Good morning, and welcome to the Civista Bancshares, Inc.'s annual shareholder meeting. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there'll be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. This presentation may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended. Forward-looking statements express management's current expectations, estimates, or projections of future events, results, or long-term goals and are generally identifiable by the use of words such as believe, accept, anticipate, plan, intend, estimate, may, will, would, could, should, or other similar expressions.
All statements in this material speak only as of the date they are made, and management undertakes no obligation to update any statements except to the extent required by law. 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 actual results or performance to differ materially from those expressed and/or implied by the forward-looking statements.
Factors that could cause actual results or performance to differ from those discussed in the forward-looking statements include the risks identified from time to time in our public filings 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, 2021, as supplemented by any additional risks identified in the company's subsequent Form 10-Qs. These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. This call will be recorded and made available on Civista Bancshares' website at civb.com. Now I would like to turn to introduce the Chairman of the Civista Bancshares, Inc.'s Board, Mr. Jim Miller.
Good morning, everyone. Welcome to the annual meeting of shareholders of Civista Bancshares, Inc. This is Jim Miller, Chairman of the Company. Due to the extraordinary circumstances in which we find ourselves, this meeting is being conducted by telephone to the extent possible. Thank you for your cooperation and understanding. Please be aware that all participants will be muted until we come to the question portion of the meeting at the conclusion of Mr. Shaffer's presentation. For those of you joining the meeting via the webcast who may have a question at the conclusion of Mr. Shaffer's presentation, please utilize the phone number previously provided, 855-238-2712. Each shareholder who wishes to ask a question will be entered into the queue, and we will take those questions in turn.
I now call the meeting to order and would like to let you know that Dennis Shaffer, CEO and President of the company, Civista Bancshares, is here. Lance Morrison, General Counsel and Corporate Secretary. Amy Grant, our recording secretary. Brian Mitchell, BKD LLP, will be available to respond to questions from shareholders, and Tony Weis from Vorys, Sater, Seymour and Pease. The board has appointed American Stock Transfer & Trust Company as inspector of elections. Mrs. Kimberly Koskowitz is the representative of American Stock Transfer and is participating by telephone as well. Mr. Morrison, will the inspector present the affidavit regarding notice of the meeting?
I present the affidavit of American Stock Transfer & Trust Company, LLC, showing that the notice of this annual meeting of shareholders was duly mailed, postage prepaid on March 15th, 2022 to each shareholder of record on February 22nd, 2022, and that each was accompanied by a proxy statement, proxy card, and the 2021 annual report to shareholders of the company.
Thank you. Pursuant to the company's regulations, the holders of the majority of the outstanding Civista common shares must be present in person or by proxy at this annual meeting to constitute a quorum. Can the inspector tell us whether there is a quorum present?
On February 22nd, 2022, the record date for this meeting, there were 14,915,472 common shares outstanding and eligible to vote at this meeting. There are 12,346,167 shares present in person or by proxy, which is 82.77% of the total shares outstanding and eligible to vote. A quorum is present.
Thank you, Kimberly. Based on this count, a quorum is present, and the meeting is lawfully convened. First item I have are minutes of the April 20, 2021 annual meeting of shareholders.
This is Bill Ritzmann, and I move to dispense with the reading of the minutes.
Thank you, Bill.
This is Harry Singer. I second the motion.
Thank you, Harry. I have a motion and a second. All in favor?
Aye.
Aye.
There are three matters to be considered and voted upon at this meeting. We will introduce an appropriate resolution with respect to each matter to be voted, acted upon. We will postpone actual voting on each matter, however, until all the resolutions have been introduced. As previously indicated, this meeting is taking place by phone and webcast. However, if any shareholder has determined to attend in person, they have joined us here and are able to present themselves as necessary. If any shareholder who is attending in person has not registered on our attendance sheets as you entered, or if any proxy holder has not delivered his or her proxy to the inspector of elections, will he or she please do so now.
