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CSB Bancorp, Inc. - Quarter Report: 2020 June (Form 10-Q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 0-21714

 

CSB Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Ohio

34-1687530

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

91 North Clay Street, P.O. Box 232

Millersburg, OH

44654

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (330) 674-9015

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Shares, $6.25 par value

 

CSBB

 

OTCPink

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, 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.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

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. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes      No  

As of August 1, 2020, the registrant had 2,742,350 shares of common stock, $6.25 par value per share, outstanding.

 

 

 


 

CSB BANCORP, INC.

FORM 10-Q

QUARTER ENDED JUNE 30, 2020

Table of Contents

 

 

 

Part I - Financial Information

 

 

 

Page

ITEM 1

FINANCIAL STATEMENTS (Unaudited)

3

 

Consolidated Balance Sheets

3

 

Consolidated Statements of Income

4

 

Consolidated Statements of Comprehensive Income

5

 

Consolidated Statements of Changes in Shareholders' Equity

6

 

Condensed Consolidated Statements of Cash Flows

7

 

Notes to Consolidated Financial Statements

8

ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

27

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

34

ITEM 4

CONTROLS AND PROCEDURES

35

 

 

 

 

Part II - Other Information

 

ITEM1

Legal Proceedings

36

ITEM1A

Risk Factors

36

ITEM2

Unregistered Sales of Equity Securities and Use of Proceeds

36

ITEM3

Defaults upon Senior Securities

36

ITEM4

Mine Safety Disclosures

36

ITEM5

Other Information

36

ITEM6

Exhibits

37

 

Signatures

38

 

2


 

CSB BANCORP, INC.

PART I – FINANCIAL INFORMATION

ITEM 1. – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

June 30,

 

 

December 31,

 

(Dollars in thousands)

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

17,259

 

 

$

17,648

 

Interest-earning deposits in other banks

 

 

156,566

 

 

 

84,369

 

Total cash and cash equivalents

 

 

173,825

 

 

 

102,017

 

Securities

 

 

 

 

 

 

 

 

Available-for-sale, at fair value

 

 

103,202

 

 

 

112,146

 

Held-to-maturity (fair value 2020-$11,120; 2019-13,950)

 

 

10,871

 

 

 

13,869

 

Equity securities

 

 

83

 

 

 

92

 

Restricted stock, at cost

 

 

4,614

 

 

 

4,614

 

Total securities

 

 

118,770

 

 

 

130,721

 

Loans held for sale

 

 

1,678

 

 

 

622

 

Loans

 

 

636,799

 

 

 

551,633

 

Less allowance for loan losses

 

 

7,835

 

 

 

7,017

 

Net loans

 

 

628,964

 

 

 

544,616

 

Premises and equipment, net

 

 

12,593

 

 

 

12,040

 

Core deposit intangible

 

 

74

 

 

 

104

 

Goodwill

 

 

4,728

 

 

 

4,728

 

Bank-owned life insurance

 

 

19,153

 

 

 

18,894

 

Accrued interest receivable and other assets

 

 

5,394

 

 

 

4,941

 

TOTAL ASSETS

 

$

965,179

 

 

$

818,683

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

254,868

 

 

$

197,780

 

Interest-bearing

 

 

561,093

 

 

 

485,766

 

Total deposits

 

 

815,961

 

 

 

683,546

 

Short-term borrowings

 

 

43,865

 

 

 

38,889

 

Other borrowings

 

 

9,865

 

 

 

6,330

 

Accrued interest payable and other liabilities

 

 

5,521

 

 

 

4,442

 

Total liabilities

 

 

875,212

 

 

 

733,207

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Common stock, $6.25 par value.  Authorized 9,000,000 shares; issued

   2,980,602 shares; outstanding 2,742,350 shares 2020 and 2019

 

 

18,629

 

 

 

18,629

 

Additional paid-in capital

 

 

9,815

 

 

 

9,815

 

Retained earnings

 

 

65,293

 

 

 

61,740

 

Treasury stock at cost:  238,252 shares 2020 and 2019

 

 

(4,780

)

 

 

(4,780

)

Accumulated other comprehensive income

 

 

1,010

 

 

 

72

 

Total shareholders' equity

 

 

89,967

 

 

 

85,476

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

965,179

 

 

$

818,683

 

 

See notes to unaudited consolidated financial statements.

3


 

 

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(Dollars in thousands, except per share data)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

7,105

 

 

$

7,185

 

 

$

13,955

 

 

$

14,257

 

Taxable securities

 

 

470

 

 

 

584

 

 

 

1,090

 

 

 

1,171

 

Nontaxable securities

 

 

125

 

 

 

134

 

 

 

233

 

 

 

268

 

Other

 

 

31

 

 

 

218

 

 

 

270

 

 

 

393

 

Total interest and dividend income

 

 

7,731

 

 

 

8,121

 

 

 

15,548

 

 

 

16,089

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

673

 

 

 

921

 

 

 

1,504

 

 

 

1,746

 

Short-term borrowings

 

 

16

 

 

 

93

 

 

 

60

 

 

 

186

 

Other borrowings

 

 

30

 

 

 

36

 

 

 

56

 

 

 

75

 

Total interest expense

 

 

719

 

 

 

1,050

 

 

 

1,620

 

 

 

2,007

 

NET INTEREST INCOME

 

 

7,012

 

 

 

7,071

 

 

 

13,928

 

 

 

14,082

 

PROVISION FOR LOAN LOSSES

 

 

717

 

 

 

285

 

 

 

895

 

 

 

570

 

Net interest income, after provision for loan losses

 

 

6,295

 

 

 

6,786

 

 

 

13,033

 

 

 

13,512

 

NON INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

211

 

 

 

313

 

 

 

501

 

 

 

605

 

Trust services

 

 

196

 

 

 

212

 

 

 

427

 

 

 

436

 

Debit card interchange fees

 

 

400

 

 

 

369

 

 

 

776

 

 

 

716

 

Gain on sale of loans, net

 

 

508

 

 

 

76

 

 

 

622

 

 

 

155

 

Earnings on bank owned life insurance

 

 

131

 

 

 

122

 

 

 

259

 

 

 

205

 

Unrealized gain or (loss) on equity securities, net

 

 

4

 

 

 

(2

)

 

 

(9

)

 

 

4

 

Other income

 

 

191

 

 

 

223

 

 

 

408

 

 

 

416

 

Total noninterest income

 

 

1,641

 

 

 

1,313

 

 

 

2,984

 

 

 

2,537

 

NON INTEREST EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

2,676

 

 

 

2,915

 

 

 

5,644

 

 

 

5,757

 

Occupancy expense

 

 

244

 

 

 

205

 

 

 

464

 

 

 

409

 

Equipment expense

 

 

198

 

 

 

143

 

 

 

333

 

 

 

280

 

Professional and director fees

 

 

282

 

 

 

308

 

 

 

611

 

 

 

647

 

Financial institutions and franchise tax expense

 

 

171

 

 

 

153

 

 

 

342

 

 

 

306

 

Marketing and public relations

 

 

65

 

 

 

139

 

 

 

193

 

 

 

256

 

Software expense

 

 

259

 

 

 

232

 

 

 

485

 

 

 

450

 

Debit card expense

 

 

146

 

 

 

132

 

 

 

286

 

 

 

259

 

Amortization of intangible assets

 

 

15

 

 

 

16

 

 

 

30

 

 

 

32

 

FDIC insurance expense

 

 

12

 

 

 

48

 

 

 

12

 

 

 

98

 

Other expenses

 

 

641

 

 

 

609

 

 

 

1,316

 

 

 

1,197

 

Total noninterest expenses

 

 

4,709

 

 

 

4,900

 

 

 

9,716

 

 

 

9,691

 

Income before income taxes

 

 

3,227

 

 

 

3,199

 

 

 

6,301

 

 

 

6,358

 

FEDERAL INCOME TAX PROVISION

 

 

621

 

 

 

613

 

 

 

1,212

 

 

 

1,232

 

NET INCOME

 

$

2,606

 

 

$

2,586

 

 

$

5,089

 

 

$

5,126

 

Basic and diluted net earnings per share

 

$

0.95

 

 

$

0.94

 

 

$

1.86

 

 

$

1.87

 

See notes to unaudited consolidated financial statements

4


 

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(Dollars in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

2,606

 

 

$

2,586

 

 

$

5,089

 

 

$

5,126

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains arising during the period

 

 

617

 

 

 

762

 

 

 

1,157

 

 

 

1,511

 

Amortization of discount on securities transferred to held-to-maturity

 

 

16

 

 

 

15

 

 

 

30

 

 

 

30

 

Income tax effect

 

 

(133

)

 

 

(163

)

 

 

(249

)

 

 

(323

)

Other comprehensive income

 

 

500

 

 

 

614

 

 

 

938

 

 

 

1,218

 

Total comprehensive income

 

$

3,106

 

 

$

3,200

 

 

$

6,027

 

 

$

6,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to unaudited consolidated financial statements.

5


 

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

 

(Dollars in thousands)

 

Common

stock

 

 

Additional

paid-in

capital

 

 

Retained

earnings

 

 

Treasury

stock

 

 

Accumulated

other

comprehensive

income (loss)

 

 

Total

 

Three Months Ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

18,629

 

 

$

9,815

 

 

$

63,455

 

 

$

(4,780

)

 

$

510

 

 

$

87,629

 

Net income

 

 

 

 

 

 

 

 

2,606

 

 

 

 

 

 

 

 

 

2,606

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

500

 

 

 

500

 

Cash dividends declared, $0.28 per share

 

 

 

 

 

 

 

 

(768

)

 

 

 

 

 

 

 

 

(768

)

Balance, end of period

 

$

18,629

 

 

$

9,815

 

 

$

65,293

 

 

$

(4,780

)

 

$

1,010

 

 

$

89,967

 

Six Months Ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

18,629

 

 

$

9,815

 

 

$

61,740

 

 

$

(4,780

)

 

$

72

 

 

$

85,476

 

Net income

 

 

 

 

 

 

 

 

5,089

 

 

 

 

 

 

 

 

 

5,089

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

938

 

 

 

938

 

Cash dividends declared, $0.56 per share

 

 

 

 

 

 

 

 

(1,536

)

 

 

 

 

 

 

 

 

(1,536

)

Balance, end of period

 

$

18,629

 

 

$

9,815

 

 

$

65,293

 

 

$

(4,780

)

 

$

1,010

 

 

$

89,967

 

Three Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

18,629

 

 

$

9,815

 

 

$

56,115

 

 

$

(4,784

)

 

$

(808

)

 

$

78,967

 

Net income

 

 

 

 

 

 

 

 

2,586

 

 

 

 

 

 

 

 

 

2,586

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

614

 

 

 

614

 

Issuance of 108 treasury shares

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Cash dividends declared, $0.26 per share

 

 

 

 

 

 

 

 

(713

)

 

 

 

 

 

 

 

 

(713

)

Balance, end of period

 

$

18,629

 

 

$

9,815

 

 

$

57,988

 

 

$

(4,780

)

 

$

(194

)

 

$

81,458

 

Six Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

18,629

 

 

$

9,815

 

 

$

54,288

 

 

$

(4,784

)

 

$

(1,412

)

 

$

76,536

 

Net income

 

 

 

 

 

 

 

 

5,126

 

 

 

 

 

 

 

 

 

5,126

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,218

 

 

 

1,218

 

Issuance of 108 treasury shares

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Cash dividends declared, $0.52 per share

 

 

 

 

 

 

 

 

(1,426

)

 

 

 

 

 

 

 

 

(1,426

)

Balance, end of period

 

$

18,629

 

 

$

9,815

 

 

$

57,988

 

 

$

(4,780

)

 

$

(194

)

 

$

81,458

 

 

See notes to unaudited consolidated financial statements.

