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) April 21, 2020

CSB Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Ohio	0-21714		34-1687530
(State or other jurisdiction of incorporation)	(Commission File Number)		(IRS Employer Identification Number)
91 North Clay Street, P.O. Box 232,<br><br><br>Millersburg, Ohio		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 communication 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 Symbol	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 April 21, 2020, CSB Bancorp, Inc. issued a press release announcing its earnings for the three-month period ended March 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

( c ) Exhibits

99.1	Press release and Quarterly Report for CSB Bancorp, Inc. for the quarter ended March 31, 2020.

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: April 21, 2020		Senior Vice President and Chief Financial Officer

csbb-ex991_6.htm

Exhibit 99.1

CSB BANCORP, INC. REPORTS FIRST QUARTER EARNINGS

First Quarter Highlights

	Quarter Ended March 31, 2020			Quarter Ended March 31, 2019
Diluted earnings per share	$	0.91		$	0.93
Net Income	$	2,483,000		$	2,540,000
Return on average common equity		11.47	%		13.20	%
Return on average assets		1.23	%		1.41	%

Millersburg, Ohio – April 21, 2020 – CSB Bancorp, Inc. (OTC Pink: CSBB) today announced first quarter 2020 net income of $2,483,000, or $.91 per basic and diluted share, as compared to $2,540,000, or $.93 per basic and diluted share, for the same period in 2019.  Income before federal income tax amounted to $3,074,000, a decrease of 3% over the same quarter in the prior year.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 11.47% and 1.23%, respectively, compared with 13.20% and 1.41% for the first quarter of 2019.

Eddie Steiner, President and CEO stated, “Revenue declined 3.8% on a linked quarter basis.  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 more than 8% of Ohio’s active workforce filing for unemployment during the last two weeks of March alone.  We anticipate that second quarter will be very difficult for many small businesses, organizations and households, and are focused on working to address the financial needs within our primary market areas during this extraordinarily challenging health crisis. We will maintain and leverage our financial strength to do all that we can to help borrowers, depositors, and investors through this trying period.”

Net interest income and noninterest income, on a fully taxable equivalent basis, totaled $8.3 million during the quarter, an increase of $23 thousand from the prior-year first quarter.   Net interest income decreased $95 thousand, or 1%, in the first quarter of 2020 compared to the same period in 2019.

Loan interest income including fees decreased $222 thousand during first quarter 2020 as compared to the same quarter in 2019, a decrease of 3%. Average total loan balances during the current quarter were $10 million higher than the year ago quarter, an increase of 2%.  Loan yields for first quarter 2020 averaged 4.92%, a decrease of 29 basis points from the 2019 first quarter average of 5.21%.

The net interest margin was 3.67% compared to 4.16% for first quarter 2019. The tax equivalency effect on the margin remained stable at 0.02% in the comparable first quarters.

Noninterest income increased 10%, compared to first quarter of 2019, driven by growth in bank owned life insurance values, increases in debit card fee income, and gain on sale of loans.

Noninterest expense increased 5% from first quarter 2019.   Salary and employee benefit costs increased $126 thousand, or 4%, compared to the prior year quarter, as a result of higher wages, medical costs, and 401k retirement expenses. The Ohio financial institutions tax increased by $18 thousand, or 12%, as a result of increased capital. Marketing and public relations increased by $10 thousand, or 9%, reflecting timing of certain electronic and billboard promotional efforts and the opening of a new banking center. The Company’s first quarter efficiency ratio increased to 60.1% compared to 57.7%.

Federal income tax expense totaled $591 thousand in first quarter 2020, as compared to $619 thousand tax expense for the same quarter in 2019. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter amounted to $812 million, an increase of $82 million, or 11%, above the same quarter of the prior year.  Liquidity increased as average interest-bearing balances with banks increased $49 million during the quarter to $76 million as compared to the first quarter in 2019. Average loan balances of $560 million increased $10 million, or 2%, from the prior year first quarter while average securities balances of $126 million increased $15 million, or 14%, as compared to first quarter 2019.

Average commercial loan balances for the quarter, including commercial real estate, increased $3 million, or less than 1%, from prior year levels.  Average residential mortgage balances including home equity lines of credit increased $7 million, or 4%, over the prior year’s quarter.  Average consumer credit balances decreased $685 thousand, or -4%, versus the same quarter of the prior year.

