averaged $2,017,523 during the three months ended March 31, 2019, an increase of $514,580 from $1,502,943 for the same period of 2018. The Company’s average interest-bearing liabilities increased from $891,071 in 2018 to $1,275,064 in 2019, largely due to the UCB acquisition in the third quarter of 2018. The Company’s fully tax equivalent net interest margin for the three months ended March 31, 2019 and 2018 was 4.45% and 4.05%, respectively.

Total interest income increased $8,660 to $24,584 for the ~~nine months~~period ended ~~September 30, 2018 was $49,970,~~March 31, 2019 which is attributable to an increase of ~~$7,215 from $42,755~~$7,324 in interest and fees on loans. This change was the result of an increase in the ~~same nine months~~average balance of ~~2017. Average earning assets~~loans, accompanied by a higher yield on the portfolio. The average balance of loans increased ~~6.1% during~~by $416,767 or 36.3% to $1,564,208 for the ~~nine months~~period ended ~~September 30, 2018~~March 31, 2019 as compared to $1,147,441 for the period ended March 31, 2018. The loan yield increased to 5.44% for 2019, from 4.82% in 2018. The net increase in interest and fees earned on loans attributable to the UCB acquisition was $3,504 for the period ended March 31, 2019.

Interest on taxable securities increased $762 to $1,748 for the period ended March 31, 2019, compared to $986 for the same period in ~~2017. Average loans and non-taxable~~2018. The average balance of taxable securities increased $66,601 to $207,600 for the ~~first nine months of 2018 increased 8.6% and 19.4%, respectively,~~period ended March 31, 2019 as compared to $140,999 for the first nine months of last year. The increases were offset by a decrease in interest-bearing deposits in other banks, which was mainly due to our tax refund processing program. The timing of cash inflows and outflows leads to large, but temporary, fluctuations in cash on deposit.period ended March 31, 2018. The yield on ~~the loan portfolio~~taxable securities increased 3660 basis points to 3.43% for 2019, compared to 2.83% for 2018. Interest on tax-exempt securities increased $473 to $1,351 for the ~~first nine months of 2018~~period ended March 31, 2019, compared to $878 for the ~~first nine months~~same period in 2018. The average balance of ~~last year.~~tax-exempt securities increased $56,141 to $157,619 for the period ended March 31, 2019 as compared to $101,478 for the period ended March 31, 2018. The yield on ~~earning assets increased 35~~tax-exempt securities decreased 4 basis points to 4.49% for ~~the first nine months of 2018~~2019, compared to ~~the first nine months of last year. Total interest expense~~4.53% for ~~the nine~~2018.

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

~~months ended September 30, 2018 was $4,608, an increase of $1,792 from $2,816 in the same nine months of 2017. Average time deposits~~Interest expense increased $1,713 or 148.7% to $2,865 for the ~~first nine months of 2018 decreased 10.0%, while average demand and savings accounts increased 7.9%~~period ended March 31, 2019, compared to the first nine months of 2017. Interest expense on demand and savings accounts, time deposits, FHLB borrowings and trust preferred securities increased $406, $154, $1,026 and $209, respectively, in the first nine months of 2018 compared towith $1,152 for the same period in ~~2017.~~2018. The change in interest ~~rate paid~~expense can be attributed to an increase in the average balance of interest-bearing liabilities and rate. For the period ended March 31, 2019 the average balance of interest-bearing liabilities increased $383,993 to $1,275,064 as compared to $891,071 for the period ended March 31, 2018. Interest incurred on ~~FHLB borrowings during~~deposits increased by $1,184 to $1,891 for the ~~first nine months~~period ended March 31, 2019, compared to $707 for the same period in 2018. The change in deposit expense was due to an increase in the average balance of ~~2018 increased 68 basis points~~interest-bearing deposits of $322,569 for the period ended March 31, 2019 as compared to the same period in ~~2017, while~~2018. In addition, the ~~average balance increased 89.2%. The interest~~ rate paid on ~~trust preferred securities during~~demand and savings accounts increased from0.17% in 2018 to 0.34% in 2019 and the ~~first nine months~~rate paid on time deposits increased from 0.98% to 1.77% in 2019. Interest expense incurred on FHLB advances and subordinated debentures increased 120.2% from 2018. The increase was due to a $57,625 increase in average balance from 2018 and a 52 basis point increase in rate from 2018. The UCB acquisition resulted in a net increase of ~~2018 increased 95 basis points as compared to the same period in 2017. The Company’s net~~ interest ~~margin for the nine months ended September 30, 2018 was 4.14% compared to 3.93%~~expense of $792 for the period ended ~~September 30, 2017.~~March 31, 2019.

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

The following table presents the condensed average balance sheets for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a 21% tax rate for tax-exempt interest ~~income in 2018 and a 35% tax rate for tax-exempt interest income in 2017.~~income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.

