8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): January 25, 2021

CSB Bancorp, Inc.

(Exact name of Registrant as Specified in Its Charter)

Ohio	0-21714	34-1687530
(State or Other Jurisdiction<br><br><br>of Incorporation)	(Commission File Number)	(IRS Employer<br><br><br>Identification No.)
91 North Clay Street, P.O. Box 232<br><br><br>Millersburg, OH		44654
(Address of Principal Executive Offices)		(Zip Code)

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

Not Applicable

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

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

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class	Trading<br><br><br>Symbol(s)	Name of each exchange on which registered
Common Stock, par value $6.25 per share	CSBB	OTC-PINK

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

Emerging growth company ☐

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

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On January 25, 2021, CSB Bancorp, Inc. issued a press release announcing its earnings for the three-month period ended December 31, 2020. A copy of this press release and related financial tables are furnished herein as Exhibit 99.1.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

99.1	Press release and Quarterly Report for CSB Bancorp, Inc. for the quarter ended December 31, 2020.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

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

	CSB Bancorp, Inc.
	By:	/s/ Paula J. Meiler
		Paula J. Meiler
Date:  January 25, 2021		Senior Vice President and Chief Financial Officer

csbb-ex991_9.htm

Exhibit 99.1

CSB BANCORP, INC. REPORTS FOURTH QUARTER EARNINGS

Fourth Quarter Highlights

	Quarter Ended December 31, 2020			Quarter Ended December 31, 2019
Diluted earnings per share	$	0.97		$	0.95
Net Income	$	2,679,000		$	2,593,000
Return on average common equity		11.45	%		12.13	%
Return on average assets		1.05	%		1.27	%

Millersburg, Ohio – January 25, 2021 – CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2020 net income of $2,679,000, or $0.97 per basic and diluted share, as compared to $2,593,000, or $0.95 per basic and diluted share, for the same period in 2019.  Income before federal income tax amounted to $3,319,000, an increase of 3% over the same quarter in the prior year. For the twelve-month period ended December 31, 2020 net income totaled $10,568,000 compared to $10,414,000 for the same period last year, an increase of   1.5%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 11.45% and 1.05%, respectively, compared with 12.13% and 1.27% for the fourth quarter of 2019.

Eddie Steiner, President and CEO stated, “Full year net income increased 1.5% from the prior year, with fourth quarter net income 3% above last year’s ending quarter.  Factors related to the COVID-19 pandemic, including very low prevailing interest rates and various government stimulus measures have appreciably curtailed business borrowing levels and compressed net interest margins.  However, strong demand for home mortgage originations and Paycheck Protection Program (PPP) lending have combined to offset the softer earnings performance in other areas of the bank.  CSB is in an excellent position to continue supporting our markets, and we are actively lending in all areas of consumer and business borrowing needs, including the newest round of PPP funding activities.”

Net interest income and noninterest income, on a fully taxable equivalent basis, totaled $9.3 million during the quarter, an increase of $693 thousand from the prior-year fourth quarter.   Net interest income increased $55 thousand, or 1%, in the fourth quarter of 2020 compared to the same period in 2019.

Loan interest income including fees increased $152 thousand during fourth quarter 2020 as compared to the same quarter in 2019, an increase of 2%. Average total loan balances during the current quarter were $65 million higher than the year ago quarter, an increase of 12%.  Loan yields for fourth quarter 2020 averaged 4.63%, a decrease of 42 basis points from the 2019 fourth quarter average of 5.05%.

The net interest margin was 2.97% compared to 3.73% for fourth quarter 2019. The tax equivalency effect on the margin remained stable at 0.02% in the comparable fourth quarters.

Due to COVID related factors, an increased provision for loan losses of $378 thousand was recognized for the fourth quarter ended December 31, 2020 as compared to $285 thousand for the prior year quarter.  Credit quality within the loan portfolio has not been significantly affected by COVID factors to date.  However, a significant degree of COVID-related uncertainty remains, and the eventual damage to household and business balance sheets cannot be fully measured at this time.

Noninterest income increased 44%, compared to fourth quarter of 2019, fueled by historic growth in gain on sale of real estate loans into the secondary market, increases in debit card fee income, and bank owned life insurance values. These increases were partially offset by decreases in service charges on deposit accounts as both consumer and business accounts maintained increased deposit balances from government stimulus payments and loans provided by the bank within the PPP.

