Form 8-K - Current report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

    Date of Report (Date of earliest event reported): October 22, 2024

   

CSB Bancorp, Inc.

(Exact name of Registrant as Specified in Its Charter)


Ohio	000-21714	34-1687530
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

91 North Clay Street P.O. Box 232
Millersburg, Ohio		44654
(Address of Principal Executive Offices)		(Zip Code)

    Registrant’s Telephone Number, Including Area Code: 330 674-9015

   

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $6.25 per share	CSBB	OTCPink

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12g-2 of the Securities Exchange Act of 1934 (§ 240.12g-2 of this chapter).

Emerging growth company ☐

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

Item 2.02. Results of Operations and Financial Condition.

On October 22, 2024, CSB Bancorp, Inc. issued a news release announcing its earnings for the quarter ended September 30, 2024. A copy of this news release and related financial tables are furnished herein as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

    99.1

    News release and Quarterly Report for CSB Bancorp, Inc. for the quarter ended September 30, 2024.

    104

    Cover Page Interactive Data File (embedded  within the Inline XBRL document).

SIGNATURES

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 hereunto duly authorized.


			CSB Bancorp, Inc.

Date:	October 22, 2024	By:	/s/ Paula J. Meiler
			Paula J. Meiler Senior Vice President and Chief Financial Officer

Exhibit 99.1

CSB BANCORP, INC. REPORTS THIRD QUARTER EARNINGS

Third Quarter Highlights


	Quarter Ended September 30, 2024			Quarter Ended September 30, 2023
Diluted earnings per share	$	1.18		$	1.30
Net Income	$	3,145,000		$	3,481,000
Return on average common equity		11.14	%		13.63	%
Return on average assets		1.05	%		1.19	%

Millersburg, Ohio – October 24, 2024 – CSB Bancorp, Inc. (OTC Pink: CSBB) today announced third quarter 2024 net income of $3,145,000, or $1.18 per basic and diluted share, as compared to $3,481,000, or $1.30 per basic and diluted share, for the same period in 2023. For the nine-month period ended September 30, 2024 net income totaled $7,693,000 compared to $11,059,000 for the same period last year, a decrease of 30%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 11.14% and 1.05%, respectively, compared with 13.63% and 1.19% for the third quarter of 2023. For the nine-month period ended September 30, 2024 ROE and ROA were 9.30% and 0.88% as compared to 14.85% and 1.28% for the comparable period in 2023.

Eddie Steiner, President and CEO stated, “Local economic conditions remain stable with continued low unemployment. Loan demand has been steady, with signs of increasing borrower appetite as interest rates decline. Total revenue is 2% above the prior year’s nine months and net revenue before provision for credit loss and taxes is 1% ahead on a year to date basis. Margins and efficiency are holding very close to prior year levels, even with higher rates paid on deposits and moderate inflation within operating costs. Overall quality within the loan portfolio remains acceptable, and shareholders’ equity and book value per share have increased 7% year to date.”

Pre-Provision Net Revenue (“PPNR”) (a non-GAAP measure) totaled $4.60 million during the quarter, an increase of $93 thousand, or 2%, from the prior year’s third quarter. Net interest income increased $377 thousand, or 4%, noninterest income increased $104 thousand, or 6%, and noninterest expense rose $388 thousand, or 6%, in the third quarter of 2024 compared to the same period in 2023.

Provision for credit loss expense for the quarter increased $523 thousand from third quarter 2023 and $4.5 million for the comparable nine-month period. As previously identified, while continuing to pursue liquidation of a commercial lending relationship originally totaling $6.4 million, the credit was charged down in third quarter 2024 by the previously held specific reserve of $4.1 million. The court appointed receiver has obtained auction values of the premises and equipment in possession and the bank continues to move through the court system to schedule liquidation of the assets or sale of company.

The allowance for expected credit losses on loans amounted to $7.2 million, or 1.00% of total loans, on September 30, 2024, as compared to $6.7 million or 0.98% of total loans on September 30, 2023. The allowance for credit losses on off-balance sheet commitments on September 30, 2024 was $532 thousand, as compared to a September 30, 2023 balance of $492 thousand. CSB recorded no allowance for credit losses related to AFS or HTM debt securities as there is a zero loss expectation on these securities.

