Equibles

10-Q

CSB Bancorp, Inc. (CSBB)

10-Q 2023-11-13 For: 2023-09-30
View Original
Added on April 06, 2026

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: September 30, 2023

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<br><br>incorporation or organization) (I.R.S. Employer<br>Identification No.)
91 North Clay Street, P.O. Box 232<br><br>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(g) of the Act:

Title of each class Trading<br><br>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 November 1, 2023, the registrant had 2,671,313 shares of common stock, $6.25 par value per share, outstanding.

CSB BANCORP, INC.

FORM 10-Q

QUARTER ENDED September 30, 2023

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 (Loss) 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 30
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 38
ITEM 4 – CONTROLS AND PROCEDURES 39
Part II - Other Information
ITEM 1 – Legal Proceedings 40
ITEM 1A – Risk Factors 40
ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds 40
ITEM 3 – Defaults upon Senior Securities 40
ITEM 4 – Mine Safety Disclosures 40
ITEM 5 – Other Information 40
ITEM 6 – Exhibits 41
Signatures 42

CSB BANCORP, INC.

PART I – FINANCIAL INFORMATION

ITEM 1. – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31,
(Dollars in thousands, except per share data) 2022
ASSETS
Cash and cash equivalents
Cash and due from banks 20,409 $ 19,911
Interest-earning deposits with banks 29,000 66,509
Total cash and cash equivalents 49,409 86,420
Securities
Available-for-sale, at fair value 145,330 150,069
Held-to-maturity (fair value 2023-187,695; 2022-211,954) 230,505 247,401
Equity securities 246 244
Restricted stock, at cost 1,561 3,430
Total securities 377,642 401,144
Loans held for sale — 52
Loans 680,949 627,171
Less allowance for credit losses 6,691 6,838
Net loans 674,258 620,333
Premises and equipment, net 13,105 13,414
Bank-owned life insurance 25,229 24,709
Goodwill 4,728 4,728
Accrued interest receivable and other assets 12,227 8,308
TOTAL ASSETS 1,156,598 $ 1,159,108
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest-bearing 300,018 $ 350,283
Interest-bearing 718,057 673,134
Total deposits 1,018,075 1,023,417
Short-term borrowings 30,734 32,550
Other borrowings 1,808 2,461
Allowance for credit losses on off-balance sheet commitments 492 141
Accrued interest payable and other liabilities 4,079 4,619
TOTAL LIABILITIES 1,055,188 1,063,188
SHAREHOLDERS' EQUITY
Common stock, 6.25 par value. Authorized 9,000,000 shares; issued   2,980,602 shares; outstanding 2,671,313 shares in 2023 and 2,707,576 in 2022 18,629 18,629
Additional paid-in capital 9,815 9,815
Retained earnings 94,614 86,502
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 ) (12,919 )
TOTAL SHAREHOLDERS' EQUITY 101,410 95,920
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,156,598 $ 1,159,108

All values are in US Dollars.

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended<br>September 30, Nine Months Ended<br>September 30,
(Dollars in thousands, except per share data) 2023 2022 2023 2022
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
Short-term borrowings 100 25 236 51
Other borrowings 9 12 31 43
Total interest expense 2,881 596 6,751 1,346
NET INTEREST INCOME 8,837 8,560 26,796 23,055
CREDIT LOSS EXPENSE
Provision (recovery) for credit loss expense - loans 13 (250 ) 287 (895 )
Provision (recovery) for credit loss expense - off-balance sheet commitments 164 — (1 ) —
Total provision (recovery) for credit loss expense 177 (250 ) 286 (895 )
NET INTEREST INCOME AFTER CREDIT LOSS EXPENSE 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
Gain on sale of loans, net 47 49 106 314
Earnings on bank owned life insurance 179 170 520 504
Unrealized gain (loss) on equity securities, net (11 ) (2 ) 2 2
Other income 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
Financial institutions tax 192 195 576 584
Marketing and public relations 124 141 383 362
Software expense 408 397 1,228 1,056
Debit card expense 179 201 494 550
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
Basic and diluted net earnings per share $ 1.30 $ 1.35 $ 4.12 $ 3.52

See notes to unaudited consolidated financial statements

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three Months Ended<br>September 30, Nine Months Ended<br>September 30,
(Dollars in thousands) 2023 2022 2023 2022
Net income $ 3,481 $ 3,650 $ 11,059 $ 9,560
Other comprehensive loss
Unrealized losses arising during the period (1,127 ) (5,189 ) (1,722 ) (15,334 )
Amortization of discount on securities transferred to held-to-maturity 50 64 143 237
Income tax effect 226 1,076 331 3,170
Other comprehensive loss (851 ) (4,049 ) (1,248 ) (11,927 )
Total comprehensive income (loss) $ 2,630 $ (399 ) $ 9,811 $ (2,367 )

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except per share data) Additional<br>paid-in<br>capital Retained<br>earnings Treasury<br>stock Accumulated<br>other<br>comprehensive<br>loss Total
Three Months Ended September 30, 2023
Balance, beginning of period 18,629 $ 9,815 $ 92,149 $ (7,137 ) $ (13,316 ) $ 100,140
Net income — — 3,481 — — 3,481
Other comprehensive loss — — — — (851 ) (851 )
Purchase of 9,012 treasury shares — — — (344 ) — (344 )
Cash dividends declared, 0.38 per share — — (1,016 ) — — (1,016 )
Balance, September 30, 2023 18,629 $ 9,815 $ 94,614 $ (7,481 ) $ (14,167 ) $ 101,410
Nine Months Ended September 30, 2023
Balance, beginning of period 18,629 $ 9,815 $ 86,502 $ (6,107 ) $ (12,919 ) $ 95,920
Net income — — 11,059 — — 11,059
Cumulative effect of adoption of ASU 2016-13 — — 52 — — 52
Other comprehensive loss — — — — (1,248 ) (1,248 )
Purchase of 36,263 treasury shares — — — (1,374 ) — (1,374 )
Cash dividends declared, 1.12 per share — — (2,999 ) — — (2,999 )
Balance, September 30, 2023 18,629 $ 9,815 $ 94,614 $ (7,481 ) $ (14,167 ) $ 101,410
Three Months Ended September 30, 2022
Balance, beginning of period 18,629 $ 9,815 $ 80,940 $ (5,719 ) $ (10,003 ) $ 93,662
Net income — — 3,650 — — 3,650
Other comprehensive loss — — — — (4,049 ) (4,049 )
Purchase of 10,448 treasury shares — — — (388 ) — (388 )
Cash dividends declared, 0.33 per share — — (894 ) — — (894 )
Balance, September 30, 2022 18,629 $ 9,815 $ 83,696 $ (6,107 ) $ (14,052 ) $ 91,981
Nine Months Ended September 30, 2022
Balance, beginning of period 18,629 $ 9,815 $ 76,715 $ (5,719 ) $ (2,125 ) $ 97,315
Net income — — 9,560 — — 9,560
Other comprehensive loss — — — — (11,927 ) (11,927 )
Purchase of 10,448 treasury shares — — — (388 ) — (388 )
Cash dividends declared, 0.95 per share — — (2,579 ) — — (2,579 )
Balance, September 30, 2022 18,629 $ 9,815 $ 83,696 $ (6,107 ) $ (14,052 ) $ 91,981

All values are in US Dollars.

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended<br>September 30,
(Dollars in thousands) 2023 2022
NET CASH FROM OPERATING ACTIVITIES $ 8,079 $ 8,894
CASH FLOWS FROM INVESTING ACTIVITIES
Securities:
Proceeds from repayments, available-for-sale 7,088 11,293
Proceeds from repayments, held-to-maturity 16,798 16,901
Purchases, available-for-sale (4,458 ) (38,868 )
Purchases, held-to-maturity — (94,542 )
Purchases, equity securities — (131 )
Redemption of FHLB stock 1,869 1,183
Loan originations, net (53,895 ) (61,004 )
Property, equipment, and software acquisitions (308 ) (217 )
Net cash used in investing activities (32,906 ) (165,385 )
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits (5,342 ) 26,527
Net decrease in short-term borrowings (1,816 ) (2,331 )
Repayment of other borrowings (653 ) (879 )
Cash dividends paid (2,999 ) (2,579 )
Purchase of treasury shares (1,374 ) (388 )
Net cash (used in) provided by financing activities (12,184 ) 20,350
NET DECREASE IN CASH AND CASH EQUIVALENTS (37,011 ) (136,141 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 86,420 243,657
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 49,409 $ 107,516
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest $ 6,584 $ 1,351
Income taxes 3,365 1,760

See notes to unaudited consolidated financial statements.

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 September 30, 2023, 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 (“GAAP”) have been omitted. The Annual Report for CSB for the year ended December 31, 2022, 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 September 30, 2023 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.