	Nine Months Ended September 30,																Three Months Ended March 31,
	2018								2017								2019								2018
Assets:	Average balance			Interest		Yield/ rate*			Average balance			Interest		Yield/ rate*			Average balance			Interest		Yield/rate*			Average balance			Interest		Yield/rate*
Interest-earning assets:
Loans, including fees	$	1,188,093		$	43,615		4.91	%	$	1,094,401		$	37,211		4.55	%	$	1,564,208		$	20,963		5.44	%	$	1,147,441		$	13,639		4.82	%
Taxable securities		144,036			3,069		2.83	%		144,379			2,764		2.59	%		207,600			1,748		3.43	%		140,999			986		2.83	%
Tax-exempt securities		103,540			2,672		4.42	%		86,713			2,307		5.65	%		157,619			1,351		4.49	%		101,478			878		4.53	%
Interest-bearing deposits in other banks		53,566			614		1.53	%		78,576			473		0.80	%		88,096			522		2.40	%		113,025			421		1.51	%
Total interest-earning assets	$	1,489,235		$	49,970		4.55	%	$	1,404,069		$	42,755		4.20	%	$	2,017,523		$	24,584		5.02	%	$	1,502,943		$	15,924		4.37	%
Noninterest-earning assets:
Cash and due from financial institutions		49,330								53,487								92,782								90,358
Premises and equipment, net		17,836								18,084								21,924								17,529
Accrued interest receivable		4,947								4,446								6,534								4,445
Intangible assets		31,918								28,682								86,116								28,368
Other assets		14,539								10,164								20,053								11,243
Bank owned life insurance		26,327								24,747								43,643								25,175
Less allowance for loan losses		(13,127	)							(13,156	)							(13,885	)							(13,141	)
Total Assets	$	1,621,005							$	1,530,523							$	2,274,690							$	1,666,920
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	628,610		$	819		0.17	%	$	582,716		$	413		0.09	%	$	855,666		$	708		0.34	%	$	616,213		$	252		0.17	%
Time		163,660			1,241		1.01	%		181,931			1,087		0.80	%		270,507			1,183		1.77	%		187,391			455		0.98	%
FHLB		108,239			1,560		1.93	%		57,195			534		1.25	%
Federal funds purchased		—			—		0.00	%		156			2		1.71	%
FHLB advance																		97,267			597		2.49	%		39,642			152		1.56	%
Subordinated debentures		29,427			975		4.43	%		29,427			766		3.48	%		29,427			372		5.13	%		29,427			288		3.97	%
Repurchase Agreements		17,871			13		0.10	%		18,597			14		0.10	%		22,197			5		0.09	%		18,398			5		0.11	%
Total interest-bearing liabilities	$	947,807		$	4,608		0.65	%	$	870,022		$	2,816		0.43	%	$	1,275,064		$	2,865		0.91	%	$	891,071		$	1,152		0.52	%
Noninterest-bearing deposits		465,448								478,137								680,929								576,809
Other liabilities		14,889								12,881								17,041								14,608
Shareholders’ Equity		192,861								169,483								301,656								184,432
Total Liabilities and Shareholders’ Equity	$	1,621,005							$	1,530,523							$	2,274,690							$	1,666,920
Net interest income and interest rate spread				$	45,362		3.90	%				$	39,939		3.77	%				$	21,719		4.11	%				$	14,772		3.85	%
Net interest margin							4.14	%							3.93	%							4.45	%							4.05	%

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

Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the nine months ended September 30, 2018 and 2017. The table is presented on a fully tax-equivalent basis.

(1)The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate.

The Company provides for loan losses through regular provisions to the allowance for loan losses. Provisions for loan losses totaled $390 for the nine months ended September 30, 2018. No provision for loan losses was recorded during the nine months ended September 30, 2017.

~~Noninterest income for the nine-month periods ended September 30, 2018 and 2017 are as follows:~~

~~Noninterest income for the nine months ended September 30, 2018 was $13,293, an increase of $589 or 4.6% from $12,704 for the same period of 2017. The primary reasons for the increase follow.~~

Service charge fee income for the period ended September 30, 2018 was $3,712, up $103 or 2.9% over the same period of 2017. The increase is primarily due to a change in the business account earnings credits, along with an increase in overdraft charges.

Net loss on the sale of securities increased $377 during the first nine months of 2018 compared to the same period of 2017. Management, from time to time, will reposition the investment portfolio to match liquidity needs of the Company

Gain on sale of loans increased $28 during the first nine months of 2018 compared to the same period of 2017. The volume of loans sold during the first nine months of 2018 was $57,854, up $4,763 or 9.0% as compared to the same period in 2017.

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

Wealth management fee income is comprised of fees earned from the management and administration of trusts and other customer assets. These fees are largely based upon the market value of the assets that we manage and the fee rate charged to customers. Wealth management fee income increased $328 or 14.7% during the first nine months of 2018 compared to the same period in 2017. The increase is mainly related to increases in assets under management and market conditions compared to the same period in 2017.

The Company processes state and federal income tax refund payments for customers of third-party income tax preparation vendors. The third-party vendors pay us a fee for processing the payments. Tax refund processing fees were $2,750 during the first nine months of 2018 and 2017. This fee income is seasonal in nature, the majority of which is received in the first quarter of the year.

Other income increased $281 during the first nine months of 2018 compared to the same period of 2017. The increase is mainly due to increases in swap related income and deluxe income during the first nine months of 2018 as compared to the same period in 2017.

~~Noninterest expense for the nine-month periods ended September 30, 2018 and 2017 are as follows:~~

~~Noninterest expense for the nine months ended September 30, 2018 was $50,288, an increase of $14,071, from $36,217 reported for the same period of 2017. The primary reasons for the increase follow.~~

Compensation expenses were $26,812, up $5,499 or 25.8% as compared to the same period of 2017. The increase is mainly due to merger related expenses of $4,239 paid in the acquisition of UCB during the first nine months of 2018. The remaining increases are due to an increase in payroll and payroll related expenses due to annual pay increases, commission based costs and employee insurance costs, as compared to the same period of 2017.

Net occupancy expense increased $373, or 18.6% from the same period of 2017. The year-over-year increase was attributable to an increase in miscellaneous building repairs and increased janitorial services. In addition, ground maintenance increased due to the extended cold weather in our region during the first part of the year.

Contracted data processing expenses increased $5,063, or 431.3% from the same period of 2017. The increase is due to $5,255 of UCB merger expenses related to the conversion of UCB’s core system data to the Company’s core system during the third quarter of 2018.

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

State franchise taxes were $1,031, up $264 or 34.4% compared to the same period in 2017. The year-over-year increase was attributable to an increase in equity capital. The Ohio Financial Institutions tax is based on equity capital.