Loan interest income including fees increased $1.4 million, or 15%, during third quarter 2024 as compared to the same quarter in 2023. The increase was almost evenly divided between volume and rate increases with a $48 million increase in average loan volume and a 41bp increase in quarter over prior quarter yield. Securities interest

income decreased $142 thousand, or 7%, during the third quarter 2024 compared to the same quarter 2023 as the Company continues to deploy cash flow from investments into loan originations. Loan yields for third quarter 2024 averaged 5.80%, an increase of 41 basis points from the 2023 third quarter average of 5.39%, while overnight funds and securities yields for third quarter 2024 averaged 5.41% and 2.17%, respectively, compared to 5.45% and 2.11% in the third quarter 2023.

Interest expense rose $1.1 million, or 38%, during third quarter 2024 as compared to third quarter 2023. The increase follows a period of rapid interest rate increases spurred by the Federal Reserve during March 2022 through July 2023, followed by competitive pressures from banks and others to secure adequate funding. The cost to fund gross earning assets for the third quarter 2024 was 1.40% as compared to 1.04% for the third quarter of 2023.

The fully-taxable equivalent (“FTE”) (a non-GAAP measure) net interest margin was 3.26% compared to 3.21% for the third quarter 2023. Compared to the 2023 third quarter, FTE net interest income increased $377 thousand, or 4%, reflecting increasing interest income with a $31 million increase in average earning assets as well as a 42 bp increase in the yield on assets. The higher interest rate environment coupled with the continued mix shift into loans from securities primarily drove the increase in earnings from assets, which was partially offset by higher average interest-bearing liabilities and a 48 bp higher cost of funds. Tax equivalency effect on net interest margin was 0.01% in third quarter 2024 and 2023.

Noninterest income increased $104 thousand, or 6%, compared to third quarter of 2023. The increase was primarily the result of a $59 thousand increase in gain on sale of mortgage loans to the secondary market, a $28 thousand increase in the unrealized gain or loss on equity securities, a $24 thousand increase in earnings on bank owned life insurance, and a $15 thousand increase in trust and brokerage fees. Offsetting decreases were recognized in service charges related to deposit overdraft fees and credit card fees.

Noninterest expense increased $388 thousand, or 6%, from third quarter 2023. Salary and employee benefit costs increased $227 thousand, or 7%, compared to the prior year quarter with increases in base salary, insurance, and social security taxes. Marketing and public relation costs increased $38 thousand, or 31%, with increases in community related activities. Professional and directors’ fees increased $25 thousand, or 7%, state financial institutions tax increased $24 thousand, or 13%, due to the increase in capital. Debit card expenses increased $7 thousand, or 4%, primarily with increases in processing. Software expense increased $13 thousand, or 3%. Equipment expense increased $25 thousand, or 13%, with increasing costs of maintenance contracts and repairs. The Company’s third quarter efficiency ratio increased to 58.2% compared to 57.0% in the prior year.

Federal income tax expense was $756 thousand in the 2024 third quarter compared to $850 thousand in the 2023 third quarter. The effective tax rates for the 2024 and 2023 third quarters were 19% and 20%, respectively.

Average earning assets for the 2024 third quarter increased $31 million, or 3%, from the year-ago quarter, primarily reflecting a $48 million, or 7%, increase in average loans, a $36 million, or 10%, decrease in average securities, and a $19 million, or 50%, increase in interest-earning deposits in other banks, held mainly at the Federal Reserve Bank.

Average commercial loan balances for the quarter, including commercial real estate, increased $36 million, or 8%, from prior year levels, as construction loans were drawn, and borrowers used term loans to fund equipment and other purchases. Average residential mortgage balances increased $10 million, or 6%, above the prior year’s quarter as borrowers have been favoring adjustable-rate mortgages during this period of higher interest rates. The bank does not sell adjustable-rate mortgages to the secondary market. Home equity lines of credit increased $3 million from the prior year’s quarter as balances were drawn for expenses and to maintain the low interest rate on the first mortgage. Average consumer credit balances decreased $839 thousand, or 5%, versus the same quarter of the prior year. Commercial loan demand softened to somewhat muted levels during third quarter, with households and businesses alike preferring to limit borrowing until the election provides some clarity as to tax rates and inflation.

Nonperforming assets were $3.4 million, or 0.47%, of total loans on September 30, 2024, compared to $260 thousand, or 0.04% of total loans, a year ago. The identified commercial relationship mentioned above accounts for $2.8 million of the $3.4 million total nonperforming loans at September 30, 2024. Delinquent loan balances as of September 30, 2024, increased to 0.59% of total loans as compared to 0.23% on September 30, 2023. Net loan charge-offs recognized during third quarter 2024 were $4 million, or 2.2% of average loans annualized, compared to third quarter 2023 net loan recoveries of $119 thousand.

