8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): October 21, 2020

CSB Bancorp, Inc.

(Exact name of Registrant as Specified in Its Charter)

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

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

Not Applicable

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

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

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

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

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

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

Emerging growth company ☐

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

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On October 21, 2020, CSB Bancorp, Inc. issued a press release announcing its earnings for the three-month period ended September 30, 2020. A copy of this press release and related financial tables are furnished herein as Exhibit 99.1.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

99.1	Press release and Quarterly Report for CSB Bancorp, Inc. for the quarter ended September 30, 2020.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

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

	CSB Bancorp, Inc.
	By:	/s/ Paula J. Meiler
		Paula J. Meiler
Date:  October 21, 2020		Senior Vice President and Chief Financial Officer

csbb-ex991_82.htm

Exhibit 99.1

CSB BANCORP, INC. REPORTS THIRD QUARTER EARNINGS

Third Quarter Highlights

	Quarter Ended September 30, 2020			Quarter Ended September 30, 2019
Diluted earnings per share	$	1.02		$	0.98
Net Income	$	2,800,000		$	2,695,000
Return on average common equity		12.19	%		12.89	%
Return on average assets		1.14	%		1.38	%

Millersburg, Ohio – October 21, 2020 – CSB Bancorp, Inc. (OTC Pink: CSBB) today announced third quarter 2020 net income of $2,800,000, or $1.02 per basic and diluted share, as compared to $2,695,000, or $.98 per basic and diluted share, for the same period in 2019.  Income before federal income tax amounted to $3,476,000, an increase of 4% over the same quarter in the prior year. For the nine-month period ended September 30, 2020 net income totaled $7,889,000 compared to $7,821,000 for the same period last year, an increase of less than 1%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 12.19% and 1.14%, respectively, compared with 12.89% and 1.38% for the third quarter of 2019.

Eddie Steiner, President and CEO stated, “Year to date earnings are a little ahead of last year, with key support from home mortgage loan volume and the fiscal stimulus programs that provided many households and businesses with cash flow needed to meet loan obligations and operating expenses.  Yield on loan and investment portfolios continues to fall with extremely low prevailing interest rates and borrowers being cautious about new debt in light of the uncertain COVID environment.  While we do not see signs of a rapid overall recovery, economic activity will expand as unemployment levels continue to improve.”

Net interest income and noninterest income, on a fully taxable equivalent basis, totaled $8.9 million during the quarter, an increase of $271 thousand from the prior-year third quarter.   Net interest income decreased $147 thousand, or 2%, in the third quarter of 2020 compared to the same period in 2019.

Loan interest income including fees decreased $49 thousand during third quarter 2020 as compared to the same quarter in 2019, a decrease of less than 1%. Average total loan balances during the current quarter were $80 million higher than the year ago quarter, an increase of 14%.  Loan yields for third quarter 2020 averaged 4.51%, a decrease of 67 basis points from the 2019 third quarter average of 5.18%.

The net interest margin was 3.04% compared to 3.95% for third quarter 2019. The tax equivalency effect on the margin remained stable at 0.02% in the comparable third quarters.

Due to COVID-19 related risk factors, an increased provision for loan losses of $377 thousand was recognized for the third quarter ended September 30, 2020 as compared to $285 thousand for the prior year quarter.  Credit quality within the loan portfolio has not been significantly affected by COVID factors to date.  However, a significant degree of COVID related uncertainty remains, and the eventual damage to household and business balance sheets cannot be effectively fully measured at this time.

Noninterest income increased 29%, compared to third quarter of 2019, fueled by historic growth in gain on sale of real estate loans into the secondary market, increases in debit card fee income, and bank owned life insurance

values. These increases were partially offset by decreases in service charges on deposit accounts as both consumer and business accounts maintained increased deposit balances from government stimulus payments and loans provided by the bank within the PPP.