Noninterest expense increased 10% from fourth quarter 2019. Salary and employee benefit costs increased $191 thousand, or 7%, compared to the prior year quarter, as a result of increases in base compensation and commissions, incentive accruals, medical insurance costs and employers FICA expense. FDIC insurance expense increased $100 thousand as the prior year quarter reflected the use of Small Bank Assessment Credits.  Software increased by $82 thousand reflecting investment in new platforms.  Professional and directors’ fees increased $72 thousand, or 20%, reflecting increases in outside service fees.    Marketing and public relations decreased by $21 thousand, or 16%, reflecting the continuing pandemic-related shut down of activities in fourth quarter 2020. The Company’s fourth quarter efficiency ratio increased to 59.8% compared to 58.7%.

Federal income tax expense totaled $640 thousand in fourth quarter 2020, as compared to $623 thousand tax expense for the same quarter in 2019. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter rose to $1 billion, an increase of $206 million, or 25%, above the same quarter of the prior year.  Liquidity increased as the Company’s average interest-bearing balances with banks increased $103 million during the quarter to $194 million as compared to the fourth quarter in 2019. Average loan balances of $619 million increased $65 million, or 12%, from the prior year fourth quarter while average securities balances of $153 million increased $36 million, or 30%, as compared to fourth quarter 2019.

Average commercial loan balances for the quarter, including commercial real estate, increased $64 million, or 18%, from prior year levels. This amount includes $84 million in average PPP loan balances originated in 2020. Excluding average PPP loan balances, commercial loans decreased year over year as borrowers reduced outstanding commercial line balances during the pandemic-related contraction in economic activity. Average residential mortgage balances increased $9 million, or 8%, over the prior year’s quarter while home equity lines of credit decreased $7 million over the prior year’s quarter as they were refinanced into low-rate term mortgages.  Average consumer credit balances decreased $2 million, or 9%, versus the same quarter of the prior year.

Nonperforming assets decreased $162 thousand from December 31, 2019 to $4.5 million, or 0.74%, of total loans plus other real estate on December 31, 2020.  On December 31, 2020, approximately $1.1 million of the non-performing loan total is guaranteed by either USDA or the SBA.  Delinquent loan balances as of December 31, 2020 decreased to 0.88% of total loans as compared to 1.02% on December 31, 2019.

Net loan charge-offs recognized during fourth quarter 2020 were $459 thousand, or 0.29% annualized, compared to fourth quarter 2019 net loan losses of $45 thousand. The allowance for loan losses amounted to 1.36% of total loans on December 31, 2020 as compared to 1.27% on December 31, 2019.

Average deposit balances grew on a quarter over prior year quarter comparison by $195 million, or 29%.  For the fourth quarter 2020, the average cost of deposits amounted to 0.27%, as compared to 0.52% for the fourth quarter 2019.  During the fourth quarter 2020, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $58 million and interest-bearing demand and savings accounts of $140 million. The average balance of securities sold under repurchase agreement during the fourth quarter of 2020 increased by $2 million, or 6%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $93.9 million on December 31, 2020 with 2.7 million common shares outstanding.  The average equity to assets ratio amounted to 9.1% on December 31, 2020 and 10.4% on December 31, 2019.  The Company declared a fourth quarter dividend of $0.29, producing an annualized yield of 3.3% based on the December 31, 2020 closing price of $35.00.

Cares Act and related events

A second stimulus bill was signed into law on December 27, 2020 adding additional emergency relief to the March 2020 Cares Act. The December relief effort includes a second round of SBA’s PPP for qualifying businesses as well as additional emergency relief programs.  We facilitated and funded more than 750 of these government assistance loans totaling approximately $92 million in the first round.  As of December 31, 2020, $22 million has been received from the SBA in forgiveness and we expect the majority of the PPP loan dollars will ultimately qualify for borrower forgiveness under the guidelines of the SBA program. We have begun to originate second round PPP loans in January 2021 and have underwritten over $18 million in additional applications during the first few days of the program.