6


 

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended

June 30,

 

(Dollars in thousands)

 

2020

 

 

2019

 

NET CASH FROM OPERATING ACTIVITIES

 

$

7,635

 

 

$

4,500

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Securities:

 

 

 

 

 

 

 

 

Proceeds from repayments, available-for-sale

 

 

25,028

 

 

 

6,268

 

Proceeds from repayments, held-to-maturity

 

 

6,437

 

 

 

1,045

 

Purchases, available-for-sale

 

 

(15,272

)

 

 

(5,705

)

Purchases, held-to-maturity

 

 

(3,425

)

 

 

 

Loan originations, net of repayments

 

 

(87,808

)

 

 

(1,587

)

Proceeds from sale of equipment

 

 

24

 

 

 

 

Property, equipment, and software acquisitions

 

 

(969

)

 

 

(2,039

)

Purchase of bank-owned life insurance

 

 

 

 

 

(3,000

)

Net cash used in investing activities

 

 

(75,985

)

 

 

(5,018

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net change in deposits

 

 

132,415

 

 

 

16,830

 

Net change in short-term borrowings

 

 

4,976

 

 

 

(1,941

)

Proceeds from other borrowings

 

 

5,000

 

 

 

 

Repayment of other borrowings

 

 

(1,465

)

 

 

(1,949

)

Cash dividends paid

 

 

(768

)

 

 

(713

)

Issuance of treasury stock

 

 

 

 

 

4

 

Net cash provided by financing activities

 

 

140,158

 

 

 

12,231

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

 

71,808

 

 

 

11,713

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

102,017

 

 

 

45,564

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

173,825

 

 

$

57,277

 

SUPPLEMENTAL DISCLOSURES

 

 

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

 

 

Interest

 

$

1,645

 

 

$

1,969

 

Income taxes

 

 

 

 

 

1,475

 

Noncash financing activities:

 

 

 

 

 

 

 

 

Dividends declared

 

 

768

 

 

 

713

 

Lease adoption:

 

 

 

 

 

 

 

 

Right of use lease asset

 

 

 

 

 

450

 

Lease liability

 

 

 

 

 

424

 

 

See notes to unaudited consolidated financial statements.

 

7


 

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements include the accounts of CSB Bancorp, Inc. and its wholly-owned subsidiaries, The Commercial and Savings Bank (the “Bank”) and CSB Investment Services, LLC (together referred to as the “Company” or “CSB”).  All significant intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated financial statements have been prepared without audit.  In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the Company’s financial position at June 30, 2020, and the results of operations and changes in cash flows for the periods presented have been made.

Certain information and footnote disclosures typically included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been omitted.  The Annual Report for CSB for the year ended December 31, 2019, contains Consolidated Financial Statements and related footnote disclosures, which should be read in conjunction with the accompanying condensed Consolidated Financial Statements.  The results of operations for the periods ended June 30, 2020 are not necessarily indicative of the operating results for the full year or any future interim period.

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

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

In preparing the Consolidated Financial Statements, in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Balance Sheets and reported amounts of revenues and expenses during each reporting period. Actual results could differ from those estimates. The most significant estimates susceptible to change in the near term relate to management’s determination of the allowance for loan losses and the fair value of financial instruments.

REVENUE RECOGNITION

Management has determined the primary sources of revenue emanating from interest and dividend income on loans and securities along with noninterest revenue resulting from investment security gains, loan servicing, gains on the sale of loans, commitment fees, fees from financial guarantees, certain credit cards fees, and income on bank-owned life insurance are not within the scope of ASC 606. These sources of revenue comprise 89% of the total revenue of the Company. Services within the scope of ASC 606 include income from fiduciary activities, brokerage fees, service charges on deposit accounts, other fee income, ATM fees, interchange fees, and gain on sale of OREO, net. For these accounts, fees are related to specific customer transactions, or attributable to specific performance obligations of the Bank where revenue is recognized at a defined point in time upon completion of the requested service/transaction.  

8


 

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

ASU 2016-13 - Financial Instruments - Credit Losses. The Update and all subsequent ASU’s that modified Topic 326, requires that financial assets be presented at the net amount expected to be collected (i.e. net of expected credit losses), eliminating the probable recognition threshold for credit losses on financial assets measured at amortized cost. The measurement of expected credit losses should be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. We expect the Update will result in an increase in the allowance for credit losses for the estimated life of the financial asset, including an estimate for debt securities. The amount of any increase will be impacted by the portfolio composition and quality at the adoption date, as well as economic conditions and forecasts at that time. A cumulative-effect adjustment to retained earnings is required as of the beginning of the year of adoption. The Company expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements. In November 2019, the FASB deferred the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASU’s.  

ASU 2017-04 - Simplifying the Test for Goodwill Impairment. The Update, and all subsequent ASU’s, simplifies the goodwill impairment test.  Under the new guidance, Step 2 of the goodwill impairment process that requires an entity to determine the implied fair value of its goodwill by assigning fair value to all its assets and liabilities is eliminated. Instead, the entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new guidance is effective for annual and interim goodwill tests performed in fiscal years beginning after December 15, 2019. Early adoption is permitted. In November 2019, the FASB deferred the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. This Update is not expected to have a material impact on the Company’s financial statements.

9


 

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

ASU 2018-15 - Intangibles – Goodwill and Other – Internal-Use Software. This Update addresses customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This Update is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The amendments in this Update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. In November 2019, the FASB deferred the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements. 

 

ASU 2019-12 - Income Taxes. This update simplifies the accounting for income taxes, changes the accounting for certain tax transactions, and makes minor improvements to the codification. This Update provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and provides guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized as a separate transaction. The Update also changes current guidance for making an intra-period allocation, if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and determining how to apply the income tax guidance to franchise taxes that are partially based on income. For public business entities, the amendments in this Update are effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. This update is not expected to have a significant impact on the Company’s financial statements.

ASU 2020-4 – Reference Rate Reform (Topic 848).  This update provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

 

 

10


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 2 – SECURITIES

Securities consist of the following at June 30, 2020 and December 31, 2019:

 

(Dollars in thousands)

 

Amortized

cost

 

 

Gross

unrealized

gains

 

 

Gross

unrealized

(losses)

 

 

Fair value

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury security

 

$

999

 

 

$

19

 

 

$

 

 

$

1,018

 

Mortgage-backed securities of government agencies

 

 

74,063

 

 

 

1,362

 

 

 

(211

)

 

 

75,214

 

Asset-backed securities of government agencies

 

 

895

 

 

 

 

 

 

(64

)

 

 

831

 

State and political subdivisions

 

 

18,828

 

 

 

549

 

 

 

 

 

 

19,377

 

Corporate bonds

 

 

6,988

 

 

 

56

 

 

 

(282

)

 

 

6,762

 

Total available-for-sale

 

 

101,773

 

 

 

1,986

 

 

 

(557

)

 

 

103,202

 

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities of government agencies

 

 

7,446

 

 

 

264

 

 

 

(15

)

 

 

7,695

 

State and political subdivisions

 

 

3,425

 

 

 

 

 

 

 

 

 

3,425

 

Total held-to-maturity

 

 

10,871

 

 

 

264

 

 

 

(15

)

 

 

11,120

 

Equity securities

 

 

53

 

 

 

30

 

 

 

 

 

 

83

 

Restricted stock

 

 

4,614

 

 

 

 

 

 

 

 

 

4,614

 

Total securities

 

$

117,311

 

 

$

2,280

 

 

$

(572

)

 

$

119,019

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury security

 

$

998

 

 

$

1

 

 

$

 

 

$

999

 

U.S. Government agencies

 

 

5,500

 

 

 

 

 

 

(4

)

 

 

5,496

 

Mortgage-backed securities of government agencies

 

 

75,676

 

 

 

326

 

 

 

(145

)

 

 

75,857

 

Asset-backed securities of government agencies

 

 

934

 

 

 

 

 

 

(17

)

 

 

917

 

State and political subdivisions

 

 

21,161

 

 

 

351

 

 

 

(1

)

 

 

21,511

 

Corporate bonds

 

 

7,605

 

 

 

23

 

 

 

(262

)

 

 

7,366

 

Total available-for-sale

 

 

111,874

 

 

 

701

 

 

 

(429

)

 

 

112,146

 

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agencies

 

 

4,999

 

 

 

 

 

 

(6

)

 

 

4,993

 

Mortgage-backed securities of government agencies

 

 

8,870

 

 

 

143

 

 

 

(56

)

 

 

8,957

 

Total held-to-maturity

 

 

13,869

 

 

 

143

 

 

 

(62

)

 

 

13,950

 

Equity securities

 

 

53

 

 

 

39

 

 

 

 

 

 

92

 

Restricted stock

 

 

4,614

 

 

 

 

 

 

 

 

 

4,614

 

Total securities

 

$

130,410

 

 

$

883

 

 

$

(491

)

 

$

130,802

 

 

The amortized cost and fair value of debt securities at June 30, 2020, by contractual maturity, are shown below.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

 

(Dollars in thousands)

 

Amortized cost

 

 

Fair value

 

Available-for-sale

 

 

 

 

 

 

 

 

Due in one year or less

 

$

3,679

 

 

$

3,722

 

Due after one through five years

 

 

10,258

 

 

 

10,394

 

Due after five through ten years

 

 

16,003

 

 

 

16,293

 

Due after ten years

 

 

71,833

 

 

 

72,793

 

Total debt securities available-for-sale

 

$

101,773

 

 

$

103,202

 

Held-to-maturity

 

 

 

 

 

 

 

 

Due in one year or less

 

$

3,425

 

 

$

3,425

 

Due after ten years

 

 

7,446

 

 

 

7,695

 

Total debt securities held-to-maturity

 

$

10,871

 

 

$

11,120

 

 

11


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES (CONTINUED)

 

Securities with a fair value of approximately $89.6 million and $80.3 million were pledged at June 30, 2020 and December 31, 2019, respectively, to secure public deposits, as well as other deposits and borrowings as required or permitted by law.

Restricted stock primarily consists of investments in Federal Home Loan Bank of Cincinnati (FHLB) and Federal Reserve Bank stock.  The Bank’s investment in FHLB stock amounted to approximately $4.1 million at June 30, 2020 and December 31, 2019. Federal Reserve Bank stock was $471 thousand at June 30, 2020 and December 31, 2019.

There were no proceeds from sales of securities for the six month periods ending June 30, 2020 and 2019. All gains and losses recognized on equity securities during the six month periods were unrealized.