ALLOWANCE FOR CREDIT LOSSES - LOANS AND LEASES POLICY

In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology applied in determining the allowance under CECL. Refer to Note 3 Loans, for further discussion of these portfolio segments. In addition to our existing segments, our new segmentation breaks out commercial lessors of buildings, and consumer indirect loans as well as separating consumer mortgage loans from home equity line of credit loans.

The ACL is a valuation reserve established and maintained by charges against operating income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The ACL is an estimate of expected credit losses, measured over the contractual life of a loan (adjusted for expected prepayment), that considers our historical loss experience, current conditions and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period.

The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of homogeneous loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.

The ACL for homogeneous loans is calculated using a life-time loss rate methodology with both a quantitative and a qualitative analysis that is applied on a quarterly basis. The ACL model is comprised of eight distinct portfolio segments: 1) Commercial and Industrial or C&I, 2) Commercial Real Estate, or CRE, 3) Commercial Lessors of Buildings, 4) Construction, 5) Consumer Mortgage, 6) Home Equity Line of Credit or HELOC, 7) Consumer Installment, and 8) Consumer Indirect loans. Each segment has a distinct set of risk characteristics monitored by management. We further evaluate the ACL at a disaggregated level which includes type of collateral, loan participations, non-owner occupied and our internal risk rating system for the commercial segments, and type of collateral and lien position, for the consumer segments.

8

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Historical credit loss experience is the basis for the estimation of expected credit losses. We apply historical loss rates to pools of loans with similar risk characteristics. After consideration of the historic loss calculation, management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date. Our reasonable and supportable forecast adjustment is based on the unemployment forecast and management judgment. For periods beyond our two-year reasonable and supportable forecast, we revert to the historical loss rate. The qualitative adjustments for current conditions are based upon changes in lending policies and practices, change in economic conditions, change in nature of the portfolio, experience and ability of lending staff, problem loan trends, quality of the bank’s loan review system, value of underlying collateral for collateral dependent loans, the existence of and changes in concentrations, and other external factors. These modified historical loss rates are multiplied by the outstanding principal balance of each loan to calculate a required reserve. A similar process is employed to calculate a reserve assigned to the portion of off-balance sheet commitments that we expect to fund, specifically unfunded loan commitments, and any needed reserve is recorded in other liabilities.

The ACL for individual loans begins with the use of normal credit review procedures to identify whether a loan no longer shares similar risk characteristics with other pooled loans and therefore, should be individually assessed. We evaluate all commercial loans greater than $500 thousand that meet the following criteria: 1) when it is determined that foreclosure is probable, 2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the operation or sale of the collateral, and 3) when it is determined by management that a loan does not share similar risk characteristics with other loans. Collateral values are discounted to consider disposition costs when appropriate. A specific reserve is established or a charge-off is taken if the fair value of the loan is less than the loan balance.

Although we believe our process for determining the ACL appropriately considers all the factors that would likely result in credit losses, the process includes subjective elements and may be susceptible to significant change. To the extent actual losses are higher than management estimates, additional provision for credit losses could be required and could adversely affect our earnings or financial position in future periods.

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 credit losses and the fair value of financial instruments.

ACCOUNTING PRONOUNCEMENTS ADOPTED IN 2023

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and subsequent related updates. This ASU replaces the incurred loss methodology for recognizing credit losses and requires businesses and other organizations to measure the current expected credit losses (CECL) on financial assets measured at amortized cost, including loans and held-to-maturity securities, net investments in leases, off-balance sheet credit exposures such as unfunded commitments, and other financial instruments. In addition, ASC 326 requires credit losses on available-for-sale debt securities to be presented as an allowance rather than as a write-down when management does not intend to sell or believes that it is not more likely than not they will be required to sell the debt securities. This guidance became effective on January 1, 2023 for the Bank. The results reported for periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable accounting standards.

9

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Bank adopted this guidance, and subsequent related updates, using the modified retrospective approach for all financial assets measured at amortized cost, including loans and held-to-maturity debt securities, available-for-sale debt securities and unfunded commitments. On January 1, 2023, the Bank recorded a cumulative effect increase to retained earnings of $52 thousand, net of tax, of which $442 thousand related to loans, offset by $390 thousand related to unfunded commitments, net of tax. There was no allowance for credit losses recorded for either available-for-sale or held-to-maturity debt securities. See Note 3 for further discussion on the adoption of CECL.

The Bank adopted the provisions of ASC 326 related to presenting other-than-temporary impairment on available-for- sale debt securities on January 1, 2023 using the prospective transition approach, though no such charges had been recorded on the securities held by the Bank as of the date of adoption.

The Bank expanded the pooling utilized under the legacy incurred loss method to include additional segmentation based on risk. The impact of the change from the incurred loss model to the current expected credit loss model is detailed below:

January 1, 2023
(Dollars in thousands) Pre-adoption Adoption Impact As Reported
Assets:
ACL on loans
Commercial and industrial $ 1,110 $ 658 $ 1,768
Commercial real estate 2,760 (541 ) 2,219
Commercial lessors of buildings — 974 974
Construction 803 (515 ) 288
Consumer mortgage 1,268 (580 ) 688
Home equity line of credit — 201 201
Consumer installment 233 (183 ) 50
Consumer indirect — 91 91
Unallocated 664 (664 ) —
Total allowance for credit losses - loans 6,838 (559 ) $ 6,279
Liabilities:
ACL for off-balance sheet commitments — 493 493
Total allowance for credit losses $ 6,838 (66 ) $ 6,772

The following table presents the Bank's loan portfolio, prior to the adoption of ASC 326, by category of loans and the impact of the change from the adoption of the standard:

(Dollars in thousands) December 31, 2022 Adoption Impact Post Adoption January 1, 2023
Commercial and industrial $ 129,343 $ (2,209 ) $ 127,134
Commercial real estate 231,785 (70,625 ) 161,160
Commercial lessors of buildings — 83,728 83,728
Construction 55,318 (10,452 ) 44,866
Consumer mortgage 194,125 (44,338 ) 149,787
Home equity line of credit — 44,243 44,243
Consumer installment 16,387 (6,730 ) 9,657
Consumer indirect — 6,383 6,383
$ 626,958 $ — $ 626,958
Gross loans prior to deferred fees
Deferred loan costs, net 213 — 213
Allowance for credit losses (6,838 ) 559 (6,279 )
Total net loans $ 620,333 $ 559 $ 620,892

10

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In March 2022, the FASB issued ASU 2022-02, “Financial Instruments – Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures”. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. The guidance also requires disclosures about the performance of modified loans to borrowers experiencing financial difficulty in the 12 months following the modification.

These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current period gross write-offs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13. This guidance has been adopted as of January 1, 2023, however, there have been no reportable loan modifications during the nine months ended September 30, 2023.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES

Securities consist of the following on September 30, 2023 and December 31, 2022:

(Dollars in thousands) Amortized<br>cost Gross<br>unrealized<br>gains Gross<br>unrealized<br>losses Fair value
September 30, 2023
Available-for-sale
U.S. Treasury securities $ 23,133 $ — $ (675 ) $ 22,458
U.S. Government agencies 13,999 — (1,151 ) 12,848
Mortgage-backed securities of government agencies 74,457 2 (10,008 ) 64,451
Asset-backed securities of government agencies 569 — (17 ) 552
State and political subdivisions 20,372 — (1,573 ) 18,799
Corporate bonds 29,158 — (2,936 ) 26,222
Total available-for-sale 161,688 2 (16,360 ) 145,330
Held-to-maturity
U.S. Treasury securities $ 10,292 $ — $ (1,083 ) $ 9,209
Mortgage-backed securities of government agencies 217,656 — (41,334 ) 176,322
State and political subdivisions 2,557 — (393 ) 2,164
Total held-to-maturity 230,505 — (42,810 ) 187,695
Equity securities 185 61 — 246
Restricted stock 1,561 — — 1,561
Total securities $ 393,939 $ 63 $ (59,170 ) $ 334,832
December 31, 2022
Available-for-sale
U.S. Treasury securities $ 23,194 $ — $ (969 ) $ 22,225
U.S. Government agencies 13,999 — (1,369 ) 12,630
Mortgage-backed securities of government agencies 77,677 72 (8,859 ) 68,890
Asset-backed securities of government agencies 633 — (15 ) 618
State and political subdivisions 20,462 — (985 ) 19,477
Corporate bonds 28,740 — (2,511 ) 26,229
Total available-for-sale 164,705 72 (14,708 ) 150,069
Held-to-maturity
U.S Treasury securities $ 12,753 $ — $ (1,136 ) $ 11,617
Mortgage-backed securities of government agencies 232,068 — (34,051 ) 198,017
State and political subdivisions 2,580 1 (261 ) 2,320
Total held-to-maturity 247,401 1 (35,448 ) 211,954
Equity securities 185 59 — 244
Restricted stock 3,430 — — 3,430
Total securities $ 415,721 $ 132 $ (50,156 ) $ 365,697

12

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES (continued)

The amortized cost and fair value of debt securities on September 30, 2023, 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 $ 15,006 $ 14,780
Due after one through five years 55,512 51,631
Due after five through ten years 24,135 21,304
Due after ten years 67,035 57,615
Total debt securities available-for-sale $ 161,688 $ 145,330
Held-to-maturity
Due in one year or less $ — $ —
Due after one through five years 7,434 6,876
Due after five through ten years 5,138 4,295
Due after ten years 217,933 176,524
Total debt securities held-to-maturity $ 230,505 $ 187,695

Securities with a fair value of approximately $129.1 million and $110.1 million were pledged on September 30, 2023 and December 31, 2022, 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 $1.0 million and $2.9 million on September 30, 2023 and December 31, 2022. The FHLB has redeemed approximately $1.9 million in stock at $100 par value per share during the nine month period ended September 30, 2023. Federal Reserve Bank stock was $471 thousand on September 30, 2023 and December 31, 2022.