Professional services costs increased $2,515, or 146.4% from the same period of 2017. The increase is due to $2,318 of legal and consulting expenses related to the merger with UCB. The remaining year-over-year increase was attributable to increased examination fees, increased facilities management costs, increased professional services costs to analyze workflow systems and recommend process improvements.

~~Amortization expense decreased $398, or 82.4% from the same period of 2017, as a result of scheduled amortization of intangible assets associated with mergers.~~

Marketing costs were $988, up $220 or 28.6% compared to the same period in 2017. The increase is due to a general increase in marketing expenses and higher promotional points and benefits paid in the first nine months of 2018 compared to the same period of 2017.

Other expenses were $6,358, up $577 or 10.0% compared to the same period in 2017. The increase is due to increases in director fees, travel and lodging, software maintenance and stationery and supplies expenses in the first nine months of 2018 compared to the same period of 2017.

Income tax expense for the nine months ended September 30, 2018 totaled $1,407, down $3,127 compared to the same period in 2017. The effective tax rates for the nine-month periods ended September 30, 2018 and September 30, 2017 were 17.6% and 27.6%, respectively. The Tax Cuts and Jobs Act, enacted on December 22, 2017, lowered the federal corporate income tax rate from 35% to 21% effective January 1, 2018. The difference between the statutory federal income tax rate and the Company’s effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low income housing tax credits and bank owned life insurance income.

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

The Company had a net loss of $3,433 for the three months ended September 30, 2018, a decrease of $7,093 from net income of $3,660 for the same three months of 2017. Basic earnings (loss) per common share were $(0.31) for the quarter ended September 30, 2018, compared to $0.33 for the same period in 2017. Diluted earnings (loss) per common share were $(0.31) for the quarter ended September 30, 2018, compared to $0.29 for the same period in 2017. The primary reasons for the changes in net income are acquisition and integration expenses related to the merger with UCB. Acquisition and integration expenses totaled $8,801 for the three months ended September 30, 2018. Changes in net income are explained below.

Net interest income for the three months ended September 30, 2018 was $15,824, an increase of $2,144 from $13,680 in the same three months of 2017. Total interest income for the three months ended September 30, 2018 was $17,886, an increase of $3,050 from $14,836 in the same three months of 2017. Average earning assets increased 11.4% during the quarter ended September 30, 2018 as compared to the same period in 2017. Average loans, tax-exempt securities and interest-bearing deposits in other banks for the third quarter of 2018 increased 12.0%, 15.3% and 114.2%, respectively, compared to the third quarter of last year. The increases were offset by decreases in taxable securities. The yield on the loan portfolio increased 40 basis points for the third quarter of 2018 compared to the third quarter of last year. The yield on earning assets increased 27 basis points for the third quarter of 2018 compared to the third quarter of last year. Total interest expense for the three months ended September 30, 2018 was $2,062, an increase of $906 from $1,156 in the same three months of 2017. Interest expense on demand and savings accounts increased $157 during the third quarter of 2018 compared to the same period in 2017. Average demand and savings accounts increased 10.0% while time deposits decreased 16.0% for the third quarter of 2018 compared to the same period in 2017. Interest expense on FHLB borrowings and trust preferred securities increased $649 and $81, respectively, in the third quarter of 2018 compared to the same period in 2017. The interest rate paid on FHLB borrowings during the third quarter of 2018 increased 76 basis points as compared to the same period in 2017, while the average balance increased 109.8%. The interest rate paid on trust preferred securities during the third quarter of 2018 increased 110 basis points as compared to the same period in 2017. The Company’s net interest margin for the three months ended September 30, 2018 and 2017 was 4.15% and 4.08%, respectively.

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

The following table presents the condensed average balance sheets for the three months ended September 30, 2018 and 2017. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a 21% tax rate for tax-exempt interest income in 2018 and a 35% tax rate for tax-exempt interest income in 2017. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.

Three Months Ended September 30,

2018

2017

Assets:

Average
balance

Interest

Yield/rate*

Average
balance

Interest

Yield/rate*

Interest-earning assets:

Loans, including fees

$
1,256,680

$
15,833

5.00
%

$
1,122,131

$
13,022

4.60
%
Taxable securities

145,621

1,042

2.81
%

150,534

977

2.61
%
Tax-exempt securities

107,211

908

4.29
%

93,022

812

5.53
%
Interest-bearing deposits in other banks

24,527

103

1.67
%

11,450

25

0.87
%
Total interest-earning assets

$
1,534,039

$
17,886

4.69
%

$
1,377,137

$
14,836

4.42
%
Noninterest-earning assets:

Cash and due from financial institutions

22,399

24,652

Premises and equipment, net

18,219

18,000

Accrued interest receivable

5,120

4,460

Intangible assets

38,920

28,541

Other assets

16,929

10,352

Bank owned life insurance

28,452

24,889

Less allowance for loan losses

(13,303
)

(12,988
)

Total Assets

$
1,650,775

$
1,475,043

Liabilities and Shareholders Equity:

Interest-bearing liabilities:

Demand and savings

$
653,537

$
317

0.19
%

$
594,088

$
160

0.11
%
Time

163,236

466

1.13
%

194,364

447

0.91
%
FHLB advance

180,073

925

2.04
%

85,840

276

1.28
%
Federal funds purchased

—

—

—

462

2

1.72
%
Subordinated debentures

29,427

349

4.71
%

29,427

268

3.61
%
Repurchase Agreements

18,664

5

0.11
%

14,328

3

0.08
%
Total interest-bearing liabilities

$
1,044,937

$
2,062

0.78
%

$
918,509

$
1,156

0.50
%
Noninterest-bearing deposits

385,646

363,783

Other liabilities

14,591

12,826

Shareholders’ Equity

205,601

179,925

Total Liabilities and Shareholders’ Equity

$
1,650,775

$
1,475,043

Net interest income and interest rate spread

$
15,824

3.91
%

$
13,680

3.92
%
Net interest margin

4.15
%

4.08
%

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

Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the three months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018. The table is presented on a fully tax-equivalent basis.