Noninterest expense increased 1% from third quarter 2019.   FDIC insurance expense increased $91 thousand as the prior year quarter reflected the use of Small Bank Assessment Credits.  Professional and directors’ fees decreased $84 thousand, or 27%, reflecting lower audit expense due to the elimination of the internal control over financial reporting audit, and the decrease of one director.  Salary and employee benefit costs decreased $34 thousand, or 1%, compared to the prior year quarter, as a result of fewer employees, decreased expense in the self-funded dental insurance plan, and deferred salary expense rising from the origination of mortgage loans held in the bank’s portfolio.  Marketing and public relations decreased by $53 thousand, or 35%, reflecting the continuing pandemic-related shut down of activities in third quarter 2020. The Company’s third quarter efficiency ratio decreased to 56.3% compared to 57.5%.

Federal income tax expense totaled $676 thousand in third quarter 2020, as compared to $649 thousand tax expense for the same quarter in 2019. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter amounted to $980 million, an increase of $206 million, or 27%, above the same quarter of the prior year.  Liquidity increased as the Company’s average interest-bearing balances with banks increased $113 million during the quarter to $173 million as compared to the third quarter in 2019. Average loan balances of $635 million increased $80 million, or 14%, from the prior year third quarter while average securities balances of $118 million increased $8 million, or 7%, as compared to third quarter 2019.

Average commercial loan balances for the quarter, including commercial real estate, increased $80 million, or 22%, from prior year levels. This amount includes $92 million in new PPP loan average balances originated in second quarter.  Excluding average PPP loan balances, commercial loans decreased year over year as borrowers reduced outstanding commercial line balances during the pandemic-related contraction in economic activity.  Average residential mortgage balances increased $6 million, or 5%, over the prior year’s quarter while home equity lines of credit decreased $4 million over the prior year’s quarter as they were refinanced into low rate term mortgages.  Average consumer credit balances decreased $2 million, or 9%, versus the same quarter of the prior year.

Nonperforming assets decreased $416 thousand from September 30, 2019 to $4.1 million, or 0.65%, of total loans plus other real estate on September 30, 2020.  On September 30, 2020, approximately $1.1 million of the non-performing loan total is guaranteed by either USDA or the SBA.  Delinquent loan balances as of September 30, 2020 decreased to 0.71% of total loans as compared to 0.96% on September 30, 2019.

Net loan recoveries recognized during third quarter 2020 were $143 thousand, or 0.09% annualized, compared to third quarter 2019 net loan charge-offs of $46 thousand. The allowance for loan losses amounted to 1.33% of total loans on September 30, 2020 as compared to 1.20% on September 30, 2019.

Average deposit balances grew on a quarter over prior year quarter comparison by $189 million, or 29%.  For the third quarter 2020, the average cost of deposits amounted to 0.30%, as compared to 0.60% for the third quarter 2019.  During the third quarter 2020, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $66 million and interest-bearing transaction accounts of $123 million. The average balance of securities sold under repurchase agreement during the third quarter of 2020 increased by $5 million, or 13%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $91.9 million on September 30, 2020 with 2.7 million common shares outstanding.  The equity to assets ratio amounted to 9.3% on September 30, 2020 and 10.6% on September 30, 2019.  The Company declared a third quarter dividend of $0.28, producing an annualized yield of 3.7% based on the September 30, 2020 closing price of $30.00.

Cares Act and related events

On March 27, 2020 the Cares Act, a $2.3 trillion emergency federal relief bill, was signed into law.  The relief effort included SBA’s PPP for qualifying businesses, and subsequent actions by Congress enlarged and extended the PPP as well as additional emergency relief programs.  We have facilitated and funded more than 750 of these government assistance loans.  We expect the majority of the PPP loan dollars will ultimately qualify for borrower forgiveness under the guidelines of the SBA program.  We have also extended loan modifications to qualifying commercial and consumer loan customers to deal with the uncertainty of the economy.  Customers could request relief from their total payment or place their obligation on interest only for a period of 3-4 months, with maturities extended on these modified loans.  As of September 30, 2020, loans which have not reentered regular payment include $12 million of term commercial loans and $579 thousand of consumer loans.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $988 million as of September 30, 2020. CSB provides a complete range of banking and other financial services to consumers and businesses through its wholly owned subsidiary, The Commercial and Savings Bank, with sixteen banking centers in Holmes, Wayne, Tuscarawas, and Stark counties and Trust offices located in Millersburg, North Canton, and Wooster, Ohio.

