8-K

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): October 24, 2023

CSB Bancorp, Inc.

(Exact name of Registrant as Specified in Its Charter)

Ohio	0-21714	34-1687530
(State or Other Jurisdiction<br>of Incorporation)	(Commission File Number)	(IRS Employer<br>Identification No.)
91 North Clay Street<br><br>P.O. Box 232
Millersburg, Ohio		44654
(Address of Principal Executive Offices)		(Zip Code)
Registrant’s Telephone Number, Including Area Code: 330 674-9015
---

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

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

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

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

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

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

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

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

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

Emerging growth company ☐

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

Item 2.02. Results of Operations and Financial Condition.

On October 24, 2023, CSB Bancorp, Inc. issued a news release announcing its earnings for the quarter ended September 30, 2023. A copy of this news release and related financial tables are furnished herein as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1	News release and Quarterly Report for CSB Bancorp, Inc. for the quarter and nine-months ended September 30, 2023.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

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

			CSB Bancorp, Inc.
Date:	October 24, 2023	By:	/s/ Paula J. Meiler
			Paula J. Meiler<br>Senior Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

CSB BANCORP, INC. REPORTS THIRD QUARTER EARNINGS

Third Quarter Highlights

	Quarter Ended<br><br>September 30, 2023			Quarter Ended<br><br>September 30, 2022
Diluted earnings per share	$	1.30		$	1.35
Net Income	$	3,481,000		$	3,650,000
Return on average common equity		13.63	%		15.24	%
Return on average assets		1.19	%		1.25	%

Millersburg, Ohio – October 24, 2023 – CSB Bancorp, Inc. (OTC Pink: CSBB) today announced third quarter 2023 net income of $3,481,000, or $1.30 per basic and diluted share, as compared to $3,650,000, or $1.35 per basic and diluted share, for the same period in 2022. For the nine-month period ended September 30, 2023, net income totaled $11,059,000 compared to $9,560,000 for the same period last year, an increase of 16%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 13.63% and 1.19%, respectively, compared with 15.24% and 1.25% for the third quarter of 2022. For the nine-month period ended September 30, 2023, ROE and ROA were 14.85% and 1.28% as compared to 13.41% and 1.12% for the comparable period in 2022.

Eddie Steiner, President and CEO stated, “Relatively low unemployment, slowly increasing labor participation, and consumer demand for goods and services are currently propping up an economy facing potent headwinds. Eventually, the forces of tighter monetary policy, significant government debt service, and other nations’ slowing economies, disasters and afflictions will disrupt the current momentum. For now, higher interest rates are rewarding savers and curbing some discretionary borrowing. Loan demand for constructing new homes, commercial buildings, and acquisition and development financing remains relatively active in our markets.”

Pre-Provision Net Revenue (PPNR) totaled $4.5 million during the quarter, an increase of $218 thousand, or 5%, from the prior year’s third quarter. Net interest income increased $277 thousand, or 3%, in the third quarter of 2023 compared to the same period in 2022.

Loan interest income including fees increased $2.5 million, or 37%, during third quarter 2023 as compared to the same quarter in 2022. The increase was mainly due to rate increases as well as an $80 million increase in average loan volume. Securities interest income increased $122 thousand, or 6%, during the third quarter 2023 compared to the same quarter 2022 from rate increases. Loan yields for third quarter 2023 averaged 5.39%, an increase of 93 basis points from the 2022 third quarter average of 4.46%, while overnight funds and securities yields for third quarter 2023 averaged 5.45% and 2.11%, respectively, compared to 2.29% and 1.91% in the third quarter 2022.

Interest expense rose $2.3 million, or 383%, during third quarter 2023 as compared to third quarter 2022. The increase follows a period of rapid interest rate increases spurred by the Federal Reserve followed by competitive pressures from banks and others to secure adequate funding. The cost to fund gross earning assets for the third quarter 2023 was 1.04% as compared to 0.22% for the third quarter of 2022. The Federal Reserve has indicated that it intends to maintain the higher interest rate environment beyond 2023.

The fully-taxable equivalent (FTE) net interest margin was 3.21% compared to 3.12% for third quarter 2022. Compared to the 2022 third quarter, FTE net interest income increased $275 thousand, or 3%, reflecting 9 basis points of net interest margin expansion, and a $2.5 million, or less than 1%, increase in average earning assets.