Nonperforming assets increased $1.2 million from March 31, 2019 to $4.5 million, or 0.80%, of total loans plus other real estate at March 31, 2020. The increase in nonperforming assets resulted primarily from the addition of one commercial real estate facility of approximately $1.5 million.  At March 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 March 31, 2020 increased to 0.96% of total loans as compared to 0.70% at March 31, 2019.

Net loan losses recognized during first quarter 2020 were $74 thousand, or 0.05% annualized, compared to first quarter 2019 net loan recoveries of $95 thousand. The allowance for loan losses amounted to 1.28% of total loans at March 31, 2020 as compared to 1.15% at March 31, 2019.

Average deposit balances grew on a quarter over prior year quarter comparison by $74 million, or 12%.  For the first quarter 2020, the average cost of deposits amounted to 0.49%, as compared to 0.55% for the first quarter 2019.  During the first quarter 2020, increases in average deposit balances over the prior year quarter included non-interest bearing demand accounts of $11 million, interest-bearing transaction accounts of $55 million, and time deposits of $8 million. The average balance of securities sold under repurchase agreement during the first quarter of 2020 increased by $293 thousand, or 1%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $87.6 million on March 31, 2020 with 2.7 million common shares outstanding.  The tangible equity to assets ratio amounted to 10.3% on March 31, 2020 and 10.2% on March 31, 2019.  The Company declared a first quarter dividend of $0.28 per share, a $.02 per share increase over first quarter 2019, producing an annualized yield of 3.2% based on the March 31, 2020 closing price of $35.00.

Cares Act and subsequent events

On March 27, 2020 the Cares Act, a $2.3 trillion emergency federal relief bill, was signed into law.  The relief effort included an SBA program for qualifying businesses known as the Paycheck Protection Program (“PPP”).  At the time of this release, we have facilitated more than 450 of these government assistance loans, aggregating in excess of $81 million, with over 75% of the approved monies already in the hands of qualifying borrowers.  Additionally, we have offered loan modifications to our commercial and consumer loan customers to deal with the uncertainty of the economy.  A customer can request relief from their total payment or place their obligation on interest only for a period of 3-4 months.  On the date of this writing we have modified $50 million of term commercial loans and $3 million of consumer loans.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $810 million as of March 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)		6,953		7,168		7,228		7,111		7,049
Provision for loan losses		178		285		285		285		285
Other income		1,343		1,451		1,440		1,313		1,224
Other expenses		5,007		5,079		4,999		4,900		4,791
FTE adjustment (a)		37		39		40		40		38
Net income		2,483		2,593		2,695		2,586		2,540
Diluted earnings per share		0.91		0.95		0.98		0.94		0.93
PERFORMANCE RATIOS
Return on average assets (ROA)		1.23	%	1.27	%	1.38	%	1.39	%	1.41	%
Return on average common equity (ROE)		11.47		12.13		12.89		12.91		13.20
Net interest margin FTE (a)		3.67		3.73		3.95		4.08		4.16
Efficiency ratio		60.08		58.74		57.52		57.96		57.72
Number of full-time equivalent employees		172		171		175		174		174
MARKET DATA
Book value/common share		31.95		31.17		30.49		29.70		28.80
Period-end common share mkt value		35.00		40.97		38.67		40.45		38.75
Market as a % of book		109.55	%	131.44	%	126.83	%	136.20	%	134.55	%
Price-to-earnings ratio		9.26		10.78		10.28		11.05		10.85
Cash dividends/common share		0.28		0.28		0.28		0.26		0.26
Common stock dividend payout ratio		30.77	%	29.47	%	28.57	%	27.66	%	27.96	%
Average basic common shares		2,742,350		2,742,350		2,742,350		2,742,350		2,742,242
Average diluted common shares		2,742,350		2,742,350		2,742,350		2,742,350		2,742,242
Period end common shares outstanding		2,742,350		2,742,350		2,742,350		2,742,350		2,742,242
Common shares repurchased		0		0		0		0		0
Common stock market capitalization		95,982		112,354		106,047		110,928		106,262
ASSET QUALITY
Gross charge-offs		86		59		75		54		70
Net (recoveries) charge-offs		74		44		46		35		-95
Allowance for loan losses		7,120		7,017		6,776		6,537		6,287
Nonperforming assets (NPAs)		4,468		4,659		4,518		4,555		3,302
Net charge-off (recovery) /average loans ratio		0.05	%	0.03	%	0.03	%	0.03	%	-0.07	%
Allowance for loan losses/period-end loans		1.28		1.27		1.20		1.19		1.15
NPAs/loans and other real estate		0.80		0.84		0.80		0.83		0.60
Allowance for loan losses/nonperforming loans		162.97		154.55		153.35		146.70		197.23
CAPITAL & LIQUIDITY
Period-end tangible equity to assets		10.28	%	9.91	%	10.07	%	10.28	%	10.15	%
Average equity to assets		10.72		10.43		10.72		10.77		10.69
Average equity to loans		15.55		15.29		14.95		14.66		14.18
Average loans to deposits		82.61		81.62		86.18		88.73		91.16
AVERAGE BALANCES
Assets		812,409		812,481		773,481		745,658		730,181
Earning assets		761,619		763,244		725,615		699,229		687,515
Loans		560,142		554,556		554,956		547,981		550,483
Deposits		678,090		679,473		643,981		617,558		603,839
Shareholders' equity		87,090		84,777		82,948		80,338		78,038
ENDING BALANCES
Assets		810,041		818,683		786,792		750,252		734,845
Earning assets		757,769		767,345		734,859		704,738		688,792
Loans		555,320		551,633		566,213		550,612		548,220
Deposits		671,162		683,546		658,119		623,328		607,342
Shareholders' equity		87,629		85,476		83,614		81,458		78,967