During the year we also extended loan modifications to qualifying commercial and consumer loan customers to deal with the uncertainty of the economy.  Customers could request relief from their total payment or place their obligation on interest only for a period of 3-4 months, with maturities extended on these modified loans.  As of December 31, 2020, loans which have not reentered regular payment include $12 million of term commercial loans and $475 thousand of consumer loans.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1 billion as of December 31, 2020. CSB provides a complete range of banking and other financial services to consumers and businesses through its wholly owned subsidiary, The Commercial and Savings Bank, with sixteen banking centers in Holmes, Wayne, Tuscarawas, and Stark counties and Trust offices located in Millersburg, North Canton, and Wooster, Ohio.

Forward-Looking Statement

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

Contact Information:

Paula J. Meiler, SVP & CFO

330.763.2873

paula.meiler@csb1.com

CSB BANCORP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)
(Dollars in thousands, except per share data)
EARNINGS
Net interest income FTE (a)		7,223		7,077			7,048		6,953		7,168		28,301		28,556
Provision for loan losses		378		377			717		178		285		1,650		1,140
Other income		2,089		1,862			1,641		1,343		1,451		6,935		5,428
Other expenses		5,576		5,050			4,709		5,007		5,079		20,342		19,769
FTE adjustment (a)		39		36			36		37		39		148		157
Net income		2,679		2,800			2,606		2,483		2,593		10,568		10,414
Diluted earnings per share		0.97		1.02			0.95		0.91		0.95		3.85		3.80
PERFORMANCE RATIOS
Return on average assets (ROA), annualized		1.05	%	1.14		%	1.15	%	1.23	%	1.27	%	1.13	%	1.36	%
Return on average common equity (ROE), annualized		11.45		12.19			11.72		11.47		12.13		11.71		12.77
Net interest margin FTE (a)		2.97		3.04			3.29		3.67		3.73		3.22		3.97
Efficiency ratio		59.75		56.32			54.05		60.08		58.74		57.55		58.00
Number of full-time equivalent employees		171		169			169		172		171
MARKET DATA
Book value/common share		34.23		33.49			32.81		31.95		31.17
Period-end common share mkt value		35.00		30.00			32.00		35.00		40.97
Market as a % of book		102.25	%	89.58		%	97.53	%	109.55	%	131.44	%
Price-to-earnings ratio		9.09		7.83			8.44		9.26		10.78
Cash dividends/common share		0.29		0.28			0.28		0.28		0.28		1.13		1.08
Common stock dividend payout ratio		29.90	%	27.45		%	29.47	%	30.77	%	29.47	%	29.35	%	28.42	%
Average basic common shares		2,742,350		2,742,350			2,742,350		2,742,350		2,742,350		2,742,350		2,742,296
Average diluted common shares		2,742,350		2,742,350			2,742,350		2,742,350		2,742,350		2,742,350		2,742,296
Period end common shares outstanding		2,742,350		2,742,350			2,742,350		2,742,350		2,742,350
Common stock market capitalization		95,982		82,271			87,755		95,982		112,354
ASSET QUALITY
Gross charge-offs		511		28			17		86		59		642		258
Net charge-offs (recoveries)		459		(143	)		3		74		44		393		30
Allowance for loan losses		8,274		8,355			7,835		7,120		7,017
Nonperforming assets (NPAs)		4,497		4,102			4,481		4,468		4,659
Net charge-off (recovery) /average loans ratio		0.29	%	(0.09	)	%	0.00	%	0.05	%	0.03	%	0.06	%	0.01	%
Allowance for loan losses/period-end loans		1.36		1.33			1.23		1.28		1.27
NPAs/loans and other real estate		0.74		0.65			0.70		0.80		0.84
Allowance for loan losses/nonperforming loans		183.99		203.71			178.78		162.97		154.55
CAPITAL & LIQUIDITY
Period-end tangible equity to assets		8.68	%	8.86		%	8.90	%	10.28	%	9.91	%
Average equity to assets		9.13		9.33			9.79		10.72		10.43
Average equity to loans		15.02		14.39			14.38		15.55		15.29
Average loans to deposits		70.81		76.22			80.95		82.61		81.62
AVERAGE BALANCES
Assets		1,018,770		979,806			912,875		812,409		812,481		931,330		765,722
Earning assets		966,304		926,377			860,838		761,619		763,244		879,153		719,127
Loans		619,455		635,124			621,710		560,142		554,556		609,207		552,014
Deposits		874,820		833,288			767,988		678,090		679,473		788,904		636,441
Shareholders' equity		93,042		91,409			89,404		87,090		84,777		90,247		81,547
ENDING BALANCES
Assets		1,031,632		987,978			965,179		810,041		818,683
Earning assets		977,092		936,323			913,813		757,769		767,345
Loans		609,159		628,084			636,799		555,320		551,633
Deposits		891,562		840,656			815,961		671,162		683,546
Shareholders' equity		93,859		91,853			89,967		87,629		85,476