Average deposit balances increased on a quarter over prior year quarter comparison by $28 million, or 3%. For the third quarter 2024, the average cost of deposits amounted to 1.48%, as compared to 1.08% for the third quarter 2023. Third quarter 2024 increases in average deposit balances over the prior year quarter included money market accounts of $28 million and time deposits of $62 million. Noninterest-bearing accounts decreased $22 million from the prior year’s third quarter while savings and interest-bearing demand accounts declined $40 million. The average balance of short-term borrowings, which are customer repurchase agreements, decreased during the third quarter of 2024 by $9 million, or 28%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $115 million on September 30, 2024, with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 9.43% for the quarter ended September 30, 2024, and 8.72% for the quarter ended September 30, 2023. The Company declared a third quarter dividend of $0.40 per share, producing an annualized yield of 4.2% based on September 30, 2024 closing price of $38.50.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1.2 billion as of September 30, 2024. CSB provides a complete range of banking and other financial services to consumers and businesses through its wholly owned subsidiary, The Commercial and Savings Bank, with sixteen banking centers in Holmes, Wayne, Tuscarawas, and Stark counties and Trust offices located in Millersburg, North Canton, and Wooster, Ohio. A loan production office was opened in Medina, Ohio on March 20, 2024.

Forward-Looking Statement

This release contains forward-looking statements relating to present or future trends or factors affecting the banking industry, and specifically the financial condition and results of operations, including without limitation, statements relating to the earnings outlook of the Company, as well as its operations, markets, and products. Actual results could differ materially from those indicated. Among the important factors that could cause results to differ materially are interest rate changes, softening in the economy, which could materially impact credit quality trends and the ability to generate loans, changes in the mix of the Company’s business, competitive pressures, changes in accounting, tax or regulatory practices or requirements and those risk factors detailed in the Company’s periodic reports and registration statements filed with the Securities and Exchange Commission. The Company undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release. See the non-GAAP disclosures at the end of this release for a reconciliation of GAAP and non-GAAP measures.

Contact Information:

Paula J. Meiler, SVP & CFO

330.763.2873

paula.meiler@csb1.com

CSB BANCORP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS


(Unaudited)		Quarters
(Dollars in thousands, except per share data)		2024			2024			2024			2023				2023				2024			2023
EARNINGS		3rd Qtr			2nd Qtr			1st Qtr			4th Qtr				3rd Qtr				9 months			9 months
Net interest income FTE (a)	$		9,248	$		8,959	$		9,190	$		9,377		$		8,871		$		27,397	$		26,897
Provision for credit loss expense			700			2,889			1,152			156				177				4,741			286
Noninterest income			1,809			1,741			1,772			1,678				1,705				5,322			5,066
Noninterest expenses			6,422			5,814			6,142			6,258				6,034				18,378			17,802
FTE adjustment(a)			34			34			42			32				34				110			101
Net income			3,145			1,615			2,933			3,697				3,481				7,693			11,059
Basic and Diluted earnings per share			1.18			0.61			1.10			1.38				1.30				2.89			4.12

PERFORMANCE RATIOS
Return on average assets (ROA), annualized			1.05	%		0.56	%		1.02	%		1.25		%		1.19		%		0.88	%		1.28		%
Return on average common equity (ROE), annualized			11.14			5.89			10.84			14.22				13.63				9.30			14.85
Net interest margin FTE(a)			3.26			3.28			3.37			3.36				3.21				3.30			3.30
Efficiency ratio			58.17			54.22			56.00			56.67				56.99				56.15			55.70
Number of full-time equivalent employees			175			173			172			168				178

MARKET DATA
Book value per common share	$		43.25	$		41.43	$		41.11	$		40.43		$		37.96
Period-end common share market value			38.50			39.00			40.00			37.54				37.75
Market as a % of book			89.02	%		94.14	%		97.30	%		92.85		%		99.45		%
Price-to-earnings ratio			9.02			8.88			7.78			6.81				6.85
Average basic common shares outstanding			2,661,474			2,664,485			2,665,277			2,671,086				2,675,967				2,663,737			2,682,872
Average diluted common shares outstanding			2,661,474			2,664,485			2,665,277			2,671,086				2,675,967				2,663,737			2,682,872
Period end common shares outstanding			2,659,324			2,663,924			2,664,683			2,669,938				2,671,313
Common stock market capitalization	$		102,384	$		103,893	$		106,587	$		100,229		$		100,842