The following table presents gross unrealized losses and fair value of securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2020 and December 31, 2019:

 

 

 

Securities in a continuous unrealized loss position

 

 

 

Less than 12 months

 

 

12 months or more

 

 

Total

 

(Dollars in thousands)

 

Gross

unrealized

losses

 

 

Fair

value

 

 

Gross

unrealized

losses

 

 

Fair

value

 

 

Gross

unrealized

losses

 

 

Fair

value

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities of government

   agencies

 

$

(197

)

 

$

21,770

 

 

$

(14

)

 

$

1,672

 

 

$

(211

)

 

$

23,442

 

Asset-backed securities of government

   agencies

 

 

 

 

 

 

 

 

(64

)

 

 

831

 

 

 

(64

)

 

 

831

 

Corporate bonds

 

 

 

 

 

 

 

 

(282

)

 

 

3,695

 

 

 

(282

)

 

 

3,695

 

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities of government

   agencies

 

 

(15

)

 

 

2,076

 

 

 

 

 

 

 

 

 

(15

)

 

 

2,076

 

Total temporarily impaired securities

 

$

(212

)

 

$

23,846

 

 

$

(360

)

 

$

6,198

 

 

$

(572

)

 

$

30,044

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agencies

 

$

 

 

$

 

 

$

(4

)

 

$

3,496

 

 

$

(4

)

 

$

3,496

 

Mortgage-backed securities of government

   agencies

 

 

(74

)

 

 

22,702

 

 

 

(71

)

 

 

8,924

 

 

 

(145

)

 

 

31,626

 

Asset-backed securities of government

   agencies

 

 

 

 

 

 

 

 

(17

)

 

 

917

 

 

 

(17

)

 

 

917

 

State and political subdivisions

 

 

 

 

 

 

 

 

(1

)

 

 

653

 

 

 

(1

)

 

 

653

 

Corporate bonds

 

 

 

 

 

 

 

 

(262

)

 

 

3,712

 

 

 

(262

)

 

 

3,712

 

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agencies

 

 

 

 

 

 

 

 

(6

)

 

 

4,993

 

 

 

(6

)

 

 

4,993

 

Mortgage-backed securities of government

   agencies

 

 

 

 

 

 

 

 

(56

)

 

 

3,009

 

 

 

(56

)

 

 

3,009

 

Total temporarily impaired securities

 

$

(74

)

 

$

22,702

 

 

$

(417

)

 

$

25,704

 

 

$

(491

)

 

$

48,406

 

 

12


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES (CONTINUED)

 

There were twenty-three securities in an unrealized loss position at June 30, 2020, nine of which were in a continuous loss position for twelve months or more.  At least quarterly, the Company conducts a comprehensive security-level impairment assessment.  The assessments are based on the nature of the securities, the extent and duration of the securities in an unrealized loss position, the extent and duration of the loss and management’s intent to sell or if it is more likely than not that management will be required to sell a security before recovery of its amortized cost basis, which may be maturity. Management believes the Company will fully recover the cost of these securities.  It does not intend to sell these securities and likely will not be required to sell them before the anticipated recovery of the remaining amortized cost basis, which may be maturity.  As a result, management concluded that these securities were not other-than-temporarily impaired at June 30, 2020.

 

 

13


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – LOANS

Loans consist of the following:

 

(Dollars in thousands)

 

June 30,

2020

 

 

December 31,

2019

 

Commercial

 

$

215,139

 

 

$

137,114

 

Commercial real estate

 

 

198,948

 

 

 

196,748

 

Residential real estate

 

 

177,799

 

 

 

174,259

 

Construction & land development

 

 

28,123

 

 

 

23,960

 

Consumer

 

 

18,851

 

 

 

19,052

 

Total loans before deferred costs

 

 

638,860

 

 

 

551,133

 

Deferred loan (fees) costs

 

 

(2,061

)

 

 

500

 

Total Loans

 

$

636,799

 

 

$

551,633

 

 

Loan Origination/Risk Management

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. The Company’s management examines current and occasionally projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers; however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans.  These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single industry. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loan

With respect to loans to developers and builders that are secured by non-owner occupied properties, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success.  Construction and land development loans are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates, and financial analysis of the developers and property owners.  Construction and land development loans are generally based upon estimates of costs and value associated with the completed project.  These estimates may be inaccurate.

14


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – LOANS (continued)

 

Construction and land development loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property, or an interim loan commitment from the Company until permanent financing is obtained.  These loans are closely monitored by on-site inspections and are considered to have higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.

The Company originates consumer loans utilizing a judgmental underwriting process.  To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed, jointly by line and staff personnel.  This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, mitigates risk.

The Company maintains an independent loan review department that reviews and validates the credit risk program on a periodic basis.  Results of these reviews are presented to management.  The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.  

Loans serviced for others approximated $96.7 million and $95.7 million at June 30, 2020 and December 31, 2019, respectively.

Paycheck Protection Program

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020 and provides over $2 trillion in economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) loan program called the Paycheck Protection Program (“PPP”). As a qualified SBA lender, the Company was automatically authorized to originate PPP loans. The PPP provides loans to small businesses who were affected by economic conditions as a result of COVID-19 to provide cash flow assistance to employers who maintain their payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19 emergency. As of June 30, 2020, the Company had 752 PPP loans with outstanding principal balances of $91.1 million. The PPP loans are 100% guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan is made as long as certain conditions are met regarding employee retention and compensation levels. PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company. PPP loans are included in the Commercial loan category with no allowance for loan losses allocated.

In accordance with the SBA terms and conditions on these PPP loans, the Company received approximately $3.2 million in fees associated with the processing of these loans. Upon funding of the loan, these fees were deferred and will be amortized over the life of the loan as an adjustment to yield in accordance with FASB ASC 310-20-25-2.

Concentrations of Credit

Nearly all of the Company’s lending activity occurs within the state of Ohio, including the four counties of Holmes, Stark, Tuscarawas and Wayne, as well as other markets.  The majority of the Company’s loan portfolio consists of commercial and commercial real estate loans.  As of June 30, 2020 and December 31, 2019, there were no concentrations of loans related to any single industry.

The Company has identified industries that could be at a higher risk due to the COVID-19 pandemic. As of June 30, 2020 the total balance of loans to COVID-19 affected businesses was $36.2 million, with $31.6 million in loans to businesses in the hotel industry.

15


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – LOANS (continued)

 

 

Allowance for Loan Losses

The following tables detail activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2020 and 2019.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

For the three and six month periods ended June 30, 2020 the decrease in the provision for loan losses for commercial loans and the increase for commercial real estate loans was due to the reallocation of allowance related to loans affected by the COVID-19 pandemic. The increase in all other categories is primarily related to the slowing economy and the continuing elevated unemployment rates associated with the pandemic.

The decrease in the provision for loan losses for the six months ended June 30, 2019 for commercial loans was primarily due to a recovery related to one loan relationship which contributed to declining historical losses of loans in this category. The decrease in the provision related to construction and land development loans and the increase for commercial real estate loans was primarily due to the change in loan balances as construction projects were completed and transferred to permanent financing. The increase in the provision for consumer loans was related to increasing charge-offs as well as an increase in historical losses partially offset by lower delinquencies.

 

 

 

Summary of Allowance for Loan Losses

 

(Dollars in thousands)

 

Commercial

 

 

Commercial

Real Estate

 

 

Residential

Real Estate

 

 

Construction

& Land

Development

 

 

Consumer

 

 

Unallocated

 

 

Total

 

Three months ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

2,609

 

 

$

2,300

 

 

$

1,347

 

 

$

255

 

 

$

518

 

 

$

91

 

 

$

7,120

 

Provision for loan losses

 

 

(343

)

 

 

480

 

 

 

237

 

 

 

82

 

 

 

2

 

 

 

259

 

 

 

717

 

Charge-offs

 

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

 

 

 

 

(16

)

Recoveries

 

 

4

 

 

 

1

 

 

 

1

 

 

 

 

 

 

8

 

 

 

 

 

 

 

14

 

Net charge-offs

 

 

 

 

 

1

 

 

 

1

 

 

 

 

 

 

(4

)

 

 

 

 

 

 

(2

)

Ending balance

 

$

2,266

 

 

$

2,781

 

 

$

1,585

 

 

$

337

 

 

$

516

 

 

$

350

 

 

$

7,835

 

Six months ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

2,408

 

 

$

2,153

 

 

$

1,152

 

 

$

203

 

 

$

481

 

 

$

620

 

 

$

7,017

 

Provision for loan losses

 

 

(131

)

 

 

627

 

 

 

446

 

 

 

134

 

 

 

89

 

 

 

(270

)

 

 

895

 

Charge-offs

 

 

(19

)

 

 

 

 

 

(15

)

 

 

 

 

 

(69

)

 

 

 

 

 

 

(103

)

Recoveries

 

 

8

 

 

 

1

 

 

 

2

 

 

 

 

 

 

15

 

 

 

 

 

 

 

26

 

Net recoveries

 

 

(11

)

 

 

1

 

 

 

(13

)

 

 

 

 

 

(54

)

 

 

 

 

 

 

(77

)

Ending balance

 

$

2,266

 

 

$

2,781

 

 

$

1,585

 

 

$

337

 

 

$

516

 

$

$

350

 

 

$

7,835

 

Three months ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,997

 

 

$

1,808

 

 

$

1,222

 

 

$

170

 

 

$

325

 

 

$

765

 

 

$

6,287

 

Provision for loan losses

 

 

277

 

 

 

138

 

 

 

5

 

 

 

(66

)

 

 

46

 

 

 

(115

)

 

 

285

 

Charge-offs

 

 

(11

)

 

 

 

 

 

 

 

 

 

 

 

(43

)

 

 

 

 

 

 

(54

)

Recoveries

 

 

4

 

 

 

 

 

 

2

 

 

 

 

 

 

13

 

 

 

 

 

 

 

19

 

Net (charge-offs) recoveries

 

 

(7

)

 

 

 

 

 

2

 

 

 

 

 

 

(30

)

 

 

 

 

 

 

(35

)

Ending balance

 

$

2,267

 

 

$

1,946

 

 

$

1,229

 

 

$

104

 

 

$

341

 

 

$

650

 

 

$

6,537

 

Six months ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

2,178

 

 

$

1,791

 

 

$

1,245

 

 

$

258

 

 

$

306

 

 

$

129

 

 

$

5,907

 

Provision for loan losses

 

 

(62

)

 

 

155

 

 

 

(19

)

 

 

(154

)

 

 

129

 

 

 

521

 

 

 

570

 

Charge-offs

 

 

(16

)

 

 

 

 

 

 

 

 

 

 

 

(108

)

 

 

 

 

 

 

(124

)

Recoveries

 

 

167

 

 

 

 

 

 

3

 

 

 

 

 

 

14

 

 

 

 

 

 

 

184

 

Net charge-offs

 

 

151

 

 

 

 

 

 

3

 

 

 

 

 

 

(94

)

 

 

 

 

 

 

60

 

Ending balance

 

$

2,267

 

 

$

1,946

 

 

$

1,229

 

 

$

104

 

 

$

341

 

 

$

650

 

 

$

6,537

 

 

16


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – LOANS (continued)

 

The following table presents the balance in the allowance for loan losses and the ending loan balances by portfolio class, based on the impairment method as of June 30, 2020 and December 31, 2019:

 

(Dollars in thousands)

 

Commercial

 

 

Commercial

Real Estate

 

 

Residential

Real Estate

 

 

Construction

 

 

Consumer

 

 

Unallocated

 

 

Total

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

6

 

 

$

19

 

 

$

1

 

 

$

 

 

$

7

 

 

$

 

 

$

33

 

Collectively evaluated for impairment

 

 

2,260

 

 

 

2,762

 

 

 

1,584

 

 

 

337

 

 

 

509

 

 

 

350

 

 

 

7,802

 

Total ending allowance balance

 

$

2,266

 

 

$

2,781

 

 

$

1,585

 

 

$

337

 

 

$

516

 

 

$

350

 

 

$

7,835

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated for

   impairment

 

$

2,465

 

 

$

2,596

 

 

$

728

 

 

$

 

 

$

146

 

 

 

 

 

 

$

5,935

 

Loans collectively evaluated for

   impairment

 

 

212,674

 

 

 

196,352

 

 

 

177,071

 

 

 

28,123

 

 

 

18,705

 

 

 

 

 

 

 

632,925

 

Total ending loans balance

 

$

215,139

 

 

$

198,948

 

 