There were no proceeds from sales of securities for the three and nine-month periods ended September 30, 2023, and 2022. All gains and losses recognized on equity securities during the three and nine-month periods were unrealized.

13

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES (continued)

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, on September 30, 2023 and December 31, 2022:

Securities in a continuous unrealized loss position
Less than 12 months 12 months or more Total
(Dollars in thousands) Gross<br>unrealized<br>losses Fair<br>value Gross<br>unrealized<br>losses Fair<br>value Gross<br>unrealized<br>losses Fair<br>value
September 30, 2023
Available-for-sale
U.S. Treasury securities $ — $ — $ (675 ) $ 22,458 $ (675 ) $ 22,458
U.S. Government agencies — — (1,151 ) 12,848 (1,151 ) 12,848
Mortgage-backed securities of government<br>   agencies (235 ) 12,748 (9,773 ) 51,513 (10,008 ) 64,261
Asset-backed securities of government<br>   agencies — — (17 ) 552 (17 ) 552
State and political subdivisions (79 ) 1,952 (1,494 ) 16,622 (1,573 ) 18,574
Corporate bonds (1 ) 492 (2,935 ) 25,730 (2,936 ) 26,222
Held-to-maturity
U.S. Treasury securities — — (1,083 ) 9,209 (1,083 ) 9,209
Mortgage-backed securities of government<br>   agencies (356 ) 8,080 (40,978 ) 168,233 (41,334 ) 176,313
State and political subdivisions (21 ) 393 (372 ) 1,771 (393 ) 2,164
Total securities with unrealized losses $ (692 ) $ 23,665 $ (58,478 ) $ 308,936 $ (59,170 ) $ 332,601
December 31, 2022
Available-for-sale
U.S. Treasury securities $ (798 ) $ 17,405 $ (171 ) $ 4,820 $ (969 ) $ 22,225
U.S. Government agencies — — (1,369 ) 12,630 (1,369 ) 12,630
Mortgage-backed securities of government<br>   agencies (1,046 ) 16,188 (7,813 ) 44,519 (8,859 ) 60,707
Asset-backed securities of government<br>   agencies — — (15 ) 618 (15 ) 618
State and political subdivisions (189 ) 9,079 (796 ) 9,848 (985 ) 18,927
Corporate bonds (1,165 ) 13,502 (1,346 ) 12,727 (2,511 ) 26,229
Held-to-maturity
U.S. Treasury securities — — (1,136 ) 11,617 (1,136 ) 11,617
Mortgage-backed securities of government<br>   agencies (9,733 ) 79,325 (24,318 ) 118,692 (34,051 ) 198,017
State and political subdivisions — — (261 ) 1,903 (261 ) 1,903
Total securities with unrealized losses $ (12,931 ) $ 135,499 $ (37,225 ) $ 217,374 $ (50,156 ) $ 352,873

14

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES (continued)

There were 203 securities in an unrealized loss position on September 30, 2023, 183 of which were in a continuous loss position for twelve (12) months or more. Each quarter the Company conducts a comprehensive security-level impairment assessment on the securities portfolio. Management believes the Company will fully recover the cost of these securities. Unrealized losses on the Company’s fixed-rate debt securities are a result of interest rate increases. U.S. Treasury securities and investments in securities of U.S. government sponsored agency bonds comprise $100 million of total AFS securities. The remaining $45 million of non-agency debt securities is made up of Corporate Bonds and debt securities to State and Political Subdivisions. For non-agency debt securities, the Company verified the current credit ratings remain above investment grade. Non-rated debt securities total $5 million. Annually, management reviews the credit profile of each non-rated issue and assesses whether any impairment to the contractually obligated cash flow is likely to occur. Based on these reviews, management has concluded the underlying creditworthiness for each security remains sufficient to maintain required payment obligations and, therefore, no allowance for credit losses has been recorded. Management believes the value will recover as the securities approach maturity or market interest rates change.

The Bank monitors the credit quality of held-to-maturity debt securities primarily through utilizing their credit rating. The Bank monitors the credit rating on a quarterly basis. There are no nonperforming held-to-maturity securities. As of September 30, 2023, no ACL was required for any held-to-maturity security. The majority of the securities are explicitly or implicitly guaranteed by the United States government, and any estimate of expected credit losses would be insignificant to the Bank. The following table summarizes the amortized cost of held-to maturity debt securities at September 30, 2023, aggregated by credit quality indicator:

(Dollars in thousands) U.S. Treasury securities Mortgage- backed securities of government agencies State and political subdivisions
September 30, 2023
Credit rating:
AAA / AA / A $ 10,292 $ 217,656 $ 2,557
BBB / BB / B — — —
Lower than B — — —
Non-rated — — —
Total $ 10,292 $ 217,656 $ 2,557

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS

The composition of net loans receivable as of September 30, 2023 and December 31, 2022:

(Dollars in thousands) September 30,<br>2023
Commercial and industrial $ 143,227
Commercial real estate 188,910
Commercial lessors of buildings 78,520
Construction 44,446
Consumer mortgage 167,419
Home equity line of credit 41,093
Consumer installment 11,197
Consumer indirect 6,168
Total loans 680,980
Allowance for credit losses (6,691 )
Deferred loan fees, net (31 )
Net Loans $ 674,258
(Dollars in thousands) December 31,<br>2022
--- --- --- ---
Commercial and industrial $ 129,343
Commercial real estate 231,785
Residential real estate 194,125
Construction & land development 55,318
Consumer 16,387
Total loans 626,958
Allowance for loan losses (6,838 )
Deferred loan costs, net 213
Total Loans * $ 620,333

* See Note 1 for reclassification of balances due to the adoption of ASC 326.

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, inventory, and equipment, 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.

16

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

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.

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.

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 credit 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 $132.2 and $137.5 million on September 30, 2023 and December 31, 2022, respectively.

17

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

Concentrations of Credit

Nearly all 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. Credit concentrations, including commitments, as determined using North American Industry Classification Codes (NAICS), to the two largest industries compared to total loans on September 30, 2023, included $62.9 million, or 9%, of total loans to lessors of non-residential buildings, and $39.6 million, or 6%, of total loans to manufacturers of animal food. These loans are generally secured by real property and equipment, with repayment expected from operational cash flow. Credit evaluation is based on a review of cash flow coverage of principal, interest payments, and the adequacy of the collateral received.

Allowance for Credit Losses

The following table details activity in the allowance for credit losses ("ACL") by portfolio segment for the three and nine months ended September 30, 2023. 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 months ended in September 2023, the decrease in the provision for commercial and industrial loans primarily relates to the recovery of prior loan charge-offs, as well as the decrease in substandard loan balances in this loan category. The remaining provision changes for the quarter are primarily a result of changes in loan volume in each loan category.

For the nine month period in 2023, the decrease in provision for commercial real estate loans is due to the payoff of one larger loan relationship with a specific allocation. The increase in the provision for commercial lessors of buildings relates to the increase in loans graded special mention in this category. All other changes during the nine month period are related to loan volume changes.