ASSET QUALITY
Gross charge-offs	$		4,095	$		274	$		88	$		15		$		43		$		4,457	$		97
Net (recoveries) charge-offs			4,008			246			74			(5	)			(119	)			4,328			(125	)
Allowance for credit losses			7,224			10,587			7,136			6,607				6,691
Nonperforming assets (NPAs)			3,371			6,683			361			396				260
Net charge-off (recovery) / average loans ratio			2.20	%		0.14	%		0.04	%		0.00		%		(0.07	)	%		0.81	%		(0.03	)	%
Allowance for credit losses / period-end loans			1.00			1.47			1.00			0.94				0.98
NPAs/loans and other real estate			0.47			0.93			0.05			0.06				0.04
Allowance for credit losses / nonperforming loans			214			158			1,979			1,667				2,576

CAPITAL & LIQUIDITY
Period-end tangible equity to assets(b)			9.16	%		9.09	%		9.10	%		8.79		%		8.39		%
Average equity to assets			9.43			9.49			9.38			8.80				8.72
Average equity to loans			15.54			15.37			15.43			14.87				15.00
Average loans to deposits			68.99			70.54			69.78			67.47				66.20

AVERAGE BALANCES
Assets	$		1,191,037	$		1,161,533	$		1,160,661	$		1,172,324		$		1,162,029		$		1,171,156	$		1,153,549
Earning assets			1,127,405			1,097,706			1,097,704			1,107,002				1,096,679				1,107,678			1,088,525
Loans			723,129			717,105			705,294			693,779				675,283				715,205			657,698
Deposits			1,048,214			1,016,569			1,010,745			1,028,207				1,020,135				1,025,260			1,014,537
Shareholders' equity			112,352			110,219			108,837			103,164				101,294				110,476			99,538

ENDING BALANCES
Assets	$		1,209,181	$		1,167,315	$		1,156,245	$		1,178,689		$		1,156,598
Earning assets			1,134,786			1,104,404			1,097,703			1,109,171				1,087,591
Loans			719,602			721,916			710,822			701,404				680,949
Deposits			1,070,531			1,023,835			1,010,115			1,027,427				1,018,075
Shareholders' equity			115,008			110,368			109,555			107,939				101,410

Notes:

(a) - Net interest income on a fully-taxable equivalent ("FTE") basis, restates interest on tax-exempt securities and loans as if such interest were subject to federal income tax at the statutory rate. Net interest income on an FTE basis differs from net interest income under U.S. Generally Accepted Accounting Principles, and is considered a non-GAAP measure.

(b) - Tangible equity is a non-GAAP measure, which is shareholders' equity net of goodwill.

CSB BANCORP, INC.

CONSOLIDATED BALANCE SHEETS


(Unaudited)		September 30,				September 30,
(Dollars in thousands, except per share data)		2024				2023
ASSETS
Cash and cash equivalents
Cash and due from banks	$		26,108		$		20,409
Interest-bearing deposits with banks			69,535				29,000
Total cash and cash equivalents			95,643				49,409
Securities
Available-for-sale, at fair-value			131,718				145,330
Held-to-maturity			211,655				230,505
Equity securities			247				246
Restricted stock, at cost			1,520				1,561
Total securities			345,140				377,642

Loans held for sale			509				-
Loans			719,602				680,949
Less allowance for credit losses			7,224				6,691
Net loans			712,378				674,258

Premises and equipment, net			13,994				13,105
Goodwill			4,728				4,728
Bank owned life insurance			27,996				25,229
Accrued interest receivable and other assets			8,793				12,227
TOTAL ASSETS	$		1,209,181		$		1,156,598

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$		286,525		$		300,018
Interest-bearing			784,006				718,057
Total deposits			1,070,531				1,018,075

Short-term borrowings			19,224				30,734
Other borrowings			1,296				1,808
Accrued interest payable and other liabilities			3,122				4,571
TOTAL LIABILITIES			1,094,173				1,055,188
SHAREHOLDERS' EQUITY
Common stock, $6.25 par value. Authorized 9,000,000 shares;
issued 2,980,602 shares in 2024 and 2023			18,629				18,629
Additional paid-in capital			9,815				9,815
Retained earnings			101,847				94,614
Treasury stock at cost - 321,278 shares in 2024
and 309,289 shares in 2023			(7,929	)			(7,481	)
Accumulated other comprehensive loss			(7,354	)			(14,167	)
TOTAL SHAREHOLDERS' EQUITY			115,008				101,410
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$		1,209,181		$		1,156,598