The higher interest rate environment drove the increase in yields coupled with loan volume growth, partially offset by the higher cost of funds. The tax equivalency effect on the margin was 0.01% in third quarter 2023 and 2022.

Noninterest income increased $30 thousand, or 2%, compared to third quarter of 2022. The increase was primarily the result of a $43 thousand, or 20%, increase in trust and brokerage fees, an $11 thousand increase in service charges on deposits, and a $9 thousand increase in cash surrender value on bank owned life insurance. Offsetting decreases were recognized in unrealized losses in equity securities, debit and credit card fees and gain on sale of mortgage loans.

Noninterest expense increased 2% from third quarter 2022. Salary and employee benefit costs increased $230 thousand, or 7%, compared to the prior year quarter, primarily resulting from the increases in base salaries, benefits, and group medical. FDIC assessment increased $38 thousand or 41% on the increase in rate in 2023. Occupancy expense increased $18 thousand, or 7%, related to building repairs. Software expense increased $11 thousand, or 3%, with the deployment of new reporting software and upgrades. Professional and directors’ fees decreased $189 thousand, or 34% primarily reflecting a consulting fee in 2022 to renegotiate the core data processing software contract. Marketing and public relations decreased by $17 thousand, or 12%, reflecting a return to normalized levels. The Company’s third quarter efficiency ratio decreased to 57.0% compared to 57.9% in the prior year.

Federal income tax expense was $850 thousand in the 2023 third quarter compared to $890 thousand in the 2022 third quarter. The effective tax rate for the 2023 and 2022 third quarter was 19.6%.

Average earning assets for the 2023 third quarter increased $2.5 million, or less than 1%, from the year-ago quarter, primarily reflecting an $80 million, or 14%, increase in average loans, a $15 million, or 4%, decrease in average securities, and a $63 million, or 62%, decrease in interest-earning deposits in other banks, held mainly at the Federal Reserve Bank.

Average commercial loan balances for the quarter, including commercial real estate, increased $58 million, or 15%, from prior year levels, as construction loans were drawn, and borrowers used term loans to fund equipment and other purchases. Average residential mortgage balances increased $24 million, or 17%, above the prior year’s quarter as borrowers have been favoring adjustable-rate mortgages during this period of higher interest rates. Home equity lines of credit decreased $3 million from the prior year’s quarter as balances were paid down due to rate increases as these loans are tied to Prime. Average consumer credit balances increased $1 million, or 9%, versus the same quarter of the prior year. Increased organic loan demand continues to be largely dependent on the pace at which excess liquidity is absorbed by businesses and households and restoration of borrower confidence.

Nonperforming assets were $260 thousand, or 0.04%, of total loans on September 30, 2023, compared to $686 thousand, or 0.11% of total loans, a year ago. Delinquent loan balances as of September 30, 2023, were stable at 0.23% of total loans as compared to 0.26% on September 30, 2022. Net loan recoveries recognized during third quarter 2023 were $119 thousand, or (0.07%) of average loans annualized, compared to third quarter 2022 net loan losses of $10 thousand.

On January 1, 2023, CSB adopted ASU 2016-13 known as current expected credit losses or “CECL”. The allowance for expected credit losses amounted to $6.7 million, or 0.98% of total loans, on September 30, 2023, as compared to 1.15% on September 30, 2022. The allowance for credit losses on off-balance sheet commitments on September 30, 2023, was $492 thousand, as compared to a September 30, 2022, balance of $141 thousand. CSB recorded no allowance for credit losses related to AFS or HTM debt securities as there is a zero loss expectation on these securities.

Average deposit balances declined slightly on a quarter over prior year quarter comparison by $2.7 million, or less than 1%. For the third quarter 2023, the average cost of deposits amounted to 1.08%, as compared to 0.22%