(Dollars in thousands) Beginning Balance Impact of Adopting ASC 326 Charge-offs Recoveries Provisions (Recovery) Ending Balance
Three Months Ended September 30, 2023
Commercial and industrial $ 2,119 $ — $ — $ 147 $ (303 ) $ 1,963
Commercial real estate 1,882 — — 8 239 2,129
Commercial lessors of buildings 1,237 — — — (11 ) 1,226
Construction 283 — — — (28 ) 255
Consumer mortgage 714 — — — 61 775
Home equity line of credit 178 — — — 9 187
Consumer installment 52 — (8 ) — 13 57
Consumer indirect 94 — (35 ) 7 33 99
Unallocated — — — — — —
$ 6,559 $ — $ (43 ) $ 162 $ 13 $ 6,691
Nine Months Ended September 30, 2023
Commercial and industrial $ 1,110 $ 658 $ — $ 166 $ 29 $ 1,963
Commercial real estate 2,760 (541 ) — 9 (99 ) 2,129
Commercial lessors of buildings — 974 — — 252 1,226
Construction 803 (515 ) — — (33 ) 255
Consumer mortgage 1,268 (580 ) — 1 86 775
Home equity line of credit — 201 — — (14 ) 187
Consumer installment 233 (183 ) (31 ) 12 26 57
Consumer indirect — 91 (66 ) 34 40 99
Unallocated 664 (664 ) — — — —
$ 6,838 $ (559 ) $ (97 ) $ 222 $ 287 $ 6,691

18

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 nine months ended September 30, 2022.

(Dollars in thousands) Commercial and industrial Commercial<br>Real Estate Residential<br>Real Estate Construction<br>& Land<br>Development Consumer Unallocated Total
Three Months Ended September 30, 2022
Beginning balance $ 1,213 $ 2,422 $ 1,177 $ 1,607 $ 395 $ 454 $ 7,268
(Recovery of) provision for loan<br>   losses 45 (298 ) 111 (331 ) (137 ) 360 (250 )
Charge-offs (13 ) (12 ) — — (4 ) (29 )
Recoveries 4 — 1 — 14 19
Net (charge-offs) recoveries (9 ) (12 ) 1 — 10 (10 )
Ending balance $ 1,249 $ 2,112 $ 1,289 $ 1,276 $ 268 $ 814 $ 7,008
Nine Months Ended September 30, 2022
Beginning balance $ 1,240 $ 2,838 $ 992 $ 1,380 $ 421 $ 747 $ 7,618
(Recovery of) provision for loan<br>   losses 30 (715 ) 295 (416 ) (156 ) 67 (895 )
Charge-offs (31 ) (12 ) — — (28 ) (71 )
Recoveries 10 1 2 312 31 356
Net (charge-offs) recoveries (21 ) (11 ) 2 312 3 285
Ending balance $ 1,249 $ 2,112 $ 1,289 $ 1,276 $ 268 $ 814 $ 7,008

19

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

Age Analysis of Past-Due Loans Receivable and Nonperforming Loans

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past-due status.

(Dollars in thousands) Current 30-59<br>Days<br>Past<br>Due 60-89<br>Days<br>Past<br>Due 90 Days +<br>Past Due Total Past Due Total<br>Loans
September 30, 2023
Commercial and industrial $ 143,026 $ 184 $ 17 $ — $ 201 $ 143,227
Commercial real estate 188,576 334 — — 334 188,910
Commercial lessors of buildings 78,520 — — — — 78,520
Construction 44,446 — — — — 44,446
Consumer mortgage 166,980 394 45 — 439 167,419
Home equity line of credit 40,874 219 — — 219 41,093
Consumer installment 11,044 121 20 12 153 11,197
Consumer indirect 6,168 — — — — 6,168
Total Loans $ 679,634 $ 1,252 $ 82 $ 12 $ 1,346 $ 680,980

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of September 30, 2023:

(Dollars in thousands) Nonaccrual with no ACL Nonaccrual with ACL Total Nonaccrual Loans Past Due Over 90 Days Still Accruing Total Nonperforming
September 30, 2023
Commercial and industrial $ 17 $ — $ 17 $ — $ 17
Commercial real estate 79 — 79 — 79
Commercial lessors of buildings — — — — —
Construction — — — — —
Consumer mortgage 110 — 110 — 110
Home equity line of credit — — — — —
Consumer installment 16 — 16 12 28
Consumer indirect 26 — 26 — 26
Total Loans $ 248 $ — $ 248 $ 12 $ 260

Interest income recognized on nonaccrual loans for the nine months ended September 30, 2023 was $1 thousand on commercial real estate loans and $22 thousand on consumer mortgage loans. Several of the consumer mortgage loans are at an amortized cost basis of $0 and all payments are being recognized as interest income.

20

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

The following table presents the aging of past due loans and nonaccrual loans as of December 31, 2022:

Accruing Loans
(Dollars in thousands) Current 30-59<br>Days<br>Past<br>Due 60-89<br>Days<br>Past<br>Due 90 Days +<br>Past Due Non-<br>Accrual Total<br>Past<br>Due<br>and<br>Non-<br>Accrual Total<br>Loans
December 31, 2022
Commercial and industrial $ 129,270 $ 70 $ 3 $ — $ — $ 73 $ 129,343
Commercial real estate 231,693 — — — 92 92 231,785
Residential real estate 193,794 95 137 — 99 331 194,125
Construction & land development 55,286 32 — — — 32 55,318
Consumer 16,091 103 128 — 65 296 16,387
Total Loans $ 626,134 $ 300 $ 268 $ — $ 256 $ 824 $ 626,958

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 all commercial loans before origination and an annual review of those with an outstanding commitment greater than $500 thousand. 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.

21

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass rated loans. Based on the most recent analysis performed, the following tables present the recorded investment in non-homogeneous loans by internal risk rating system as of September 30, 2023 and December 31, 2022:

Term Loans Amortized Costs Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term
(Dollars in thousands) 2023 2022 2021 2020 2019 Prior Total
September 30, 2023
Commercial and industrial:
Pass $ 21,665 $ 27,127 $ 13,867 $ 5,840 $ 4,057 $ 8,540 $ 45,546 $ — $ 126,642
Special mention 16 19 651 178 90 352 7,248 — 8,554
Substandard 294 570 483 901 60 1,230 4,493 — 8,031
Doubtful — — — — — — — — —
Total $ 21,975 $ 27,716 $ 15,001 $ 6,919 $ 4,207 $ 10,122 $ 57,287 $ — $ 143,227
YTD gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Commercial real estate:
Pass $ 20,649 $ 36,877 $ 57,330 $ 14,776 $ 19,773 $ 24,035 $ 695 $ — $ 174,135
Special Mention 213 465 652 398 — 2,688 — — 4,416
Substandard — — 902 — 471 8,986 — — 10,359
Doubtful — — — — — — — — —
Total $ 20,862 $ 37,342 $ 58,884 $ 15,174 $ 20,244 $ 35,709 $ 695 $ — $ 188,910
YTD gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Commercial lessors of buildings:
Pass $ 13,317 $ 22,938 $ 15,821 $ 6,516 $ 3,594 $ 9,202 $ 381 $ — $ 71,769
Special Mention — 446 1,513 — 3,627 — — — 5,586
Substandard — — — 999 — 166 — — 1,165
Doubtful — — — — — — — — —
Total $ 13,317 $ 23,384 $ 17,334 $ 7,515 $ 7,221 $ 9,368 $ 381 $ — $ 78,520
YTD gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Construction:
Pass $ 16,348 $ 19,495 $ 599 $ 275 $ 288 $ 269 $ — $ — $ 37,274
Special Mention — 289 6 635 — — — — 930
Substandard — — — 33 80 — — — 113
Doubtful — — — — — — — — —
Total $ 16,348 $ 19,784 $ 605 $ 943 $ 368 $ 269 $ — $ — $ 38,317
YTD gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Total
Pass $ 71,979 $ 106,437 $ 87,617 $ 27,407 $ 27,712 $ 42,046 $ 46,622 $ — $ 409,820
Special Mention 229 1,219 2,822 1,211 3,717 3,040 7,248 — 19,486
Substandard 294 570 1,385 1,933 611 10,382 4,493 — 19,668
Doubtful — — — — — — — — —
Total $ 72,502 $ 108,226 $ 91,824 $ 30,551 $ 32,040 $ 55,468 $ 58,363 $ — $ 448,974
(Dollars in thousands) Pass Special<br>Mention Substandard Doubtful Not<br>Rated Total
--- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2022
Commercial and industrial $ 119,353 $ 282 $ 7,927 $ — $ 1,781 $ 129,343
Commercial real estate 220,414 485 8,352 — 2,534 231,785
Construction & land development 40,640 6,655 — — 8,023 55,318
Total $ 380,407 $ 7,422 $ 16,279 $ — $ 12,338 $ 416,446

22

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

The Company monitors the credit risk profile by payment activity for the loan classes listed below. Loans past due 90 days or more and loans on nonaccrual status are considered nonperforming. The following table presents the amortized cost in residential consumer loans based on payment activity:

Term Loans Amortized Costs Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term
(Dollars in thousands) 2023 2022 2021 2020 2019 Prior Total
September 30, 2023
Consumer mortgage:
Performing $ 19,430 $ 35,098 $ 38,086 $ 33,815 $ 9,080 $ 31,800 $ — $ — $ 167,309
Nonperforming — — — — — 110 — — 110
Total $ 19,430 $ 35,098 $ 38,086 $ 33,815 $ 9,080 $ 31,910 $ — $ — $ 167,419
YTD gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Construction
Performing $ 3,422 $ 1,736 $ 270 $ 576 $ 83 $ 42 $ — $ — $ 6,129
Nonperforming — — — — — — — — —
Total $ 3,422 $ 1,736 $ 270 $ 576 $ 83 $ 42 $ — $ — $ 6,129
YTD gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Home equity line of credit:
Performing $ — $ — $ — $ — $ — $ — $ 41,046 $ 47 $ 41,093
Nonperforming — — — — — — — — —
Total $ — $ — $ — $ — $ — $ — $ 41,046 $ 47 $ 41,093
YTD gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Consumer installment:
Performing $ 5,410 $ 3,476 $ 1,187 $ 603 $ 211 $ 208 $ 74 $ — $ 11,169
Nonperforming — 1 17 — 10 — — — 28
Total $ 5,410 $ 3,477 $ 1,204 $ 603 $ 221 $ 208 $ 74 $ — $ 11,197
YTD gross charge-offs $ 1 $ 11 $ 10 $ 3 $ 2 $ 4 $ — $ — $ 31
Consumer indirect:
Performing $ 760 $ 1,219 $ 636 $ 589 $ 643 $ 2,295 $ — $ — $ 6,142
Nonperforming — — — — 21 5 — — 26
Total $ 760 $ 1,219 $ 636 $ 589 $ 664 $ 2,300 $ — $ — $ 6,168
YTD gross charge-offs $ — $ — $ — $ — $ — $ 66 $ — $ — $ 66
Total
Performing $ 29,022 $ 41,529 $ 40,179 $ 35,583 $ 10,017 $ 34,345 $ 41,120 $ 47 $ 231,842
Nonperforming — 1 17 — 31 115 — — 164
Total $ 29,022 $ 41,530 $ 40,196 $ 35,583 $ 10,048 $ 34,460 $ 41,120 $ 47 $ 232,006

Consumer mortgages are substantially secured by one to four family owner occupied properties and consumer indirect loans are substantially secured by recreational vehicles. All nonperforming consumer loans are evaluated when placed on nonaccrual status and may be charged down based on the fair value less cost to sell if that value is lower than the outstanding balance.

Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Bank modifies loans to borrowers in financial distress by providing – principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

In some cases, the Bank may provide multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

There were no modifications of loans to borrowers in financial distress completed during the nine months ended September 30, 2023.

23

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

Impaired Loans

The following impaired loan information relates to required disclosures under the previous incurred loan loss methodology and are only presented with prior period information.

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 December 31, 2022:

(Dollars in thousands) Commercial and industrial Commercial<br>Real Estate Residential<br>Real Estate Construction Consumer Unallocated Total
December 31, 2022
Allowance for loan losses:
Individually evaluated for<br>   impairment $ — $ — $ — $ — $ 4 $ — $ 4
Collectively evaluated for<br>   impairment 1,110 2,760 1,268 803 229 664 6,834
Total ending allowance balance $ 1,110 $ 2,760 $ 1,268 $ 803 $ 233 $ 664 $ 6,838
Loans:
Loans individually<br>   evaluated for<br>   impairment $ 123 $ 113 $ 677 $ — $ 123 $ 1,036
Loans collectively<br>   evaluated for<br>   impairment 129,220 231,672 193,448 55,318 16,264 625,922
Total ending loans balance $ 129,343 $ 231,785 $ 194,125 $ 55,318 $ 16,387 $ 626,958

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2022:

(Dollars in thousands) Unpaid<br>Principal<br>Balance Recorded<br>Investment<br>with no<br>Allowance Recorded<br>Investment<br>with<br>Allowance Total<br>recorded<br>investment1 Related<br>Allowance
December 31, 2022
Commercial and industrial $ 123 $ 124 $ — $ 124 $ —
Commercial real estate 117 92 20 112 —
Residential real estate 733 166 518 683 —
Construction & land development — — — — —
Consumer 127 6 121 127 4
Total impaired loans $ 1,101 $ 387 $ 659 $ 1,046 $ 4

1Includes principal, accrued interest, unearned fees, and origination costs

24

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.

For the Three Months Ended September 30, For the Nine Months Ended September 30,
(Dollars in thousands) 2022 2022
Average recorded investment:
Commercial and industrial $ 255 $ 258
Commercial real estate 173 198
Residential real estate 715 781
Construction & land development — 164
Consumer 131 132
Average recorded investment in impaired loans $ 1,274 $ 1,533
Interest income recognized:
Commercial and industrial $ — $ 2
Commercial real estate 2 6
Residential real estate 7 23
Construction & land development — —
Consumer 2 6
Interest income recognized on a cash basis on impaired loans $ 11 $ 37

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<br>Overnight and Continuous
September 30, December 31,
(Dollars in thousands) 2023 2022
Securities of U.S. Government Agencies and mortgage-backed securities of<br>   government agencies pledged, fair value $ 30,911 $ 32,755
Repurchase agreements 30,734 32,550

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.

26

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 September 30, 2023 and December 31, 2022 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 and are not included in the table below.

(Dollars in thousands) Level I Level II Level III Total
September 30, 2023
Assets:
Securities available-for-sale
U.S. Treasury securities $ 22,458 $ — $ — $ 22,458
U.S. Government agencies — 12,848 — 12,848
Mortgage-backed securities of government agencies — 64,451 — 64,451
Asset-backed securities of government agencies — 552 — 552
State and political subdivisions — 18,799 — 18,799
Corporate bonds — 26,222 — 26,222
Total available-for-sale securities $ 22,458 $ 122,872 $ — $ 145,330
Equity securities $ 211 $ — $ — $ 211
December 31, 2022
Assets:
Securities available-for-sale
U.S. Treasury securities $ 22,225 $ — $ — $ 22,225
U.S. Government agencies — 12,630 — 12,630
Mortgage-backed securities of government agencies — 68,890 — 68,890
Asset-backed securities of government agencies — 618 — 618
State and political subdivisions — 19,477 — 19,477
Corporate bonds — 26,229 — 26,229
Total available-for-sale securities $ 22,225 $ 127,844 $ — $ 150,069
Equity securities $ 198 $ — $ — $ 198

There were no assets measured on a nonrecurring basis on September 30, 2023, and December 31, 2022.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6 – FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of recognized financial instruments carried at amortized cost as of September 30, 2023 and December 31, 2022 are as follows:

(Dollars in thousands) Carrying<br>Value Level I Level II Level III Fair Value
September 30, 2023
Financial assets
Securities held-to-maturity $ 230,505 $ 9,209 $ 178,486 $ — $ 187,695
Loans held for sale — — — — —
Net loans 674,258 — — 640,671 640,671
Mortgage servicing rights 601 — — 601 601
Financial liabilities
Deposits $ 1,018,075 $ 840,637 $ — $ 179,008 $ 1,019,645
Other borrowings 1,808 — — 1,687 1,687
December 31, 2022
Financial assets
Securities held-to-maturity $ 247,401 $ 11,617 $ 200,337 $ — $ 211,954
Loans held for sale 52 55 — — 55
Net loans 620,333 — — 600,720 600,720
Mortgage servicing rights 621 — — 621 621
Financial liabilities
Deposits $ 1,023,417 $ 905,335 $ — $ 114,478 $ 1,019,813
Other borrowings 2,461 — — 2,321 2,321

Other financial instruments carried at amortized cost include cash and cash equivalents, restricted stock, bank-owned life insurance, accrued interest receivable, short-term borrowings, and accrued interest payable, all of which have a Level I fair value that approximates their carrying value. The Company also has unrecognized financial instruments on September 30, 2023 and December 31, 2022. These financial instruments relate to commitments to extend credit and letters of credit. The aggregate contract amount of such financial instruments was approximately $301 million on September 30, 2023 and $268 million on December 31, 2022. 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.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 7- ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in accumulated other comprehensive loss by component net of tax for the three and nine months ended September 30, 2023 and 2022:

(Dollars in thousands) Pretax Tax Effect After-tax
Three Months Ended September 30, 2023
Balance, beginning of period $ (16,856 ) $ 3,540 $ (13,316 )
Unrealized holding loss on available-for-sale securities arising during<br>   the period (1,127 ) 237 (890 )
Amortization of held-to-maturity discount resulting from transfer 50 (11 ) 40
Total other comprehensive loss (1,077 ) 226 (851 )
Balance, end of period $ (17,933 ) $ 3,766 $ (14,167 )
Nine Months Ended September 30, 2023
Balance, beginning of period $ (16,354 ) $ 3,435 $ (12,919 )
Unrealized holding loss on available-for-sale securities arising during<br>   the period (1,722 ) 361 (1,361 )
Amortization of held-to-maturity discount resulting from transfer 143 (30 ) 113
Total other comprehensive loss (1,579 ) 331 (1,248 )
Balance, end of period $ (17,933 ) $ 3,766 $ (14,167 )
Three Months ended September 30, 2022
Balance, beginning of period $ (12,663 ) $ 2,660 $ (10,003 )
Unrealized holding loss on available-for-sale securities arising during<br>   the period (5,189 ) 1,090 (4,099 )
Amortization of held-to-maturity discount resulting from transfer 64 (14 ) 50
Total other comprehensive loss (5,125 ) 1,076 (4,049 )
Balance, end of period $ (17,788 ) $ 3,736 $ (14,052 )
Nine Months Ended September 30, 2022
Balance, beginning of period $ (2,691 ) $ 566 $ (2,125 )
Unrealized holding loss on available-for-sale securities arising during<br>   the period (15,334 ) 3,220 (12,114 )
Amortization of held-to-maturity discount resulting from transfer 237 (50 ) 187
Total other comprehensive loss (15,097 ) 3,170 (11,927 )
Balance, end of period $ (17,788 ) $ 3,736 $ (14,052 )

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 on September 30, 2023 as compared to December 31, 2022, and the consolidated results of operations for the three and nine months ended September 30, 2023 compared to the same periods in 2022. 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 decreased $2.5 million to $1.157 billion at September 30, 2023 compared to $1.159 billion December 31, 2022. During the nine months ended September 30, 2023, securities decreased $24 million, net loans increased $54 million, and cash and cash equivalents decreased $37 million. Deposits and short-term borrowings decreased $7 million.

Net loans increased $54 million, or 9%, as residential real estate loans increased $18 million, or 12%, from December 31, 2022. Commercial and commercial real estate loans increased $39 million, or 10% compared to December 31, 2022. Consumer refinance activity slowed significantly on mortgage loans, home purchase activity remained stable despite limited inventory, and home equity line balances decreased by $3 million. Residential mortgage loan originations for the nine months ended September 30, 2023 totaled $40 million, a decrease from $61 million in originations during the nine months ended September 30, 2022. As interest rates continued to rise in 2023, more variable rate residential mortgage loans were originated for the portfolio. Originations sold into the secondary market were $3 million and $8 million, respectively during the nine months ended September 30, 2023 and September 30, 2022. The Bank originates and sells primarily fixed rate thirty-year mortgages into the secondary market.

The allowance for credit losses decreased $317 thousand from the year ago quarter to $6.7 million. The Company adopted CECL on January 1, 2023. Net recoveries were $119 thousand, or an annualized (0.07)% of average loans, in the current nine-month period compared to net charge-offs of $10 thousand, or 0.01% of average loans in the year-ago nine-month period. At September 30, 2023, the allowance for credit losses to total loans was 0.98%. We believe the allowance level is appropriate given the low level of problem loans and composition of the overall loan portfolio in the current economic environment.

CSB BANCORP, INC.

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

Nonperforming loans increased $4 thousand to $260 thousand, or 0.04%, of total loans from $256 thousand, or 0.04% of total loans, on December 31, 2022. For the nine months ended September 30, 2023, $125 thousand in loans were placed on nonaccrual status, $99 thousand in paydowns were received, and $34 thousand in personal loans were charged-off due to non-payment.

September 30, December 31, September 30,
(Dollars in thousands) 2023 2022 2022
Non-performing loans $ 260 $ 256 $ 686
Other real estate — — —
Repossessed assets — — —
Allowance for credit/loan losses 6,691 6,838 7,008
Total loans $ 680,949 $ 627,171 $ 609,971
Allowance for credit/loan losses as a percentage of total loans 0.98 % 1.09 % 1.15 %
Allowance for credit/loan losses to total nonperforming loans 25.8X 26.7X 10.2X

The ratio of gross loans to deposits was 66.9% at September 30, 2023, compared to 61.3% at December 31, 2022.

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 losses of $59.2 million within the available-for-sale and held-to-maturity portfolios as of September 30, 2023, was primarily the result of current market yields compared to the yields at the time the investments were purchased by the Company and not due to credit quality. As a result, all embedded security losses on September 30, 2023, are considered temporary and no allowance for credit loss is necessary.

The weighted average life of total debt securities was 5.22 years at September 30, 2023 as compared to 5.57 years at December 31, 2022. If interest rates declined 100 basis points, the weighted average life was estimated to fall to 5.17 years at September 30, 2023 and 5.10 years at December 31, 2022. If interest rates rose 100 basis points the weighted average life would be expected to increase to 5.22 years at September 30, 2023 and 6.01 years at December 31, 2022.

Deposits decreased $5 million, or less than 1%, from December 31, 2022 with noninterest-bearing deposits decreasing approximately $50 million, or 14%, and interest-bearing deposit accounts increasing approximately $45 million, or 7%. Total deposits as of September 30, 2023 are $1.02 billion, or 1%, below September 30, 2022 deposit balances. On a year over year comparison, decreases were recognized in noninterest-bearing demand deposits of $38 million, savings of $28 million and money market accounts of $18 million. Increases were recognized in interest bearing demand accounts of $11 million, and time deposits of $61 million. Deposits have declined somewhat as customers use excess liquid funds and move funds into time certificates of deposit to take advantage of the increased interest rates. The estimated amount of uninsured deposits was $267 million, $267 million, and $286 million as of September 30, 2023, December 31, 2022, and September 30, 2022, respectively.

Short-term borrowings consisting of overnight repurchase agreements with retail customers decreased $2 million, or 6%, to $31 million at September 30, 2023 as compared to December 31, 2022 and other borrowings decreased $653 thousand as the Company repaid FHLB advances.

Total shareholders’ equity amounted to $101 million, or 8.8%, of total assets at September 30, 2023, an increase of $5 million, or 6%, from $96 million December 31, 2022. The increase in shareholders’ equity during the nine months ended September 30, 2023 was due to net income of $11.1 million, accumulated other comprehensive loss (“AOCL”) of $1.2 million, less cash dividends of $3.0 million, and treasury stock repurchase of $1.4 million. An increase of U.S. Treasury rates during the nine months ended September 30, 2023 caused the AOCL to increase as AFS securities are marked to fair market value. As interest rates increase, the fair value of AFS fixed-rate securities decrease with a corresponding net of tax increase recorded in the AOCL portion of equity. This remaining unrealized loss in securities is temporary and is adjusted monthly for additional interest rate fluctuations, principal paydowns, calls, and maturities. The Company and the Bank met all regulatory capital requirements at September 30, 2023 as shown in the Capital Resources section of this report.

CSB BANCORP, INC.

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

RESULTS OF OPERATIONS

Three months ended September 30, 2023 and 2022

For the quarters ended September 30, 2023 and 2022, the Company recorded net income of $3.5 million and $3.7 million and $1.30 and $1.35 per share, respectively. The $169 thousand decrease in net income for the period was primarily the result of the provision for credit losses of $177 thousand compared to the recovery for credit losses in the prior year period of $250 thousand. The increase of $277 thousand in net interest income and $30 thousand increase in noninterest income was offset by an increase in noninterest expenses of $89 thousand. The federal income tax provision decreased $40 thousand. Return on average assets and return on average equity were 1.19% and 13.63%, respectively, for the three-month period of 2023, compared to 1.25% and 15.24%, respectively for the same quarter in 2022.

Average Balance Sheets and Net Interest Margin Analysis

For the Three Months Ended September 30,
2023 2022
(Dollars in thousands) Average<br>balance1 Interest Average<br>rate2 Average<br>balance1 Interest Average<br>rate2
ASSETS
Interest-earning deposits $ 38,669 $ 531 5.45 % $ 101,460 $ 586 2.29 %
Taxable securities 360,868 1,910 2.10 373,290 1,780 1.89
Tax-exempt securities 4 21,859 130 2.36 24,627 139 2.24
Loans 3,4 675,283 9,181 5.39 594,820 6,687 4.46
Total interest-earning assets 1,096,679 11,752 4.25 % 1,094,197 9,192 3.33 %
Noninterest-earning assets 65,350 65,326
TOTAL ASSETS $ 1,162,029 $ 1,159,523
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing demand deposits $ 256,223 $ 689 1.07 % $ 243,343 $ 151 0.25 %
Savings deposits 292,706 662 0.90 323,033 183 0.22
Time deposits 169,766 1,420 3.32 115,899 225 0.77
Borrowed funds 35,618 110 1.23 37,479 37 0.39
Total interest-bearing liabilities 754,313 2,881 1.52 % 719,754 596 0.33 %
Noninterest-bearing demand deposits 301,440 340,576
Other liabilities 4,982 4,150
Shareholders' Equity 101,294 95,043
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,162,029 $ 1,159,523
Taxable equivalent net interest<br>   income, (Non-GAAP) $ 8,871 $ 8,596
Tax equivalent adjustment 4 (34 ) (36 )
Net interest income, (GAAP) $ 8,837 $ 8,560
Net interest margin, (GAAP) 3.20 % 3.10 %
Tax equivalent adjustment 4 0.01 0.02
Net interest margin-taxable equivalent, (Non-GAAP) 3.21 % 3.12 %
Taxable equivalent net interest spread 2.73 % 3.00 %

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, which is a Non-GAAP measure and is reconciled to the GAAP measure at the bottom of the table.