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME


		Quarters ended							Nine months ended
(Unaudited)		September 30,							September 30,
(Dollars in thousands, except per share data)		2024			2023				2024				2023
Interest and dividend income:
Loans, including fees	$		10,531	$		9,175		$		30,959		$		25,855
Taxable securities			1,782			1,910				5,489				5,867
Nontaxable securities			88			102				264				305
Other			789			531				1,537				1,520
Total interest and dividend income			13,190			11,718				38,249				33,547
Interest expense:
Deposits			3,898			2,772				10,687				6,484
Other			78			109				275				267
Total interest expense			3,976			2,881				10,962				6,751
Net interest income			9,214			8,837				27,287				26,796
Provision for credit loss expense			700			177				4,741				286
Net interest income, after provision
for credit loss expense			8,514			8,660				22,546				26,510
Noninterest income
Service charges on deposit accounts			301			332				872				924
Trust services			274			259				951				769
Debit card interchange fees			535			525				1,570				1,579
Credit card fees			162			166				484				535
Earnings on bank owned life insurance			203			179				585				520
Gain on sale of loans			106			47				215				106
Unrealized gain (loss) on equity securities			17			(11	)			(12	)			2
Other			211			208				657				631
Total noninterest income			1,809			1,705				5,322				5,066
Noninterest expenses
Salaries and employee benefits			3,656			3,429				10,181				10,112
Occupancy expense			295			290				872				856
Equipment expense			224			199				649				595
Professional and director fees			391			366				1,160				1,073
Software expense			421			408				1,263				1,228
Marketing and public relations			162			124				432				383
Debit card expense			186			179				568				494
Financial institutions tax			216			192				648				576
FDIC insurance expense			132			131				396				380
Other expenses			739			716				2,209				2,105
Total noninterest expenses			6,422			6,034				18,378				17,802
Income before income taxes			3,901			4,331				9,490				13,774
Federal income tax provision			756			850				1,797				2,715
Net income	$		3,145	$		3,481		$		7,693		$		11,059
Net income per share:
Basic and diluted	$		1.18	$		1.30		$		2.89		$		4.12

CSB BANCORP, INC.

NON-GAAP DISCLOSURES

NET INTEREST INCOME, FULLY-TAXABLE EQUIVALENT


		Quarters ended
(Unaudited)		September 30,
(Dollars in thousands)		2024				2023
Net interest income	$		9,214		$		8,837
Taxable equivalent adjustment1			34				34
Net interest income, FTE	$		9,248		$		8,871
Net interest margin			3.25	%			3.20	%
Taxable equivalent adjustment1			0.01				0.01
Net interest margin, FTE			3.26	%			3.21	%

1 Net interest income on a fully-taxable equivalent ("FTE") basis, restates interest on tax-exempt securities and loans as if such interest were subject to federal income tax at the statutory rate. Net interest income on an FTE basis differs from net interest income under U.S. Generally Accepted Accounting Principles, and is considered a non-GAAP measure.

PRE-PROVISION NET REVENUE


		Quarters ended
(Unaudited)		September 30,
(Dollars in thousands)		2024			2023
Pre-Provision Net Revenue (PPNR)
Net interest income	$		9,214	$		8,837
Total noninterest income			1,809			1,705
Total revenue			11,023			10,542

Less: Noninterest expense			6,422			6,034

PPNR	$		4,601	$		4,508

TANGIBLE EQUITY


(Unaudited)		Sept 30,			Sept 30,
(Dollars in thousands)		2024			2023
Total Shareholders' Equity	$		115,008	$		101,410
Less: Goodwill			4,728			4,728
Tangible Shareholders' Equity	$		110,280	$		96,682

Document And Entity Information	Oct. 22, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 22, 2024
Entity Registrant Name	CSB Bancorp, Inc.
Entity Central Index Key	0000880417
Entity Emerging Growth Company	false
Entity File Number	000-21714
Entity Incorporation, State or Country Code	OH
Entity Tax Identification Number	34-1687530
Entity Address, Address Line One	91 North Clay Street
Entity Address, Address Line Two	P.O. Box 232
Entity Address, City or Town	Millersburg
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	44654
City Area Code	330
Local Phone Number	674-9015
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $6.25 per share
Trading Symbol	CSBB
Security Exchange Name	NONE