Forward-Looking Statement

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

Contact Information:

Paula J. Meiler, SVP & CFO

330.763.2873

paula.meiler@csb1.com

CSB BANCORP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)
(Dollars in thousands, except per share data)
EARNINGS
Net interest income FTE (a)		7,077			7,048		6,953		7,168		7,228		21,078			21,388
Provision for loan losses		377			717		178		285		285		1,272			855
Other income		1,862			1,641		1,343		1,451		1,440		4,846			3,977
Other expenses		5,050			4,709		5,007		5,079		4,999		14,766			14,690
FTE adjustment (a)		36			36		37		39		40		109			118
Net income		2,800			2,606		2,483		2,593		2,695		7,889			7,821
Diluted earnings per share		1.02			0.95		0.91		0.95		0.98		2.88			2.85
PERFORMANCE RATIOS
Return on average assets (ROA)		1.14		%	1.15	%	1.23	%	1.27	%	1.38	%	1.17		%	1.39		%
Return on average common equity (ROE)		12.19			11.72		11.47		12.13		12.89		11.80			13.00
Net interest margin FTE (a)		3.04			3.29		3.67		3.73		3.95		3.31			4.06
Efficiency ratio		56.32			54.05		60.08		58.74		57.52		56.76			57.75
Number of full-time equivalent employees		169			169		172		171		175
MARKET DATA
Book value/common share		33.49			32.81		31.95		31.17		30.49
Period-end common share mkt value		30.00			32.00		35.00		40.97		38.67
Market as a % of book		89.58		%	97.53	%	109.55	%	131.44	%	126.83	%
Price-to-earnings ratio		7.83			8.44		9.26		10.78		10.28
Cash dividends/common share		0.28			0.28		0.28		0.28		0.28		0.84			0.80
Common stock dividend payout ratio		27.45		%	29.47	%	30.77	%	29.47	%	28.57	%	29.17		%	28.07		%
Average basic common shares		2,742,350			2,742,350		2,742,350		2,742,350		2,742,350		2,742,350			2,742,278
Average diluted common shares		2,742,350			2,742,350		2,742,350		2,742,350		2,742,350		2,742,350			2,742,278
Period end common shares outstanding		2,742,350			2,742,350		2,742,350		2,742,350		2,742,350
Common shares repurchased		0			0		0		0		0
Common stock market capitalization		82,271			87,755		95,982		112,354		106,047
ASSET QUALITY
Gross charge-offs		28			17		86		59		75		131			199
Net charge-offs (recoveries)		(143	)		3		74		44		46		(66	)		(14	)
Allowance for loan losses		8,355			7,835		7,120		7,017		6,776
Nonperforming assets (NPAs)		4,102			4,481		4,468		4,659		4,518
Net charge-off (recovery) /average loans ratio		(0.09	)	%	0.00	%	0.05	%	0.03	%	0.03	%	(0.01	)	%	0.00		%
Allowance for loan losses/period-end loans		1.33			1.23		1.28		1.27		1.20
NPAs/loans and other real estate		0.65			0.70		0.80		0.84		0.80
Allowance for loan losses/nonperforming loans		203.71			178.78		162.97		154.55		153.35
CAPITAL & LIQUIDITY
Period-end tangible equity to assets		8.86		%	8.90	%	10.28	%	9.91	%	10.07	%
Average equity to assets		9.33			9.79		10.72		10.43		10.72
Average equity to loans		14.39			14.38		15.55		15.29		14.95
Average loans to deposits		76.22			80.95		82.61		81.62		86.18
AVERAGE BALANCES
Assets		979,806			912,875		812,409		812,481		773,481		901,994			749,958
Earning assets		926,377			860,838		761,619		763,244		725,615		849,893			704,260
Loans		635,124			621,710		560,142		554,556		554,956		605,767			551,157
Deposits		833,288			767,988		678,090		679,473		643,981		760,056			621,939
Shareholders' equity		91,409			89,404		87,090		84,777		82,948		89,308			80,459
ENDING BALANCES
Assets		987,978			965,179		810,041		818,683		786,792
Earning assets		936,323			913,813		757,769		767,345		734,859
Loans		628,084			636,799		555,320		551,633		566,213
Deposits		840,656			815,961		671,162		683,546		658,119
Shareholders' equity		91,853			89,967		87,629		85,476		83,614

All values are in US Dollars.