CSB BANCORP, INC.

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

Interest income for the quarter ended September 30, 2023, was $11.7 million representing a $2.6 million increase, or 22%, compared to the same period in 2022. This increase was primarily due to increased volume and rates on loans and increased rates on interest-earning deposits, and taxable securities partially offset by the volume decrease in interest-earning deposits in the comparable period. Average interest-earning deposit rates increased 316 basis points while loan rates increased 93 basis points, and taxable securities interest rates rose 21 basis points for the quarter ended September 30, 2023 as compared to the same period in 2022. The Federal Reserve raised managed interest rates 6 times and 225 basis points during the 1 year period. Interest expense for the quarter ended September 30, 2023 was $2.9 million, an increase of $2.3 million, or 383%, from the same quarter in 2022. The increase in interest expense occurred primarily due to the increase in interest rates on all deposit types as well as an increase in volume of demand and time deposit accounts for the quarter ended September 30, 2023.

For the quarter ended September 30, 2023, with improving credit quality and minimal loan charge-offs, the bank recognized net recoveries of $119 thousand, compared to $10 thousand net charge-offs for the same quarter in 2022. The provision for credit losses for loans in the current quarter of $13 thousand, compared to a credit provision of $250 thousand in the third quarter 2022, reflects loan growth in 2023. The company recorded $164 thousand credit provision for off-balance credit exposure in 2023 compared to a $0 provision in the third quarter of 2022. This increase results from an increase primarily in commercial construction loans in 2023 compared to 2022. Economic indicators reflect a leveling off in residential real estate prices and low unemployment. The provision for credit losses is determined based on management’s calculation of the adequacy of the allowance for credit 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 September 30, 2023, was $1.7 million, an increase of $30 thousand, or 2%, compared to the same quarter in 2022. The gain on the sale of mortgage loans into the secondary market decreased by $2 thousand, or 4%, for the quarter ended September 30, 2023 as fewer loans were sold into the secondary market due to decreasing demand for mortgage refinancing as interest rates increased and inventories of homes available for sale declined. Fees from trust and brokerage services amounted to $259 thousand for the third quarter 2023, an increase of $43 thousand, or 20%, as compared to the same quarter in 2022. Service charges on deposit accounts increased $11 thousand, or 3%, compared to the same quarter in 2022, primarily from increased customer fees, partially offset by a decline in customer overdraft fees.. Debit card interchange income decreased $5 thousand, or less than 1%, with less fees generated from usage in the third quarter 2023. Credit card fee income decreased $4 thousand, or 2%. Earnings on bank owned life insurance increased $9 thousand, or 5%, for the third quarter 2023.

Noninterest expenses for the quarter ended September 30, 2023 increased $89 thousand, or 2%, compared to the third quarter 2022. Salaries and employee benefits increased $230 thousand, or 7%, a result increases in headcount and base salary compared to third quarter 2022. Occupancy and equipment expense increased $24 thousand, or 5%, in 2023 over the third quarter 2022, primarily due to increases in rooftop air conditioner repair. Software expense increased $11 thousand due to additional software purchases over third quarter 2022. Professional and director fees decreased $189 thousand, or 34%, for the quarter ended September 30, 2023 as compared to the third quarter 2022, primarily reflecting a consulting fee in 2022 to renegotiate the core data processing software contract. Marketing and public relations expense decreased $17 thousand, or 12%. Data line and phone expense increased $2 thousand, or 4%, as renegotiated contracts have stabilized. Debit card expense decreased $22 thousand or 11%. FDIC insurance expense increased $38 thousand, or 41%, with the increase in insurance rates. Federal income tax expense decreased $40 thousand, or 4%, for the quarter ended September 30, 2023 as compared to the third quarter 2022. The provision for income taxes was $850 thousand (effective rate of 18.2%) for the quarter ended September 30, 2023, compared to $890 thousand (effective rate of 19.6%) for the same quarter ended 2022.

CSB BANCORP, INC.

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

RESULTS OF OPERATIONS

Nine months ended September 30, 2023, and 2022

For the nine months ended September 30, 2023, and 2022, the Company recorded net income of $11.1 million and $9.6 million and $4.12 and $3.52 per share, respectively. The $1.5 million increase in net income for the nine-month period was primarily the result of an increase in net interest income of $3.7 million, which was partially offset by an increase in the total provision for credit losses of $1.2 million, an increase in noninterest expenses of $615 thousand, and a reduction in noninterest income of $33 thousand. The federal income tax provision was $413 thousand higher during the nine-month period in 2023. Return on average assets and return on average equity were 1.28% and 14.85%, respectively, for the nine months ended September 30, 2023, compared to 1.12% and 13.41%, respectively for the same period in 2022.

For the Nine Months Ended September 30,
2023 2022
(Dollars in thousands) Average<br>balance1 Interest Average<br>rate2 Average<br>balance1 Interest Average<br>rate2
ASSETS
Interest-earning deposits $ 40,272 $ 1,520 5.05 % $ 119,373 $ 863 0.97 %
Taxable securities 368,510 5,867 2.13 360,774 4,721 1.75
Tax-exempt securities 4 22,045 387 2.35 24,705 416 2.25
Loans 3,4 657,698 25,874 5.26 576,821 18,510 4.29
Total interest-earning assets 1,088,525 33,648 4.13 % 1,081,673 24,510 3.03 %
Noninterest-earning assets 65,024 63,217
TOTAL ASSETS $ 1,153,549 $ 1,144,890
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing demand deposits $ 247,530 $ 1,810 0.98 % $ 239,679 $ 257 0.14 %
Savings deposits 303,250 1,784 0.79 313,172 325 0.14
Time deposits 144,539 2,890 2.67 117,999 670 0.76
Borrowed funds 34,289 267 1.04 41,032 94 0.31
Total interest-bearing liabilities 729,608 6,751 1.24 % 711,882 1,346 0.25 %
Noninterest-bearing demand deposits 319,218 333,715
Other liabilities 5,185 3,956
Shareholders' Equity 99,538 95,337
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,153,549 $ 1,144,890
Taxable equivalent net interest<br>   income, (Non-GAAP) $ 26,897 $ 23,164
Tax equivalent adjustment 4 (101 ) (109 )
Net interest income, (GAAP) $ 26,796 $ 23,055
Net interest margin, (GAAP) 3.29 % 2.85 %
Tax equivalent adjustment 4 0.01 0.01
Net interest margin-taxable equivalent, (Non-GAAP) 3.30 % 2.86 %
Taxable equivalent net interest spread 2.89 % 2.78 %

CSB BANCORP, INC.

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

Interest income for the nine months ended September 30, 2023, was $33.5 million representing a $9.1 million increase, or 37%, compared to the same period in 2022. This increase was primarily due to volume and yield increases on loans and taxable securities along with rate increases on interest-earning deposits in other banks for the period ended September 30, 2023, as compared to the same period in 2022. Interest expense for the nine months ended September 30, 2023, was $6.8 million, an increase of $5.4 million, or 402%, from the same period in 2022. The increase in interest expense occurred primarily due to an increase in rates on all interest-bearing liabilities for the nine months ended September 30, 2023, as well as a shift in balances into higher rate time deposits.

For the nine months ended September 30, 2023, the provision for credit losses was $287 thousand, compared to a credit reversal of $895 thousand for the same period in 2022. For more discussion see Results of Operations, three months. The provision for loan losses is determined based on management’s calculation of the adequacy of the allowance for credit 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 nine months ended September 30, 2023, was $5.1 million, a decrease of $33 thousand, or less than 1%, compared to the same period in 2022. The gain on the sale of mortgage loans to the secondary market decreased $208 thousand to $106 thousand for the nine months ended September 30, 2023, as increases in interest rates slowed mortgage loan refinancing. Service charges on deposit accounts increased $49 thousand, or 6%, compared to the same period in 2022 primarily from increases in business service charges on deposit accounts and customer nsf fees. Credit card fee income increased $19 thousand, or 4% with growth in business credit card customers and interchange income. Debit card interchange income increased $11 thousand, or less than 1%. Earnings on bank owned life insurance policies increased $16 thousand for the period. Fees from trust and brokerage services increased $36 thousand for the period.