Please raise your hand now if you have a proxy to turn in, and the proctor will collect it and bring it forward. If your shares are registered in your name or you hold a legal proxy from your brokerage firm and you wish to vote in person, then you must revoke your proxy and complete a ballot at this meeting. If you wish to vote in person by ballot, please raise your hand now to register with the Inspector of Elections, and the proctor will assist you. We will pass out ballots after all matters have been presented. The first matter to be considered and voted upon is the election of the nominees of the board listed in the proxy. As there is no notice of any other nominations as required by Article Three, Section Two of the regulations, the nominations are closed.
May I have a motion to elect the slate of nominee?
This is Julie Mattlin. I move for the election of the slate nominated by the board.
Thank you, Julie. May I have a second?
This is Barry Boerger. I second the motion.
Thank you, Barry. Proposal two, to be considered and voted upon is the proposal to approve in a non-binding advisory vote the compensation of the corporation's named executive officers as disclosed in the proxy statement for this annual meeting. May I have a motion on this proposal?
This is Bill Ritzmann. Moved.
Thank you, Bill. May I have a second?
This is Harry Singer. I second the motion.
Thank you, Harry. The third and final matter to be considered and voted upon is a proposal to ratify the appointment of BKD LLP as the independent public accounting firm of the corporation for fiscal year ending December 31, 2022. May I have a motion on this proposal? This is Dennis Murray. I so move. Thank you, Dennis. May I have a second?
This is Pat Oliver. I second the motion.
Thank you, Pat. Ms. Trina Stewart, on behalf of the Inspector of Elections, will now pass out a ballot to anyone who wishes to vote in person. Only those shareholders who have not voted by proxy or who wish to revoke a previously given proxy and vote in person should request a ballot. Does anyone need a ballot? If so, please mark your ballot and return it to the inspector. When the ballots are collected, the polls will be closed. The polls are now closed. We will proceed with our management presentation while the inspector continues her count of the ballots. At the conclusion of Mr. Shaffer's presentation, we will take shareholder questions. Dennis?
Thanks, Jim. Let me start by congratulating all of our employees for delivering record results in 2021. I want to thank each and every one of them for their hard work and their resilience as they delivered these results despite ongoing challenges created by the pandemic. I also want to thank our board of directors for their support throughout the year. First, I'd like to share with you some of our financial highlights from last year. I will then talk about some of our other accomplishments, including our upcoming transaction with The Henry County Bank and our ongoing digital transformation project. I'll then wrap up with a few of my thoughts on what lies ahead for us in 2022. 2021 was the most financially successful year in our 137-year history.
We earned record net income of $40.5 million compared to $32.2 million in 2020. Despite operating in a low interest rate environment, we were able to increase both our net and non-interest income from the previous year. Our return on average assets was 1.34%, and our return on average equity was 11.61%. One of the most significant accomplishments for the year was our record gross loan production of nearly $1.2 billion from our commercial and consumer lending teams. Growth came from across our entire footprint.
Some of our more noteworthy production numbers included $131.1 million of loans made during the second round of the SBA's Paycheck Protection Program, $260.3 million in sold secondary market residential mortgage loans, and $31.2 million in residential portfolio loans made through the bank's Community View Program, a program designed to help low- to moderate-income borrowers purchase homes in qualifying neighborhoods. When factoring in payoffs, renewal balances, sold secondary market loans, and excluding loans made through the SBA's Paycheck Protection Program, our loan portfolio grew on a net basis by $114.5 million or 6.2%. Our loan portfolio balance, excluding PPP loans at the end of the year was approximately $2 billion.
As we see these borrowed dollars being invested into our local communities, Civista is proud to be playing a part in making our communities a stronger and better place to live and work. Our credit quality and our allowance for loan losses to loans at 1.33% remains strong. For the year, we recorded net recoveries of $783,000 and non-performing loans decreased to $5.4 million, or just 0.27% of all loans at year-end. Deposit balances grew by $227.3 million or 10.4%, and our deposit portfolio balance was $2.4 billion at the end of the year.