$

177,799

 

 

$

28,123

 

 

$

18,851

 

 

 

 

 

 

$

638,860

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

16

 

 

$

17

 

 

$

1

 

 

$

 

 

$

 

 

$

 

 

$

34

 

Collectively evaluated for impairment

 

 

2,392

 

 

 

2,136

 

 

 

1,151

 

 

 

203

 

 

 

481

 

 

 

620

 

 

 

6,983

 

Total ending allowance balance

 

$

2,408

 

 

$

2,153

 

 

$

1,152

 

 

$

203

 

 

$

481

 

 

$

620

 

 

$

7,017

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated for

   impairment

 

$

2,555

 

 

$

2,637

 

 

$

853

 

 

$

 

 

$

14

 

 

 

 

 

 

$

6,059

 

Loans collectively evaluated for

   impairment

 

 

134,559

 

 

 

194,111

 

 

 

173,406

 

 

 

23,960

 

 

 

19,038

 

 

 

 

 

 

 

545,074

 

Total ending loans balance

 

$

137,114

 

 

$

196,748

 

 

$

174,259

 

 

$

23,960

 

 

$

19,052

 

 

 

 

 

 

$

551,133

 

 

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2020 and December 31, 2019:

 

(Dollars in thousands)

 

Unpaid

Principal

Balance

 

 

Recorded

Investment

with no

Allowance

 

 

Recorded

Investment

with

Allowance

 

 

Total

recorded

investment1

 

 

Related

Allowance

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

2,899

 

 

$

2,281

 

 

$

183

 

 

$

2,464

 

 

$

6

 

Commercial real estate

 

 

2,968

 

 

 

2,363

 

 

 

241

 

 

 

2,604

 

 

 

19

 

Residential real estate

 

 

920

 

 

 

549

 

 

 

180

 

 

 

729

 

 

 

1

 

Consumer

 

 

148

 

 

 

 

 

 

151

 

 

 

151

 

 

 

7

 

Total impaired loans

 

$

6,935

 

 

$

5,193

 

 

$

755

 

 

$

5,948

 

 

$

33

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

2,982

 

 

$

2,541

 

 

$

16

 

 

$

2,557

 

 

$

16

 

Commercial real estate

 

 

2,952

 

 

 

2,471

 

 

 

176

 

 

 

2,647

 

 

 

17

 

Residential real estate

 

 

1,024

 

 

 

457

 

 

 

396

 

 

 

853

 

 

 

1

 

Consumer

 

 

14

 

 

 

14

 

 

 

 

 

 

14

 

 

 

 

Total impaired loans

 

$

6,972

 

 

$

5,483

 

 

$

588

 

 

$

6,071

 

 

$

34

 

 

1

includes principal, accrued interest, unearned fees, and origination costs

17


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – LOANS (continued)

 

The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated.

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(Dollars in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Average recorded investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

2,523

 

 

$

1,582

 

 

$

2,488

 

 

$

1,228

 

Commercial real estate

 

 

2,550

 

 

 

2,152

 

 

 

2,553

 

 

 

2,233

 

Residential real estate

 

 

820

 

 

 

943

 

 

 

833

 

 

 

986

 

Consumer

 

 

95

 

 

 

15

 

 

 

52

 

 

 

9

 

Average recorded investment in impaired loans

 

$

5,988

 

 

$

4,692

 

 

$

5,926

 

 

$

4,456

 

Interest income recognized:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

19

 

 

$

28

 

 

$

37

 

 

$

37

 

Commercial real estate

 

 

4

 

 

 

3

 

 

 

6

 

 

 

6

 

Residential real estate

 

 

9

 

 

 

12

 

 

 

19

 

 

 

23

 

Consumer

 

 

1

 

 

 

 

 

 

1

 

 

 

 

Interest income recognized on a cash basis on impaired loans

 

$

33

 

 

$

43

 

 

$

63

 

 

$

66

 

 

The following table presents the aging of past due loans and nonaccrual loans as of June 30, 2020 and December 31, 2019 by class of loans:

 

 

 

 

 

 

 

Accruing Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Current

 

 

30-59

Days

Past

Due

 

 

60-89

Days

Past

Due

 

 

90 Days +

Past Due

 

 

Non-

Accrual

 

 

Total

Past

Due

and

Non-

Accrual

 

 

Total

Loans

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

213,726

 

 

$

4

 

 

$

3

 

 

$

25

 

 

$

1,381

 

 

$

1,413

 

 

$

215,139

 

Commercial real estate

 

 

196,634

 

 

 

11

 

 

 

 

 

 

 

 

 

2,303

 

 

 

2,314

 

 

 

198,948

 

Residential real estate

 

 

176,946

 

 

 

202

 

 

 

10

 

 

 

 

 

 

641

 

 

 

853

 

 

 

177,799

 

Construction & land development

 

 

28,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,123

 

Consumer

 

 

18,795

 

 

 

23

 

 

 

1

 

 

 

 

 

 

32

 

 

 

56

 

 

 

18,851

 

Total Loans

 

$

634,224

 

 

$

240

 

 

$

14

 

 

$

25

 

 

$

4,357

 

 

$

4,636

 

 

$

638,860

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

135,707

 

 

$

15

 

 

$

 

 

$

67

 

 

$

1,325

 

 

$

1,407

 

 

$

137,114

 

Commercial real estate

 

 

194,157

 

 

 

186

 

 

 

 

 

 

 

 

 

2,405

 

 

 

2,591

 

 

 

196,748

 

Residential real estate

 

 

173,023

 

 

 

264

 

 

 

277

 

 

 

174

 

 

 

521

 

 

 

1,236

 

 

 

174,259

 

Construction & land development

 

 

23,960

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,960

 

Consumer

 

 

18,640

 

 

 

365

 

 

 

 

 

 

 

 

 

47

 

 

 

412

 

 

 

19,052

 

Total Loans

 

$

545,487

 

 

$

830

 

 

$

277

 

 

$

241

 

 

$

4,298

 

 

$

5,646

 

 

$

551,133

 

 

18


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – LOANS (continued)

 

CARES Act Loan Modifications  

 

The table below summarizes the Company’s deferral activity at June 30, 2020 under the COVID-19 related loan modification program to customers.  Loan modifications consist of three to four months deferral of principal and interest payments, and extension of maturity date.  All loans provided modifications were performing in accordance with their terms at the time of modification.  In accordance with the CARES Act, these loans are not required to be evaluated as TDR’s.

 

 

 

June 30, 2020

 

 

 

Deferred

 

 

Outstanding

 

(Dollars in thousands)

 

# of loans

 

 

Portfolio

 

 

Deferred

 

%

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

72

 

 

$

215,139

 

 

$

10,450

 

 

5

 

Commercial real estate

 

77

 

 

 

198,948

 

 

 

51,645

 

 

26

 

Construction

 

 

3

 

 

 

28,123

 

 

 

535

 

 

2

 

Total Commercial

 

 

152

 

 

 

442,210

 

 

 

62,630

 

 

14

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

33

 

 

 

177,799

 

 

 

3,663

 

 

2

 

RV

 

12

 

 

 

9,271

 

 

 

254

 

 

3

 

Other consumer

 

 

15

 

 

 

9,580

 

 

 

211

 

 

2

 

Total Consumer

 

 

60

 

 

 

196,650

 

 

 

4,128

 

 

2

 

Total Loans

 

212

 

 

$

638,860

 

 

$

66,758

 

 

10

 

 

Troubled Debt Restructurings

All troubled debt restructurings (“TDR’s) are individually evaluated for impairment and a related allowance is recorded, as needed.  Loans whose terms have been modified as TDR’s totaled $2.4 million as of June 30, 2020, and $2.5 million as of December 31, 2019, with $31 thousand of specific reserves allocated to those loans at June 30, 2020 and $18 thousand at December 31, 2019, respectively.  At June 30, 2020, $2.1 million of the loans classified as TDR’s were performing in accordance with their modified terms.  Of the remaining $327 thousand, all were in nonaccrual of interest status.    

 

(Dollars in thousands)

 

Number of

loans

restructured

 

Pre-

Modification

Recorded

Investment

 

 

Post-

Modification

Recorded

Investment

 

For the Three months ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

Commercial

 

4

 

$

112

 

 

$

112

 

Commercial Real Estate

 

1

 

 

80

 

 

 

80

 

Residential

 

1

 

 

66

 

 

 

66

 

Consumer

 

6

 

 

146

 

 

 

146

 

Total Restructured Loans

 

12

 

$

404

 

 

$

404

 

For the Six months ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

Commercial

 

5

 

$

181

 

 

$

181

 

Commercial Real Estate

 

1

 

 

80

 

 

 

80

 

Residential

 

1

 

 

66

 

 

 

66

 

Consumer

 

6

 

 

146

 

 

 

146

 

Total Restructured Loans

 

13

 

$

473

 

 

$

473

 

 

The loans restructured were modified by changing the monthly payment to interest only and extending the maturity dates.

19


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – LOANS (continued)

 

None of the loans restructured in 2019 have defaulted in 2020. There was one loan in the amount of $200 thousand restructured in 2018 that subsequently defaulted in 2019.

Other real estate owned amounted to one property at $98 thousand at June 30, 2020 and $99 thousand at December 31, 2019, respectively.  There were $61 thousand in mortgage loans in the process of foreclosure at June 30, 2020 and $50 thousand at December 31, 2019.  There were no other repossessed assets at June 30, 2020 and December 31, 2019.

 

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  The Company analyzes commercial loans individually by classifying the loans as to credit risk.  This analysis includes commercial loans with an outstanding balance greater than $500 thousand.  This analysis is performed on an annual basis.  The Company uses the following definitions for risk ratings:

Pass.  Loans classified as pass (Cash Secured, Exceptional, Acceptable, Monitor, or Pass Watch) may exhibit a wide array of characteristics but at a minimum represent an acceptable risk to the Bank.  Borrowers in this rating may have leveraged but acceptable balance sheet positions, satisfactory asset quality, stable to favorable sales and earnings trends, acceptable liquidity and adequate cash flow.  Loans are considered fully collectible and require an average amount of administration.  While generally adhering to credit policy, these loans may exhibit occasional exceptions that do not result in undue risk to the Bank.  Borrowers are generally capable of absorbing setbacks, financial and otherwise, without the threat of failure.

Special Mention.  Assets assigned a Special Mention grade are not considered classified assets but are considered criticized.  These assets exhibit potential weaknesses that, deserve management’s close attention. If left uncorrected, those potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date.  Loans in this rating warrant special attention but have not yet reached the point of concern for loss.  These assets have deteriorated sufficiently to the point they would have difficulty refinancing elsewhere.  Similarly, purchasers of the business would not be eligible for bank financing unless they represent a significantly stronger credit risk.