Noninterest expenses for the nine months ended September 30, 2023, increased $615 thousand, or 4%, compared to the same period in 2022. Salaries and employee benefits increased $346 thousand, or 4%, a result of increased salaries and medical benefits. Software increased $172 thousand, or 16%, with investment in enhanced reporting software. FDIC assessment rose $129 thousand, or 51%, a result of increasing rates set by the FDIC in 2002 for 2023. Marketing and public relations expense increased $21 thousand, or 6%, with marketing, brand recognition initiatives, and community support in the company’s market slowly increasing in volume due to increasing opportunities presenting after previous cancellations due to COVID-19. Occupancy and equipment expenses increased $27 thousand over the same period in 2022 with an increase in maintenance expense. Professional and director fees decreased $88 thousand for the nine months ended September 30, 2023, as compared to the same period in 2022 as an IT consulting fee did not recur in 2023 which was partially offset with increases in audit function and CECL.

Federal income tax expense increased $413 thousand, or 18%, for the nine months ended September 30, 2023, as compared to the same period in 2022. The provision for income taxes was $2.7 million (effective rate of 19.7%) for the nine months ended September 30, 2023, compared to $2.3 million (effective rate of 19.4%) for the same period ended 2022.

CSB BANCORP, INC.

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

CAPITAL RESOURCES

The Company maintained a strong capital position with tangible common equity to tangible assets of 8.4% at September 30, 2023 compared with 7.9% at December 31, 2022.

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 common equity tier 1 (“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, 2022. As of September 30, 2023, the Company and the Bank met all capital adequacy requirements to which they were subject.

Capital Ratios
September 30,<br>2023 December 31,<br>2022
Total Capital To Risk Weighted Assets Ratio
Consolidated 16.1 % 16.0 %
Bank 16.0 15.9
Tier 1 Capital To Risk Weighted Assets Ratio
Consolidated 15.1 15.1
Bank 15.1 14.9
Common Equity Tier 1 Capital To Risk Weighted Assets
Consolidated 15.1 15.1
Bank 15.1 14.9
Tier 1 Leverage Ratio
Consolidated 9.5 8.8
Bank 9.4 8.7

LIQUIDITY

(Dollars in thousands) September 30,<br>2023 December 31,<br>2022 Change
Cash and cash equivalents $ 49,409 $ 86,420 $ (37,011 )
Available from FHLB 124,045 122,062 1,983
Unpledged AFS securities at fair market value 123,340 134,401 (11,061 )
$ 296,794 $ 342,883 $ (46,089 )
Net deposits and short-term liabilities $ 1,027,414 $ 1,041,016 $ (13,602 )
Liquidity ratio 28.9 % 32.9 % (4.0 )
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.

CSB BANCORP, INC.

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

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.

PER SHARE DATA

Earnings per share is computed based on the weighted average number of shares of common stock outstanding during each year. The company currently maintains a simple capital structure, thus, there are no dilutive effects on earnings per share.

The weighted average number of common shares outstanding for earnings per share computations was as follows:

Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands, except per share data) 2023 2022 2023 2022
Net income $ 3,481 $ 3,650 $ 11,059 $ 9,560
Weighted average common shares outstanding 2,675,967 2,712,686 2,682,872 2,716,225
Earnings per share, basic and diluted 1.30 1.35 4.12 3.52

CSB BANCORP, INC.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

By September 2023, Ohio's unemployment rate had stabilized at 3.4%. The bank based in Holmes County is reporting an unemployment rate of 2.5% in September 2023. Of the counties within the bank's footprint, Stark County reported the highest unemployment rate at 3.5% in September. Tuscarawas and Wayne Counties posted a lower unemployment rates of 3.2% and 2.7% in September 2023. Many jobs within the Bank's market footprint continue to go unfilled. The rate of inflation, increased to 3.7% on a year over year basis at September 2023, following a high base rate in 2022. The rate continues to be above the Federal Reserve target rate of 2%, but has fallen from 8.5% in March 2022. The Federal Reserve continues to raise interest rates in an effort to stabilize prices with maximum employment. Credit quality in the Bank's loan portfolio is good, however risks to the economy remain with higher prices for goods and labor.

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 for both the twelve- month and twenty-four-month periods.

The following table presents an analysis of the estimated sensitivity of the Company’s annual net interest income to sudden and sustained -400 through +400 basis point changes, in 100 basis point increments, in market interest rates at September 30, 2023 and December 31, 2022. 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.

September 30, 2023
(Dollars in thousands)
Change in<br>Interest Rates<br>(basis points) Net Interest <br>Income Dollar<br>Change Percentage<br>Change Board Policy<br>Limits
+400 $ 37,686 $ 537 1.4 % ± 25 %
+300 37,640 491 1.3 ± 15
+200 37,495 346 0.9 ± 10
+100 37,324 175 0.5 ± 5
0 37,149 — —
-100 36,701 (448 ) (1.2 ) ± 5
-200 35,696 (1,453 ) (3.9 ) ± 10
-300 34,841 (2,308 ) (6.2 ) ± 15
-400 33,673 (3,476 ) (9.4 ) ± 25
December 31, 2022
+ 400 $ 38,810 $ 1,090 2.9 % ± 25 %
+ 300 38,581 861 2.3 ± 15
+ 200 38,302 582 1.5 ± 10
+ 100 38,003 283 0.8 ± 5
0 37,720 — —
– 100 37,368 (352 ) (0.9 ) ± 5
– 200 36,869 (851 ) (2.3 ) ± 10
– 300 35,973 (1,747 ) (4.6 ) ± 15
– 400 35,519 (2,201 ) (5.8 ) ± 25

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.

CSB BANCORP, INC.

FORM 10-Q

Quarter ended September 30, 2023

PART II – OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS.

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.

Not required for Smaller Reporting Companies.

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

(a) Not applicable

(b) Not applicable

(c) The following table provides information about repurchases of common stock by the Company during the quarter ended September 30, 2023:

Period Total Number of Common Shares Purchased Average Price Paid per Common Share Total Number of Shares Purchased as Part of Publicly Announced Authorization Maximum Number of Remaining Shares that May be Purchased as Part of Publicly Announced Authorization
July 1, 2023 - July 31, 2023 — — — 75,093
August 1, 2023 - August 31, 2023 8,880 37.60 8,880 66,213
September 1, 2023 - September 30, 2023 132 36.26 132 66,081
Total for quarter 9,012 73.86 — 9,012 66,081

On March 2, 2021, 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 5% of the Company’s common shares or 137,117 of the Company’s outstanding shares. 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.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4 - MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5 - OTHER INFORMATION.

Not applicable.

CSB BANCORP, INC.

FORM 10-Q

Quarter ended September 30, 2023

PART II – OTHER INFORMATION

ITEM 6 - Exhibits.

Exhibit<br><br>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 04958544).
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, film number 99579179).
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).
3.2.2 Amended Article II of the Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form DEF 14a file on March 16, 2021, Appendix A, film number 21747059).
3.2.3 Amended Article III of the Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to Registrant's Form DEF 14a file on March 16, 2023, Appendix A, film number 23738842).
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, film number 20717009).
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 September 30, 2023, 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).

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: November 13, 2023 /s/ Eddie L. Steiner
Eddie L. Steiner
President
Chief Executive Officer
Date: November 13, 2023 /s/ Paula J. Meiler
Paula J. Meiler
Senior Vice President
Chief Financial Officer

EX-31.1

CSB BANCORP, INC.

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification

President and Chief Executive Officer

I, Eddie L. Steiner, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CSB Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2023

/s/ Eddie L. Steiner
Eddie L. Steiner
President and
Chief Executive Officer

EX-31.2

CSB BANCORP, INC.

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification

Senior Vice President and Chief Financial Officer

I, Paula J. Meiler, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CSB Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

1. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

2. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

3. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

4. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2023

/s/ Paula J. Meiler
Paula J. Meiler
Senior Vice President and
Chief Financial Officer

EX-32.1

CSB BANCORP, INC.

EXHIBIT 32.1

SECTION 1350 CERTIFICATION

In connection with the quarterly report of CSB Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof, (the “Report”), I, Eddie L. Steiner, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 13, 2023

/s/ Eddie L. Steiner
Eddie L. Steiner
President and<br><br>Chief Executive Officer

* This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

EX-32.2

CSB BANCORP, INC.

EXHIBIT 32.2

SECTION 1350 CERTIFICATION

In connection with the quarterly report of CSB Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof, (the “Report”), I, Paula J. Meiler, Senior Vice President and Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 13, 2023

/s/ Paula J. Meiler
Paula J. Meiler<br><br>Senior Vice President and<br><br>Chief Financial Officer

* This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

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