Approximately 30% or $68.1 million of this growth occurred in non-interest demand accounts. At year-end, non-interest demand accounts made up 33% of all Civista deposits. The bank's investment security portfolio grew by $196.6 million from December 31, 2020, and stood at $560.9 million at year-end as we put some of the low-interest yielding excess liquidity on our balance sheet into higher-earning assets. Non-interest income was $31.5 million in 2021, an increase of $3.3 million or 11.6%. Backing out a one-time $1.8 million dollar gain on the sale of some Visa B shares, non-interest income still increased $1.5 million or 5.3% for the year.
In addition to the previously mentioned strong residential mortgage production, we had increased earnings in interchange fees, service charges, and wealth management. Other accomplishments in 2021 included the approval by the board of directors of a $13.5 million share repurchase authorization in August. This is an important part of our capital management plan and provides us a method to efficiently deploy our capital. During 2021, we repurchased 983,400 shares at $22.59 per share. At year-end, we had $9.3 million of this authorization remaining. Our strong earnings allowed us to increase our dividend twice during the year. We continue to go through the exercise of balancing the retention of capital to be used for growth and financial stability versus the total return to our shareholders.
We did see nice appreciation in our stock price, which increased 39.2% for the year. Although we remain strongly capitalized, we were able to take advantage of historically low interest rates to complete a private placement of $75 million in subordinated notes to be used for general corporate purposes to support organic growth and to be used for strategic initiatives, including acquisitions. Early in January 2022, we did announce that Civista had entered into a definitive agreement to acquire Comunibanc Corp., the parent company of The Henry County Bank, headquartered in Napoleon, Ohio. Comunibanc has total assets of $329 million and total loans of $165 million. The acquisition will add seven branches in Henry and Wood counties in Northwest Ohio and $276 million in low-cost deposits.
Based on the latest financial data at the time of the announcement, the combined company will have total assets of $3.3 billion, total net loans of approximately $2.1 billion, and total deposits of approximately $2.7 billion. The acquisition will significantly accelerate our presence in Northwest Ohio, and it accomplishes one of our strategic goals of having a significant presence in the top five metropolitan areas in the state of Ohio. Continued growth should help us leverage many of our recent technology investments, which should lead to greater efficiency. Henry County Bank's strong core customer base fits in well with our relationship banking philosophy, and their approximate 60% loan-to-deposit ratio will provide us with ample liquidity to accelerate loan growth throughout Northwest Ohio and the Greater Toledo area.
The deal was financially attractive, and we are estimating 10%-11% earnings per share accretion once cost savings are fully recognized in 2023. We do anticipate retaining almost all customer-facing personnel with most of the cost savings recognized by the elimination of duplicate services and systems. We continue to invest in technology to make it easier for our customers to do business with us. 2021 marked the achievement of several key digital initiatives, which included electronic statement enhancement, a new digital banking platform, the introduction of the bank's first chatbot, online account opening, and an automated commercial lending workflow system. Each of these strategic implementations, while in their infancy, are providing us with greater efficiency, revenue opportunities, and enhancing the overall customer experience.
In early April, we launched a new and improved electronic document delivery portal for statements, account notices, and tax documents, enabling customers to control their preferred method of document delivery with greater ease. Over the following nine months, we experienced a 16% increase in electronic statement adoption for checking and savings accounts. On the heels of the electronic statement upgrade, we transitioned over 33,000 online and mobile banking customers to a smarter, modernized digital banking experience in June with outstanding customer reviews. The new Civista digital banking platform not only provided Civista's customers a simplified and consistent experience across all devices, mobile, tablet, and desktop, but also introduced new tools enabling customers to manage their daily finances with additional security and ease, providing insight into their total financial picture and empowering customers to make informed financial decisions.
Features include multi-factor authentication for additional security, card swap for easily updating your preferred payment card, and multiple online service providers and financial tools, a robust personal financial management tool providing customers the ability to categorize expenses and visualize their cash flow and net worth by linking external accounts. Customers can now manage their total financial picture in one place. The new platform also enables us to deliver a more personalized customer experience with the ability to target relevant communications to authenticated customers during the banking session. We have had early success using this marketing tool to promote the new online account opening feature with Civista's digital banking and expand existing customer relationships. Launched in late September, online account opening will be a key channel for both existing customer and new customer checking acquisition and deposit growth.