	Increase (decrease) due to:									Increase (decrease) due to:
	Volume (1)			Rate (1)			Net			Volume (1)			Rate (1)			Net
	(Dollars in thousands)									(Dollars in thousands)
Interest income:
Loans, including fees	$	1,639		$	1,172		$	2,811		$	5,421		$	1,903		$	7,324
Taxable securities		(11	)		76			65			524			238			762
Tax-exempt securities		144			(48	)		96			480			(7	)		473
Interest-bearing deposits in other banks		43			35			78			(108	)		209			101
Total interest income	$	1,815		$	1,235		$	3,050		$	6,317		$	2,343		$	8,660
Interest expense:
Demand and savings	$	17		$	140		$	157		$	126		$	330		$	456
Time		(78	)		97			19			259			469			728
FHLB advance		420			229			649			315			130			445
Federal funds purchased		(2	)		—			(2	)
Subordinated debentures		—			81			81			—			84			84
Repurchase agreements		1			1			2			1			(1	)		—
Total interest expense	$	358		$	548		$	906		$	701		$	1,012		$	1,713
Net interest income	$	1,457		$	687		$	2,144		$	5,616		$	1,331		$	6,947

The Company provides for loan losses through regular provisions to the allowance for loan losses. ~~Provisions for loan losses totaled $390 for~~During the ~~quarter~~quarters ended ~~September 30, 2018. No~~March 31, 2019 and March 31, 2018, no provision for loan losses was ~~recorded during~~provided. Management’s analysis of the ~~quarter~~provision for the quarters ended ~~September 30, 2017.~~March 31, 2019 and March31, 2018, indicated that no provision was required.

Noninterest income for the three-month periods ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ are as follows:

	Three months ended September 30,						Three months ended March 31,
	2018			2017			2019		2018
Service charges	$	1,219		$	1,177		$	1,456	$	1,134
Net loss on sale of securities		(392	)		(9	)		4		—
Net gain on equity securities		27			—			2		40
Net gain on sale of loans		428			472			331		333
ATM/Interchange fees		622			567			906		554
Wealth management fees		873			787			847		852
Bank owned life insurance		147			142			247		142
Tax refund processing fees		—			—			2,200		2,200
Other		364			329			291		361
Total noninterest income	$	3,288		$	3,465		$	6,284	$	5,616

Noninterest income for the three months ended ~~September 30, 2018~~March 31, 2019 was ~~$3,288, a decrease~~$6,284, an increase of ~~$177~~$668 or ~~5.1%~~11.9% from ~~$3,465~~$5,616 for the same period of ~~2017.~~2018. The increase was primary ~~reasons for the increase follow.~~due to increases in service charge fees of $322, ATM/Interchange fees of $352 and bank owned life insurance of $105 which was offset by a decrease in other income of $70.

~~Net loss on~~The increases in service charge fee income, ATM/Interchange fees and bank owned life insurance income is primarily attributable to the ~~sale~~Company’s acquisition of ~~securities increased $383~~UCB during the third quarter of ~~2018 compared to the same period~~2018. Other income decreased primarily as a result of ~~2017. Management, from time to time, will reposition the investment portfolio to match liquidity needs of the Company.~~lower swap fee income.

Gain on sale of loans decreased $44 during the third quarter of 2018 compared to the same period of 2017. The volume of loans sold during the first nine months of 2018 was $20,261, down $1,264 or 5.9% as compared to the same period in 2017.

ATM/Interchange fees increased $55 during the first nine months of 2018 compared to the same period of 2017. The increase is due to higher interchange fee income during the third quarter of 2018 as compared to the same period in 2017.

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

~~Wealth management~~Additionally, the Company processes state and federal income tax refund payments for customers of third-party income tax preparation vendors for which we receive a fee for processing the refund payments. Tax refund processing fees were $2,200 during the period ended March 31, 2019 and 2018. This fee income is ~~comprised~~seasonal in nature, the majority of ~~fees~~which is earned ~~from~~in the ~~management and administration of trusts and other customer assets. These fees are largely based upon the market value~~first quarter of the assets that we manage and the fee rate charged to customers. Wealth management fee income increased $86 or 10.9% during the third quarter of 2018 compared to the same period in 2017. The increase is mainly related to increases in assets under management and market conditions compared to the same period in 2017.

Other income increased $35 during the third quarter of 2018 compared to the same period of 2017. The increase is mainly due to increases in deluxe income during the third quarter of 2018 as compared to the same period in 2017.year.

Noninterest expense for the three-month periods ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ are as follows:

	Three months ended September 30,				Three months ended March 31,
	2018		2017		2019		2018
Compensation expense	$	12,054	$	7,389	$	9,805	$	7,374
Net occupancy expense		751		690		1,040		761
Equipment expense		371		350		463		374
Contracted data processing		3,150		357		419		348
FDIC assessment		121		115		192		151
State franchise tax		351		255		401		318
Professional services		2,198		534		694		552
Amortization of intangible assets		26		158		240		33
ATM expense		286		233		378		218
Marketing		350		240		340		318
Other operating expenses		2,498		1,846		2,477		1,758
Total noninterest expense	$	22,156	$	12,167	$	16,449	$	12,205

Noninterest expense for the three months ended ~~September 30, 2018~~March 31, 2019 was ~~$22,156,~~$16,449, an increase of ~~$9,989,~~$4,244, or ~~82.1%~~34.8%, from ~~$12,167~~$12,205 reported for the same period of ~~2017.~~2018. The primary reasons for the increase ~~follow.~~were increases in compensation expenses of $2,431, net occupancy expense of $279, equipment expense of $89, contracted data processing expenses of $71, FDIC assessments of $41, state franchise taxes of $83, professional services costs of $142, amortization expense of $207, ATM expense of $160 and other operating expenses of $719.