for the third quarter 2022. During the third quarter 2023, increases in average deposit balances over the prior year quarter included interest-bearing demand accounts of $13 million and time deposits of $54 million. Noninterest-bearing accounts decreased $39 million from the prior year’s third quarter while savings and money market accounts declined $30 million. The average balance of securities sold under repurchase agreement during the third quarter of 2023 decreased by $1 million, or 3%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $101 million on September 30, 2023, with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 8.72% for the quarter ended September 30, 2023, and 8.20% for the quarter ended September 30, 2022. The Company declared a third quarter dividend of $0.38 per share, producing an annualized yield of 4.0% based on the September 30, 2023, closing price of $37.75.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1.2 billion as of September 30, 2023. 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)		8,871			9,027			8,999			9,304		8,596			26,897			23,164
Provision (Recovery) of credit losses		177			140			(31	)		-		(250	)		286			(895	)
Other income		1,705			1,733			1,628			1,612		1,675			5,066			5,099
Other expenses		6,034			6,049			5,719			6,206		5,945			17,802			17,187
FTE adjustment(a)		34			33			34			36		36			101			109
Net income		3,481			3,644			3,934			3,753		3,650			11,059			9,560
Basic and Diluted earnings per share		1.30			1.36			1.46			1.39		1.35			4.12			3.52
PERFORMANCE RATIOS
Return on average assets (ROA), annualized		1.19		%	1.27		%	1.39		%	1.27	%	1.25		%	1.28		%	1.12		%
Return on average common equity (ROE), annualized		13.63			14.62			16.39			15.94		15.24			14.85			13.41
Net interest margin FTE(a)		3.21			3.33			3.37			3.33		3.12			3.30			2.86
Efficiency ratio		56.99			56.24			53.86			56.83		57.87			55.70			60.82
Number of full-time equivalent employees		178			172			170			172		172
MARKET DATA
Book value per common share		37.96			37.36			36.93			35.43		33.97
Period-end common share market value		37.75			38.88			38.00			38.50		39.00
Market as a % of book		99.45		%	104.07		%	102.90		%	108.66	%	114.81		%
Price-to-earnings ratio		6.85			6.99			7.06			7.84		8.92
Average basic common shares outstanding		2,675,967			2,680,526			2,692,304			2,707,576		2,712,686			2,682,872			2,716,225
Average diluted common shares outstanding		2,675,967			2,680,526			2,692,304			2,707,576		2,712,686			2,682,872			2,716,225
Period end common shares outstanding		2,671,313			2,680,325			2,680,625			2,707,576		2,707,576
Common stock market capitalization		100,842			104,211			101,864			104,242		105,595
ASSET QUALITY
Gross charge-offs		43			15			39			217		29			97			71
Net (recoveries) charge-offs		(119	)		(10	)		4			170		10			(125	)		(285	)
Allowance for credit losses		6,691			6,559			6,307			6,838		7,008
Nonperforming assets (NPAs)		260			255			218			256		685
Net charge-off (recovery) / average loans ratio		(0.07	)	%	(0.01	)	%	0.00		%	0.11	%	0.01		%	(0.03	)	%	(0.07	)	%
Allowance for credit losses / period-end loans		0.98			0.99			0.97			1.09		1.15
NPAs/loans and other real estate		0.04			0.04			0.03			0.04		0.11
Allowance for credit losses / nonperforming loans		2,576			2,577			2,893			2,667		1,022
CAPITAL & LIQUIDITY
Period-end tangible equity to assets(b)		8.39		%	8.29		%	8.28		%	7.90	%	7.54		%
Average equity to assets		8.72			8.68			8.48			7.96		8.20
Average equity to loans		15.00			15.15			15.27			15.06		15.98
Average loans to deposits		66.20			65.05			63.19			59.84		58.15
AVERAGE BALANCES
Assets		1,162,029			1,151,403			1,147,033			1,172,785		1,159,523			1,153,549			1,144,890
Earning assets		1,096,679			1,085,751			1,082,996			1,108,231		1,094,197			1,088,525			1,081,673
Loans		675,283			660,004			637,392			620,243		594,820			657,698			576,821
Deposits		1,020,135			1,014,631			1,008,721			1,036,559		1,022,851			1,014,537			1,004,565
Shareholders' equity		101,294			99,958			97,319			93,404		95,043			99,538			95,337
ENDING BALANCES
Assets		1,156,598			1,156,157			1,143,394			1,159,108		1,161,830
Earning assets		1,087,591			1,088,561			1,080,939			1,094,876		1,096,302
Loans		680,949			664,605			647,773			627,171		609,971
Deposits		1,018,075			1,021,671			1,007,507			1,023,417		1,029,274
Shareholders' equity		101,410			100,140			99,007			95,920		91,981

All values are in US Dollars.