All values are in US Dollars.

NOTES:

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

CSB BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)
(Dollars in thousands, except per share data)
ASSETS
Cash and cash equivalents
Cash and due from banks	19,281			17,648
Interest-earning deposits in other banks	162,371			84,369
Total cash and cash equivalents	181,652			102,017
Securities
Available-for-sale, at fair-value	190,438			112,146
Held-to-maturity	9,045			13,869
Equity securities	87			92
Restricted stock, at cost	4,614			4,614
Total securities	204,184			130,721
Loans held for sale	1,378			622
Loans	609,159			551,633
Less allowance for loan losses	8,274			7,017
Net loans	600,885			544,616
Premises and equipment, net	12,633			12,040
Goodwill and core deposit intangible	4,772			4,831
Bank owned life insurance	21,416			18,894
Accrued interest receivable and other assets	4,712			4,942
TOTAL ASSETS	1,031,632			818,683
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing	272,051			193,425
Interest-bearing	619,511			490,121
Total deposits	891,562			683,546
Short-term borrowings	37,215			38,889
Other borrowings	4,664			6,330
Accrued interest payable and other liabilities	4,332			4,442
Total liabilities	937,773			733,207
Shareholders' equity
Common stock, 6.25 par value. Authorized
9,000,000 shares; issued 2,980,602 shares
in 2020 and 2019	18,629			18,629
Additional paid-in capital	9,815			9,815
Retained earnings	69,209			61,740
Treasury stock at cost - 238,252 shares in 2020
and  2019	(4,780	)		(4,780	)
Accumulated other comprehensive income	986			72
Total shareholders' equity	93,859			85,476
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	1,031,632			818,683

All values are in US Dollars.

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)
(Dollars in thousands, except per share data)
Interest and dividend income:
Loans, including fees		7,209		7,057		28,354			28,553
Taxable securities		421		542		1,882			2,247
Nontaxable securities		121		130		464			532
Other		53		381		366			1,129
Total interest and dividend income		7,804		8,110		31,066			32,461
Interest expense:
Deposits		584		898		2,723			3,609
Short-term and other borrowings		36		83		190			453
Total interest expense		620		981		2,913			4,062
Net interest income		7,184		7,129		28,153			28,399
Provision for loan losses		378		285		1,650			1,140
Net interest income after provision
for loan losses		6,806		6,844		26,503			27,259
Noninterest income
Service charges on deposits accounts		250		313		1,003			1,252
Trust services		234		229		896			899
Debit card interchange fees		453		389		1,661			1,481
Gain on sale of loans		762		174		1,951			462
Market value change in equity securities		5		-		(4	)		9
Other		385		346		1,428			1,325
Total noninterest income		2,089		1,451		6,935			5,428
Noninterest expenses
Salaries and employee benefits		3,104		2,913		11,707			11,663
Occupancy expense		242		215		953			832
Equipment expense		151		163		657			571
Professional and director fees		441		369		1,284			1,332
Software expense		346		264		1,101			938
Marketing and public relations		109		130		398			535
Debit card expense		171		153		621			554
Other expenses		1,012		872		3,621			3,344
Total noninterest expenses		5,576		5,079		20,342			19,769
Income before income tax		3,319		3,216		13,096			12,918
Federal income tax provision		640		623		2,528			2,504
Net income		2,679		2,593		10,568			10,414
Net income per share:
Basic		0.97		0.95		3.85			3.80
Diluted		0.97		0.95		3.85			3.80

All values are in US Dollars.