~~Compensation expenses were $12,054, up $4,665 or 63.1% as compared to the same period of 2017.~~ The increase in compensation expense is mainly due to ~~merger related expenses~~being a larger company as a result of ~~$4,239 paid in~~ the acquisition of ~~UCB during~~UCB. In addition, the ~~third quarter of 2018. The remaining increases are due~~increase can be attributed to ~~an increase in~~ payroll and payroll related expenses due to annual pay increases, commission based costs, stock-based compensation and employee insurance ~~costs increased, as compared to the same period of 2017.~~

~~Contracted~~cost increases. The increases in net occupancy expense, equipment expense, contracted data processing expenses, ~~were $3,150, up $2,793 or 782.4% compared to the same period on 2017. The increase is~~FDIC assessments, amortization expense, ATM expense and other operating expenses are primarily due to ~~$2,833~~being a larger company as a result of ~~UCB merger expenses related to~~ the ~~conversion~~acquisition of ~~UCB’s core system data to the Company’s core system during the third quarter of 2018.~~

~~State franchise taxes were $351, up $96 or 37.6% compared to the same period in 2017.~~UCB. The quarter-over-quarter increase in state franchise taxes was attributable to an increase in equity ~~capital. The~~capital, which is the basis of the Ohio Financial Institutions ~~tax is based on equity capital.~~

~~Professional~~tax. The increase in professional services costs ~~increased $1,664, or 311.6% from the same period of 2017. The increase~~ is due to ~~$1,618 of legal~~increases in shareholder expense, investment advisory services and consulting ~~expenses related to the merger with UCB.~~ expenses.

~~Amortization~~Income tax expense ~~decreased $132, or 83.5% from~~for the ~~same period of 2017, as a result of scheduled amortization of intangible assets associated with mergers.~~

~~ATM costs were $286,~~three months ended March 31, 2019 totaled $1,885, up ~~$53 or 22.7%~~$691 compared to the same period in ~~2017. The increase is primarily due to merger-related card stock costs during the third quarter of~~ 2018.

Marketing costs were $350, up $110 or 45.8% compared to the same period in 2017. The increase is due to a general increase in marketing expenses and higher promotional points and benefits paid in the third quarter of 2018 compared to the same period of 2017.

Other operating expenses were $2,498, up $652 or 35.3% compared to the same period in 2017. The increase is due to increases in director fees, travel and lodging, software maintenance and stationery and supplies expenses in the third quarter of 2018 compared to the same period of 2017.

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

~~Income tax expense (benefit) for the three months ended September 30, 2018 totaled ($1), down $1,319 compared to the same period in 2017.~~ The effective tax rates for the three-month periods ended ~~September 30,~~March 31, 2019 and 2018 were 16.3% and ~~2017 were 0.0% and 26.5%~~14.6%, respectively. ~~The Tax Cuts and Jobs Act, enacted on December 22, 2017, lowered the federal corporate income tax rate from 35% to 21% effective January 1, 2018.~~ The difference between the statutory federal income tax rate and the Company’s effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low income housing tax credits and bank owned life insurance income.

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

Shareholders’ equity totaled ~~$289,238~~$312,057 at ~~September 30, 2018~~March 31, 2019 compared to ~~$184,461~~$298,898 at December 31, ~~2017.~~2018. The ~~primary reason for the increase was the issuance of common shares as part of the consideration in the acquisition of UCB, which added $104,669 to shareholders’ equity. In addition, the~~ increase in shareholders’ equity included net income of ~~$6,570,~~$9,669, a ~~$339~~$116 net decrease in the Company’s pension liability and ~~a decrease~~an increase in the fair value of securities available for sale, net of tax, of ~~$3,818,~~$4,853, which was partially offset by dividends on preferred stock and common stock of ~~$794~~$164 and ~~$2,404,~~$1,404, respectively.

All of the Company’s capital ratios exceeded the regulatory minimum guidelines as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 as identified in the following table:

	Total Risk Based Capital			Tier I Risk Based Capital			CET1 Risk Based Capital			Leverage Ratio			Total Risk Based Capital			Tier I Risk Based Capital			CET1 Risk Based Capital			Leverage Ratio
Company Ratios—September 30, 2018		16.3	%		15.4	%		12.9	%		15.4	%
Company Ratios—December 31, 2017		16.6	%		15.5	%		11.6	%		12.7	%
Company Ratios—March 31, 2019														16.5	%		15.6	%		13.3	%		11.6	%
Company Ratios—December 31, 2018														16.1	%		15.3	%		12.9	%		12.2	%
For Capital Adequacy Purposes		8.0	%		6.0	%		4.5	%		4.0	%		8.0	%		6.0	%		4.5	%		4.0	%
To Be Well Capitalized Under Prompt
Corrective Action Provisions		10.0	%		8.0	%		6.5	%		5.0	%		10.0	%		8.0	%		6.5	%		5.0	%

The Company paid a cash dividend of $0.09 per common share on February 1, 2019. In 2018, the Company paid a cash dividend of $0.07 per common share on February 1, ~~2018 and on May 1, 2018 and~~2018. The Company also paid a 6.50% cash dividend on its Series B preferred shares in the amount of ~~$0.09 per common share~~approximately $164 on ~~August 1, 2018.~~March 15, 2019. In ~~2017,~~2018, the Company ~~paid a cash dividend of $0.06 per common share on February 1, 2017, on May 1, 2017 and on August 1, 2017. The Company also~~ paid a 6.50% cash dividend on its Series B preferred shares in the amount of approximately $303 on March 15, ~~2018, approximately $299 on June 15, 2018 and approximately $192 on September 15,~~ 2018. In 2017, the Company paid a 6.50% cash dividend on its Series B preferred shares in the amount of approximately $319 on March 15, 2017 and approximately $308 on June 15, 2017 and on September 15, 2017.