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	18,277			15,110
Interest-earning deposits in other banks	77,995			29,133
Total cash and cash equivalents	96,272			44,243
Securities
Available-for-sale, at fair-value	108,263			86,378
Held-to-maturity	11,242			20,218
Equity securities	79			89
Restricted stock, at cost	4,614			4,614
Total securities	124,198			111,299
Loans held for sale	256			140
Loans	555,320			548,220
Less allowance for loan losses	7,120			6,287
Net loans	548,200			541,933
Premises and equipment, net	12,387			10,800
Goodwill and core deposit intangible	4,817			4,879
Bank owned life insurance	19,023			16,638
Accrued interest receivable and other assets	4,888			4,913
TOTAL ASSETS	810,041			734,845
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing	188,137			177,404
Interest-bearing	483,025			429,938
Total deposits	671,162			607,342
Short-term borrowings	40,605			36,324
Other borrowings	6,206			8,373
Accrued interest payable and other liabilities	4,439			3,839
Total liabilities	722,412			655,878
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	63,455			56,115
Treasury stock at cost - 238,252 shares in 2020
and 238,360 in 2019	(4,780	)		(4,784	)
Accumulated other comprehensive income (loss)	510			(808	)
Total shareholders' equity	87,629			78,967
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	810,041			734,845

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		6,850			7,072
Taxable securities		609			587
Nontaxable securities		119			134
Other		239			175
Total interest and dividend income		7,817			7,968
Interest expense:
Deposits		831			825
Other		70			132
Total interest expense		901			957
Net interest income		6,916			7,011
Provision for loan losses		178			285
Net interest income after provision
for loan losses		6,738			6,726
Noninterest income
Service charges on deposits accounts		291			292
Trust services		230			224
Debit card interchange fees		375			347
Gain on sale of loans		114			79
Market value change in equity securities		(13	)		6
Other		346			276
Total noninterest income		1,343			1,224
Noninterest expenses
Salaries and employee benefits		2,968			2,842
Occupancy expense		220			204
Equipment expense		135			137
Professional and director fees		330			339
Software expense		227			218
Marketing and public relations		127			117
Debit card expense		140			127
Other expenses		860			807
Total noninterest expenses		5,007			4,791
Income before income tax		3,074			3,159
Federal income tax provision		591			619
Net income		2,483			2,540
Net income per share:
Basic		0.91			0.93
Diluted		0.91			0.93

All values are in US Dollars.