NOTES:

(a) - Net Interest income on a fully tax-equivalent ("FTE") basis restates interest on tax-exempt securities and loans as if such interest were subject to federal income tax at the statutory rate.  Net interest income on an FTE basis differs from net interest income under U.S. generally accepted accounting principles.

CSB BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)
(Dollars in thousands, except per share data)
ASSETS
Cash and cash equivalents
Cash and due from banks	18,269			20,696
Interest-earning deposits in other banks	179,875			58,873
Total cash and cash equivalents	198,144			79,569
Securities
Available-for-sale, at fair-value	112,279			89,572
Held-to-maturity	9,901			15,097
Equity securities	82			91
Restricted stock, at cost	4,614			4,614
Total securities	126,876			109,374
Loans held for sale	1,488			399
Loans	628,084			566,213
Less allowance for loan losses	8,355			6,776
Net loans	619,729			559,437
Premises and equipment, net	12,685			11,595
Goodwill and core deposit intangible	4,787			4,847
Bank owned life insurance	19,284			16,880
Accrued interest receivable and other assets	4,985			4,691
TOTAL ASSETS	987,978			786,792
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing	252,891			192,620
Interest-bearing	587,765			465,499
Total deposits	840,656			658,119
Short-term borrowings	41,645			35,070
Other borrowings	9,765			6,453
Accrued interest payable and other liabilities	4,059			3,536
Total liabilities	896,125			703,178
Shareholders' equity
Common stock, 6.25 par value. Authorized
9,000,000 shares; issued 2,980,602 shares
in 2020 and 2019	18,629			18,629
Additional paid-in capital	9,815			9,815
Retained earnings	67,325			59,915
Treasury stock at cost - 238,252 shares in 2020
and  2019	(4,780	)		(4,780	)
Accumulated other comprehensive income	864			35
Total shareholders' equity	91,853			83,614
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	987,978			786,792

All values are in US Dollars.

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)
(Dollars in thousands, except per share data)
Interest and dividend income:
Loans, including fees		7,190			7,239		21,145			21,496
Taxable securities		372			534		1,462			1,705
Nontaxable securities		110			133		343			401
Other		42			356		312			749
Total interest and dividend income		7,714			8,262		23,262			24,351
Interest expense:
Deposits		636			966		2,139			2,711
Other		37			108		154			370
Total interest expense		673			1,074		2,293			3,081
Net interest income		7,041			7,188		20,969			21,270
Provision for loan losses		377			285		1,272			855
Net interest income after provision
for loan losses		6,664			6,903		19,697			20,415
Noninterest income
Service charges on deposits accounts		252			333		753			938
Trust services		236			234		662			670
Debit card interchange fees		433			377		1,209			1,093
Gain on sale of loans		567			132		1,189			287
Market value change in equity securities		(1	)		5		(10	)		8
Other		375			359		1,043			981
Total noninterest income		1,862			1,440		4,846			3,977
Noninterest expenses
Salaries and employee benefits		2,959			2,993		8,603			8,750
Occupancy expense		246			209		711			618
Equipment expense		172			128		505			408
Professional and director fees		232			316		843			963
Software expense		269			225		755			674
Marketing and public relations		96			149		289			405
Debit card expense		165			142		451			401
Other expenses		911			837		2,609			2,471
Total noninterest expenses		5,050			4,999		14,766			14,690
Income before income tax		3,476			3,344		9,777			9,702
Federal income tax provision		676			649		1,888			1,881
Net income		2,800			2,695		7,889			7,821
Net income per share:
Basic		1.02			0.98		2.88			2.85
Diluted		1.02			0.98		2.88			2.85

All values are in US Dollars.