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 26, 2022

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 26, 2022, CSB Bancorp, Inc. issued a press release announcing its earnings for the three-month period ended December 31, 2021. 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, 2021.
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 26, 2022		Senior Vice President and Chief Financial Officer

csbb-ex991_6.htm

Exhibit 99.1

CSB BANCORP, INC. REPORTS FOURTH QUARTER EARNINGS

Fourth Quarter Highlights

	Quarter Ended<br><br><br>December 31, 2021			Quarter Ended<br><br><br>December 31, 2020
Diluted earnings per share	$	0.85		$	0.97
Net Income	$	2,306,000		$	2,679,000
Return on average common equity		9.41	%		11.45	%
Return on average assets		0.80	%		1.05	%

Millersburg, Ohio – January 26, 2022 – CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2021 net income of $2,306,000, or $0.85 per basic and diluted share, as compared to $2,679,000, or $0.97 per basic and diluted share, for the same period in 2020.  Income before federal income tax amounted to $2,840,000, a decrease of 14% over the same quarter in the prior year.   For the year ended December 31, 2021 net income totaled $10,837,000 compared to $10,568,000 for the same period last year, an increase of 3%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 9.41% and 0.80%, respectively, compared with 11.45% and 1.05% for the fourth quarter of 2020.

Eddie Steiner, President and CEO stated, “Residential mortgage applications declined during the quarter, as many homeowners have refinanced to lower rates, housing stock remains in tight supply, mortgage rates have increased modestly, and the holiday season and covid levels impeded some activity.  Business loan demand shows signs of strengthening, although still held somewhat in check by significant borrower liquidity, supply chain disruptions, labor shortages, and inflation uncertainties.  Deposit growth has remained strong, with our balances increasing 3.5% during fourth quarter to finish the year above one billion dollars.  We are also grateful to report our tenth consecutive year of record net income.”

Net interest income and noninterest income totaled $8.5 million during the quarter, a decrease of $724 thousand from the prior-year fourth quarter.   Net interest income decreased $471 thousand, or 7%, in the fourth quarter of 2021 compared to the same period in 2020.

Loan interest income, including fees, decreased $1.1 million, or 15%, during fourth quarter 2021 as compared to the same quarter in 2020.  The decrease was mainly due to average total loan balances declining $75 million below the year ago quarter, including average Paycheck Protection Program loans (“PPP”) declining $73 million from the prior year quarter. Loan yields for fourth quarter 2021 averaged 4.47%, a decrease of 16 basis points from the 2020 fourth quarter average of 4.63%, The loan yield decrease partially resulted from PPP loan forgiveness resulting in $394 thousand less in PPP fees recognized in fourth quarter 2021 compared to fourth quarter 2020.

The net interest margin was 2.48% compared to 2.85% for fourth quarter 2020. As discussed above, both loan volume and rate declined, partially offset with volume increases within the securities account, and rate decreases on liabilities. Liquidity continues to play a factor on the margin as the growth of average overnight funds rose $72 million on a quarter over prior year quarter comparison.   The tax equivalency effect on the margin was 0.01% in fourth quarter 2021 compared to 0.02% in fourth quarter 2020.

With the decrease in outstanding loan balances and continuing improvement in credit quality, there was no provision for loan losses for the quarter ended December 31, 2021 as compared to $378 thousand loss provision for the prior year fourth quarter when the effect of Covid on future credit losses was not discernable.  COVID

factors have not significantly affected the Bank’s loan portfolio quality to date, and local businesses are beginning or restarting construction projects previously sidelined by a significant degree of COVID-related uncertainty.

Noninterest income decreased 12%, compared to fourth quarter of 2020. The decrease was primarily the result of a $487 thousand, or 64%, decline in gain on sale of mortgages to the secondary market, as refinancing of mortgages slowed and home purchases were limited by a lack of housing inventory for sale.  Offsetting increases were recognized in debit and credit card fee income, earnings from bank owned life insurance values, and brokerage and trust income.