Notes:

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

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

CSB BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)
(Dollars in thousands, except per share data)
ASSETS
Cash and cash equivalents
Cash and due from banks	20,409			20,859
Interest-earning deposits in other banks	29,000			86,657
Total cash and cash equivalents	49,409			107,516
Securities
Available-for-sale, at fair-value	145,330			143,433
Held-to-maturity	230,505			252,362
Equity securities	246			249
Restricted stock, at cost	1,561			3,430
Total securities	377,642			399,474
Loans held for sale	-			200
Loans	680,949			609,971
Less allowance for credit losses	6,691			7,008
Net loans	674,258			602,963
Premises and equipment, net	13,105			13,455
Goodwill	4,728			4,728
Bank owned life insurance	25,229			24,539
Accrued interest receivable and other assets	12,227			8,955
TOTAL ASSETS	1,156,598			1,161,830
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	300,018			338,043
Interest-bearing	718,057			691,231
Total deposits	1,018,075			1,029,274
Short-term borrowings	30,734			34,199
Other borrowings	1,808			2,528
Accrued interest payable and other liabilities	4,571			3,848
TOTAL LIABILITIES	1,055,188			1,069,849
SHAREHOLDERS' EQUITY
Common stock, 6.25 par value. Authorized 9,000,000 shares;
issued 2,980,602 shares in 2023 and 2022	18,629			18,629
Additional paid-in capital	9,815			9,815
Retained earnings	94,614			83,696
Treasury stock at cost - 309,289 shares in 2023
and 273,026 shares in 2022	(7,481	)		(6,107	)
Accumulated other comprehensive loss	(14,167	)		(14,052	)
TOTAL SHAREHOLDERS' EQUITY	101,410			91,981
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	1,156,598			1,161,830

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		9,175			6,680			25,855		18,489
Taxable securities		1,910			1,780			5,867		4,721
Nontaxable securities		102			110			305		328
Other		531			586			1,520		863
Total interest and dividend income		11,718			9,156			33,547		24,401
Interest expense:
Deposits		2,772			559			6,484		1,252
Other		109			37			267		94
Total interest expense		2,881			596			6,751		1,346
Net interest income		8,837			8,560			26,796		23,055
Provision (Recovery) for credit losses		177			(250	)		286		(895	)
Net interest income, after provision
(recovery) for credit losses		8,660			8,810			26,510		23,950
Noninterest income
Service charges on deposit accounts		332			321			924		875
Trust services		259			216			769		733
Debit card interchange fees		525			530			1,579		1,568
Credit card fees		166			170			535		516
Earnings on bank owned life insurance		179			170			520		504
Gain on sale of loans		47			49			106		314
Unrealized (loss) gain on equity securities		(11	)		(2	)		2		2
Other		208			221			631		587
Total noninterest income		1,705			1,675			5,066		5,099
Noninterest expenses
Salaries and employee benefits		3,429			3,199			10,112		9,766
Occupancy expense		290			272			856		820
Equipment expense		199			193			595		604
Professional and director fees		366			555			1,073		1,161
Software expense		408			397			1,228		1,056
Marketing and public relations		124			141			383		362
Debit card expense		179			201			494		550
Financial institutions tax		192			195			576		584
FDIC insurance expense		131			93			380		251
Other expenses		716			699			2,105		2,033
Total noninterest expenses		6,034			5,945			17,802		17,187
Income before income taxes		4,331			4,540			13,774		11,862
Federal income tax provision		850			890			2,715		2,302
Net income		3,481			3,650			11,059		9,560
Net income per share:
Basic and diluted		1.30			1.35			4.12		3.52

All values are in US Dollars.

CSB BANCORP, INC.

NON-GAAP DISCLOSURES

NET INTEREST INCOME, FULLY-TAXABLE EQUIVALENT

(Unaudited)
(Dollars in thousands)
Net interest income		8,837			8,560
Taxable equivalent adjustment1		34			36
Net interest income, FTE		8,871			8,596
Net interest margin		3.20	%		3.11	%
Taxable equivalent adjustment1		0.01			0.01
Net interest margin, FTE		3.21	%		3.12	%

All values are in US Dollars.

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

PRE-PROVISION NET REVENUE

(Unaudited)
(Dollars in thousands)
Pre-Provision Net Revenue (PPNR)
Net interest income		8,837		8,560
Total noninterest income		1,705		1,675
Total revenue		10,542		10,235
Less: Noninterest expense		6,034		5,945
PPNR		4,508		4,290

All values are in US Dollars.

TANGIBLE EQUITY

(Unaudited)
(Dollars in thousands)
Total Shareholders' Equity		101,410		91,981
Less: Goodwill		4,728		4,728
Tangible Shareholders' Equity		96,682		87,253

All values are in US Dollars.