The Company maintains a conservative liquidity position. All securities are classified as available for sale. Securities, with maturities of one year or less, totaled ~~$15,226,~~$10,877, or ~~4.8%~~3.1% of the total security portfolio at ~~September 30, 2018.~~March 31, 2019. The available for sale portfolio helps to provide the Company with the ability to meet its funding needs. The Condensed Consolidated Statements of Cash Flows (Unaudited) contained in the consolidated financial statements detail the Company’s cash flows from operating activities resulting from net earnings.

As reported in the Condensed Consolidated Statements of Cash Flows (Unaudited), our cash flows are classified for financial reporting purposes as operating, investing or financing cash flows. Net cash provided by operating activities was ~~$19,488~~$12,905 and ~~$11,821~~$6,613 for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively. These amounts differ from net income due to a variety of cash receipts and disbursements that did not affect net income for the respective periods. Net cash provided by (used for) investing activities was ~~$41,097~~($9,201) and ~~($119,937)~~$3,310 for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively, principally reflecting our loan and investment security activities. Cash provided by and used for deposits ~~borrowings~~ and ~~net proceeds from our common equity offering~~borrowings comprised most of our financing activities, which resulted in net cash provided by ~~(used for)~~ of ~~($36,350)~~$117,611 and ~~$104,815~~$68,528 for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.

Future loan demand of Civista may be funded by increases in deposit accounts, proceeds from payments on existing loans, the maturity of securities, and the sale of securities classified as available for sale. Additional sources of funds may also come from borrowing in the Federal Funds market and/or borrowing from the FHLB. Through its correspondent banks, Civista maintains federal funds borrowing lines totaling $42,500. As of ~~September 30, 2018,~~March 31, 2019, Civista had total credit availability with the FHLB of ~~$395,520~~$552,662 with standby letters of credit totaling ~~$20,000~~$20,100 and a remaining borrowing capacity of approximately ~~$230,420.~~$405,462. In addition, Civista Bancshares, Inc. maintains a credit line totaling $10,000.

The Company’s primary market risk exposure is interest-rate risk and, to a lesser extent, liquidity risk. All of the Company’s transactions are denominated in U.S. dollars with no specific foreign exchange exposure.

Interest-rate risk is the exposure of a banking organization’s financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value. However, excessive levels of interest-rate risk can pose a significant threat to the Company’s earnings and capital base. Accordingly, effective risk management that maintains interest-rate risk at prudent levels is essential to the Company’s safety and soundness.

Evaluating a financial institution’s exposure to changes in interest rates includes assessing both the adequacy of the management process used to control interest-rate risk and the organization’s quantitative level of exposure. When assessing the interest-rate risk management process, the Company seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest-rate risk at prudent levels with consistency and continuity. Evaluating the quantitative level of interest rate risk exposure requires the Company to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity and, where appropriate, asset quality.

The Federal Reserve Board, together with the Office of the Comptroller of the Currency and the Federal Deposit Insurance ~~Company,~~Corporation, adopted a Joint Agency Policy Statement on interest-rate risk, effective June 26, 1996. The policy statement provides guidance to examiners and bankers on sound practices for managing interest-rate risk, which will form the basis for ongoing evaluation of the adequacy of interest-rate risk management at supervised institutions. The policy statement also outlines fundamental elements of sound management that have been identified in prior Federal Reserve guidance and discusses the importance of these elements in the context of managing interest-rate risk. Specifically, the guidance emphasizes the need for active board of director and senior management oversight and a comprehensive risk-management process that effectively identifies, measures, and controls interest-rate risk.

Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institution’s assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institution’s interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution’s profits could decrease on existing assets because the institution will have either lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment.

Several techniques may be used by an institution to minimize interest-rate risk. One approach used by the Company is to periodically analyze its assets and liabilities and make future financing and investment decisions based on payment streams, interest rates, contractual maturities, and estimated sensitivity to actual or potential changes in market interest rates. Such activities fall under the broad definition of asset/liability management. The Company’s primary asset/liability management technique is the measurement of the Company’s asset/liability gap, that is, the difference between the cash flow amounts of interest sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year, or longer period, the institution is in an asset sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. If, alternatively, more liabilities than assets will reprice, the institution is in a liability sensitive position. Accordingly, net interest income would decline when rates rose and increase when rates fell. Also, these examples assume that interest rate changes for assets and liabilities are of the same magnitude, whereas actual interest rate changes generally differ in magnitude for assets and liabilities.

Several ways an institution can manage interest-rate risk include selling existing assets or repaying certain liabilities; matching repricing periods for new assets and liabilities, for example, by shortening terms of new loans or securities; and hedging existing assets, liabilities, or anticipated transactions. An institution might also invest in more complex financial instruments intended to hedge or otherwise change interest-rate risk. Interest rate swaps, futures contracts, options on futures, and other such derivative financial instruments often are used for this purpose. Because these instruments are sensitive to interest rate changes, they require management expertise to be effective. The Company has not purchased derivative financial instruments to hedge interest rate risk in the past and does not currently intend to purchase such instruments in the near future. Financial institutions are also subject to prepayment risk in falling rate environments. For example, mortgage loans and other financial assets may be prepaid by a debtor

so that the debtor may refinance its obligations at new, lower rates. Prepayments of assets carrying higher rates reduce the Company’s interest income and overall asset yields. A large portion of an institution’s liabilities may be short-term or due on demand, while most of its assets may be invested in long-term loans or securities. Accordingly, the Company seeks to have in place sources of cash to meet short-term demands. These funds can be obtained by increasing deposits, borrowing, or selling assets. FHLB advances and wholesale borrowings may also be used as important sources of liquidity for the Company.