Noninterest expense increased 2% from fourth quarter 2020. Salary and employee benefit costs increased $194 thousand, or 6%, compared to the prior year quarter, primarily resulting from increases in compensation and workman’s compensation as the 2020 credits expired.  A recovery was recognized on the provision for unfunded loan commitments of $107 thousand compared to the prior year quarter primarily as commercial loan construction commitments funded in the fourth quarter decreasing the senior/assisted living sector unfunded exposure at December 31, 2021.   Marketing and public relations increased by $137 thousand, or 26%, reflecting a return to normalized levels after the pandemic-related curtailment of activities in 2020. Software expense increased by $42 thousand reflecting investment in new platforms. FDIC insurance expense increased $20 thousand above the prior year quarter due to the increase in asset size.  Professional and directors’ fees decreased $88 thousand, or 20% primarily reflecting a decline in collection legal fees. The Company’s fourth quarter efficiency ratio increased to 66.4% compared to 59.8%.

Federal income tax expense totaled $534 thousand in fourth quarter 2021, as compared to $640 thousand tax expense for the same quarter in 2020. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter rose to $1.14 billion, an increase of $120 million, or 12%, above the same quarter of the prior year.  Liquidity increased as the Company’s average interest-bearing balances with banks increased $72 million, to $266 million, as compared to the fourth quarter in 2020. Average loan balances of $544 million decreased $75 million, or 12%, from the prior year fourth quarter while average securities balances of $234 million increased $116 million, or 76%, as compared to fourth quarter 2020.

Average commercial loan balances for the quarter, including commercial real estate, decreased $64 million, or 15%, from prior year levels. Excluding a $73 million decrease in average PPP loan balances, commercial loans increased $9 million year over year as construction loans were drawn and borrowers used term loans to fund equipment and other purchases. Average residential mortgage balances decreased $3 million, or 3%, below the prior year’s quarter while home equity lines of credit decreased $6 million from the prior year’s quarter as balances were paid down or refinanced into low-rate term mortgages.  Average consumer credit balances decreased $2 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 as pandemic uncertainty diminishes.

Nonperforming assets decreased $3.4 million from December 31, 2020 to $1.1 million, or 0.20%, of total loans plus other real estate on December 31, 2021, primarily the result of payoffs of $2.1 million.  Delinquent loan balances as of December 31, 2021 decreased to 0.27% of total loans as compared to 0.88% on December 31, 2020.

Net loan charge-offs recognized during fourth quarter 2021 were $27 thousand, or 0.02% annualized, compared to fourth quarter 2020 net loan losses of $459 thousand. The allowance for loan losses amounted to 1.39% of total loans on December 31, 2021 as compared to 1.36% on December 31, 2020.

Average deposit balances grew on a quarter over prior year quarter comparison by $122 million, or 14%.  For the fourth quarter 2021, the average cost of deposits amounted to 0.15%, as compared to 0.27% for the fourth quarter 2020.  During the fourth quarter 2021, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $62 million and interest-bearing demand and savings accounts of $61 million, while time deposits decreased $1 million. The average balance of securities sold under repurchase

agreement during the fourth quarter of 2021 decreased by $4 million, or 9%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $97.3 million on December 31, 2021 with 2.7 million common shares outstanding.  The average equity to assets ratio amounted to 8.54% on December 31, 2021 and 9.13% on December 31, 2020.  The Company declared a fourth quarter dividend of $0.31 per share, producing an annualized yield of 3.3% based on the December 31, 2021 closing price of $37.75.

Cares Act and related events

CSB facilitated and funded $129 million of SBA emergency PPP loans in 2020 and 2021.  As of December 31, 2021, $125 million has been received from the SBA in forgiveness. and approximately $181 thousand remains in unearned fees at December 31, 2021.  All loans modified to businesses and consumers to deal with the uncertainty of the economy during 2020 and 2021 have entered repayment.

During fourth quarter 2021, the available for sale investment securities were reviewed for price volatility with $78.3 million book value securities transferred from available for sale to held to maturity at $76.3 million market value to protect additional declines to tangible book value with the projected increases in market interest rates in 2022 and 2023.