Substandard.  Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.  Loans listed as not rated are either less than $500 thousand or are included in groups of homogeneous loans.  Based on the most recent analysis performed, the risk category of loans by class is as follows as of June 30, 2020 and December 31, 2019:

20


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – LOANS (continued)

 

 

(Dollars in thousands)

 

Pass

 

 

Special

Mention

 

 

Substandard

 

 

Doubtful

 

 

Not

Rated

 

 

Total

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

192,349

 

 

$

4,601

 

 

$

15,408

 

 

$

 

 

$

2,781

 

 

$

215,139

 

Commercial real estate

 

 

171,443

 

 

 

9,930

 

 

 

15,547

 

 

 

 

 

 

2,028

 

 

 

198,948

 

Residential real estate

 

 

180

 

 

 

 

 

 

21

 

 

 

 

 

 

177,598

 

 

 

177,799

 

Construction & land development

 

 

22,513

 

 

 

93

 

 

 

478

 

 

 

 

 

 

5,039

 

 

 

28,123

 

Consumer

 

 

 

 

 

 

 

 

71

 

 

 

 

 

 

18,780

 

 

 

18,851

 

Total

 

$

386,485

 

 

$

14,624

 

 

$

31,525

 

 

$

 

 

$

206,226

 

 

$

638,860

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

110,731

 

 

$

15,040

 

 

$

10,295

 

 

$

 

 

$

1,048

 

 

$

137,114

 

Commercial real estate

 

 

174,045

 

 

 

11,546

 

 

 

9,994

 

 

 

 

 

 

1,163

 

 

 

196,748

 

Residential real estate

 

 

183

 

 

 

 

 

 

237

 

 

 

 

 

 

173,839

 

 

 

174,259

 

Construction & land development

 

 

19,423

 

 

 

104

 

 

 

 

 

 

 

 

 

4,433

 

 

 

23,960

 

Consumer

 

 

 

 

 

 

 

 

73

 

 

 

 

 

 

18,979

 

 

 

19,052

 

Total

 

$

304,382

 

 

$

26,690

 

 

$

20,599

 

 

$

 

 

$

199,462

 

 

$

551,133

 

 

The following table presents loans that are not rated by class of loans as of June 30, 2020 and December 31, 2019.  Nonperforming loans include loans past due 90 days or more and loans on nonaccrual of interest status.

 

(Dollars in thousands)

 

Performing

 

 

Non-

Performing

 

 

Total

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

2,781

 

 

$

 

 

$

2,781

 

Commercial real estate

 

 

2,028

 

 

 

 

 

 

2,028

 

Residential real estate

 

 

177,016

 

 

 

582

 

 

 

177,598

 

Construction & land development

 

 

5,039

 

 

 

 

 

 

5,039

 

Consumer

 

 

18,766

 

 

 

14

 

 

 

18,780

 

Total

 

$

205,630

 

 

$

596

 

 

$

206,226

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

1,048

 

 

$

 

 

$

1,048

 

Commercial real estate

 

 

1,163

 

 

 

 

 

 

1,163

 

Residential real estate

 

 

173,407

 

 

 

432

 

 

 

173,839

 

Construction & land development

 

 

4,433

 

 

 

 

 

 

4,433

 

Consumer

 

 

18,979

 

 

 

 

 

 

18,979

 

Total

 

$

199,030

 

 

$

432

 

 

$

199,462

 

 

 

21


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 4 – SHORT-TERM BORROWINGS

The following table provides additional detail regarding repurchase agreements and the related collateral accounted for as secured borrowings.

 

 

 

Remaining Contractual Maturity

Overnight and Continuous

 

 

 

June 30,

 

 

December 31,

 

(Dollars in thousands)

 

2020

 

 

2019

 

Securities of U.S. Government Agencies and mortgage-backed securities of

   government agencies pledged, fair value

 

$

44,040

 

 

$

39,058

 

Repurchase agreements

 

 

43,865

 

 

 

38,889

 

 

 

NOTE 5 – FAIR VALUE MEASUREMENTS

The Company provides disclosures about assets and liabilities carried at fair value.  The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. The three broad levels of the fair value hierarchy are described below:

 

Level I:

Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level II:

Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by corroborated or other means.  If the asset or liability has a specified (contractual) term, the Level II input must be observable for substantially the full term of the asset or liability.

Level III:

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

22


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 5 – FAIR VALUE MEASUREMENTS – (CONTINUED)

 

The following table presents the assets reported on the Consolidated Balance Sheets at their fair value on a recurring basis as of June 30, 2020 and December 31, 2019 by level within the fair value hierarchy. No liabilities are carried at fair value.  Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  Equity securities with readily determinable values and U.S. Treasury Notes are valued at the closing price reported on the active market on which the individual securities are traded. Obligations of U.S. government agencies, mortgage-backed securities, asset-backed securities, obligations of states and political subdivisions and corporate bonds are valued at observable market data for similar assets.  Equity securities without readily determinable values are carried at amortized cost adjusted for impairment and observable price changes.

 

(Dollars in thousands)

 

Level I

 

 

Level II

 

 

Level III

 

 

Total

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury security

 

$

1,018

 

 

$

 

 

$

 

 

$

1,018

 

Mortgage-backed securities of government agencies

 

 

 

 

 

75,214

 

 

 

 

 

 

75,214

 

Asset-backed securities of government agencies

 

 

 

 

 

831

 

 

 

 

 

 

831

 

State and political subdivisions

 

 

 

 

 

19,377

 

 

 

 

 

 

19,377

 

Corporate bonds

 

 

 

 

 

6,762

 

 

 

 

 

 

6,762

 

Total available-for-sale securities

 

$

1,018

 

 

$

102,184

 

 

$

 

 

$

103,202

 

Equity securities

 

$

37

 

 

$

 

 

$

 

 

$

37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury security

 

$

999

 

 

$

 

 

$

 

 

$

999

 

U.S. Government agencies

 

 

 

 

 

5,496

 

 

 

 

 

 

5,496

 

Mortgage-backed securities of government agencies

 

 

 

 

 

75,857

 

 

 

 

 

 

75,857

 

Asset-backed securities of government agencies

 

 

 

 

 

917

 

 

 

 

 

 

917

 

State and political subdivisions

 

 

 

 

 

21,511

 

 

 

 

 

 

21,511

 

Corporate bonds

 

 

 

 

 

7,366

 

 

 

 

 

 

7,366

 

Total available-for-sale securities

 

$

999

 

 

$

111,147

 

 

$

 

 

$

112,146

 

Equity securities

 

$

46

 

 

$

 

 

$

 

 

$

46

 

 

23


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 5 – FAIR VALUE MEASUREMENTS – (CONTINUED)

 

The following table presents the assets measured on a nonrecurring basis on the Consolidated Balance Sheets at their fair value as of June 30, 2020 and December 31, 2019, by level within the fair value hierarchy. An impaired loan is written down to fair value through the establishment of specific reserves or a charge down is taken to reduce the loan to fair value of the collateral (less estimated selling costs) and the loan is included in the following table as a Level III measurement.  Techniques used to value the collateral that secure the impaired loans include quoted market prices for identical assets classified as Level I inputs, and observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs.  In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

 

(Dollars in thousands)

 

Level I

 

 

Level II

 

 

Level III

 

 

Total

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets measured on a nonrecurring basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impaired loans

 

$

 

 

$

 

 

$

10

 

 

$

10

 

Other real estate owned

 

 

 

 

 

 

 

 

98

 

 

 

98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets measured on a nonrecurring basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impaired loans

 

$

 

 

$

 

 

$

553

 

 

$

553

 

Other real estate owned

 

 

 

 

 

 

 

 

99

 

 

 

99

 

 

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level III inputs to determine fair value.   

 

 

 

Quantitative Information about Level III Fair Value Measurements

 

(Dollars in thousands)

 

Fair Value

Estimate

 

 

Valuation

Techniques

 

Unobservable

Input

 

Range

(Weighted Average)

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Impaired loans

 

$

10

 

 

Apprasial of collateral 1

 

Appraisal adjustments 2

 

-20%

 

 

 

 

 

 

 

 

 

Liquidation expense 2

 

-10%

 

Other real estate owned

 

 

98

 

 

Appraisal of collateral 1

 

Appraisal adjustments 2

 

-33%

 

 

 

 

 

 

 

 

 

Liquidation expense 2

 

-10%

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Impaired loans

 

$

553

 

 

Discounted cash flow

 

Remaining term

 

3.9 yrs to 26.9 yrs / (16 yrs)

 

 

 

 

 

 

 

 

 

Discount rate

 

3.5% to 6.0% / (5.3%)

 

Other real estate owned

 

 

99

 

 

Appraisal of collateral 1

 

Appraisal adjustments 2

 

-0.33

 

 

 

 

 

 

 

 

 

Liquidation expense 2

 

-0.1

 

 

1

Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various inputs which are not identifiable.

2

Appraisals may be adjusted by management for qualitative factors.  The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

 

 

24


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 6 – FAIR VALUES OF FINANCIAL INSTRUMENTS

The fair values of recognized financial instruments as of June 30, 2020 and December 31, 2019 are as follows:

 

(Dollars in thousands)

 

Carrying

Value

 

 

Level I

 

 

Level II

 

 

Level III

 

 

Fair Value

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

173,825

 

 

$

173,825

 

 

$

 

 

$

 

 

$

173,825

 

Securities available-for-sale

 

 

103,202

 

 

 

1,018

 

 

 

102,184

 

 

 

 

 

 

103,202

 

Securities held-to-maturity

 

 

10,871

 

 

 

 

 

 

11,120

 

 

 

 

 

 

11,120

 

Equity securities

 

 

83

 

 

 

37

 

 

 

 

 

 

46

 

 

 

83

 

Restricted stock

 

 

4,614

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

Loans held for sale

 

 

1,678

 

 

 

1,678

 

 

 

 

 

 

 

 

 

1,678

 

Net loans

 

 

628,964

 

 

 

 

 

 

 

 

 

630,125

 

 

 

630,125

 

Bank-owned life insurance

 

 

19,153

 

 

 

19,153

 

 

 

 

 

 

 

 

 

19,153

 

Accrued interest receivable

 

 

1,581

 

 

 

1,581

 

 

 

 

 

 

 

 

 

1,581

 

Mortgage servicing rights

 

 

381

 

 

 

 

 

 

 

 

 

381

 

 

 

381

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

815,961

 

 

$

690,584

 

 

$

 

 

$

126,988

 

 

$

817,572

 

Short-term borrowings

 

 

43,865

 

 

 

43,865

 

 

 

 

 

 

 

 

 

43,865

 

Other borrowings

 

 

9,865

 

 

 

 

 

 

 

 

 

9,993

 

 

 

9,993

 

Accrued interest payable

 

 

102

 

 

 

102

 

 

 

 

 

 

 

 

 

102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

102,017

 

 

$

102,017

 

 

$

 

 

$

 

 

$

102,017

 

Securities available-for-sale

 

 

112,146

 

 

 

999

 

 

 

111,147

 

 

 

 

 

 

112,146

 

Securities held-to-maturity

 

 

13,869

 

 

 

 

 

 

13,950

 

 

 

 

 

 

13,950

 

Equity securities

 

 

92

 

 

 

46

 

 

 

 

 

 

46

 

 

 

92

 

Restricted stock

 

 

4,614

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

Loans held for sale

 

 

622

 

 

 

622

 

 

 

 

 

 

 

 

 

622

 

Net loans

 

 

544,616

 

 

 

 

 

 

 

 

 

542,981

 

 

 

542,981

 

Bank-owned life insurance

 

 

18,894

 

 

 

18,894

 

 

 

 

 

 

 

 

 

18,894

 

Accrued interest receivable

 

 

1,641

 

 

 

1,641

 

 

 

 

 

 

 

 

 

1,641

 

Mortgage servicing rights

 

 

328

 

 

 

 

 

 

 

 

 

328

 

 

 

328

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

683,546

 

 

$

555,985

 

 

$

 

 

$

127,440

 

 

$

683,425

 

Short-term borrowings

 

 

38,889

 

 

 

38,889

 

 

 

 

 

 

 

 

 

38,889

 

Other borrowings

 

 

6,330

 

 

 

 

 

 

 

 

 

6,273

 

 

 

6,273

 

Accrued interest payable

 

 

127

 

 

 

127

 

 

 

 

 

 

 

 

 

127

 

 

The Company also has unrecognized financial instruments at June 30, 2020 and December 31, 2019.  These financial instruments relate to commitments to extend credit and letters of credit.  The aggregated contract amount of such financial instruments was approximately $207.1 million at June 30, 2020 and $211.3 million at December 31, 2019.  Such amounts are also considered to be the fair values.