The following table provides information about the Company’s financial instruments that were sensitive to changes in interest rates as of December 31, ~~2017~~2018 and ~~September 30, 2018,~~March 31, 2019, based on certain prepayment and account decay assumptions that management believes are reasonable. The table shows the changes in the Company’s net portfolio value (in amount and percent) that would result from hypothetical interest rate increases of 200 basis points and 100 basis points and an interest rate decrease of 100 basis points at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

The Company had derivative financial instruments as of December 31, ~~2017~~2018 and ~~September 30, 2018.~~March 31, 2019. The changes in fair value of the assets and liabilities of the underlying contracts offset each other. Expected maturity date values for interest-bearing core deposits were calculated based on estimates of the period over which the deposits would be outstanding. The Company’s borrowings were tabulated by contractual maturity dates and without regard to any conversion or repricing dates.

Net Portfolio Value	Net Portfolio Value																	Net Portfolio Value
		September 30, 2018								December 31, 2017									March 31, 2019								December 31, 2018
Change in Rates		Dollar Amount		Dollar Change			Percent Change			Dollar Amount		Dollar Change			Percent Change				Dollar Amount		Dollar Change			Percent Change			Dollar Amount		Dollar Change			Percent Change
+200bp			409,491		32,199			9	%		270,928		33,923			14	%			462,458		43,915			10	%		417,572		29,451			8	%
+100bp			400,663		23,371			6	%		261,071		24,066			10	%			447,282		28,739			7	%		409,514		21,393			6	%
Base			377,292		—			—			237,005		—			—				418,543		—			—			388,121		—			—
-100bp			351,327		(25,965	)		-7	%		223,526		(13,479	)		-6	%			391,450		(28,739	)		-6	%		366,486		(21,393	)		-6	%

The change in net portfolio value from December 31, ~~2017~~2018 to ~~September 30, 2018,~~March 31, 2019, can be attributed to ~~two~~a couple of factors. While the yield curve has ~~risen and flattened slightly~~fallen from the end of the year, both the volume and mix of assets and funding sources has changed. The volume of loans has increased, ~~mostly due to the merger,~~ but the mix has shifted toward ~~cash, securities and other assets.~~cash. Similarly, the volume of ~~liabilities~~deposits has increased, ~~due to the merger,~~ while the mix has shifted away from ~~deposits and CDs~~borrowed money toward ~~borrowed money.~~deposits. The balance change from the end of the year led to an increase in the base net portfolio value. ~~Both the assets and~~Assets have shifted toward less volatile components while liabilities have shifted toward ~~less~~more volatile components. Combined, this led to a small ~~decrease~~increase in volatility. Beyond the change in the base level of net portfolio value, projected movements in rates, up or down, would also lead to changes in market values. The change in the rates up scenarios for both the 100 and 200 basis point movements would lead to a ~~similar decreases~~larger decrease in the market value of ~~assets and~~ liabilities. Accordingly, we see a small increase in the net portfolio ~~value, although the increase is smaller relative to the end of 2017.~~value. However, a downward change in rates would lead to a decrease in the net portfolio value as the market value of liabilities would increase more quickly than the market value of assets.

Under the supervision and with the participation of our management, including our principal executive and our principal financial officers, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our principal executive and our principal financial officers concluded that our disclosure controls and procedures as of ~~September 30, 2018,~~March 31, 2019, were effective.

There have not been any changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There were no material changes during the current period to the risk factors disclosed in “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017, as supplemented by the risk factors disclosed in “Item 1A. Risk Factors” of Part II of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31,~~ 2018.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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)

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐☒
Emerging growth company	☐

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common	CIVB	NASDAQ Capital Market
Preferred	CIVBP	NASDAQ Capital Market

PART I.	Financial Information
Item 1.	Financial Statements:
	Consolidated Balance Sheets (Unaudited) ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018	2
	Consolidated Statements of Operations (Unaudited) Three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	3
	Consolidated Statements of Comprehensive Income (Unaudited) Three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	4
	Condensed Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) ~~Nine~~Three months ended ~~September 30,~~March 31, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) ~~Nine~~Three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	6
	Notes to Interim Consolidated Financial Statements (Unaudited)	~~7-38~~7-32
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~39-50~~33-40
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	~~51-52~~41-42
Item 4.	Controls and Procedures	5343

PART II.	Other Information
Item 1.	Legal Proceedings	5444
Item 1A.	Risk Factors	5444
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5444
Item 3.	Defaults upon Senior Securities	5444
Item 4.	Mine Safety Disclosures	5444
Item 5.	Other Information	5444
Item 6.	Exhibits	5545
Signatures		5646

	September 14, 2018
	(In Thousands)
Contractually required payments	$	2,353
Non-accretable discount		(1,141	)
Expected cash flows		1,212
Accretable discount		(334	)
Estimated fair value	$	878

September 30, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	29,069	$	139	$	(233	)	$	28,975
Obligations of states and political subdivisions		153,285		1,862		(1,277	)		153,870
Mortgage-backed securities in government sponsored entities		135,764		316		(1,959	)		134,121
Total debt securities	$	318,118	$	2,317	$	(3,469	)	$	316,966

	Three months ended		Nine months ended
	September 30, 2018		September 30, 2018
Net gains recognized on equity securities during the period	$	27	$	102
Less: Net gains (losses) realized on the sale of equity securities during the period		—		—
Unrealized gains recognized in equity securities held at reporting date	$	27	$	102

	For the Three-Month Period Ended March 31, 2019			For the Three-Month Period Ended March 31, 2018
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	336		$	15
Acquisition of PCI loans		—			—
Accretion		(10	)		(7	)
Balance at end of period	$	326		$	8

	September 30, 2018				September 30, 2017
For the three months ended:	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	675	$	6	$	1,366	$	7
Commercial Real Estate—Owner Occupied		511		9		1,377		18
Commercial Real Estate—Non-Owner Occupied		38		1		202		2
Residential Real Estate		1,811		17		1,437		17
Farm Real Estate		742		7		614		8
Total	$	3,777	$	40	$	4,996	$	52