Following the rise in market interest rates during the first weeks of January 2022, approximately $60 million in investment securities were purchased and added to the investment portfolio, reducing overnight cash.  Purchased investments included mortgage-backed instruments and short-term corporate and US treasury notes.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1.1 billion as of December 31, 2021. 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

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. 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)		6,752		7,364			6,509			7,046			7,223		27,671			28,301
Provision for (recovery of) loan losses		-		(210	)		(475	)		30			378		(655	)		1,650
Other income		1,836		1,768			1,843			1,878			2,089		7,325			6,935
Other expenses		5,709		5,713			5,390			5,281			5,576		22,093			20,342
FTE adjustment (a)		39		39			38			38			39		154			148
Net income		2,306		2,901			2,745			2,885			2,679		10,837			10,568
Diluted earnings per share		0.85		1.06			1.00			1.05			0.97		3.97			3.85
PERFORMANCE RATIOS
Return on average assets (ROA), annualized		0.80	%	1.03		%	0.97		%	1.10		%	1.05	%	0.97		%	1.13	%
Return on average common equity (ROE), annualized		9.41		11.79			11.62			12.33			11.45		11.27			11.71
Net interest margin FTE (a)		2.48		2.77			2.43			2.85			2.97		2.63			3.22
Efficiency ratio		66.41		62.49			64.40			59.14			59.75		63.05			57.55
Number of full-time equivalent employees		171		178			174			170			171
MARKET DATA
Book value/common share		35.80		35.62			35.11			33.94			34.23
Period-end common share mkt value		37.75		39.25			38.00			37.50			35.00
Market as a % of book		105.45	%	110.19		%	108.23		%	110.49		%	102.25	%
Price-to-earnings ratio		9.51		9.62			9.41			9.40			9.09
Cash dividends/common share		0.31		0.31			0.30			0.30			0.29		1.22			1.13
Common stock dividend payout ratio		36.47	%	29.25		%	30.00		%	28.57		%	29.90	%	30.73		%	29.35	%
Average basic common shares		2,720,633		2,729,410			2,740,390			2,742,350			2,742,350		2,733,126			2,742,350
Average diluted common shares		2,720,633		2,729,410			2,740,390			2,742,350			2,742,350		2,733,126			2,742,350
Period end common shares outstanding		2,718,024		2,725,524			2,734,244			2,742,350			2,742,350
Common stock market capitalization		102,605		106,977			103,901			102,838			95,982
ASSET QUALITY
Gross charge-offs		66		39			20			5			511		130			642
Net charge-offs (recoveries)		27		20			(12	)		(34	)		459		1			393
Allowance for loan losses		7,618		7,645			7,875			8,338			8,274
Nonperforming assets (NPAs)		1,088		1,320			2,786			3,089			4,497
Net charge-off (recovery) / average loans ratio		0.02	%	0.01		%	(0.01	)	%	(0.02	)	%	0.29	%	0.00		%	0.06	%
Allowance for loan losses / period-end loans		1.39		1.40			1.43			1.43			1.36
NPAs/loans and other real estate		0.20		0.24			0.50			0.53			0.74
Allowance for loan losses/nonperforming loans		699.86		579.07			282.61			269.92			183.99
CAPITAL & LIQUIDITY
Period-end tangible equity to assets		8.13	%	8.34		%	8.12		%	7.99		%	8.68	%
Average equity to assets		8.54		8.75			8.38			8.95			9.13
Average equity to loans		17.86		17.89			16.78			15.92			15.02
Average loans to deposits		54.62		56.09			57.18			64.95			70.81
AVERAGE BALANCES
Assets		1,138,690		1,115,814			1,131,251			1,060,485			1,018,770		1,111,808			931,330
Earning assets		1,079,002		1,056,424			1,073,865			1,004,521			966,304		1,053,666			879,153
Loans		544,389		545,420			564,998			596,319			619,455		562,592			609,207
Deposits		996,646		972,409			988,017			918,063			874,820		969,009			788,904
Shareholders' equity		97,241		97,584			94,786			94,929			93,042		96,145			90,247
ENDING BALANCES
Assets		1,144,239		1,111,696			1,128,922			1,110,157			1,031,632
Earning assets		1,084,744		1,054,141			1,072,286			1,043,016			977,092
Loans		549,154		546,095			552,030			582,714			609,159
Deposits		1,002,747		968,629			986,668			968,569			891,562
Shareholders' equity		97,315		97,089			96,012			93,085			93,859