During the fourth quarter of 2021, we introduced Penny, Civista's new chatbot, providing a virtual banking assistant for customers within Civista's digital banking and to all visitors to the civista.bank website. Using the power of artificial intelligence, coupled with the availability of live support, allows us to meet our customers in the channel they prefer. We also started the integration of a new loan origination system called LoanVantage that internally improves workflow from application to closing. The system should eliminate duplication and streamline work efforts across internal departments. As we look ahead in 2022, we will focus our attention on building out our strategic implementations while continuing to invest in our people, systems, and products.
We plan to accelerate our digital banking efforts so that we can deliver products and services more efficiently to our customers and to make banking with Civista as effortless as possible. A key objective in our digital transformation journey is to build customer confidence in using additional digital services with Civista to improve their financial lives, gain customer loyalty, and to establish Civista as a trusted financial provider. We will continue to build a strong corporate culture that expresses our core values, ethics, behaviors, and beliefs. This includes continuing to support and build upon our diversity, equity, and inclusion efforts. Last year marked our first full year of our Diversity, Equity, and Inclusion Council, with members consisting of employees from all departments throughout the bank.
Much of the council's efforts this past year focused on education, creating a more inclusive and diverse culture, building industry partnerships, and supporting DEI efforts in the communities that we serve. The council will help ensure that all voices are heard, valued, and embraced. By listening and respecting different perspectives, we will all gain a better understanding of one another and who we are as a company. The bank is committed to providing a welcoming, equitable environment with opportunities for engagement, employment, and business relationships. Civista and its employees continue to invest in the communities that we serve. We donate significant dollars to local schools, civic, and nonprofit organizations throughout our footprint each year. Our employees donate their time serving in leadership roles or as active volunteers at hundreds of organizations where we live and work.
We take great pride in being a community leader and in the commitment that we make to our communities. In closing, I am very pleased with our 2021 results and accomplishments. As I've stated in the past, our goal is to remain an independent community bank, and I believe we earn that independence through our actions and performance each day. I am confident that through our disciplined approach to managing Civista and our long-term focus on driving shareholder value, we will continue to produce positive results. I would now be happy to entertain any questions that you may have.
We will now begin the question -and- answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Again, if you have a question, please press star, then one. This concludes the question-and-answer session. I would like to turn the meeting back over to Mr. Miller.
May I have the election results for the election of directors, please?
I have inspected the signed proxies and ballots, and the nine nominees have received the greatest number of votes cast for election.
I declare that each of the nominees has been duly elected and qualified as a director for the coming year. May I have the voting results on the issue of executive compensation?
I have inspected the signed proxies and ballots, and I can report that a majority of the votes cast have been cast in favor of the non-binding advisory resolution to approve the compensation of the corporation's named executive officers as disclosed in the proxy statement.
The proposal regarding the executive compensation has passed. May I have the voting results on the approval of the independent public accounting firm?
Yes, I have inspected the signed proxies and ballots, and I can report that a majority of the votes cast have been cast in favor of approval of the public accounting firm.
The proposal to approve BKD LLP as the corporation's independent public accounting firm for 2022 has passed. There are no other business to come at the moment, but I would like to comment. 2022 is the 35th anniversary of the formation of the holding company in 1987. I do believe I might be the last person in the room that was here when that was put together. At that time, we had three offices and $173 million in total assets. When we complete the Henry County deal, we'll have 42 offices and $3.3 billion, give or take, in assets. That's quite an accomplishment over that time period. The team here should be congratulated for everything they've done.
With no other matters to come, I would entertain a motion to adjourn.
This is Bill Ritzmann.
Oh, sorry. Go ahead, Bill. Bill, I think I got your motion. Thank you.
Okay. Thank you. This is Harry Singer. I second the motion.
Thank you, Harry. This meeting is adjourned. Thank you all.
Thank you.
Thank you.
Thank you.
Bye-bye.
Bye.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.