The fair value estimates of financial instruments are made at a specific point in time based on relevant market information.  Since no ready market exists for a significant portion of the financial instruments, fair value estimates are largely based on judgments after considering such factors as future expected credit losses, current economic conditions, risk characteristics of various financial instruments, and other factors.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision.  Changes in assumptions could significantly affect these estimates.

25


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 7- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in accumulated other comprehensive income (loss) by component net of tax for the three and six month periods ended June 30, 2020 and 2019:

 

(Dollars in thousands)

 

Pretax

 

 

Tax Effect

 

 

After-tax

 

Three months ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of  March 31, 2020

 

$

646

 

 

$

(136

)

 

$

510

 

Unrealized holding gain on available-for-sale securities arising during

   the period

 

 

617

 

 

 

(130

)

 

 

487

 

Amortization of held-to-maturity discount resulting from transfer

 

 

16

 

 

 

(3

)

 

 

13

 

Total other comprehensive income

 

 

633

 

 

 

(133

)

 

 

500

 

Balance as of June 30, 2020

 

$

1,279

 

 

$

(269

)

 

$

1,010

 

Six months ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of  December 31, 2019

 

$

92

 

 

$

(20

)

 

$

72

 

Unrealized holding gain on available-for-sale securities arising during

   the period

 

 

1,157

 

 

 

(243

)

 

 

914

 

Amortization of held-to-maturity discount resulting from transfer

 

 

30

 

 

 

(6

)

 

 

24

 

Total other comprehensive income

 

 

1,187

 

 

 

(249

)

 

 

938

 

Balance as of June 30, 2020

 

$

1,279

 

 

$

(269

)

 

$

1,010

 

Three months ended June 30,2019

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of  March 31, 2019

 

 

(1,022

)

 

 

214

 

 

$

(808

)

Unrealized holding gain on available-for-sale securities arising during

   the period

 

 

762

 

 

 

(160

)

 

 

602

 

Amortization of held-to-maturity discount resulting from transfer

 

 

15

 

 

 

(3

)

 

 

12

 

Total other comprehensive income

 

 

777

 

 

 

(163

)

 

 

614

 

Balance as of June 30, 2019

 

$

(245

)

 

$

51

 

 

$

(194

)

Six months ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of  December 31, 2018

 

$

(1,786

)

 

$

374

 

 

$

(1,412

)

Unrealized holding loss on available-for-sale securities arising during

   the period

 

 

1,511

 

 

 

(317

)

 

 

1,194

 

Amortization of held-to-maturity discount resulting from transfer

 

 

30

 

 

 

(6

)

 

 

24

 

Total other comprehensive loss

 

 

1,541

 

 

 

(323

)

 

 

1,218

 

Balance as of June 30, 2019

 

$

(245

)

 

$

51

 

 

$

(194

)

 

 

 

 

 

 

 

26


CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis focuses on the consolidated financial condition of the Company at June 30, 2020 as compared to December 31, 2019, and the consolidated results of operations for the three and six month periods ended June 30, 2020 compared to the same periods in 2019. The purpose of this discussion is to provide the reader with a more thorough understanding of the Consolidated Financial Statements. This discussion should be read in conjunction with the interim condensed Consolidated Financial Statements and related footnotes contained in Part I, Item 1 of this Quarterly Report.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report are not historical facts but rather are forward-looking statements that are subject to certain risks and uncertainties. When used herein, the terms “anticipates”, “plans”, “expects”, “believes”, and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, and rapidly changing technology affecting financial services. Other factors not currently anticipated may also materially and adversely affect the Company’s results of operations, cash flows, and financial position.  There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in this report are reasonable, the reader should not place undue reliance on any forward-looking statement.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by applicable law.

FINANCIAL CONDITION

Total assets were $965 million at June 30, 2020 as compared to $819 million at December 31, 2019. During the six-month period ended June 30, 2020, net loans increased $84 million. Cash and cash equivalents, and securities increased $60 million. Deposits and short-term borrowings increased $137 million.

Net loans increased $84 million, or 13%, as commercial real estate and construction loans increased $6 million, or 3%, and residential real estate loans increased $3.5 million, or 2%, from December 31, 2019. Commercial loans increased $78 million, or 36%, as loans originated under SBA Paycheck Protection Program exceeded $90 million in second quarter 2020. Consumers continued to refinance their mortgage loans for historically low long-term fixed rates while home purchase activity increased through the first half of 2020. Residential mortgage loan originations for the six months ended June 30, 2020 totaled $56 million, an increase from $28 million in originations during the six-month period ended June 30, 2019. Originations sold into the secondary market were $22 million and $5.9 million, respectively during the six-month periods ended June 30, 2020 and June 30, 2019. The Bank originates and sells primarily fixed rate thirty-year mortgages into the secondary market.  

 

 

 

27


CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The allowance for loan losses increased $1.3 million from the year ago quarter to $7.8 million or 1.23% of total loans. The Company has not early adopted CECL which has been delayed for smaller reporting companies. Outstanding loan balances increased 13% to $637 million at June 30, 2020. Net charge-offs increased to $77 thousand, or an annualized 0.03% of average loans, in the current six-month period compared to the $60 thousand recovery, or -0.02% of average loans in the year-ago six-month period. At June 30, 2020 the allowance for total loans minus the SBA guaranteed Payroll Protection loans was 1.44%. We believe the allowance level is appropriate given the low level of problem loans and current composition of the overall loan portfolio.  

Nonperforming loans decreased to $4.4 million, or 1.23% of total loans from $4.5 million, or 1.19%, a year ago. For the six months ending June 30, 2020 loans totaling $257 thousand were placed on nonaccrual status, there were $26 thousand in charge-downs recognized, and pay downs of $172 thousand were received.

 

 

 

June 30,

 

 

December 31,

 

 

June 30,

 

(Dollars in thousands)

 

2020

 

 

2019

 

 

2019

 

Non-performing loans

 

$

4,382

 

 

$

4,539

 

 

$

4,497

 

Other real estate

 

 

98

 

 

 

99

 

 

 

99

 

Repossessed assets

 

 

 

 

 

20

 

 

 

 

Allowance for loan losses

 

 

7,835

 

 

 

7,017

 

 

 

6,537

 

Total loans

 

$

636,799

 

 

$

551,633

 

 

$

550,612

 

Allowance for loan losses as a percentage of total loans

 

 

1.23

%

 

 

1.27

%

 

 

1.19

%

Allowance for loan losses to total nonperforming loans

 

1.7x

 

 

1.5x

 

 

1.5x

 

 

The ratio of gross loans to deposits was 78.0% at June 30, 2020, compared to 80.7% at December 31, 2019.

The Company has no exposure to government-sponsored enterprise preferred stocks, collateralized debt obligations, or trust preferred securities. Management has considered industry analyst reports, sector credit reports, and the volatility within the bond market in concluding that the gross unrealized gain of $2 million within the available-for-sale and held-to-maturity portfolios as of June 30, 2020, were primarily the result of customary and expected fluctuations in the bond market and not necessarily the expected cash flows of the individual securities. As a result, all embedded security impairments on June 30, 2020, are considered temporary and no impairment loss relating to these securities has been recognized.

Deposits increased $132 million, or 19%, from December 31, 2019 with noninterest bearing deposits increasing approximately $57 million and interest-bearing deposit accounts increasing approximately $75 million. Total deposits as of June 30, 2020 are $193 million greater than June 30, 2019 deposit balances. On a year over year comparison, increases were recognized in noninterest-bearing demand deposits of $74 million, interest-bearing demand deposits of $79 million, money market accounts of $17 million, savings of $22 million, and time deposits of $1 million.

Short-term borrowings consisting of overnight repurchase agreements with retail customers increased $5 million to $44 million at June 30, 2020 as compared to December 31, 2019 and other borrowings increased $4 million as the Company took out FHLB advances.  

Total shareholders’ equity amounted to $90 million, or 9.3%, of total assets at June 30, 2020 up from $85 million December 31, 2019. The increase in shareholders’ equity during the six months ending June 30, 2020 was due to net income of $5.1 million and an increase in accumulated other comprehensive income of $938 thousand offset by dividends declared of $1.5 million. The Company and the Bank met all regulatory capital requirements at June 30, 2020.

RESULTS OF OPERATIONS

Three months ended June 30, 2020 and 2019

For the quarters ended June 30, 2020 and 2019, the Company recorded net income of $2.61 million and $2.59 million and $0.95 and $0.94 per share, respectively. The $20 thousand increase in net income for the period was primarily the result of a $328 thousand increase in noninterest income and a decrease of $191 thousand in other noninterest expenses. The increases were partially offset by a decrease of $59 thousand in net interest income, an increase in the provision for loan losses of $432 thousand and a $8 thousand increase in federal income tax provision.

28


CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Return on average assets and return on average equity were 1.15% and 11.72%, respectively, for the three-month period of 2020, compared to 1.39% and 12.91%, respectively for the same quarter in 2019.

Average Balance Sheets and Net Interest Margin Analysis

 

 

 

For the Three Months Ended June 30,

 

 

 

2020

 

 

2019

 

(Dollars in thousands)

 

Average

balance1

 

 

Interest

 

 

Average

rate2

 

 

Average

balance1

 

 

Interest

 

 

Average

rate2

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold

 

$

 

 

$

 

 

 

 

 

$

212

 

 

$

1

 

 

 

2.08

%

Interest-earning deposits

 

 

117,916

 

 

 

31

 

 

 

0.11

%

 

 

39,772

 

 

 

217

 

 

 

2.19

 

Taxable securities

 

 

99,353

 

 

 

481

 

 

 

1.95

 

 

 

87,942

 

 

 

584

 

 

 

2.66

 

Tax-exempt securities 4

 

 

21,858

 

 

 

145

 

 

 

2.65

 

 

 

23,322

 

 

 

169

 

 

 

2.92

 

Loans 3,4

 

 

621,710

 

 

 

7,110

 

 

 

4.60

 

 

 

547,981

 

 

 

7,190

 

 

 

5.26

 

Total interest-earning assets

 

 

860,837

 

 

 

7,767

 

 

 

3.63

%

 

 

699,229

 

 

 

8,161

 

 

 

4.68

%

Noninterest-earning assets

 

 

52,038

 

 

 

 

 

 

 

 

 

 

 

46,429

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

912,875

 

 

 

 

 

 

 

 

 

 

$

745,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS'

   EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

 

$

186,993

 

 

$

79

 

 

 

0.17

%

 

$

127,211

 

 

$

145

 

 

 

0.46

%

Savings deposits

 

 

215,644

 

 

 

70

 

 

 

0.13

 

 

 

186,179

 

 

 

252

 

 

 

0.54

 

Time deposits

 

 

126,475

 

 

 

523

 

 

 

1.66

 

 

 

124,001

 

 

 

524

 

 

 

1.69

 

Borrowed funds

 

 

51,748

 

 

 

47

 

 

 

0.37

 

 

 

44,803

 

 

 

129

 

 

 

1.15

 

Total interest-bearing liabilities

 

 

580,860

 

 

 

719

 

 

 

0.50

%

 

 

482,194

 

 

 

1,050

 

 

 

0.87

%

Noninterest-bearing demand deposits

 

 

238,876

 

 

 

 

 

 

 

 

 

 

 

180,167

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

3,735

 

 

 

 

 

 

 

 

 

 

 