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.

CSB BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)
(Dollars in thousands, except per share data)
ASSETS
Cash and cash equivalents
Cash and due from banks	19,543			19,281
Interest-earning deposits in other banks	224,114			162,371
Total cash and cash equivalents	243,657			181,652
Securities
Available-for-sale, at fair-value	131,708			190,438
Held-to-maturity	174,808			9,045
Equity securities	115			87
Restricted stock, at cost	4,614			4,614
Total securities	311,245			204,184
Loans held for sale	231			1,378
Loans	549,154			609,159
Less allowance for loan losses	7,618			8,274
Net loans	541,536			600,885
Premises and equipment, net	13,866			12,633
Goodwill and core deposit intangible	4,728			4,772
Bank owned life insurance	24,035			21,416
Accrued interest receivable and other assets	4,941			4,712
TOTAL ASSETS	1,144,239			1,031,632
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing	334,346			272,051
Interest-bearing	668,401			619,511
Total deposits	1,002,747			891,562
Short-term borrowings	36,530			37,215
Other borrowings	3,407			4,664
Accrued interest payable and other liabilities	4,240			4,332
Total liabilities	1,046,924			937,773
Shareholders' equity
Common stock, 6.25 par value. Authorized
9,000,000 shares; issued 2,980,602 shares
in 2021 and 2020	18,629			18,629
Additional paid-in capital	9,815			9,815
Retained earnings	76,715			69,209
Treasury stock at cost - 262,578 shares in 2021
and 238,252 shares in 2020	(5,719	)		(4,780	)
Accumulated other comprehensive (loss) income	(2,125	)		986
Total shareholders' equity	97,315			93,859
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	1,144,239			1,031,632

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		6,131		7,209		26,124			28,354
Taxable securities		773		421		2,613			1,882
Nontaxable securities		116		121		455			464
Other		109		53		337			366
Total interest and dividend income		7,129		7,804		29,529			31,066
Interest expense:
Deposits		388		584		1,884			2,723
Other		28		36		128			190
Total interest expense		416		620		2,012			2,913
Net interest income		6,713		7,184		27,517			28,153
Provision for (recovery of) loan losses		-		378		(655	)		1,650
Net interest income, after provision
for (recovery of) loan losses		6,713		6,806		28,172			26,503
Noninterest income
Service charges on deposits accounts		263		250		939			1,003
Trust services		261		234		1,059			896
Debit card interchange fees		538		453		2,050			1,661
Gain on sale of loans		275		762		1,449			1,951
Market value change in equity securities		8		5		28			(4	)
Other		491		385		1,800			1,428
Total noninterest income		1,836		2,089		7,325			6,935
Noninterest expenses
Salaries and employee benefits		3,298		3,104		12,599			11,707
Occupancy expense		262		242		1,033			953
Equipment expense		195		151		714			657
Professional and director fees		353		441		1,184			1,284
Software expense		388		346		1,342			1,101
Marketing and public relations		137		109		461			398
Debit card expense		186		171		710			621
Other expenses		890		1,012		4,050			3,621
Total noninterest expenses		5,709		5,576		22,093			20,342
Income before income tax		2,840		3,319		13,404			13,096
Federal income tax provision		534		640		2,567			2,528
Net income		2,306		2,679		10,837			10,568
Net income per share:
Basic and diluted		0.85		0.97		3.97			3.85

All values are in US Dollars.