	For the Nine-Month Period Ended September 30, 2018			For the Nine-Month Period Ended September 30, 2017
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	15		$	49
Acquisition of PCI loans		334			—
Accretion		(11	)		(27	)
Balance at end of period	$	338		$	22

	For the Three-Month Period Ended September 30, 2018			For the Three-Month Period Ended September 30, 2017
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	6		$	31
Acquisition of PCI loans		334			—
Accretion		(2	)		(9	)
Balance at end of period	$	338		$	22

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (a)
Details about Accumulated Other Comprehensive Loss Components	For the Nine months ended September 30, 2018			For the Nine months ended September 30, 2017			Affected Line Item in the Statement Where Net Income is Presented
Unrealized losses on available-for-sale securities	$	(386	)	$	(9	)	Net loss on securities available for sale
Tax effect		81			3		Income tax expense
		(305	)		(6	)	Net of tax
Amortization of defined benefit pension items
Actuarial gains/(losses) (b)		(429	)		(946	)	Salaries, wages and benefits
Tax effect		90			321		Income tax expense
		(339	)		(625	)	Net of tax
Total reclassifications for the period	$	(644	)	$	(631	)	Net of tax

	2019						2018
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized intangible assets(1):
MSRs	$	2,141	$	485	$	1,656	$	2,110	$	446	$	1,664
Core deposit intangibles		14,792		7,344		7,448		14,792		7,104		7,688
Total amortized intangible assets	$	16,933	$	7,829	$	9,104	$	16,902	$	7,550	$	9,352

	March 31, 2019		December 31, 2018
Securities pledged for repurchase agreements:
U.S. Treasury securities	$	858	$	861
Obligations of U.S. government agencies		21,112		21,338
Total securities pledged	$	21,970	$	22,199
Gross amount of recognized liabilities for repurchase agreements	$	21,970	$	22,199
Amounts related to agreements not included in offsetting disclosures above	$	—	$	—

	Actual From Acquisition Date Through September 30, 2018
	(in thousands)
Net interest income after provision for loan losses	$	432
Noninterest income		7
Net income		298

	Pro Formas				Pro Formas
	Nine months ended September 30,				Three months ended September 30,
	2018		2017		2018			2017
Net interest income after provision for loan losses	$	54,340	$	50,809	$	17,236		$	17,378
Noninterest income		13,493		16,015		1,158			4,565
Net income		5,895		14,679		(5,708	)		4,522
Pro forma earnings per share:
Basic	$	0.47	$	1.40	$	(0.51	)	$	0.41
Diluted	$	0.46	$	1.20	$	(0.51	)	$	0.36

	Classification on the Consolidated Balance Sheet	March 31, 2019
Assets:
Operating lease	Other assets	$	2,133
Total lease assets		$	2,133
Liabilities:
Operating lease	Accrued expenses and other liabilities	$	2,133
Total lease liabilities		$	2,133

Consideration paid				$	117,344

Net assets acquired:
Cash and due from financial institutions	$	156,472
Securities available for sale		43,214
Equity securities		212
Loans held for sale		492
Loans, net		298,319
Other securities		3,527
Premises and equipment		5,291
Accrued interest receivable		950
Core deposit intangible		7,518
Bank owned life insurance		17,193
Other assets		10,896
Noninterest-bearing deposits		(226,795	)
Interest-bearing deposits		(249,149	)
Other liabilities		(17	)
					68,123
Goodwill resulting from UCB merger				$	49,221

	March 31, 2019		December 31, 2018
Noninterest-bearing demand	$	657,510	$	468,083
Interest-bearing demand		284,369		261,996
Savings and money market		550,591		582,128
Time deposits		273,331		267,686
Total Deposits	$	1,765,801	$	1,579,893

Exhibit	Description	Location

~~2.1~~	~~Agreement and Plan of Merger, dated March 11, 2018 by and between Civista Bancshares, Inc., Civista Bank, United Community Bancorp and United Community Bank.~~	~~Filed as Exhibit 2.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on March 12, 2018 and incorporated herein by reference. (File No. 001-36192)~~
3.1	Second Amended and Restated Articles of Incorporation of Civista Bancshares, Inc., as filed with the Ohio Secretary of State on ~~December 4, 2015.~~November 15, 2018.	Filed as Exhibit 3.1 to Civista Bancshares, Inc.’s ~~Quarterly~~Current Report on Form ~~10-Q for the period ended September 30, 2017,~~8-K, filed on November ~~8, 2017~~16, 2018 and incorporated herein by reference. (File No. 001-36192)
3.2	Amended and Restated Code of Regulations of Civista Bancshares, Inc. (adopted April 15, 2008)	Filed as Exhibit 3.2 to Civista Bancshares, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed on November 8, 2017 and incorporated herein by reference. (File No. 001-36192)
31.1	Rule 13a-14(a)/15-d-14(a) Certification of Chief Executive Officer.	Included herewith
31.2	Rule 13a-14(a)/15-d-14(a) Certification of Principal Accounting Officer.	Included herewith
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith
32.2	Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2018,~~March 31, 2019, formatted in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets (Unaudited) as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017;~~2018; (ii) Consolidated Statements of Income (Unaudited) for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017;~~2018; (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017;~~2018; (iv) Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018; (v) Condensed Consolidated Statement of Cash Flows (Unaudited) for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 and ~~2017;~~2018; and (vi) Notes to Interim Consolidated Financial Statements (Unaudited).	Included herewith


/s/ Dennis G. Shaffer		~~November 9, 2018~~May 10, 2019
Dennis G. Shaffer		Date
President, Chief Executive Officer


/s/ Todd A. Michel		~~November 9, 2018~~May 10, 2019
Todd A. Michel		Date
Senior Vice President, Controller