2,959

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

89,404

 

 

 

 

 

 

 

 

 

 

 

80,338

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS'

   EQUITY

 

$

912,875

 

 

 

 

 

 

 

 

 

 

$

745,658

 

 

 

 

 

 

 

 

 

Taxable equivalent net interest income

 

 

 

 

 

$

7,048

 

 

 

 

 

 

 

 

 

 

$

7,111

 

 

 

 

 

Tax equivalent adjustment

 

 

 

 

 

 

(36

)

 

 

 

 

 

 

 

 

 

 

(40

)

 

 

 

 

Net interest income

 

 

 

 

 

$

7,012

 

 

 

 

 

 

 

 

 

 

$

7,071

 

 

 

 

 

Taxable equivalent net interest margin

 

 

 

 

 

 

 

 

 

 

3.29

%

 

 

 

 

 

 

 

 

 

 

4.08

%

Tax equivalent adjustment

 

 

 

 

 

 

 

 

 

 

(0.02

)

 

 

 

 

 

 

 

 

 

 

(0.02

)

Net interest margin

 

 

 

 

 

 

 

 

 

 

3.27

%

 

 

 

 

 

 

 

 

 

 

4.06

%

Taxable equivalent net interest spread

 

 

 

 

 

 

 

 

 

 

3.13

%

 

 

 

 

 

 

 

 

 

 

3.81

%

 

1 Average balances have been computed on an average daily basis.

2 Average rates have been computed based on the amortized cost of the corresponding asset or liability.

3 Average loan balances include nonaccrual loans.

4 Interest income is shown on a fully tax-equivalent basis.

 

Interest income for the quarter ended June 30, 2020, was $7.7 million representing a $390 thousand decrease, or a 5% decline, compared to the same period in 2019. This decrease was primarily due to average loan rates decreasing 66 basis points partially offset by a volume increase of $74 million for the quarter ended June 30, 2020 as compared to the second quarter 2019. Interest expense for the quarter ended June 30, 2020 was $719 thousand, a decrease of $331 thousand, or 32%, from the same period in 2019. The decrease in interest expense occurred primarily due to a decrease in rates on all liabilities for the quarter ended June 30, 2020.

For the quarter ended June 30, 2020, the provision for loan losses was $717 thousand, compared to a provision of $285 thousand provision for the same quarter in 2019. At December 31, 2019, the allowance had an unallocated reserve portion that was allocated during first quarter 2020 including a qualitative factor for the developing Covid-19 pandemic.  For more discussion see Financial Condition. The provision for loan losses is

29


CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

determined based on management’s calculation of the adequacy of the allowance for loan losses, which includes provisions for classified loans as well as for the remainder of the portfolio based on historical data, including past charge-offs and current economic trends.

Noninterest income for the quarter ended June 30, 2020, was $1.6 million, an increase of $328 thousand, or 25%, compared to the same quarter in 2019. Earnings on bank owned life insurance increased $9 thousand for the second quarter 2020 a result of adding policies in 2019. The gain on the sale of mortgage loans to the secondary market increased by $432 thousand for the quarter ended June 30, 2020 as additional loan volume was sold into the secondary market. Debit card interchange income increased $31 thousand, or 8%, with greater fees generated from usage in the second quarter of 2020. Fees from trust and brokerage services decreased $16 thousand to $196 thousand for the second quarter 2020 as compared to the same quarter in 2019. Service charges on deposit accounts decreased $102 thousand, or 33%, compared to the same quarter in 2019 primarily from a volume decrease in overdraft fees.

Noninterest expenses for the quarter ended June 30, 2020 decreased $191 thousand, or 4%, compared to the second quarter of 2019. Salaries and employee benefits decreased $239 thousand, or 8%, a result of the capitalization of approximately $300 thousand in salary and benefits expense to deferred loan origination costs related to PPP loan originations. The Ohio financial institutions tax increased $18 thousand in the second quarter due to the Company’s increased capital base. Marketing and public relations expense decreased $74 thousand, or 53%, primarily due to events being cancelled due to COVID-19. Debit card expenses increased $14 thousand, or 11%, compared to the second quarter 2019 with increased volume. Software expense rose $27 thousand quarter over quarter with additional investment. Occupancy expense increased $39 thousand in 2020 over the second quarter of 2019. Professional and director fees decreased $26 thousand for the quarter ended June 30, 2020 as compared to the second quarter 2019.

Federal income tax expense increased $8 thousand, or 1%, for the quarter ended June 30, 2020 as compared to the second quarter of 2019. The provision for income taxes was $621 thousand (effective rate of 19%) for the quarter ended June 30, 2020, compared to $613 thousand (effective rate of 19%) for the same quarter ended 2019.

RESULTS OF OPERATIONS

Six months ended June 30, 2020 and 2019

For the six months ended June 30, 2020 and 2019, the Company recorded net income of $5.09 million and $5.13 million and $1.86 and $1.87 per share, respectively. The $37 thousand decrease in net income for the quarter was primarily the result of a $154 thousand decrease in net interest income, an increase of $25 thousand in noninterest expense, and an increase in the provision for loan losses of $325 thousand.  The decreases were partially offset by an increase of $447 thousand in other noninterest income and a decrease in the federal income tax provision of $20 thousand.

Return on average assets and return on average equity were 1.19% and 11.60%, respectively, for the six-month period of 2020, compared to 1.40% and 13.05%, respectively for the same period in 2019.

 

30


CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Average Balance Sheets and Net Interest Margin Analysis

 

 

 

For the Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

(Dollars in thousands)

 

Average

balance1

 

 

Interest

 

 

Average

rate2

 

 

Average

balance1

 

 

Interest

 

 

Average

rate2

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold

 

$

 

 

$

 

 

 

 

 

$

305

 

 

$

4

 

 

 

2.38

%

Interest-earning deposits in other banks

 

 

96,867

 

 

 

270

 

 

 

0.56

%

 

 

33,144

 

 

 

389

 

 

 

2.37

 

Taxable securities

 

 

101,915

 

 

 

1,090

 

 

 

2.14

 

 

 

87,502

 

 

 

1,171

 

 

 

2.70

 

Tax-exempt securities4

 

 

21,521

 

 

 

296

 

 

 

2.76

 

 

 

23,228

 

 

 

340

 

 

 

2.95

 

Loans3,4

 

 

590,926

 

 

 

13,965

 

 

 

4.74

 

 

 

549,225

 

 

 

14,263

 

 

 

5.24

 

Total earning assets

 

 

811,229

 

 

 

15,621

 

 

 

3.86

%

 

 

693,404

 

 

 

16,167

 

 

 

4.70

%

Other assets

 

 

51,410

 

 

 

 

 

 

 

 

 

 

 

44,598

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

862,639

 

 

 

 

 

 

 

 

 

 

$

738,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

 

$

173,962

 

 

$

223

 

 

 

0.26

%

 

$

123,050

 

 

$

258

 

 

 

0.42

%

Savings deposits

 

 

208,546

 

 

 

198

 

 

 

0.19

 

 

 

187,211

 

 

 

510

 

 

 

0.55

 

Time deposits

 

 

126,837

 

 

 

1,083

 

 

 

1.72

 

 

 

121,495

 

 

 

978

 

 

 

1.62

 

Other borrowed funds

 

 

47,665

 

 

 

116

 

 

 

0.49

 

 

 

45,101

 

 

 

261

 

 

 

1.17

 

Total interest bearing liabilities

 

 

557,010

 

 

 

1,620

 

 

 

0.58

%

 

 

476,857

 

 

 

2,007

 

 

 

0.85

%

Non-interest bearing demand deposits

 

 

213,694

 

 

 

 

 

 

 

 

 

 

 

178,980

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

3,688

 

 

 

 

 

 

 

 

 

 

 

2,971

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

88,247

 

 

 

 

 

 

 

 

 

 

 

79,194

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

862,639

 

 

 

 

 

 

 

 

 

 

$

738,002

 

 

 

 

 

 

 

 

 

Taxable equivalent net interest income

 

 

 

 

 

$

14,001

 

 

 

 

 

 

 

 

 

 

$

14,160

 

 

 

 

 

Tax equivalent adjustment

 

 

 

 

 

 

(73

)

 

 

 

 

 

 

 

 

 

 

(78

)

 

 

 

 

Net interest income

 

 

 

 

 

$

13,928

 

 

 

 

 

 

 

 

 

 

$

14,082

 

 

 

 

 

Taxable equivalent net interest margin

 

 

 

 

 

 

 

 

 

 

3.47

%

 

 

 

 

 

 

 

 

 

 

4.12

%

Tax equivalent adjustment

 

 

 

 

 

 

 

 

 

 

(0.02

)

 

 

 

 

 

 

 

 

 

 

(0.02

)

Net interest margin

 

 

 

 

 

 

 

 

 

 

3.45

%

 

 

 

 

 

 

 

 

 

 

4.10

%

Taxable equivalent net interest spread

 

 

 

 

 

 

 

 

 

 

3.28

%

 

 

 

 

 

 

 

 

 

 

3.85

%

 

1 Average balances have been computed on an average daily basis.

2 Average rates have been computed based on the amortized cost of the corresponding asset or liability.

3 Average loan balances include nonaccrual loans.

4 Interest income is shown on a fully tax-equivalent basis.

31


CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

 

Interest income for the six months ended June 30, 2020, was $15.5 million representing a $541 thousand decrease, or a 3.4% decline, compared to the same period in 2019. This decrease was primarily due to the decrease in average loan rates, of 50 basis points the period ended June 30, 2020 as compared to the same period in 2019. Interest expense for the six months ended June 30, 2020 was $1.6 million, a decrease of $387 thousand, or 19%, from the same period in 2019. The decrease in interest expense occurred primarily due to a decrease in rates on all interest-bearing liabilities, except time deposits for the six-month period ended June 30, 2020.

For the six-month period ended June 30, 2020, the provision for loan losses was $895 thousand, compared to a provision of $570 thousand provision for the same period in 2019. For more discussion see Financial Condition. The provision for loan losses is determined based on management’s calculation of the adequacy of the allowance for loan losses, which includes provisions for classified loans as well as for the remainder of the portfolio based on historical data, including past charge-offs and current economic trends.

Noninterest income for the six-month period ended June 30, 2020, was $3 million, an increase of $447 thousand, or 18%, compared to the same period in 2019. Service charges on deposit accounts decreased $104 thousand, or 17%, compared to the same period in 2019 primarily from decreases in overdraft fees. Debit card interchange income increased $60 thousand, or 8%, with increased card usage in the first six months of 2020.  Earnings on bank owned life insurance policies increased $54 thousand for the period with the additional purchase of $3 million in policies in 2019.  The gain on the sale of mortgage loans to the secondary market increased $467 thousand to $622 thousand for the six-month period ended June 30, 2020. Fees from trust and brokerage services decreased $9 thousand for the period.

 

Noninterest expenses for the six-month period ended June 30, 2020 increased $25 thousand, or less than 1%, compared to the same period in 2019.   Salaries and employee benefits decreased $113 thousand, or 2%, a result of the capitalization of deferred loan origination costs related to PPP loan originations. Marketing and public relations expense decreased $63 thousand, or 25%, with decreases in market, brand recognition initiatives, and community support in the company’s market due to Covid-19. Debit card expenses increased $27 thousand, or 10%, compared to the prior period in 2019.  Occupancy expense increased $55 thousand over the same period in 2019 with an increase in depreciation, maintenance, and supplies expense.  Professional and director fees decreased $36 thousand for the six-month period ended June 30, 2020 as compared to the same period in 2019.

Federal income tax expense decreased $20 thousand, or 2%, for the six months ended June 30, 2020 as compared to the same period in 2019. The provision for income taxes was $1.21 million (effective rate of 19%) for the six-month period ended June 30, 2020, compared to $1.23 million (effective rate of 19%) for the same period ended 2019.

CAPITAL RESOURCES

The Company maintained a strong capital position with tangible common equity to tangible assets of 8.9% at June 30, 2020 compared with 9.9% at December 31, 2019.

Consistent with the Board of Director’s commitment to public confidence and safe and sound banking operations, capital targets and minimum risk-based capital ratios for CSB were established to maintain excess capital to well-capitalized standards. To be considered well-capitalized, an institution must have a total risk-based capital ratio of at least 10%, a tier 1 capital ratio of at least 8%, a leverage capital ratio of at least 5%, a CET1 ratio of at least 6.5%, and must not be subject to any order or directive requiring the institution to improve its capital level. An adequately capitalized institution has a total risk-based capital ratio of at least 8%, a tier 1 capital ratio of at least 6%, a CET1 ratio of at least 4.5%, and a leverage ratio of at least 4%.

Failure to meet specified minimum capital requirements could result in regulatory actions by the Federal Reserve or Ohio Division of Financial Institutions that could have a material effect on the Company’s financial condition or results of operations. Management believes there were no material changes to capital resources as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. As of June 30, 2020, the Company and the Bank met all capital adequacy requirements to which they were subject.

32


CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

During October 2019, the federal banking agencies adopted an optional community bank leverage ratio (“CBLR”).  Depository institutions and depository institution holding companies, that have less than $10 billion in total consolidated assets and have a tier 1 leverage ratio of greater than 9 percent, are considered qualifying community banking organizations and are eligible to opt into the community bank leverage ratio framework.  Additionally, such insured depository institutions are considered to have satisfied the risk-based and leverage capital requirements and will be considered well-capitalized under the rule, effective January 1, 2020.  The Company met the well-capitalized ratios under the new standard at both June 30, 2020 and December 31, 2019 but has not elected to opt-in to the CBLR framework as of June 30, 2020.

 

 

 

Capital Ratios

 

 

 

June 30,

2020

 

 

December 31,

2019

 

Common Equity Tier 1 Capital To Risk Weighted Assets

 

 

 

 

 

 

 

 

Consolidated

 

 

15.1

%

 

 

14.3

%

Bank

 

 

14.6

%

 

 

14.1

%

 

 

 

 

 

 

 

 

 

Tier 1 Capital To Risk Weighted Assets Ratio

 

 

 

 

 

 

 

 

Consolidated

 

 

15.1

%

 

 

14.3

%

Bank

 

 

14.6

%

 

 

14.1

%

 

 

 

 

 

 

 

 

 

Total Capital To Risk Weighted Assets Ratio

 

 

 

 

 

 

 

 

Consolidated

 

 

16.4

%

 

 

15.5

%

Bank

 

 

15.9

%

 

 

15.3

%

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

 

 

 

 

 

 

Consolidated

 

 

9.3

%

 

 

10.0

%

Bank

 

 

9.0

%

 

 

9.9

%

 

LIQUIDITY

 

(Dollars in millions)

 

June 30,

2020

 

 

December 31,

2019

 

 

Change

 

Cash and cash equivalents

 

$

174

 

 

$

102

 

 

$

72

 

Available from FHLB

 

 

95

 

 

 

97

 

 

 

(2

)

Unpledged AFS securities at fair market value

 

 

33

 

 

 

61

 

 

 

(28

)

 

 

$

302

 

 

$

260

 

 

$

42

 

Net deposits and short-term liabilities

 

$

797

 

 

$

673

 

 

$

124

 

Liquidity ratio

 

 

37.9

 

%

 

38.6

 

%

 

 

 

Minimum board approved liquidity ratio

 

 

20.0

 

 

 

20.0

 

 

 

 

 

 

Liquidity refers to the Company’s ability to generate sufficient cash to fund current loan demand, meet deposit withdrawals, pay operating expenses, and meet other obligations. Liquidity is monitored by the Company’s Asset Liability Committee. Other sources of liquidity include, but are not limited to, purchases of federal funds, advances from the FHLB, adjustments of interest rates to attract deposits, brokered deposits, and borrowing at the Federal Reserve discount window. Management believes that its sources of liquidity are adequate to meet cash flow obligations for the foreseeable future.

The liquidity and on-hand liquidity ratios were 37.9% and 21.0% at June 30, 2020 as compared to 38.6% and 17.9% at December 31, 2019.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements (as such term is defined in applicable Securities and Exchange Commission (the “Commission”) rules) that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.

 

33


CSB BANCORP, INC.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The COVID-19 pandemic added market risk disclosure which should be read with the disclosures presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. While 2020 began with increased loan demand and strong employment, the economic picture reversed sharply as coronavirus wreaked havoc and became the lead story by mid-March. A series of emergency health orders for public safety curtailed nonessential activity and had the effect of shutting down vast swaths of Ohio’s economy, resulting in a peak of approximately 1 million people on unemployment, or an unemployment rate of 17.6%, in Ohio during April of 2020.  By late June, Ohio’s unemployment rate approximated 11%.     The longer-term impact of our response is dependent on a number of variables, including higher delinquencies from continued high unemployment and increased credit deterioration in industries highly impacted by Covid-19. This pandemic may affect the Company’s employee base which has been dispersed amongst different buildings and home to ensure no one department could be disrupted by illness.

Management performs a quarterly analysis of the Company’s interest rate risk over a twenty-four month horizon. The analysis includes two balance sheet models, one based on a static balance sheet and one on a dynamic balance sheet with projected growth in assets and liabilities. All balance sheet positions and interest rate projections are currently within the Company’s board-approved policy.

The following table presents an analysis of the estimated sensitivity of the Company’s annual net interest income to sudden and sustained -200 through +400 basis point changes, in 100 basis point increments, in market interest rates at June 30, 2020 and December 31, 2019. The net interest income reflected is for the first twelve-month period of the modeled twenty-four month horizon. The underlying balance sheet for illustrative purposes is dynamic with projected growth in assets and liabilities.    

 

June 30, 2020

(Dollars in thousands)

 

 

Change in

Interest Rates

(basis points)

 

Net Interest

Income

 

 

Dollar

Change

 

 

Percentage

Change

 

 

Board Policy

Limits

 

 

+400

 

$

29,542

 

 

$

1,344

 

 

 

4.8

 

%

+/- 25

 

%

+300

 

 

29,097

 

 

 

899

 

 

 

3.2

 

 

+/-15

 

 

+200

 

 

28,693

 

 

 

495

 

 

 

1.8

 

 

+/-10

 

 

+100

 

 

28,413

 

 

 

215

 

 

 

0.8

 

 

+/-5

 

 

0

 

 

28,198

 

 

 

 

 

 

 

 

 

 

 

-100

 

 

27,746

 

 

 

(452

)

 

 

(1.6

)

 

+/-5

 

 

-200

 

 

27,286

 

 

 

(912

)

 

 

(3.2

)

 

+/-10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

+400

 

$

30,266

 

 

$

1,481

 

 

 

5.1

 

%

+/- 25

 

%

+300

 

 

29,958

 

 

 

1,173

 

 

 

4.2

 

 

+/-15

 

 

+200

 

 

29,599

 

 

 

814

 

 

 

3.0

 

 

+/-10

 

 

+100

 

 

29,208

 

 

 

423

 

 

 

1.5

 

 

+/-5

 

 

0

 

 

28,785

 

 

 

 

 

 

 

 

 

 

 

-100

 

 

27,955

 

 

 

(830

)

 

 

(2.9

)

 

+/-5

 

 

-200

 

 

26,767

 

 

 

(2,018

)

 

 

(7.0

)

 

+/-10

 

 

 

 

34


CSB BANCORP, INC.

CONTROLS AND PROCEDURES

 

ITEM 4 - CONTROLS AND PROCEDURES

With the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its 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, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that:

 

(a)

information required to be disclosed by the Company in this Quarterly Report on Form 10-Q would be accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure;

 

(b)

information required to be disclosed by the Company in this Quarterly Report on Form 10-Q would be recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms; and

 

(c)

the Company’s disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to the Company and its consolidated subsidiary is made known to them, particularly during the period for which the Company’s periodic reports, including this Quarterly Report on Form 10-Q, are being prepared.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes during the period covered by this Quarterly Report on Form 10-Q in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

35


 

CSB BANCORP, INC.

FORM 10-Q

Quarter ended June 30, 2020

PART II – OTHER INFORMATION

In the opinion of management there are no outstanding legal proceedings that are reasonably likely to have a material adverse effect on the company’s financial condition or results of operations.

ITEM 1A - RISK FACTORS.

There have been no material changes to the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, other than the COVID-19 developments previously discussed under Item 3 - Quantitative and Qualitative Disclosures About Market Risk in Part I of this report.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On July 7, 2005 CSB Bancorp, Inc. filed Form 8-K with the Commission announcing that its Board of Directors approved a Stock Repurchase Program authorizing the repurchase of up to 10% of the Company’s common shares then outstanding. Repurchases may be made from time to time as market and business conditions warrant, in the open market, through block purchases, and in negotiated private transactions. No repurchases were made during the quarterly period ended June 30, 2020.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4 - MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5 - OTHER INFORMATION.

Not applicable.

 

 

36


CSB BANCORP, INC.

FORM 10-Q

Quarter ended June 30, 2020

PART II – OTHER INFORMATION

 

ITEM 6 - Exhibits.

 

Exhibit

Number

 

Description of Document

 

 

 

3.1

 

Amended Articles of Incorporation of CSB Bancorp, Inc. (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed August 6, 2004, Exhibit 3.1, film number 000-21714).

 

3.1.1

 

Amended form of Article Fourth of Amended Articles of Incorporation, as effective April 9, 1998 (incorporated by reference to registrant’s Annual Report on Form 10-K filed on March 30, 1999, Exhibit 3.1.1, file number 000-21714).

3.2

 

Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to the Registrant’s Form 10-SB).

 

 

 

3.2.1

 

Amended Article VIII of the Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form DEF 14a filed on March 25, 2009, Appendix A, film number 09703970).

 

 

 

4.0

 

Description of Capital Stock (incorporated by reference to registrants Annual Report on Form 10-K filed on March 16, 2020, Exhibit 4.0, file number 000-21714).

 

 

 

11

 

Statement Regarding Computation of Per Share Earnings.

 

 

 

31.1

 

Rule 13a-14(a)/15d-14(a) Chief Executive Officer’s Certification.

 

 

 

31.2

 

Rule 13a-14(a)/15d-14(a) Chief Financial Officer’s Certification.

 

 

 

32.1

 

Section 1350 Chief Executive Officer’s Certification.

 

 

 

32.2

 

Section 1350 Chief Financial Officer’s Certification.

 

 

 

101

 

The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Net Loss and Comprehensive Loss , (iii) Consolidated Statements of Stockholders' Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

 

 

 

104

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

 

37


 

CSB BANCORP, INC.

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, thereunto duly authorized.

 

 

 

 

CSB BANCORP, INC.

 

 

 

(Registrant)

 

 

 

 

 

 

 

 

Date:

 

August 10, 2020

/s/ Eddie L. Steiner

 

 

 

Eddie L. Steiner

 

 

 

President

 

 

 

Chief Executive Officer

 

 

 

 

 

 

 

 

Date:

 

August 10, 2020

/s/ Paula J. Meiler

 

 

 

Paula J. Meiler

 

 

 

Senior Vice President

 

 

 

Chief Financial Officer

 

 

38